ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRU INC, 485BPOS, 1996-10-31

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRU INC
485BPOS, 1996-10-31

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<PAGE>

As filed with the Securities and Exchange
Commission on October 31, 1996

File Nos. 33-45328
811-06554

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 14 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940

Amendment No. 14 X

Alliance North American Government Income Trust, Inc.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code:
(800) 221-5672

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)

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

X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.

<PAGE>

If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Registrant has registered an indefinite number of shares of
common stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant's Rule 24f-2 notice for its fiscal year
ended November 30, 1995 was filed on January 29, 1996.

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 404(c))

N-1A Item No. Location in Prospectus
- ------------ -----------------------
PART A (CAPTION)
- ------

Item 1. Cover Page Cover Page

Item 2. Synopsis Expense Information

Item 3. Condensed Financial
Information Financial Highlights

Item 4. General Description of
Registrant Description of the Fund

Item 5. Management of the Fund Management of the Fund;
General Information

Item 6. Capital Stock and Other Dividends, Distributions
Securities and Taxes;
General Information

Item 7. Purchase of Securities Purchase and Sale of
Being Offered Shares; General
Information

Item 8. Redemption or Repurchase Purchase and Sale of
Shares

Item 9. Pending Legal Proceedings General Information

Location in Statement of
PART B Additional Information
- ------ ------------------------

Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information and Management of the
History Fund; General
Information

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 404(c))

Location in Statement of
PART B Additional Information
- ------ ------------------------
(CAPTION)

Item 13. Investment Objectives Investment Objective,
and Policies Policies and
Restrictions;
Further Information
About Canada, the
United Mexican
States and the
Republic of
Argentina

Item 14. Management of the Management of
Registrant the Fund

Item 15. Control Persons and General Information
Principal Holders
of Securities

Item 16. Investment Advisory and Management of
Other Services the Fund

Item 17. Brokerage Allocation and General Information
Other Practices

Item 18. Capital Stock and Other General Information
Securities

Item 19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Redemption and
Being Offered Repurchase of
Shares; Net Asset Value

Item 20. Tax Status Investment Objective,
Policies and Restrictions;
Dividends, Distributions
and Taxes

Item 21. Underwriters General Information

Item 22. Calculation of Performance
Data General Information

Item 23. Financial Statements Financial Statements;

<PAGE>

Report of Independent
Auditors

<PAGE>

THE ALLIANCE BOND FUNDS
_______________________________________________________________________________

P.O. BOX 1520, SECAUCUS, NEW JERSEY 07096-1520
TOLL FREE (800) 221-5672
FOR LITERATURE: TOLL FREE (800) 227-4618

PROSPECTUS

NOVEMBER 1, 1996

U.S. GOVERNMENT FUNDS GLOBAL BOND FUNDS
-ALLIANCE SHORT-TERM U.S. -ALLIANCE NORTH AMERICAN
GOVERNMENT FUND GOVERNMENT INCOME TRUST
-U.S. GOVERNMENT -ALLIANCE GLOBAL DOLLAR
PORTFOLIO GOVERNMENT FUND
-ALLIANCE LIMITED MATURITY -ALLIANCE GLOBAL STRATEGIC
GOVERNMENT FUND INCOME TRUST

MORTGAGE FUND CORPORATE BOND FUND
-ALLIANCE MORTGAGE -CORPORATE BOND PORTFOLIO
SECURITIES INCOME FUND

MULTI-MARKET FUNDS
-ALLIANCE WORLD INCOME TRUST
-ALLIANCE SHORT-TERM
MULTI-MARKET TRUST
-ALLIANCE MULTI-MARKET
STRATEGY TRUST

TABLE OF CONTENTS PAGE
The Funds at a Glance 2
Expense Information 4
Financial Highlights 7
Glossary 15
Description of the Funds 16
Investment Objectives and Policies 16
Additional Investment Practices 23
Certain Fundamental Investment Policies 34
Risk Considerations 36
Purchase and Sale of Shares 40
Management of the Funds 42
Dividends, Distributions and Taxes 44
General Information. 45
Appendix A: Bond Ratings A-1
Appendix B: General Information About Canada,
Mexico and Argentina B-1

Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105

The Alliance Bond Funds provide a broad selection of investment alternatives to
investors seeking high current income. The U.S. Government Funds invest mainly
in U.S. Government securities and the Mortgage Fund invests in mortgage-related
securities, while the Multi-Market Funds diversify their investments among debt
markets around the world and the Global Bond Funds invest primarily in foreign
government securities. The Corporate Bond Fund invests primarily in corporate
debt securities.

Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund that provides
further information regarding certain matters discussed in this Prospectus and
other matters that may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, write Alliance Fund Services, Inc. at the indicated address or
call the "For Literature" telephone number shown above.

Each Fund (except Alliance World Income Trust) offers three classes of shares
that may be purchased, at the investor's choice, at a price equal to their net
asset value (i) plus an initial sales charge imposed at the time of purchase
(the "Class A shares"), (ii) with a contingent deferred sales charge imposed on
most redemptions made within three years of purchase (the "Class B shares"), or
(iii) without any initial or contingent deferred sales charge, as long as the
shares are held for one year or more (the "Class C shares"). Alliance World
Income Trust offers only one class of shares, which may be purchased at a price
equal to its net asset value without any initial or contingent deferred sales
charge. See "Purchase and Sale of Shares."

AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

INVESTORS ARE ADVISED TO READ THIS PROSPECTUS CAREFULLY AND TO RETAIN IT FOR
FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

ALLIANCE
INVESTING WITHOUT THE MYSTERY.

R/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.

THE FUNDS AT A GLANCE

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

THE FUNDS' INVESTMENT ADVISER IS . . .
Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including more than 100 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world with over $168
billion in assets under management as of June 30, 1996. Alliance provides
investment management services to employee benefit plans for 33 of the FORTUNE
100 companies.

U.S. GOVERNMENT FUNDS

SHORT-TERM U.S. GOVERNMENT FUND
SEEKS . . . High current income consistent with preservation of capital.

INVESTS PRIMARILY IN . . . A diversified portfolio of U.S. Government
securities.

U.S. GOVERNMENT PORTFOLIO
SEEKS . . . As high a level of current income as is consistent with safety of
principal.

INVESTS SOLELY IN . . . A diversified portfolio of U.S. Government securities
backed by the full faith and credit of the United States.

LIMITED MATURITY GOVERNMENT FUND
SEEKS . . . The highest level of current income, consistent with low volatility
of net asset value.

INVESTS PRIMARILY IN . . . U.S. Government securities, including
mortgage-related securities, and repurchase agreements relating to U.S.
Government securities.

MORTGAGE FUND

MORTGAGE SECURITIES INCOME FUND
SEEKS . . . A high level of current income consistent with prudent investment
risk.

INVESTS PRIMARILY IN . . . A diversified portfolio of mortgage-related
securities.

MULTI-MARKET FUNDS

WORLD INCOME TRUST
SEEKS . . . The highest level of current income that is available from a
portfolio of high-quality debt securities having remaining maturities of not
more than one year.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of debt securities
denominated in the U.S. Dollar and selected foreign currencies. The Fund
maintains at least 35% of its net assets in U.S. Dollar-denominated securities.

SHORT-TERM MULTI-MARKET TRUST
SEEKS . . . The highest level of current income through investment in a
portfolio of high-quality debt securities having remaining maturities of not
more than three years.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of debt securities
denominated in the U.S. Dollar and selected foreign currencies. While the Fund
normally will maintain a substantial portion of its assets in debt securities
denominated in foreign currencies, the Fund will invest at least 25% of its net
assets in U.S. Dollar-denominated securities.

MULTI-MARKET STRATEGY TRUST
SEEKS . . . The highest level of current income that is available from a
portfolio of high-quality debt securities having remaining maturities of not
more than five years.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of debt securities
denominated in the U.S. Dollar and selected foreign currencies. The Fund
expects to maintain at least 70% of its assets in debt securities denominated
in foreign currencies, but not more than 25% of the Fund's total assets may be
invested in debt securities denominated in a single currency other than the
U.S. Dollar.

GLOBAL BOND FUNDS

NORTH AMERICAN GOVERNMENT INCOME TRUST
SEEKS . . . The highest level of current income that is available from a
portfolio of investment grade debt securities issued or guaranteed by the
governments of the United States, Canada and Mexico.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of government securities
denominated in the U.S. Dollar, the Canadian Dollar and the Mexican Peso. The
Fund expects to maintain at least 25% of its assets in securities denominated
in the U.S. Dollar. In addition, the Fund may invest up to 25% of its total
assets in debt securities issued by governmental entities in Argentina.

GLOBAL DOLLAR GOVERNMENT FUND
SEEKS . . . Primarily a high level of current income and, secondarily, capital
appreciation.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of sovereign debt
obligations and in U.S. and non-U.S. corporate fixed-income securities.
Substantially all of the Fund's assets are invested in lower-rated securities.

GLOBAL STRATEGIC INCOME TRUST

SEEKS . . . Primarily a high level of current income and secondarily capital
appreciation.

INVESTS PRIMARILY IN . . . A non-diversified portfolio of fixed-income
securities of U.S. and non-U.S. issuers.

CORPORATE BOND FUND

CORPORATE BOND PORTFOLIO
SEEKS . . . Primarily to maximize income over the long term; secondarily, the
Fund will attempt to increase its capital through appreciation of its
investments.

INVESTS PRIMARILY IN . . . A diversified portfolio of U.S. Dollar-denominated
corporate bonds issued by domestic and foreign issuers that give promise of
relatively attractive yields.

A WORD ABOUT RISK . . .
The prices of the shares of the Alliance Bond Funds will fluctuate as the daily
prices of the individual bonds in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
Price fluctuations may be caused by changes in the general level of interest
rates or changes in bond credit quality ratings. Changes in interest rates have
a greater effect on bonds with longer maturities than those with shorter
maturities. Some of the Funds invest in high-yield, high-risk bonds that are
rated below investment grade and are considered to have predominantly
speculative characteristics. The prices of non-U.S. Dollar denominated bonds
also fluctuate with changes in foreign exchange rates. Investment in the Global
Bond Funds, the Multi-Market Funds and any other Fund that may invest a
significant amount of its assets in non-U.S. securities involves risks not
associated with Funds that invest primarily in securities of U.S. issuers.
While the Funds invest principally in fixed-income securities, in order to
achieve their investment objectives, the Funds may at times use certain types
of derivative instruments, such as options, futures, forwards and swaps. These
instruments involve risks different from, and, in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in this Prospectus. See "Description of the Funds-Additional
Investment Practices" and "-Risk Considerations."

GETTING STARTED . . .
Shares of the Funds are available through your financial representative and
most banks, insurance companies and brokerage firms nationwide. Shares of each
Fund (except WORLD INCOME) can be purchased for a minimum initial investment of
$250, and subsequent investments can be made for as little as $50. For detailed
information about purchasing and selling shares, see "Purchase and Sale of
Shares." In addition, the Funds offer several time and money saving services to
investors. Be sure to ask your financial representative about:

AUTOMATIC REINVESTMENT
AUTOMATIC INVESTMENT PROGRAM
RETIREMENT PLANS
SHAREHOLDER COMMUNICATIONS
DIVIDEND DIRECTION PLANS
AUTO EXCHANGE
SYSTEMATIC WITHDRAWALS
CHECK-WRITING
A CHOICE OF PURCHASE PLANS
TELEPHONE TRANSACTIONS
24 HOUR INFORMATION

ALLIANCE
INVESTING WITHOUT THE MYSTERY.

R/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.

EXPENSE INFORMATION
_______________________________________________________________________________

SHAREHOLDER TRANSACTION EXPENSES are one of several factors to consider when
you invest in a Fund. The following tables summarize your maximum transaction
costs from investing in a Fund, other than WORLD INCOME, and annual operating
expenses for each class of shares of each Fund. WORLD INCOME, which has only
one class of shares, has no sales charge on purchases or reinvested dividends,
no deferred sales charge, and no redemption fee or exchange fee. For each Fund,
the "Examples" below show the cumulative expenses attributable to a
hypothetical $1,000 investment, assuming a 5% annual return, in each class for
the periods specified.

CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- ---------------- ----------------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 4.25%(a) None None
Sales charge imposed on dividend reinvestments None None None
Deferred sales charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower) None 3.0% 1.0% during
during the the first year,
first year, 0% thereafter
decreasing 1.0%
annually to 0%
after the
third year (b)
Exchange fee None None None

</TABLE>

(A) REDUCED FOR LARGER PURCHASES. PURCHASES OF $1,000,000 OR MORE ARE NOT
SUBJECT TO AN INITIAL SALES CHARGE BUT MAY BE SUBJECT TO A 1.0% DEFERRED SALES
CHARGE ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASE AND SALE OF
SHARES-HOW TO BUY SHARES" -PAGE 37.

(B) CLASS B SHARES OF EACH FUND AUTOMATICALLY CONVERT TO CLASS A SHARES AFTER
SIX YEARS. SEE "PURCHASE AND SALE OF SHARES-HOW TO BUY SHARES" -PAGE 37.

ANNUAL OPERATING EXPENSES EXAMPLES
- -------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees(b)
(after waiver) None None None After 1 year $ 57 $ 53 $ 23 $ 33 $ 23
12b-1 fees .30% 1.00% 1.00% After 3 years $ 89 $ 80 $ 70 $ 69 $ 69
Other expenses After 5 years $122 $119 $119 $119 $119
Interest expense .13% .13% .12% After 10 years $217 $223 $223 $255 $255
Other operating expenses (a)(b)
(after reimbursement) 1.10% 1.10% 1.10%
Total other expenses 1.23% 1.23% 1.22%
Total fund operating expenses(b) 1.53% 2.23% 2.22%

U.S. GOVERNMENT CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .53% .53% .53% After 1 year $ 52 $ 47 $ 17 $ 27 $ 17
12b-1 fees .30% 1.00% 1.00% After 3 years $ 73 $ 64 $ 54 $ 54 $ 54
Other expenses(a) .18% .19% .18% After 5 years $ 96 $ 93 $ 93 $ 93 $ 93
Total fund operating After 10 years $161 $167 $167 $202 $202
expenses 1.01% 1.72% 1.71%

LIMITED MATURITY GOVERNMENT CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .65% .65% .65% After 1 year $ 63 $ 59 $ 29 $ 39 $ 29
12b-1 fees .30% 1.00% 1.00% After 3 years $107 $ 98 $ 88 $ 88 $ 88
Other expenses After 5 years $153 $150 $150 $150 $150
Interest expense .73% .74% .75% After 10 years $279 $285 $285 $318 $318
Other operating expenses(a) .46% .46% .45%
Total other expenses 1.19% 1.20% 1.20%
Total fund operating expenses(h) 2.14% 2.85% 2.85%

MORTGAGE SECURITIES INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .51% .51% .51% After 1 year $ 59 $ 54 $ 24 $ 34 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 84 $ 74 $ 73 $ 73
Other expenses After 5 years $129 $127 $127 $126 $126
Interest expense .63% .63% .62% After 10 years $231 $237 $237 $269 $269
Other operating expenses(a) .22% .23% .22%
Total other expenses .85% .86% .84%
Total fund operating expenses(g) 1.66% 2.37% 2.35%
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 5.

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES EXAMPLES
- -------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORLD INCOME
Management fees(c)(after waiver) .49% After 1 year $ 20
12b-1 fees(c)(after waiver) .68% After 3 years $ 62
Other expenses(a) .80% After 5 years $106
Total fund operating expenses(c) 1.97% After 10 years $230

SHORT-TERM MULTI-MARKET CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .55% .55% .55% After 1 year $ 54 $ 50 $ 20 $ 29 $ 19
12b-1 fees .30% 1.00% 1.00% After 3 years $ 80 $ 71 $ 61 $ 60 $ 60
Other expenses(a) .38% .40% .37% After 5 years $107 $105 $105 $104 $104
Total fund operating expenses 1.23% 1.95% 1.92% After 10 years $185 $192 $192 $224 $224

MULTI-MARKET STRATEGY CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .60% .60% .60% After 1 year $ 58 $ 53 $ 23 $ 33 $ 23
12b-1 fees .30% 1.00% 1.00% After 3 years $ 91 $ 82 $ 72 $ 72 $ 72
Other expenses After 5 years $126 $123 $123 $123 $123
Interest expense .05% .07% .05% After 10 years $224 $229 $229 $263 $263
Other operating expenses(a) .65% .62% .64%
Total other expenses .70% .69% .69%
Total fund operating expenses(d) 1.60% 2.29% 2.29%

NORTH AMERICAN
GOVERNMENT INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees(e) .65% .65% .65% After 1 year $ 68 $ 64 $ 34 $ 44 $ 34
12b-1 fees .30% 1.00% 1.00% After 3 years $120 $112 $102 $102 $102
Other expenses After 5 years $176 $174 $174 $174 $174
Interest expense 1.11% 1.11% 1.12% After 10 years $325 $331 $331 $362 $362
Other operating expenses(a) .56% .57% .56%
Total other expenses 1.67% 1.68% 1.68%
Total fund operating expenses(f) 2.62% 3.33% 3.33%

GLOBAL DOLLAR GOVERNMENT CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .75% .75% .75% After 1 year $ 59 $ 54 $ 24 $ 34 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 92 $ 84 $ 74 $ 73 $ 73
Other expenses(a) .60% .62% .60% After 5 years $128 $127 $127 $126 $126
Total fund operating expenses 1.65% 2.37% 2.35% After 10 years $230 $236 $236 $269 $269

GLOBAL STRATEGIC INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees(i) None None None After 1 year $ 61 $ 56 $ 26 $ 36 $ 26
12b-1 fees .30% 1.00% 1.00% After 3 years $100 $ 91 $ 81 $ 81 $ 81
Other expenses(a)(i) 1.60% 1.60% 1.60% After 5 years $141 $138 $138 $138 $138
Total fund operating expenses(i) 1.90% 2.60% 2.60% After 10 years $255 $261 $261 $293 $293

CORPORATE BONDCLASS A CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .63% .63% .63% After 1 year $ 54 $ 49 $ 19 $ 29 $ 19
12b-1 fees .30% 1.00% 1.00% After 3 years $ 79 $ 70 $ 60 $ 60 $ 60
Other expenses(a) .27% .27% .27% After 5 years $106 $103 $103 $103 $103
Total fund operating expenses 1.20% 1.90% 1.90% After 10 years $182 $187 $187 $222 $222
</TABLE>

+ ASSUMES REDEMPTION AT END OF PERIOD AND, WITH RESPECT TO SHARES HELD TEN
YEARS, CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER SIX YEARS.

++ ASSUMES NO REDEMPTION AT END OF PERIOD AND, WITH RESPECT TO SHARES HELD
TEN YEARS, CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER SIX YEARS.

(a) THESE EXPENSES INCLUDE A TRANSFER AGENCY FEE PAYABLE TO ALLIANCE FUND
SERVICES, INC., AN AFFILIATE OF ALLIANCE, BASED ON A FIXED DOLLAR AMOUNT
CHARGED TO THE FUND FOR EACH SHAREHOLDER'S ACCOUNT.

(b) NET OF VOLUNTARY FEE WAIVERS AND EXPENSE REIMBURSEMENTS. ABSENT SUCH
WAIVERS AND REIMBURSEMENTS, MANAGEMENT FEES WOULD HAVE BEEN .55%, OTHER
EXPENSES WOULD HAVE BEEN 2.19% FOR CLASS A, 2.19% FOR CLASS B AND 2.17% FOR
CLASS C AND TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN 3.17% FOR CLASS A,
3.87% FOR CLASS B AND 3.85% FOR CLASS C.

(c) NET OF VOLUNTARY FEE WAIVERS. ABSENT SUCH WAIVERS, ANNUALIZED MANAGEMENT
FEES WOULD HAVE BEEN .65%, ANNUALIZED RULE 12B-1 FEES WOULD HAVE BEEN .90% AND
ANNUALIZED TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN 2.35%.

(d) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.55%, FOR CLASS B, 2.22% AND FOR CLASS C, 2.24%.

(e) REPRESENTS .65 OF 1% OF THE THE FUND'S AVERAGE DAILY ADJUSTED TOTAL NET
ASSETS.

(f) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.51%, FOR CLASS B, 2.22% AND FOR CLASS C, 2.21%.

(g) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.03%, FOR CLASS B, 1.74%, FOR CLASS C, 1.73%.

(h) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.41%, FOR CLASS B, 2.11%, FOR CLASS C, 2.10%.

(i) NET OF VOLUNTARY FEE WAIVERS AND EXPENSE REIMBURSEMENT. ABSENT SUCH
WAIVERS AND REIMBURSEMENTS, MANAGEMENT FEES WOULD HAVE BEEN .75%, OTHER
EXPENSES WOULD HAVE 27.55% FOR CLASS A, 27.55% FOR CLASS B, AND 27.55% FOR
CLASS C AND TOTAL OPERATING EXPENSES WOULD HAVE BEEN 28.60% FOR CLASS A, 29.30%
FOR CLASS B, AND 29.30% FOR CLASS C.

The purpose of the tables on pages 4 and 5 is to assist the investor in
understanding the various costs and expenses that shareholders of a Fund will
bear directly or indirectly. Long-term shareholders of a Fund may pay aggregate
sales charges totaling more than the economic equivalent of the maximum initial
sales charges permitted by the Conduct Rules of the National Association of
Securities Dealers, Inc. See "Management of the Funds-Distribution Services
Agreements." The Rule 12b-1 fee for each class comprises a service fee not
exceeding .25% of the aggregate average daily net assets of the Fund
attributable to the class and an asset-based sales charge equal to the
remaining portion of the Rule 12b-1 fee. With respect to each of MULTI-MARKET
STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, MORTGAGE SECURITIES INCOME and
LIMITED MATURITY GOVERNMENT, "interest expense" represents interest paid by the
Fund on borrowings for the purpose of making additional portfolio investments.
Such borrowings are intended to enable each of those Funds to produce higher
net yields to shareholders than the Funds could pay without such borrowings.
See "Description of Funds-Risk Considerations-Effects of Borrowing." Excluding
interest expense, total fund operating expenses of each of MULTI-MARKET
STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, MORTGAGE SECURITIES INCOME and
LIMITED MATURITY GOVERNMENT would be lower (see notes (d), (f), (g) and (h)
above) and the cumulative expenses shown in the Examples above with respect to
those Funds would be lower. The management fee rates of GLOBAL DOLLAR
GOVERNMENT and GLOBAL STRATEGIC INCOME, are higher than that paid by most other
investment companies, but Alliance believes the fees are comparable to those
paid by investment companies of similar investment orientation. The expense
ratios for Class B and Class C shares of MULTI-MARKET STRATEGY and NORTH
AMERICAN GOVERNMENT INCOME are higher than the expense ratios of most other
mutual funds, but are comparable to the expense ratios of mutual funds whose
shares are similarly priced. The Examples set forth above assume reinvestment
of all dividends and distributions and utilize a 5% annual rate of return as
mandated by Commission regulations. THE EXAMPLES SHOULD NOT BE CONSIDERED
REPRESENTATIVE OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. ACTUAL RETURN WILL VARY.

FINANCIAL HIGHLIGHTS
_______________________________________________________________________________

The tables on the following pages present, for each Fund, per share income and
capital changes for a share outstanding throughout each period indicated. The
information in the tables relating to SHORT-TERM U.S. GOVERNMENT has been
audited by Price Waterhouse LLP, the independent accountants for the Fund, and
the information in the tables relating to U.S. GOVERNMENT, LIMITED MATURITY
GOVERNMENT, MORTGAGE SECURITIES INCOME, WORLD INCOME, SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR
GOVERNMENT, GLOBAL STRATEGIC INCOME and CORPORATE BOND has been audited by
Ernst & Young LLP, the independent auditors for each Fund. A report of Price
Waterhouse LLP or Ernst & Young LLP, as the case may be, on the information
with respect to each Fund appears in the Fund's Statement of Additional
Information. The following information for each Fund should be read in
conjunction with the financial statements and related notes which are included
in the Fund's Statement of Additional Information.

Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge by
contacting Alliance Fund Services, Inc. at the address or the "For Literature"
telephone number shown on the cover of this Prospectus.

NET NET NET
ASSET REALIZED AND INCREASE
VALUE NET UNREALIZED (DECREASE) IN DIVIDENDS FROM DISTRIBUTIONS
BEGINNING OF INVESTMENT GAIN (LOSS) ON NET ASSET VALUE NET INVESTMENT FROM NET
FISCAL YEAR OR PERIOD PERIOD INCOME (LOSS) INVESTMENTS FROM OPERATIONS INCOME REALIZED GAINS
- --------------------------------- ------------ ------------ -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT#
CLASS A
Year Ended 8/31/96 $ 9.70 $ .47 $ (.02) $ .45 $ (.49) $0.00
Year Ended 8/31/95 9.67 .42 .05 .47 (.41) 0.00
Period Ended 8/31/94** 9.77 .14 (.09) .05 (.12) 0.00
Year Ended 4/30/94 10.22 .35 (.29) .06 (.42) 0.00
5/4/92+ to 4/30/93 10.00 .46 .34 .80 (.46) (.12)

CLASS B
Year Ended 8/31/96 $ 9.81 $ .41 $ (.03) $ .38 $ (.42) $0.00
Year Ended 8/31/95 9.78 .36 .04 .40 (.34) 0.00
Period Ended 8/31/94** 9.88 .10 (.07) .03 (.11) 0.00
Year Ended 4/30/94 10.31 .40 (.39) .01 (.35) 0.00
5/4/92+ to 4/30/93 10.00 .38 .33 .71 (.38) (.02)

CLASS C
Year Ended 8/31/96 $ 9.80 $ .40 $ (.02) $ .38 $ (.42) $0.00
Year Ended 8/31/95 9.77 .34 .06 .40 (.34) 0.00
Period Ended 8/31/94** 9.87 .10 (.07) .03 (.11) 0.00
8/2/93++ to 4/30/94 10.34 .26 (.42) (.16) (.25) 0.00

U.S. GOVERNMENT
CLASS A
Year Ended 6/30/96 $ 7.96 $ .58 $ (.44) $ .14 $ (.58) $0.00
Year Ended 6/30/95 7.84 .64 .13 .77 (.65) 0.00
Year Ended 6/30/94 8.64 .65 (.80) (.15) (.65) 0.00
Year Ended 6/30/93 8.34 .69 .29 .98 (.68) 0.00
Year Ended 6/30/92 8.01 .70 .35 1.05 (.72) 0.00
Year Ended 6/30/91 8.14 .81 (.11) .70 (.83) 0.00
Year Ended 6/30/90 8.49 .86 (.38) .48 (.83) 0.00
Year Ended 6/30/89 8.51 .89 (.03) .86 (.88) 0.00
Year Ended 6/30/88 8.90 .93 (.39) .54 (.93) 0.00
Year Ended 6/30/87 9.24 .98 (.34) .64 (.98) 0.00

CLASS B
Year Ended 6/30/96 $ 7.96 $ .52 $ (.44) $ .08 $ (.52) $0.00
Year Ended 6/30/95 7.84 .58 .13 .71 (.59) 0.00
Year Ended 6/30/94 8.64 .59 (.80) (.21) (.59) 0.00
Year Ended 6/30/93 8.34 .62 .30 .92 (.62) 0.00
9/30/91++ to 6/30/92 8.25 .49 .09 .58 (.49) 0.00

CLASS C
Year Ended 6/30/96 $ 7.96 $ .52 $ (.44) $ .08 $ (.52) $0.00
Year Ended 6/30/95 7.83 .58 .14 .72 (.59) 0.00
Year Ended 6/30/94 8.64 .59 (.81) (.22) (.59) 0.00
4/30/93++ to 6/30/93 8.56 .10 .08 .18 (.10) 0.00

LIMITED MATURITY GOVERNMENT
CLASS A
Six Months Ended 5/31/96 unaudited $ 9.52 $ .25(h) $ (.25) $ .00 $ (.27) $0.00
Year Ended 11/30/95 9.51 .52(h) .02 .54 (.50) 0.00
Year Ended 11/30/94 9.94 .42 (.32) .10 (.48) (.01)
Year Ended 11/30/93 9.84 .57 .11 .68 (.58) 0.00
6/1/92+ to 11/30/92 10.00 .35 (.17) .18 (.34) 0.00

CLASS B
Six Months Ended 5/31/96 unaudited $ 9.52 $ .22(h) $ (.25) $(.03) $ (.24) $0.00
Year Ended 11/30/95 9.52 .46(h) .01 .47 (.44) 0.00
Year Ended 11/30/94 9.94 .39 (.35) .04 (.42) (.01)
Year Ended 11/30/93 9.84 .49 .12 .61 (.51) 0.00
6/1/92+ to 11/30/92 10.00 .31 (.17) .14 (.30) 0.00

CLASS C
Six Months Ended 5/31/96 unaudited $ 9.52 $ .22(h) $ (.25) $(.03) $ (.24) $0.00
Year Ended 11/30/95 9.52 .46(h) .01 .47 (.44) 0.00
Year Ended 11/30/94 9.94 .37 (.33) .04 (.42) (.01)
5/3/93++ to 11/30/93 9.98 .27 (.03) .24 (.28) 0.00

MORTGAGE SECURITIES INCOME
CLASS A
Six Months Ended 6/30/96 unaudited $ 8.75 $ .26 $ (.31) $(.05) $ (.29) $0.00
Year Ended 12/31/95 8.13 .57(h) .64 1.21 (.57) 0.00
Year Ended 12/31/94 9.29 .57 (1.13) (.56) (.58) 0.00
Year Ended 12/31/93 9.08 .67 .23 .90 (.67) 0.00
Year Ended 12/31/92 9.21 .77 (.09) .68 (.81) 0.00
Year Ended 12/31/91 8.79 .88 .41 1.29 (.87) 0.00
Year Ended 12/31/90 8.76 .87 .03 .90 (.87) 0.00
Year Ended 12/31/89 8.81 .97 (.05) .92 (.97) 0.00
Year Ended 12/31/88 9.03 .99 (.23) .76 (.98) 0.00
Year Ended 12/31/87 9.74 1.00 (.68) .32 (1.00) (.03)
Year Ended 12/31/86 9.97 1.06 (.02) 1.04 (1.06) (.21)

CLASS B
Six Months Ended 6/30/96 unaudited $ 8.75 $ .23 $ (.31) $(.08) $ (.26) $0.00
Year Ended 12/31/95 8.13 .51(h) .64 1.15 (.51) 0.00
Year Ended 12/31/94 9.29 .51 (1.14) (.63) (.51) 0.00
Year Ended 12/31/93 9.08 .61 .22 .83 (.60) 0.00
1/30/92++ to 12/31/92 9.16 .68 (.08) .60 (.68) 0.00

CLASS C
Six Months Ended 6/30/96 unaudited $ 8.75 $ .23 $ (.31) $(.08) $ (.26) $0.00
Year Ended 12/31/95 8.13 .51(h) .64 1.15 (.51) 0.00
Year Ended 12/31/94 9.29 .51 (1.14) (.63) (.51) 0.00
5/3/93++ to 12/31/93 9.30 .40 0.00 .40 (.40) 0.00
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

<TABLE>
<CAPTION>
DISTRIBUTIONS TOTAL NET ASSETS RATIO OF NET
IN EXCESS TOTAL INVESTMENT AT END OF RATIO INVESTMENT
OF NET RETURN DIVIDENDS NET ASSET RETURN PERIOD OF EXPENSES INCOME (LOSS) PORTFOLIO
INVESTMENT OF AND VALUE END BASED ON NET (000'S TO AVERAGE TO AVERAGE TURNOVER
INCOME CAPITAL DISTRIBUTIONS OF PERIOD ASSET VALUE (B) OMITTED) NET ASSETS NET ASSETS RATE
- ----------- -------- ------------- ---------- --------------- ------------ ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $ (.49) $ 9.66 4.71% $ 3,455 1.53%(d)(e) 4.85% 110%
(.03) 0.00 (.44) 9.70 5.14 2,997 1.40(d) 4.56 15
(.03)(a) 0.00 (.15)(c) 9.67 .53 2,272 1.40(d) 3.98 144
(.09)(a) 0.00 (.51)(c) 9.77 .52 2,003 1.27(d) 4.41 55
0.00 0.00 (.58)(c) 10.22 8.20 6,081 1.00*(d) 4.38* 294

$0.00 $0.00 $ (.42) $ 9.77 3.89% $ 6,781 2.23%(d)(e) 4.11% 110%
(.03) 0.00 (.37) 9.81 4.32 6,380 2.10(d) 3.82 15
(.02)(a) 0.00 (.13)(c) 9.78 .28 6,281 2.10(d) 3.22 144
(.09)(a) 0.00 (.44)(c) 9.88 .03 7,184 2.05(d) 3.12 55
0.00 0.00 (.40)(c) 10.31 7.22 1,292 1.75*(d) 3.36* 294

$0.00 $0.00 $ (.42) $ 9.76 3.90% $ 4,850 2.22%(d)(e) 4.11% 110%
(.03) 0.00 (.37) 9.80 4.33 5,180 2.10(d) 3.80 15
(.02)(a) 0.00 (.13)(c) 9.77 .28 7,128 2.10(d) 3.26 144
(.06)(a) 0.00 (.31)(c) 9.87 (1.56) 8,763 2.10*(d) 2.60* 55

$0.00 $0.00 $ (.58) $ 7.52 1.74% $ 397,894 1.01% 7.38% 334%
0.00 0.00 (.65) 7.96 10.37 463,660 1.01 8.27 190
0.00 0.00 (.65) 7.84 (1.93) 482,595 1.02 7.76 188
0.00 0.00 (.68) 8.64 12.23 527,968 1.10 8.04 386
0.00 0.00 (.72) 8.34 13.52 492,448 1.12 8.43 418
0.00 0.00 (.83) 8.01 8.97 491,910 1.07 10.02 402
0.00 0.00 (.83) 8.14 5.99 510,675 1.09 10.35 455
0.00 0.00 (.88) 8.49 10.87 532,525 1.11 10.70 148
0.00 0.00 (.93) 8.51 6.41 529,909 1.14 10.70 149
0.00 0.00 (.98) 8.90 7.00 496,600 1.07(d) 10.36 255

$0.00 $0.00 $ (.52) $ 7.52 1.01% $ 628,628 1.72% 6.67% 334%
0.00 0.00 (.59) 7.96 9.52 774,097 1.72 7.57 190
0.00 0.00 (.59) 7.84 (2.63) 756,282 1.72 7.04 188
0.00 .00 (.62) 8.64 11.45 552,471 1.81 7.25 386
0.00 .00 (.49) 8.34 6.95 32,227 1.80* 7.40* 418

$0.00 $0.00 $ (.52) $ 7.52 1.01% $ 166,075 1.71% 6.68% 334%
0.00 0.00 (.59) 7.96 9.67 181,948 1.71 7.59 190
0.00 0.00 (.59) 7.83 (2.75) 231,859 1.70 6.97 188
0.00 .00 (.10) 8.64 2.12 67,757 1.80* 6.00* 386

$0.00 $0.00 $ (.27) $ 9.25 (0.02)% $ 19,816 2.43%*(e) 5.36%* 101%
0.00 (.03) (.53) 9.52 5.91 27,887 2.14(e) 5.53 293
0.00 (.04) (.53) 9.51 1.03 43,173 1.34(e) 4.78 375
0.00 0.00 (.58) 9.94 7.02 59,215 1.54(e) 5.66 499
0.00 0.00 (.34) 9.84 1.84 24,186 1.44*(d)(e) 6.58*(d) 101

$0.00 $0.00 $ (.24) $ 9.25 (.38)% $ 62,110 3.14%*(e) 4.67%* 101%
0.00 (.03) (.47) 9.52 5.05 84,362 2.85(e) 4.83 293
0.00 (.03) (.46) 9.52 .42 136,458 2.08(e) 4.12 375
0.00 0.00 (.51) 9.94 6.27 168,157 2.26(e) 4.98 499
0.00 0.00 (.30) 9.84 1.50 149,188 2.13*(d)(e) 6.01*(d) 101

$0.00 $0.00 $ (.24) $ 9.25 (.35)% $ 53,265 3.13%*(e) 4.69%* 101%
0.00 (.03) (.47) 9.52 5.06 68,459 2.85(e) 4.84 293
0.00 (.03) (.46) 9.52 .42 141,838 2.04(e) 4.10 375
0.00 0.00 (.28) 9.94 2.40 228,703 1.58*(e) 3.70* 499

$0.00 $0.00 $ (.29) $ 8.41 (.52)% $ 441,071 1.47%*(e) 6.25%* 140%
0.00 (.02) (.59) 8.75 15.34 502,390 1.66(e) 6.77 285
0.00 (.02) (.60) 8.13 (6.14) 553,889 1.29(e) 6.77 438
(.02) 0.00 (.69) 9.29 10.14 848,069 1.00 7.20 622
0.00 0.00 (.81) 9.08 7.73 789,898 1.18 8.56 555
0.00 0.00 (.87) 9.21 15.44 544,171 1.16 9.92 439
0.00 0.00 (.87) 8.79 11.01 495,353 1.12 10.09 393
0.00 0.00 (.97) 8.76 10.98 556,077 1.13 11.03 328
0.00 0.00 (.98) 8.81 8.64 619,572 1.11 10.80 239
0.00 0.00 (1.03) 9.03 3.49 682,650 1.15 10.79 211
0.00 0.00 (1.27) 9.74 11.18 756,730 1.00 10.86 190

$0.00 $0.00 $ (.26) $ 8.41 (.89)% $ 584,494 2.17%*(e) 5.54%* 140%
0.00 (.02) (.53) 8.75 14.48 737,593 2.37(e) 6.06 285
0.00 (.02) (.53) 8.13 (6.84) 921,418 2.00(e) 6.05 438
(.02) 0.00 (.62) 9.29 9.38 1,454,303 1.70 6.47 622
0.00 0.00 (.68) 9.08 7.81 1,153,957 1.67* 5.92* 555

$0.00 $0.00 $ (.26) $ 8.41 (.90)% $ 41,615 2.17%*(e) 5.55%* 140%
0.00 (.02) (.53) 8.75 14.46 45,558 2.35(e) 6.07 285
0.00 (.02) (.53) 8.13 (6.84) 58,338 1.97(e) 6.06 438
(.01) 0.00 (.41) 9.29 4.34 91,724 1.67* 5.92* 622
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND INCREASE
VALUE NET UNREALIZED (DECREASE) IN DIVIDENDS FROM DISTRIBUTIONS
BEGINNING OF INVESTMENT GAIN (LOSS) ON NET ASSET VALUE NET INVESTMENT FROM NET
FISCAL YEAR OR PERIOD PERIOD INCOME (LOSS) INVESTMENTS FROM OPERATIONS INCOME REALIZED GAINS
- --------------------------------- ------------ ------------ -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
WORLD INCOME
Six Months Ended 4/30/96 unaudited $ 1.66 $ .04(h) $ .02 $ .06 $ (.05) $0.00
Year Ended 10/31/95 1.88 .11(h) (.23) (.12) 0.00 0.00
Year Ended 10/31/94 1.90 .18 (.12) .06 (.05) 0.00
Year Ended 10/31/93 1.91 .22 (.16) .06 (.07) 0.00
Year Ended 10/31/92 1.98 .19 (.17) .02 (.09) 0.00
12/3/90+ to 10/31/91 2.00 .14 (.03) .11 (.13) 0.00

SHORT-TERM MULTI-MARKET
CLASS A
Six Months Ended 4/30/96 unaudited $ 7.47 $ .29(h) $ .20 $ .49 $ (.34) $0.00
Year Ended 10/31/95 8.71 .46(h) (.98) (.52) 0.00 0.00
Year Ended 10/31/94 9.25 .93 (.86) .07 0.00 0.00
Year Ended 10/31/93 9.25 .92 (.32) .60 (.60) 0.00
Year Ended 10/31/92 9.94 .91 (.86) .05 (.72) (.02)
Year Ended 10/31/91 9.89 .97 .06 1.03 (.97) (.01)
Year Ended 10/31/90 9.69 1.09 .19 1.28 (1.08) 0.00
5/5/89+ to 10/31/89 9.70 .53 (.01) .52 (.53) 0.00

CLASS B
Six Months Ended 4/30/96 unaudited $ 7.47 $ .28(h) $ .20 $ .48 $ (.33) $0.00
Year Ended 10/31/95 8.71 .41(h) (.99) (.58) 0.00 0.00
Year Ended 10/31/94 9.25 .94 (.93) .01 0.00 0.00
Year Ended 10/31/93 9.25 .87 (.34) .53 (.53) 0.00
Year Ended 10/31/92 9.94 .84 (.86) (.02) (.65) (.02)
Year Ended 10/31/91 9.89 .89 .07 .96 (.90) (.01)
2/5/90++ to 10/31/90 9.77 .74 .12 .86 (.74) 0.00

CLASS C
Six Months Ended 4/30/96 unaudited $ 7.47 $ .29(h) $ .19 $ .48 $ (.33) $0.00
Year Ended 10/31/95 8.71 .39(h) (.97) (.58) 0.00 0.00
Year Ended 10/31/94 9.25 .58 (.57) .01 0.00 0.00
5/3/93++ to 10/31/93 9.18 .28 .05 .33 (.26) 0.00

MULTI-MARKET STRATEGY
CLASS A
Six Months Ended 4/30/96 unaudited $ 6.83 $ .30(h) $ .24 $ .54 $ .33 $0.00
Year Ended 10/31/95 8.04 .77(h) (1.31) (.54) 0.00 0.00
Year Ended 10/31/94 8.94 .85 (1.08) (.23) (.09) 0.00
Year Ended 10/31/93 8.85 1.02 (.26) .76 (.67) 0.00
Year Ended 10/31/92 9.91 1.00 (1.23) (.23) (.81) (.02)
5/29/91+ to 10/28/91 10.00 .42 (.09) .33 (.42) 0.00

CLASS B
Six Months Ended 4/30/96 unaudited $ 6.83 $ .27(h) $ .24 $ .51 $ (.30) $0.00
Year Ended 10/31/95 $ 8.04 $ .44(h) $(1.05) $ (.61) $ 0.00 $0.00
Year Ended 10/31/94 8.94 .88 (1.18) (.30) (.08) 0.00
Year Ended 10/31/93 8.85 .92 (.22) .70 (.61) 0.00
Year Ended 10/31/92 9.91 1.04 (1.34) (.30) (.74) (.02)
5/29/91+ to 10/28/91 10.00 .39 (.09) .30 (.39) 0.00

CLASS C
Six Months Ended 4/30/96 unaudited $ 6.83 $ .27(h) $ .24 $ .51 $ (.30) $0.00
Year Ended 10/31/95 8.04 .44(h) (1.04) (.60) 0.00 0.00
Year Ended 10/31/94 8.94 .46 (.75) (.29) (.09) 0.00
5/3/93++ to 10/31/93 8.76 .32 .16 .48 (.30) 0.00

NORTH AMERICAN GOVERNMENT INCOME
CLASS A
Six Months Ended 5/31/96 unaudited $ 6.75 $ .58(h) $ .46 $ 1.04 $ (.48) $0.00
Year Ended 11/30/95 8.13 1.18(h) (1.59) (.41) 0.00 0.00
Year Ended 11/30/94 10.35 1.02 (2.12) (1.10) (.91) 0.00
Year Ended 11/30/93 9.70 1.09 .66 1.75 (1.09) (.01)
3/27/92+ to 11/30/92 10.00 .69 (.31) .38 (.68) 0.00

CLASS B
Six Months Ended 5/31/96 unaudited $ 6.75 $ .56(h) $ .45 $ 1.01 $ (.45) $0.00
Year Ended 11/30/95 8.13 1.13(h) (1.61) (.48) 0.00 0.00
Year Ended 11/30/94 10.35 .96 (2.13) (1.17) (.84) 0.00
Year Ended 11/30/93 9.70 1.01 .67 1.68 (1.02) (.01)
3/27/92+ to 11/30/92 10.00 .64 (.31) .33 (.63) 0.00

CLASS C
Six Months Ended 5/31/96 unaudited $ 6.75 $ .56(h) $ .45 $ 1.01 $ (.45) $0.00
Year Ended 11/30/95 $ 8.13 $1.13(h) $(1.61) $ (.48) $ 0.00 $0.00
Year Ended 11/30/94 10.34 .96 (2.12) (1.16) (.84) 0.00
5/3/93++ to 11/30/93 10.04 .58 .30 .88 (.58) 0.00

GLOBAL DOLLAR GOVERNMENT
CLASS A
Year Ended 8/31/96 $ 8.02 $ .84 $ 2.10 $ 2.94 $ (.95) $0.00
Year Ended 8/31/95 9.14 .86 (1.10) (.24) (.88) 0.00
2/25/94+ to 8/31/94 10.00 .45 (.86) (.41) (.45) 0.00

CLASS B
Year Ended 8/31/96 $ 8.02 $ .78 $ 2.08 $ 2.86 $ (.87) $0.00
Year Ended 8/31/95 9.14 .80 (1.11) (.31) (.81) 0.00
2/25/94+ to 8/31/94 10.00 .42 (.86) (.44) (.42) 0.00

CLASS C
Year Ended 8/31/96 $ 8.02 $ .77 $ 2.10 $ 2.87 $ (.88) $0.00
Year Ended 8/31/95 9.14 .79 (1.10) (.31) (.81) 0.00
2/25/94+ to 8/31/94 10.00 .42 (.86) (.44) (.42) 0.00
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

<TABLE>
<CAPTION>
DISTRIBUTIONS TOTAL NET ASSETS RATIO OF NET
IN EXCESS TOTAL INVESTMENT AT END OF RATIO INVESTMENT
OF NET RETURN DIVIDENDS NET ASSET RETURN PERIOD OF EXPENSES INCOME (LOSS) PORTFOLIO
INVESTMENT OF AND VALUE END BASED ON NET (000'S TO AVERAGE TO AVERAGE TURNOVER
INCOME CAPITAL DISTRIBUTIONS OF PERIOD ASSET VALUE (B) OMITTED) NET ASSETS NET ASSETS RATE
- ----------- -------- ------------- ---------- --------------- ------------ ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $ (.05) $ 1.67 4.02% $ 47,692 2.12%*(d) 5.56%* N/A
0.00 (.10) (.10) 1.66 (6.35) 55,778 1.97(d) 6.46 N/A
0.00 (.03) (.08) 1.88 3.27 103,310 1.70(d) 3.96 N/A
0.00 0.00 (.07) 1.90 3.51 149,623 1.54(d) 5.14 N/A
0.00 0.00 (.09) 1.91 1.26 318,716 1.59(d) 7.21 N/A
0.00 0.00 (.13) 1.98 6.08 1,059,222 1.85*(d) 7.29* N/A

$0.00 $0.00 $ (.34) $ 7.62 6.95% $ 295,888 1.30%* 8.21%* 99%
0.00 (.72) (.72) 7.47 (5.74) 320,333 1.23 7.39 230
0.00 (.61) (.61) 8.71 .84 593,677 1.13 7.28 109
0.00 0.00 (.60) 9.25 6.67 953,571 1.16 8.26 182
0.00 0.00 (.74) 9.25 .49 1,596,903 1.10 9.00 133
0.00 0.00 (.98) 9.94 10.91 2,199,393 1.09 9.64 146
0.00 0.00 (1.08) 9.89 13.86 1,346,035 1.18 10.81 152
0.00 0.00 (.53) 9.69 5.57 210,294 1.14* 10.83* 10

$0.00 $0.00 $ (.33) $ 7.62 6.52% $ 434,660 2.01%* 7.46%* 99%
0.00 (.66) (.66) 7.47 (6.50) 523,530 1.95 6.69 230
0.00 (.55) (.55) 8.71 .12 1,003,633 1.85 6.58 109
0.00 0.00 (.53) 9.25 5.91 1,742,703 1.87 7.57 182
0.00 0.00 (.67) 9.25 (.24) 2,966,071 1.81 8.28 133
0.00 0.00 (.91) 9.94 10.11 3,754,003 1.81 8.87 146
0.00 0.00 (.74) 9.89 9.07 1,950,330 1.86* 9.90* 152

$0.00 $0.00 $ (.33) $ 7.62 6.52% $ 4,731 1.99%* 7.46%* 99%
0.00 (.66) (.66) 7.47 (6.49) 3,416 1.92 6.66 230
0.00 (.55) (.55) 8.71 .12 8,136 1.83 6.50 109
0.00 0.00 (.26) 9.25 3.66 5,538 1.82* 7.19* 182

$0.00 $0.00 $ (.33) $ 7.04 8.12% $ 70,038 1.65%(f)* 8.60%* 137%
0.00 (.67) (.67) 6.83 (6.47) 76,837 1.60(f) 8.56 400
0.00 (.58) (.67) 8.04 (2.64) 52,385 1.41(f) 7.17 605
0.00 0.00 (.67) 8.94 9.01 82,977 1.94(f) 9.17(g) 200
0.00 0.00 (.83) 8.85 (2.80) 141,526 2.53(f) 10.58(g) 239
0.00 0.00 (.42) 9.91 3.68 143,594 2.81*(f) 10.17*(g) 121

$0.00 $0.00 $ (.30) $ 7.04 7.63% $ 99,649 2.35%*(f) 7.88% 137%
0.00 (.60) (.60) 6.83 (7.31) 116,551 2.29(f) 7.53 400
0.00 (.52) (.60) 8.04 (3.35) 233,896 2.11(f) 6.44 605
0.00 0.00 (.61) 8.94 8.25 431,186 2.64(f) 8.46(g) 200
0.00 0.00 (.76) 8.85 (3.51) 701,465 3.24(f) 9.83(g) 239
0.00 0.00 (.39) 9.91 3.36 662,981 3.53*(f) 9.40*(g) 121

$0.00 $0.00 $ (.30) $ 7.04 7.64% $ 798 2.34%*(f) 7.86%* 137%
0.00 (.61) (.61) 6.83 (7.29) 786 2.29(f) 7.55 400
0.00 (.52) (.61) 8.04 (3.34) 1,252 2.08(f) 6.10% 605%
0.00 0.00 (.30) 8.94 5.54 718 2.44*(f) 7.17*(g) 200

$0.00 $0.00 $ (.48) $ 7.31 15.73% $ 303,684 2.44%*(f) 16.19%* 162%
0.00 (.97) (.97) 6.75 (3.59) 252,608 2.62(f) 18.09 180
0.00 (.21) (1.12) 8.13 (11.32) 303,538 1.70(f) 11.22 131
0.00 0.00 (1.10) 10.35 18.99 268,233 1.61(f) 10.77 254
0.00 0.00 (.68) 9.70 3.49 61,702 2.45*(d)(f) 10.93* 86

$0.00 $0.00 $ (.45) $ 7.31 15.17% $1,216,642 3.15%*(f) 15.49%* 162%
0.00 (.90) (.90) 6.75 (4.63) 1,123,074 3.33(f) 17.31 180
0.00 (.21) (1.05) 8.13 (11.89) 1,639,602 2.41(f) 10.53 131
0.00 0.00 (1.03) 10.35 18.15 1,313,591 2.31(f) 10.01 254
0.00 0.00 (.63) 9.70 3.30 216,317 3.13*(d)(f) 10.16* 86

$0.00 $0.00 $ (.45) $ 7.31 15.17% $ 234,462 3.14%*(f) 15.50%* 162%
0.00 (.90) (.90) 6.75 (4.63) 219,009 3.33(f) 17.32 180
0.00 (.21) (1.05) 8.13 (11.89) 369,714 2.39(f) 10.46 131
0.00 0.00 (.58) 10.34 9.00 310,230 2.21*(f) 9.74* 254

$0.00 $0.00 $ (.95) $10.01 38.43% $ 23,253 1.65% 9.23% 315%
0.00 0.00 (.88) 8.02 (1.48) 12,020 1.93 11.25 301
0.00 0.00 (.45) 9.14 (3.77) 10,995 .75*(d) 9.82* 100

$0.00 $0.00 $ (.87) $10.01 37.35% $ 84,295 2.37% 8.57% 315%
0.00 0.00 (.81) 8.02 (2.40) 62,406 2.64 10.52 301
0.00 0.00 (.42) 9.14 (4.17) 47,030 1.45*(d) 9.11* 100

$0.00 $0.00 $ (.88) $10.01 37.39% $ 14,511 2.35% 8.52% 315%
0.00 0.00 (.81) 8.02 (2.36) 9,330 2.63 10.46 301
0.00 0.00 (.42) 9.14 (4.16) 10,404 1.45*(d) 9.05* 100
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

CLASS A
1/9/96+ to 4/30/96 unaudited $10.00 $ .27 $ .27 $ .54 $ (.31) $0.00

CLASS B
3/25/96++ to 4/30/96 unaudited $9.97 $ .09 $ .27 $ .36 $ (.10) $0.00

CLASS C
3/25/96++ to 4/30/96 unaudited $9.97 $ .09 $ .27 $ .36 $ (.11) $0.00

CORPORATE BOND
CLASS A
Year Ended 6/30/96 $12.92 $1.26 $ .27 $1.53 $(1.16) $0.00
Year Ended 6/30/95 12.51 1.19 .36 1.55 (1.14) 0.00
Year Ended 6/30/94 14.15 1.11 (1.36) (.25) (1.11) (.25)
Year Ended 6/30/93 12.01 1.25 2.13 3.38 (1.24) 0.00
Year Ended 6/30/92 11.21 1.06 .82 1.88 (1.08) 0.00
Year Ended 6/30/91 11.39 1.11 (.06) 1.05 (1.23) 0.00
Year Ended 6/30/90 12.15 1.24 (.86) .38 (1.14) 0.00
Year Ended 6/30/89 11.82 1.12 .32 1.44 (1.11) 0.00
Year Ended 6/30/88 12.24 1.10 (.38) .72 (1.14) 0.00
Nine Months Ended 6/30/87 12.25 .86 (.06) .80 (.81) 0.00
Year ended 9/30/86 11.52 1.20 .73 1.93 (1.20) 0.00

CLASS B
Year Ended 6/30/96 $12.92 $1.15 $ .29 $1.44 $(1.07) $0.00
Year Ended 6/30/95 12.50 1.11 .36 1.47 (1.05) 0.00
Year Ended 6/30/94 14.15 1.02 (1.37) (.35) (1.04) (.25)
1/8/93++ to 6/30/93 12.47 .49 1.69 2.18 (.50) 0.00

CLASS C
Year Ended 6/30/96 $12.93 $1.14 $ .29 $1.43 $(1.07) $0.00
Year Ended 6/30/95 12.50 1.10 .38 1.48 (1.05) 0.00
Year Ended 6/30/94 14.15 1.02 (1.37) (.35) (1.05) (.25)
5/30/93++ to 6/30/93 13.63 .16 .53 .69 (.17) 0.00
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

$0.00 $0.00 $ (.10) $10.23 2.75% $73,494(i) 2.60%*(d) 8.14%* 179%

$0.00 $0.00 $ (.11) $10.22 2.75% $102(i) 2.60%*(d) 8.14%* 179%

$0.00 $0.00 $(1.16) $13.29 12.14% $ 277,369 1.20% 9.46% 389%
0.00 0.00 (1.14) 12.92 13.26 230,750 1.24 9.70 387
(.03) 0.00 (1.39) 12.51 (2.58) 219,182 1.30 7.76 372
0.00 0.00 (1.24) 14.15 29.62 216,171 1.39 9.29 579
0.00 0.00 (1.08) 12.01 17.43 60,356 1.48 8.98 610
0.00 0.00 (1.23) 11.21 9.71 62,268 1.44 9.84 357
0.00 0.00 (1.14) 11.39 3.27 68,049 1.51 10.70 480
0.00 0.00 (1.11) 12.15 12.99 52,381 1.84 9.53 104
0.00 0.00 (1.14) 11.82 6.24 37,587 1.81 9.24 98
0.00 0.00 (.81) 12.24 7.32 41,072 1.27 9.17 95
0.00 0.00 (1.20) 12.25 17.19 45,178 1.08 9.80 240

$0.00 $0.00 $(1.07) $13.29 11.38% $ 338,152 1.90% 8.75% 389%
0.00 0.00 (1.05) 12.92 12.54 241,393 1.99 9.07 387
(.01) 0.00 (1.30) 12.50 (3.27) 184,129 2.00 7.03 372
0.00 0.00 (.50) 14.15 17.75 55,508 2.10* 7.18* 579

$0.00 $0.00 $(1.07) $13.29 11.30% $ 83,095 1.90% 8.74% 389%
0.00 0.00 (1.05) 12.93 12.62 51,028 1.84 8.95 387
0.00 0.00 (1.30) 12.50 (3.27) 50,860 1.99 6.98 372
0.00 0.00 (.17) 14.15 5.08 5,115 2.05* 5.51* 579
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

# PRIOR TO JULY 22, 1993, EQUITABLE CAPITAL MANAGEMENT CORPORATION
("EQUITABLE") SERVED AS THE INVESTMENT ADVISER TO THE ALLIANCE PORTFOLIOS (THE
"TRUST"), OF WHICH SHORT-TERM U.S. GOVERNMENT IS A SERIES. ON JULY 22, 1993,
ALLIANCE ACQUIRED THE BUSINESS AND SUBSTANTIALLY ALL OF THE ASSETS OF EQUITABLE
AND BECAME INVESTMENT ADVISER OF THE TRUST.

+ COMMENCEMENT OF OPERATIONS.

++ COMMENCEMENT OF DISTRIBUTION.

* ANNUALIZED.

** REFLECTS NEWLY ADOPTED FISCAL YEAR END.

(a) INCLUDES WITH RESPECT TO SHORT-TERM U.S. GOVERNMENT A RETURN OF CAPITAL
FOR THE YEAR ENDED APRIL 30, 1994 OF $(0.08) FOR CLASS A, $(0.08) FOR CLASS B
AND $(0.05) FOR CLASS C AND FOR THE PERIOD ENDED AUGUST 31, 1994 OF $(0.03) FOR
CLASS A AND $(0.02) FOR CLASS B AND CLASS C.

(b) 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 THE NET ASSET VALUE DURING THE PERIOD, AND A
REDEMPTION ON THE LAST DAY OF THE PERIOD. INITIAL SALES CHARGE OR CONTINGENT
DEFERRED SALES CHARGE IS NOT REFLECTED IN THE CALCULATION OF TOTAL INVESTMENT
RETURN. TOTAL INVESTMENT RETURNS CALCULATED FOR PERIODS OF LESS THAN ONE YEAR
ARE NOT ANNUALIZED.

(c) "TOTAL DIVIDENDS AND DISTRIBUTIONS" INCLUDES DIVIDENDS IN EXCESS OF NET
INVESTMENT INCOME AND RETURN OF CAPITAL. SHORT-TERM U.S. GOVERNMENT HAD
DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME WITH RESPECT TO CLASS A SHARES,
FOR THE YEAR ENDED APRIL 30, 1994, OF $(.01); WITH RESPECT TO CLASS B SHARES,
$(.01); AND WITH RESPECT TO CLASS C SHARES, $(.01).

(d) NET OF EXPENSES ASSUMED AND/OR WAIVED/REIMBURSED. IF SHORT-TERM U.S.
GOVERNMENT HAD BORNE ALL EXPENSES, THE EXPENSE RATIOS WOULD HAVE BEEN WITH
RESPECT TO CLASS A SHARES, 2.20% (ANNUALIZED) FOR 1993, 2.17% FOR THE YEAR
ENDED APRIL 30, 1994, 2.95% (ANNUALIZED) FOR THE PERIOD ENDED AUGUST 31, 1994,
3.71% FOR THE YEAR ENDED AUGUST 31, 1995, 3.04 % FOR THE YEAR ENDED AUGUST 31,
1996; WITH RESPECT TO CLASS B SHARES, 4.81% (ANNUALIZED) FOR 1993, 3.21% FOR
THE YEAR ENDED APRIL 30, 1994, 3.60% (ANNUALIZED) FOR THE PERIOD ENDED AUGUST
31, 1994, 4.33% FOR THE YEAR ENDED AUGUST 31, 1995, 3.74% FOR THE YEAR ENDED
AUGUST 31, 1996; WITH RESPECT TO CLASS C SHARES, 3.10% (ANNUALIZED) FOR THE
YEAR ENDED APRIL 30, 1994, 3.64% (ANNUALIZED) FOR THE PERIOD ENDED AUGUST 31,
1994, 4.23% FOR THE YEAR ENDED AUGUST 31, 1995, 3.72% FOR THE YEAR ENDED AUGUST
31, 1996. IF U.S. GOVERNMENT HAD BORNE ALL EXPENSES, THE EXPENSE RATIOS WOULD
HAVE BEEN 1.22% FOR 1986 AND 1.09% FOR 1987. IF LIMITED MATURITY GOVERNMENT HAD
BORNE ALL EXPENSES, THE EXPENSE RATIOS WOULD HAVE BEEN WITH RESPECT TO CLASS A
SHARES, 1.55% (ANNUALIZED) FOR 1992; AND WITH RESPECT TO CLASS B SHARES, 2.28%
(ANNUALIZED) FOR 1992. THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
FOR LIMITED MATURITY GOVERNMENT WOULD HAVE BEEN WITH RESPECT TO CLASS A SHARES,
6.47% (ANNUALIZED) FOR 1992; AND WITH RESPECT TO CLASS B SHARES, 5.86%
(ANNUALIZED) FOR 1992. IF WORLD INCOME HAD BORNE ALL EXPENSES, THE EXPENSE
RATIOS WOULD HAVE BEEN 1.87% FOR 1992, 1.92% FOR 1993, 2.08% FOR 1994, AND
2.35% FOR 1995. IF NORTH AMERICAN GOVERNMENT INCOME HAD BORNE ALL EXPENSES, THE
EXPENSE RATIOS WOULD HAVE BEEN WITH RESPECT TO CLASS A SHARES, 2.49%
(ANNUALIZED) FOR 1992; AND WITH RESPECT TO CLASS B SHARES, 3.16% (ANNUALIZED)
FOR 1992. IF GLOBAL DOLLAR GOVERNMENT HAD BORNE ALL EXPENSES FOR THE PERIOD
FEBRUARY 25, 1994 TO AUGUST 31, 1994, THE EXPENSE RATIOS WOULD HAVE BEEN WITH
RESPECT TO CLASS A SHARES, 1.91% (ANNUALIZED); WITH RESPECT TO CLASS B SHARES,
2.63% (ANNUALIZED); AND WITH RESPECT TO CLASS C SHARES, 2.59% (ANNUALIZED). IF
GLOBAL STRATEGIC INCOME HAD BORNE ALL EXPENSES FOR THE PERIOD JANUARY 9, 1996
TO APRIL 30, 1996, THE EXPENSE RATIO WOULD HAVE BEEN WITH RESPECT TO CLASS A
SHARES, 28.6% (ANNUALIZED); WITH RESPECT TO CLASS B SHARES, FOR THE PERIOD
MARCH 25, 1996 TO APRIL 30, 1996 TO 29.30% (ANNUALIZED); AND WITH RESPECT TO
CLASS C SHARES 29.30% (ANNUALIZED).

(e) IF SHORT-TERM U.S. GOVERNMENT HAD NOT BORNE INTEREST EXPENSES, THE RATIO
OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN WITH RESPECT TO CLASS A
SHARES 1.40% FOR 1996; WITH RESPECT TO CLASS B SHARES, 2.10% FOR 1996; AND WITH
RESPECT TO CLASS C SHARES 2.10% FOR 1996. IF LIMITED MATURITY GOVERNMENT HAD
NOT BORNE INTEREST EXPENSES, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD
HAVE BEEN WITH RESPECT TO CLASS A SHARES, 1.42% (ANNUALIZED) FOR 1992, 1.33%
FOR 1993, 1.20% FOR 1994, 1.41% FOR 1995, AND FOR THE PERIOD ENDED MAY 31, 1996
1.61% (ANNUALIZED); WITH RESPECT TO CLASS B SHARES, 2.10% (ANNUALIZED) FOR
1992, 2.07% FOR 1993, 1.91% FOR 1994, 2.11% FOR 1995, AND FOR THE PERIOD ENDED
MAY 31, 1996 2.33% (ANNUALIZED); WITH RESPECT TO CLASS C SHARES, 1.74%
(ANNUALIZED), FOR 1993, 1.89% FOR 1994, 2.10% FOR 1995, AND FOR THE PERIOD
ENDED MAY 31, 1996 2.32% (ANNUALIZED). IF MORTGAGE SECURITIES INCOME FUND HAD
NOT BORNE INTEREST EXPENSE THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD
HAVE BEEN WITH RESPECT TO CLASS A SHARES .97% FOR 1994, 1.03% FOR 1995, AND FOR
THE PERIOD ENDED JUNE 30, 1996 1.02% (ANNUALIZED); WITH RESPECT TO CLASS B
SHARES, 1.68% FOR 1994, 1.74% FOR 1995, AND FOR THE PERIOD ENDED JUNE 30, 1996
1.73% (ANNUALIZED); WITH RESPECT TO CLASS C SHARES 1.69% FOR 1994, 1.73% FOR
1995, AND FOR THE PERIOD ENDED JUNE 30, 1996 1.72% (ANNUALIZED).

(f) INCLUDES INTEREST EXPENSES. IF MULTI-MARKET STRATEGY HAD NOT BORNE
INTEREST EXPENSES OR LOAN FEES, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
WOULD HAVE BEEN WITH RESPECT TO CLASS A SHARES, 1.33% (ANNUALIZED) FOR 1991,
1.33% FOR 1992, 1.40% FOR 1993, 1.30% FOR 1994, 1.55% FOR 1995, AND FOR THE
PERIOD ENDED APRIL 30, 1996 1.59% (ANNUALIZED); WITH RESPECT TO CLASS B SHARES,
2.05% (ANNUALIZED) FOR 1991, 2.05% FOR 1992, 2.11% FOR 1993, 2.01% FOR 1994,
2.22% FOR 1995, AND FOR THE PERIOD ENDED APRIL 30, 1996 2.30% (ANNUALIZED);
WITH RESPECT TO CLASS C SHARES, 2.11% (ANNUALIZED) FOR 1993, 1.99% FOR 1994,
2.24% FOR 1995, AND FOR THE PERIOD ENDED APRIL 30, 1996 2.29% (ANNUALIZED). IF
NORTH AMERICAN GOVERNMENT INCOME HAD NOT BORNE INTEREST EXPENSES, THE RATIO OF
EXPENSES (NET OF INTEREST EXPENSES) TO AVERAGE NET ASSETS WOULD HAVE BEEN WITH
RESPECT TO CLASS A SHARES, 1.66% (ANNUALIZED) FOR 1992, 1.33% FOR 1993, 1.37%
FOR 1994, 1.51% FOR 1995, AND FOR THE PERIOD ENDED MAY 31, 1996 1.46%
(ANNUALIZED); WITH RESPECT TO CLASS B SHARES, 2.35% (ANNUALIZED) FOR 1992,
2.04% FOR 1993, 2.07% FOR 1994, 2.22% FOR 1995, AND FOR THE PERIOD ENDED MAY
31, 1996 2.17% (ANNUALIZED); AND WITH RESPECT TO CLASS C SHARES, 2.04%
(ANNUALIZED) FOR 1993, 2.06% FOR 1994, 2.21% FOR 1995, AND FOR THE PERIOD ENDED
MAY 31, 1996 2.16% (ANNUALIZED).

(g) INCLUDES LOAN FEES. IF MULTI-MARKET STRATEGY HAD NOT INCURRED LOAN FEES,
THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN WITH
RESPECT TO CLASS A SHARES, 11.65% (ANNUALIZED) FOR 1991, 11.78% FOR 1992 AND
9.73% FOR 1993; WITH RESPECT TO CLASS B SHARES, 10.88% (ANNUALIZED) FOR 1991,
11.02% FOR 1992 AND 8.99% FOR 1993; AND WITH RESPECT TO CLASS C SHARES, 7.50%
(ANNUALIZED) FOR 1993.

(h) BASED ON AVERAGE SHARES OUTSTANDING.

(i) NET ASSETS AT END OF PERIOD.

GLOSSARY
_______________________________________________________________________________

The following terms are frequently used in this Prospectus. Many of these terms
are explained in greater detail under "Description of the Funds-Additional
Investment Practices" and in Appendix A.

BONDS are fixed, floating and variable rate debt obligations.

DEBT SECURITIES are bonds, debentures, notes, bills and repurchase agreements.

FIXED-INCOME SECURITIES are debt securities, convertible securities and
preferred stocks and include floating rate and variable rate instruments.
Fixed-income securities may be rated (or if unrated, for purposes of the Funds'
investment policies may be determined by Alliance to be of equivalent quality
to those rated) TRIPLE-A (Aaa or AAA), HIGH QUALITY (Aa or AA or above), HIGH
GRADE (A or above) or INVESTMENT GRADE (Baa or BBB or above) by, as the case
may be, Moody's, S&P, Duff & Phelps or Fitch, or may be lower-rated securities,
as defined below. In the case of "split-rated" fixed-income securities (i.e.,
securities assigned non-equivalent credit quality ratings, such as Baa by
Moody's but BB by S&P, or, to take another example, Ba by Moody's and BB by S&P
but B by Fitch), a Fund will use the rating deemed by Alliance to be the most
appropriate under the circumstances.

LOWER-RATED SECURITIES are fixed-income securities rated Ba or BB or below, or
determined by Alliance to be of equivalent quality, and are commonly referred
to as "junk bonds."

EQUITY SECURITIES are common and preferred stocks, securities convertible into
common and preferred stocks, and rights and warrants to subscribe for the
purchase of common and preferred stocks.

CONVERTIBLE SECURITIES are bonds, debentures, corporate notes and preferred
stocks that are convertible into common and preferred stock.

U.S. GOVERNMENT SECURITIES are securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. These securities include
securities backed by the full faith and credit of the United States, those
supported by the right of the issuer to borrow from the U.S. Treasury and those
backed only by the credit of the issuing agency itself. The first category
includes U.S. TREASURY SECURITIES (which are U.S. Treasury bills, notes and
bonds) and certificates issued by GNMA (see below). U.S. Government securities
not backed by the full faith and credit of the United States include
certificates issued by FNMA and FHLMC (see below).

MORTGAGE-RELATED SECURITIES are pools of mortgage loans that are assembled for
sale to investors (such as mutual funds) by various governmental,
government-related and private organizations. These securities include:

ARMS, which are adjustable-rate mortgage securities;

SMRS, which are stripped mortgage-related securities;

CMOS, which are collateralized mortgage obligations;

GNMA CERTIFICATES, which are securities issued by the Government National
Mortgage Association;

FNMA CERTIFICATES, which are securities issued by the Federal National
Mortgage Association; and

FHLMC CERTIFICATES, which are securities issued by the Federal Home Loan
Mortgage Corporation.

INTEREST-ONLY or IO securities are debt securities that receive only the
interest payments on an underlying debt that has been structured to have two
classes, one of which is the IO class and the other of which is the
PRINCIPAL-ONLY or PO class, which class receives only the principal payments on
the underlying debt obligation. POs are similar to, and are sometimes referred
to as, ZERO COUPON SECURITIES, which are debt securities issued without
interest coupons.

FOREIGN GOVERNMENT SECURITIES are securities issued or guaranteed, as to
payment of principal and interest, by a foreign government or any of its
political subdivisions, authorities, agencies or instrumentalities.

SOVEREIGN DEBT OBLIGATIONS are foreign government debt securities, loan
participations between foreign governments and financial institutions and
interests in entities organized and operated for the purpose of restructuring
the investment characteristics of foreign government securities.

WORLD BANK is the commonly used name for the International Bank for
Reconstruction and Development.

LIBOR is the London Interbank Offered Rate.

MOODY'S is Moody's Investors Service, Inc.

S&P is Standard & Poor's.

DUFF & PHELPS is Duff & Phelps Credit Rating Co.

FITCH is Fitch Investors Service, Inc.

PRIME COMMERCIAL PAPER is commercial paper rated Prime-1 or higher by Moody's,
A-1 or higher by S&P, Fitch-1 by Fitch or Duff 1 by Duff & Phelps. HIGHER
QUALITY COMMERCIAL PAPER is commercial paper rated at least Prime-2 by Moody's,
A-2 by S&P, Fitch-2 by Fitch or Duff 2 by Duff & Phelps.

QUALIFYING BANK DEPOSITS are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than $1
billion and which are members of the Federal Deposit Insurance Corporation.

RULE 144A SECURITIES are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "SECURITIES ACT").

1940 ACT is the Investment Company Act of 1940, as amended.

CODE is the Internal Revenue Code of 1986, as amended.

COMMISSION is the Securities and Exchange Commission.

DESCRIPTION OF THE FUNDS
_______________________________________________________________________________

Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without a shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder
vote. No Fund will change a non-fundamental objective or policy without
notifying its shareholders. There is no guarantee that any Fund will achieve
its investment objective.

INVESTMENT OBJECTIVES AND POLICIES

U.S. GOVERNMENT FUNDS

The U.S. Government Funds are diversified investment companies that have been
designed to offer investors high current income consistent with preservation of
capital by investing primarily in U.S. Government securities.

ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND

Alliance Short-Term U.S. Government Fund ("Short-Term U.S. Government") seeks
high current income consistent with preservation of capital by investing
primarily in a portfolio of U.S. Government securities. Under normal
circumstances, the Fund maintains an average dollar-weighted portfolio maturity
of not more than three years and invests at least 65% of its total assets in
U.S. Government securities and repurchase agreements and forward commitments
relating to U.S. Government securities. The Fund's investment objective is not
fundamental.

In addition to investing in U.S. Government securities, the Fund may invest a
portion of its assets in securities of non-governmental issuers. Although these
investments will be of high quality at the time of purchase, they generally
involve higher levels of credit risk than do U.S. Government securities, as
well as the risk (present with all fixed-income securities) of fluctuations in
value as interest rates change. The Fund will not be obligated to dispose of
any security whose credit quality falls below high quality.

The Fund may also (i) invest in certain SMRS, (ii) invest in variable, floating
and inverse floating rate instruments, (iii) make short sales "against the
box," (iv) enter into various hedging transactions, such as interest rate
swaps, caps and floors, (v) enter into reverse repurchase agreements, (vi)
purchase and sell futures contracts for hedging purposes, (vii) purchase and
sell call and put options on futures contracts or on securities, for hedging
purposes or to earn additional income, (viii) make secured loans of portfolio
securities, (ix) enter into repurchase agreements, and (x) purchase securities
for future delivery. The Fund may not invest more than 5% of its total assets
in securities the disposition of which is restricted under Federal securities
laws (excluding, to the extent permitted by applicable law, Rule 144A
securities). For additional information on the use, risks and costs of these
practices, see "Additional Investment Practices."

U.S. GOVERNMENT PORTFOLIO

U.S. Government Portfolio ("U.S. Government") seeks as high a level of current
income as is consistent with safety of principal. As a matter of fundamental
policy, the Fund pursues its objective by investing solely in U.S. Government
securities that are backed by the full faith and credit of the U.S. Government.
These include U.S. Treasury securities, including zero coupon Treasury
securities, and GNMA certificates, including certain SMRS and variable and
floating rate instruments. The average weighted maturity of the Fund's
portfolio of U.S. Government securities is expected to vary between one year or
less and 30 years. For additional information on the use, risks and cost of
these practices, see "Additional Investment Practices." The Fund's investment
objective is not fundamental.

Counsel to the Fund has advised the Fund that, in their view, shares of the
Fund are a legal investment for, among other investors, (i) savings and loan
associations and commercial banks chartered under the laws of the United
States, (ii) savings and loan associations chartered under the laws of Arizona,
Arkansas, California, Colorado, Delaware, Florida, Hawaii*, Illinois, Indiana,
Kansas, Louisiana, Maine, Mississippi, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Dakota,
Texas and Washington, (iii) credit unions chartered under the laws of
California, Florida*, Illinois, Kentucky, Maine, Maryland*, Minnesota, Nevada*,
New York, Ohio*, Pennsylvania*, Tennessee, Utah and West Virginia, and (iv)
commercial banks chartered under the laws of Alabama, Alaska, Arizona,
California, Colorado, Delaware, Florida, Hawaii*, Illinois, Indiana, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York,
North Carolina*, North Dakota, Oklahoma, Pennsylvania, Rhode Island,
Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming. Institutions
in the asterisked(*) states should obtain prior state regulatory approval
before investing in shares of the Fund. In addition, the Fund believes that it
is currently a legal investment for savings and loan associations, credit
unions and commercial banks chartered under the laws of certain other states.

ALLIANCE LIMITED MATURITY GOVERNMENT FUND

Alliance Limited Maturity Government Fund, Inc. ("Limited Maturity Government")
seeks the highest level of current income, consistent with low volatility of
net asset value. As a matter of fundamental policy, the Fund normally has at
least 65% of the value of its total assets invested in U.S. Government
securities, including mortgage-related securities, and repurchase agreements
relating to U.S. Government securities. For a description of these securities,
see "Additional Investment Practices."

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 10 years or a duration not exceeding that of a 10-year Treasury note.
Duration is a measure that relates the price volatility of a security to
changes in interest rates. The duration of a debt security is the weighted
average term to maturity, expressed in years, of the present value of all
future cash flows, including coupon payments and principal repayments. Thus, by
definition, duration is always less than or equal to full maturity.

The Fund believes that because of the nature of its assets, it is not exposed
to any material risk of loss as a result of default on its portfolio
securities. The Fund is, however, exposed to the risk that the prices of such
securities will fluctuate, in some cases significantly, as interest rates
change.

The Fund may invest up to 35% of its total assets in (i) high quality
asset-backed securities, including mortgage-related securities that are not
U.S. Government securities, (ii) Treasury securities issued by private
corporate issuers, (iii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of domestic and foreign banks having total
assets of more than $1 billion, (iv) higher quality commercial paper or, if not
rated, issued by companies that have outstanding high quality debt issues and
(v) high quality debt securities of corporate issuers.

The Fund may also (i) enter into futures contracts and purchase and write
options on futures contracts, (ii) enter into forward commitments for the
purchase or sale of securities, (iii) enter into interest rate swaps, caps and
floors, (iv) invest in Eurodollar instruments, (v) purchase and write put and
call options on foreign currencies, (vi) invest in variable, floating and
inverse floating rate instruments, (vii) enter into repurchase agreements
pertaining to the types of securities in which it invests, (viii) use reverse
repurchase agreements and dollar rolls and (ix) make secured loans of its
portfolio securities. For additional information on the use, risks and costs of
these investment practices, see "Additional Investment Practices."

The Fund may invest up to 15% of the value of its total assets in debt
securities denominated in U.S. Dollars or in foreign currencies and issued or
guaranteed by foreign governments or issued by foreign non-governmental
issuers, provided that such foreign debt securities are of high quality. The
percentage of the Fund's assets invested in foreign debt securities will vary
and its portfolio of foreign debt securities may include those of a number of
foreign countries or, depending upon market conditions, those of a single
country. See "Risk Considerations-Foreign Investment."

MORTGAGE FUND

ALLIANCE MORTGAGE SECURITIES INCOME FUND

Alliance Mortgage Securities Income Fund, Inc. ("Mortgage Securities Income")
is a diversified investment company that seeks a high level of current income
to the extent consistent with prudent investment risk. The Fund invests
primarily in a diversified portfolio of mortgage-related securities, including
CMOs, and, as a matter of fundamental policy, maintains at least 65% of its
total assets in mortgage-related securities.

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 such new types of securities. The
Fund may invest up to 20% of its total assets in lower-rated mortgage-related
securities. See "Risk Considerations-Securities Ratings" and "-Investment in
Lower-Rated Fixed-Income Securities." The average weighted maturity of the
Fund's portfolio of fixed-income securities is expected to vary between two and
ten years.

The Fund may invest up to 35% of the value of its total assets in (i) U.S.
Government securities, (ii) qualifying bank deposits, (iii) prime commercial
paper or, if not rated, issued by companies which have an outstanding high
quality debt issue, (iv) high grade debt securities secured by mortgages on
commercial real estate or residential rental properties, and (v) high grade
asset-backed securities.

The Fund may also (i) invest in repurchase agreements pertaining to the types
of securities in which it invests, (ii) enter into forward commitments for the
purchase or sale of securities, (iii) purchase put and call options written by
others and write covered put and call options on the types of securities in
which the Fund may invest for hedging purposes, (iv) enter into interest rate
swaps, caps and floors, (v) enter into interest rate futures contracts, (vi)
invest in variable floating and inverse floating rate instruments, and (vii)
lend portfolio securities. The Fund will not invest in illiquid securities if,
as a result, more than 10% of its total assets would be illiquid. For
additional information on the use, risk and costs of these practices, see
"Additional Investment Practices."

MULTI-MARKET FUNDS

The Multi-Market Funds are non-diversified investment companies that have been
designed to offer investors a higher yield than a money market fund and less
fluctuation in net asset value than a longer-term bond fund.

ALLIANCE WORLD INCOME TRUST

ALLIANCE SHORT-TERM MULTI-MARKET TRUST

ALLIANCE MULTI-MARKET STRATEGY TRUST

Alliance World Income Trust, Inc. ("World Income"), Alliance Short-Term Multi-
Market Trust, Inc. ("Short-Term Multi-Market") and Alliance Multi-Market
Strategy Trust, Inc. ("Multi-Market Strategy") each seek the highest level of
current income, consistent with what Alliance considers to be prudent
investment risk, that is available from a portfolio of high quality

debt securities having remaining maturities of not more than, with respect to
WORLD INCOME, one year, with respect to SHORT-TERM MULTI-MARKET, three years,
and with respect to MULTI-MARKET STRATEGY, five years. Each Fund seeks high
current yields by investing in a portfolio of debt securities denominated in
the U.S. Dollar and selected foreign currencies. The Multi-Market Funds seek
investment opportunities in foreign, as well as domestic, securities markets.
WORLD INCOME, which is not a money market fund, will maintain at least 35% of
its net assets in U.S. Dollar-denominated securities. SHORT-TERM MULTI-MARKET
will normally maintain a substantial portion of its assets in debt securities
denominated in foreign currencies, but will invest at least 25% of its net
assets in U.S. Dollar-denominated securities. MULTI-MARKET STRATEGY normally
expects to maintain at least 70% of its assets in debt securities denominated
in foreign currencies.

In pursuing their investment objectives, the Multi-Market Funds seek to
minimize credit risk and fluctuations in net asset value by investing only in
short-term debt securities. Normally, a high proportion of these Funds'
portfolios consists of money market instruments. Alliance actively manages the
Multi-Market Funds' portfolios in accordance with a multi-market investment
strategy, allocating a Fund's investments among securities denominated in the
U.S. Dollar and the currencies of a number of foreign countries and, within
each such country, among different types of debt securities. Alliance adjusts
each Multi-Market Fund's exposure to each currency such that the percentage of
assets invested in securities of a particular country or denominated in a
particular currency varies in accordance with Alliance's assessment of the
relative yield and appreciation potential of such securities and the relative
strength of a country's currency. Fundamental economic strength, credit quality
and interest rate trends are the principal factors considered by Alliance in
determining whether to increase or decrease the emphasis placed upon a
particular type of security or industry sector within a Fund's investment
portfolio. None of the Multi-Market Funds invests more than 25% of its net
assets in debt securities denominated in a single currency other than the U.S.
Dollar.

The returns available from short-term foreign currency-denominated debt
instruments can be adversely affected by changes in exchange rates. Alliance
believes that the use of foreign currency hedging techniques, including
"cross-hedges" (see "Additional Investment Practices-Forward Foreign Currency
Exchange Contracts"), can help protect against declines in the U.S. Dollar
value of income available for distribution to shareholders and declines in the
net asset value of a Fund's shares resulting from adverse changes in currency
exchange rates. For example, the return available from securities denominated
in a particular foreign currency would diminish in the event the value of the
U.S. Dollar increased against such currency. Such a decline could be partially
or completely offset by an increase in value of a cross-hedge involving a
forward exchange contract to sell a different foreign currency, where such
contract is available on terms more advantageous to a Fund than a contract to
sell the currency in which the position being hedged is denominated. It is
Alliance's belief that cross-hedges can therefore provide significant
protection of net asset value in the event of a general rise in the U.S. Dollar
against foreign currencies. However, a cross-hedge cannot protect against
exchange rate risks perfectly, and if Alliance is incorrect in its judgment of
future exchange rate relationships, a Fund could be in a less advantageous
position than if such a hedge had not been established.

Each Multi-Market Fund invests in debt securities denominated in the currencies
of countries whose governments are considered stable by Alliance. In addition
to the U.S. Dollar, such currencies include, among others, the Australian
Dollar, Austrian Schilling, British Pound Sterling, Canadian Dollar, Danish
Krone, Dutch Guilder, European Currency Unit ("ECU"), French Franc, Irish
Pound, Italian Lira, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian
Krone, Spanish Peseta, Swedish Krona, Swiss Franc and German Mark.

An issuer of debt securities purchased by a Multi-Market Fund may be domiciled
in a country other than the country in whose currency the instrument is
denominated. In addition, the Funds may purchase debt securities (sometimes
referred to as "linked" securities) that are denominated in one currency while
the principal amounts of, and value of interest payments on, such securities
are determined with reference to another currency. In this regard, as of the
date of this Prospectus each Fund has invested in U.S. Dollar denominated
securities issued by Mexican issuers and/or Peso-linked securities. The value
of these investments may fluctuate inversely in correlation with changes in the
Peso-U.S. Dollar exchange rate and with the general level of interest rates in
Mexico. For a general description of Mexico, see Appendix B and each
Multi-Market Fund's Statement of Additional Information.

Each Multi-Market Fund may invest in debt securities denominated in the ECU,
which is a "basket" consisting of specified amounts of the currencies of
certain of the member states of the European Union, a fifteen-nation
organization engaged in cooperative economic activities. The specific amounts
of currencies comprising the ECU may be adjusted by the Council of Ministers of
the European Union to reflect changes in relative values of the underlying
currencies.

Each Multi-Market Fund may invest in debt securities issued by supranational
organizations including the World Bank, which was chartered to finance
development projects in developing member countries; the European Union; the
European Coal and Steel Community, which is an economic union of various
European nations' steel and coal industries; and the Asian Development Bank,
which is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations in the Asian and
Pacific regions.

Each Multi-Market Fund seeks to minimize investment risk by limiting its
portfolio investments to debt securities of high quality, and WORLD INCOME will
invest 65% (and normally substantially all) of its total assets in high quality
income-producing debt securities. Accordingly, the Multi-Market Funds'
portfolio securities will consist of (i) U.S. Government

securities, (ii) high quality foreign government securities, (iii) obligations
issued by supranational entities and corporate debt securities having a
triple-A rating, with respect to WORLD INCOME, or a high quality rating, with
respect to SHORT-TERM MULTI-MARKET and MULTI-MARKET STRATEGY, (iv) certificates
of deposit and bankers' acceptances issued or guaranteed by, or time deposits
maintained at, banks (including foreign branches of foreign banks) having total
assets of more than $1 billion, with respect to WORLD INCOME, or $500 million,
with respect to SHORT-TERM MULTI-MARKET and MULTI-MARKET STRATEGY, and
determined by Alliance to be of high quality, and (v) prime commercial paper or
unrated commercial paper determined by Alliance to be of equivalent quality and
issued by U.S. or foreign companies having outstanding: in the case of WORLD
INCOME, triple-A debt securities; in the case of MULTI-MARKET STRATEGY, high
quality debt securities; and in the case of SHORT-TERM MULTI-MARKET, high grade
debt securities.

As a matter of fundamental policy, each Multi-Market Fund concentrates at least
25% of its total assets in debt instruments issued by domestic and foreign
companies engaged in the banking industry, including bank holding companies.
Such investments may include certificates of deposit, time deposits, bankers'
acceptances, and obligations issued by bank holding companies, as well as
repurchase agreements entered into with banks (as distinct from non-banks) in
accordance with the policies set forth with respect to the Funds in "Additional
Investment Practices-Repurchase Agreements." See "Risk
Considerations-Investment in the Banking Industry."

Each Multi-Market Fund may also (i) invest in indexed commercial paper, (ii)
enter into futures contracts and purchase and write options on futures
contracts, (iii) purchase and write put and call options on foreign currencies,
(iv) purchase or sell forward foreign currency exchange contracts, (v) with
respect to SHORT-TERM MULTI-MARKET and MULTI-MARKET STRATEGY, enter into
interest rate swaps, caps and floors, (vi) invest in variable, floating and
inverse floating rate instruments, (vii) make secured loans of its portfolio
securities, and (viii) enter into repurchase agreements. A Multi-Market Fund
will not invest in illiquid securities if, as a result, more than 10% of its
assets would be so invested. For additional information on the use, risks and
costs of these practices, see "Additional Investment Practices." MULTI-MARKET
STRATEGY maintains borrowings of approximately 25% of its total assets less
liabilities (other than the amount borrowed). See "Risk Considerations-Effects
of Borrowing."

GLOBAL BOND FUNDS

The Global Bond Funds are non-diversified investment companies that have been
designed to offer investors a high level of current income through investments
primarily in foreign government securities.

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST

Alliance North American Government Income Trust, Inc. ("North American
Government Income") seeks the highest level of current income, consistent with
what Alliance considers to be prudent investment risk, that is available from a
portfolio of debt securities issued or guaranteed by the United States, Canada
and Mexico, their political subdivisions (including Canadian provinces but
excluding states of the United States), agencies, instrumentalities or
authorities ("Government securities"). The Fund invests in investment grade
securities denominated in the U.S. Dollar, the Canadian Dollar and the Mexican
Peso and expects to maintain at least 25% of its assets in securities
denominated in the U.S. Dollar. In addition, the Fund may invest up to 25% of
its total assets in debt securities issued by governmental entities of
Argentina ("Argentine Government securities"). The Fund expects that it will
not retain a debt security which is down-graded below BBB or Baa, or, if
unrated, determined by Alliance to have undergone similar credit quality
deterioration, subsequent to purchase by the Fund. There may be circumstances,
however, such as the downgrading to below investment grade of all of the
securities of a governmental issuer in one of the countries in which the Fund
has substantial investments, under which the Fund, after considering all the
circumstances, would conclude that it is in the best interests of the
shareholders to retain its holdings in securities of that issuer. The average
weighted maturity of the Fund's portfolio of fixed-income securities is
expected to vary between one year or less and 30 years.

Alliance believes that the increasingly integrated economic relationship among
the United States, Canada and Mexico, characterized by the reduction and
projected elimination of most barriers to free trade among the three nations
and the growing coordination of their fiscal and monetary policies, will over
the long term benefit the economic performance of all three countries and
promote greater correlation of currency fluctuation among the U.S. and Canadian
Dollars and the Mexican Peso. See, however, Appendix B and the Fund's Statement
of Additional Information with respect to the current state of the Mexican
economy.

Alliance will actively manage the Fund's assets in relation to market
conditions and general economic conditions and adjust the Fund's investments in
an effort to best enable the Fund to achieve its investment objective. Thus,
the percentage of the Fund's assets invested in a particular country or
denominated in a particular currency will vary in accordance with Alliance's
assessment of the relative yield and appreciation potential of such securities
and the relationship of the country's currency to the U.S. Dollar. The Fund
invests at least, and normally substantially more than, 65% of its total assets
in Government securities. To the extent that its assets are not invested in
Government securities, however, the Fund may invest the balance of its total
assets in investment grade debt securities issued by the governments of
countries located in Central and South America or any of their political
subdivisions, agencies, instrumentalities or authorities, provided that such
securities are denominated in their local currencies. The Fund will not invest
more than 10% of its total assets in debt securities issued by the governmental
entities of any one such country, except that the Fund may invest up to 25% of
its total assets in Argentine Government securities. The Fund will normally
invest at least 65% of its total assets in income-producing securities. For a
general description of Canada, Mexico and Argentina, see Appendix B and the
Fund's Statement of Additional Information.

Canadian Government securities include the sovereign debt of Canada or any of
its provinces and Government of Canada bonds and Government of Canada Treasury
bills. Canada Treasury bills are debt obligations with maturities of less than
one year. A new issue of Government of Canada bonds frequently consists of
several different bonds with maturities ranging from one to 25 years.

All Canadian provinces have outstanding bond issues and several provinces also
guarantee bond issues of provincial authorities, agents and Crown corporations.
Each new issue yield is based upon a spread from an outstanding Government of
Canada issue of comparable term and coupon. Many Canadian municipalities,
municipal financial authorities and Crown corporations raise funds through the
bond market in order to finance capital expenditures. Unlike U.S. municipal
securities, which have special tax status, Canadian municipal securities have
the same tax status as other Canadian Government securities and trade similarly
to such securities. The Canadian municipal market may be less liquid than the
provincial bond market.

Canadian Government securities in which the Fund may invest include a modified
pass-through vehicle issued pursuant to the program established under the
National Housing Act of Canada. Certificates issued pursuant to this program
benefit from the guarantee of the Canada Mortgage and Housing Corporation, a
federal Crown corporation that is (except for certain limited purposes) an
agency of the Government of Canada whose guarantee is an unconditional
obligation of the Government of Canada in most circumstances (similar to that
of GNMA in the United States).

Mexican Government securities denominated and payable in the Mexican Peso
include (i) Cetes, which are book-entry securities sold directly by the Mexican
Government on a discount basis and with maturities that range from seven to 364
days, (ii) Bonds, which are long-term development bonds issued directly by the
Mexican Government with a minimum term of 364 days, and (iii) Ajustabonos,
which are adjustable-rate bonds with a minimum three-year term issued directly
by the Mexican Government with the face amount adjusted each quarter by the
quarterly inflation rate.

The Fund may invest up to 25% of its total assets in Argentine Government
securities that are denominated and payable in the Argentine Peso. Argentine
Government securities include (i) Bono de Inversion y Crecimiento ("BIC"),
which are investment and growth bonds issued directly by the Argentine
Government with maturities of up to ten years, (ii) Bono de Consolidacion
Economica ("BOCON"), which are economic consolidation bonds issued directly by
the Argentine Government with maturities of up to ten years and (iii) Bono de
Credito a la Exportacion ("BOCREX"), which are export credit bonds issued
directly by the Argentine government with maturities of up to four years. To
date, Argentine Government securities are not rated by S&P, Moody's, Duff &
Phelps or Fitch. Alliance, however, believes, that there are Argentine
Government securities that are of investment grade quality.

The Fund may also (i) enter into futures contracts and purchase and write
options on futures contracts for hedging purposes, (ii) purchase and write put
and call options on foreign currencies, (iii) purchase or sell forward foreign
currency exchange contracts, (iv) write covered put and call options and
purchase put and call options on U.S. Government and foreign government
securities traded on U.S. and foreign securities exchanges, and write put and
call options for cross-hedging purposes, (v) enter into interest rate swaps,
caps and floors, (vi) enter into forward commitments for the purchase or sale
of securities, (vii) invest in variable, floating and inverse floating rate
instruments, (viii) make secured loans of its portfolio securities, and (ix)
enter into repurchase agreements. The Fund will not invest in illiquid
securities if, as a result, 10% of its net assets would be so invested. For
additional information on the use, risks and costs of these practices, see
"Additional Investment Practices." The Fund also maintains borrowings of
approximately one-third of the Fund's total assets less liabilities (other than
the amount borrowed). See "Risk Considerations-Effects of Borrowing."

ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND

Alliance Global Dollar Government Fund, Inc. ("Global Dollar Government") seeks
primarily a high level of current income, and secondarily capital appreciation.
In seeking to achieve these objectives, the Fund invests at least 65% of its
total assets in sovereign debt obligations. The Fund's investments in sovereign
debt obligations will emphasize obligations of a type customarily referred to
as "Brady Bonds" that are issued as part of debt restructurings and that are
collateralized in full as to principal due at maturity by zero coupon U.S.
Government securities ("collateralized Brady Bonds"). See "Additional
Investment Practices-Brady Bonds." The Fund may also invest up to 35% of its
total assets in U.S. and non-U.S. corporate fixed-income securities. See "Risk
Considerations-U.S. Corporate Fixed-Income Securities." The Fund will limit its
investments in sovereign debt obligations and U.S. and non-U.S. corporate
fixed-income securities to U.S. Dollar-denominated securities. Alliance expects
that, based upon current market conditions, the Fund's portfolio of U.S.
fixed-income securities will have an average maturity range of approximately
nine to 15 years and the Fund's portfolio of non-U.S. fixed-income securities
will have an average maturity range of approximately 15 to 25 years. Alliance
anticipates that the Fund's portfolio of sovereign debt obligations will have a
longer average maturity.

capacity to pay interest and repay principal when due in the event of adverse
business, financial or economic conditions, and/or to be in default or not
current in the payment of interest or principal. For a description of bond
ratings, see Appendix A. The Fund may also invest in investment grade
securities. Unrated securities will be considered for investment by the Fund
when Alliance believes that the financial condition of the issuers of such
obligations and the protection afforded by the terms of the obligations
themselves limit the risk to the Fund to a degree comparable to that of rated
securities which are consistent with the Fund's investment objectives and
policies. As of August 31, 1996, the percentages of the Fund's assets invested
in securities rated (or considered by Alliance to be of equivalent quality to
securities rated) in particular rating categories were 2% in A and above, 51%
in Ba or BB, 22% in B and 25% in non-rated. See "Risk Considerations-Securities
Ratings," "-Investment in Fixed-Income Securities Rated Baa and BBB,"
"-Investment in Lower-Rated Fixed-Income Securities" and Appendix A.

With respect to its investments in sovereign debt obligations and non-U.S.
corporate fixed-income securities, the Fund will emphasize investments in
countries that are considered at the time of purchase to be emerging or
developing countries by the World Bank. A substantial part of the Fund's
investment focus is expected to be in securities or obligations of Argentina,
Brazil, Mexico, Morocco, the Philippines and Venezuela because these countries
are now, or are expected by Alliance at a future date to be, the principal
participants in debt restructuring programs (including, in the case of
Argentina, Mexico, the Philippines and Venezuela, issuers of currently
outstanding Brady Bonds) that, in Alliance's opinion, will provide the most
attractive investment opportunities for the Fund. Alliance anticipates that
other countries that will provide investment opportunities for the Fund
include, among others, Bolivia, Costa Rica, the Dominican Republic, Ecuador,
Jordan, Nigeria, Panama, Peru, Poland, Thailand, Turkey and Uruguay. See
"Additional Investment Practices-Brady Bonds."

The Fund may invest up to 30% of its total assets in the sovereign debt
obligations and corporate fixed-income securities of issuers in any one of
Argentina, Brazil, Mexico, Morocco, the Philippines or Venezuela, each
of which is an emerging market country, and the Fund will limit investments in
the sovereign debt obligations of each such country (or of any other single
foreign country) to less than 25% of its total assets. The Fund expects that it
will not invest more than 10% of its total assets in the sovereign debt
obligations and corporate fixed-income securities of issuers in any other
single foreign country and is not required to invest any minimum amount of its
assets in the securities or obligations of issuers located in any particular
country.

A substantial portion of the Fund's investments will be in (i) securities which
were initially issued at discounts from their face values ("Discount
Obligations") and (ii) securities purchased by the Fund at a price less than
their stated face amount or, in the case of Discount Obligations, at a price
less than their issue price plus the portion of "original issue discount"
previously accrued thereon, i.e., purchased at a "market discount."

The Fund may also (i) invest in structured securities, (ii) invest in fixed and
floating rate loans that are arranged through private negotiations between an
issuer of sovereign debt obligations and one or more financial institutions and
in participations in and assignments of these types of loans, (iii) invest in
other investment companies, (iv) invest in warrants, (v) enter into interest
rate swaps, caps and floors, (vi) enter into forward commitments for the
purchase or sale of securities, (vii) make secured loans of its portfolio
securities, (viii) enter into repurchase agreements pertaining to the types of
securities in which it invests, (ix) use reverse repurchase agreements and
dollar rolls, (x) enter into standby commitment agreements, (xi) make short
sales of securities or maintain a short position, (xii) write put and call
options on securities of the types in which it is permitted to invest and write
call options for cross-hedging purposes, (xiii) purchase and sell
exchange-traded options on any securities index composed of the types of
securities in which it may invest, and (xiv) invest in variable, floating and
inverse floating rate instruments. The Fund may also at any time, with respect
to up to 35% of its total assets, temporarily invest funds awaiting
reinvestment or held for reserves for dividends and other distributions to
shareholders in U.S. Dollar-denominated money market instruments. For
additional information on the use, risks and costs of these practices, see
"Additional Investment Practices." While the Fund does not currently intend to
do so, it reserves the right to borrow an amount not to exceed one-third of the
Fund's assets less liabilities (other than the amount borrowed). See "Risk
Considerations-Effects of Borrowing."

ALLIANCE GLOBAL STRATEGIC INCOME TRUST

Alliance Global Strategic Income Trust, Inc. ("Global Strategic Income") is a
non-diversified investment company that seeks primarily a high level of current
income and secondarily capital appreciation. The Fund pursues its investment
objectives by investing primarily in a portfolio of fixed-income securities of
U.S. and non-U.S. companies and U.S. Government and foreign government
securities and supranational entities, including lower-rated securities. The
Fund may also use derivative instruments to attempt to enhance income. The
average weighted maturity of the Fund's portfolio of fixed-income securities is
expected to vary between 5 years and 30 years in accordance with Alliance's
changing perceptions of the relative attractiveness of various maturity ranges.

Under normal market conditions, at least 65% of the value of the Fund's total
assets will be invested in the fixed-income securities of issuers located in
three countries, one of which may be the United States. No more than 25% of the
value of its total assets, however, will be invested in the securities of any
one foreign government. U.S. Government securities in which the Fund may invest
include mortgage-related securities and zero coupon securities. Fixed-income
securities in which the Fund may invest include preferred stock,
mortgage-related and other asset-backed securities, and zero coupon securities.
The Fund may also invest in rights and warrants (for debt securities or for
equity securities that are acquired in connection with debt instruments), and
loan participations and assignments.

The Fund will maintain at least 65% of the value of its total assets in
investment grade securities and may maintain not more than 35% of the value of
its total assets in lower-rated securities. See "Risk Considerations-Securities
Ratings" and "-Investment in Lower-Rated Fixed-Income Securities." Unrated
securities will be considered for investment by the Fund when Alliance believes
that the financial condition of the issuers of such obligations and the
protection afforded by the terms of the obligations themselves limit the risk
to the Fund to a degree comparable to that of rated securities which are
consistent with the Fund's investment objectives and policies. Lower-rated
securities in which the Fund may invest include Brady Bonds and fixed-income
securities of issuers located in emerging markets. There is no minimum rating
requirement applicable to the Fund's investments in lower-rated fixed-income
securities.

The Fund may also: (i) invest in foreign currencies, (ii) purchase and write
put and call options on securities and foreign currencies, (iii) purchase or
sell forward foreign exchange contracts, (iv) invest in variable, floating and
inverse floating rate instruments, (v) invest in indexed commercial paper, (vi)
invest in structured securities, (vii) lend portfolio securities amounting to
not more than 25% of its total assets, (viii) enter into repurchase agreements
pertaining to the types of securities in which it invests, (ix) use reverse
repurchase agreements and dollar rolls, (x) purchase and sell securities on a
forward commitment basis, (xi) enter into standby commitments, (xii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, foreign government
securities or common stock, and purchase and write options on futures
contracts, (xiii) invest in Eurodollar instruments, (xiv) enter into interest
rate swaps, caps and floors, and (xv) make short sales of securities or
maintain a short position. For additional information on the use, risks and
costs of these policies and practices see "Additional Investment Practices" and
"Risk Consideration." The Fund currently intends to limit its ability to borrow
to an amount not to exceed 25% of its total assets. See "Risk
Considerations-Effects of Borrowing."

CORPORATE BOND FUND

CORPORATE BOND PORTFOLIO

Corporate Bond Portfolio ("Corporate Bond") is a diversified investment company
that seeks primarily to maximize income over the long term consistent with
providing reasonable safety in the value of each shareholder's investment, and
secondarily to increase its capital through appreciation of its investments in
order to preserve and, if possible, increase the purchasing power of each
shareholder's investment. In pursuing these objectives, the Fund's policy is to
invest in readily marketable securities which give promise of relatively
attractive yields, but which do not involve substantial risk of loss of
capital. The Fund follows a policy of maintaining at least 65% of its net
assets invested in debt securities. Such objectives and policies cannot be
changed without the approval of the shareholders. Although the Fund also
follows a policy of maintaining at least 65% of its total assets invested in
corporate bonds, it is permitted to invest in securities of non-corporate
issuers.

The Fund follows an investment strategy which in certain respects can be
regarded as more aggressive than the strategies of many other funds investing
primarily in corporate bonds. In this regard, the Fund's investment portfolio
normally tends to have a relatively long average maturity and duration, and to
place significant emphasis on both foreign corporate and sovereign debt
obligations and corporate bonds that are expected to benefit from improvement
in their issuers' credit fundamentals. Consequently, in recent years the Fund
frequently has experienced greater net asset value volatility than most other
corporate bond funds. Prospective investors in the Fund should therefore be
prepared to accept the degree of volatility associated with its investment
strategy. See "Risk Considerations".

There is no minimum rating requirement applicable to the Fund's investments in
fixed-income securities, except the Fund expects that it will not retain a
security that is downgraded below B, or if unrated, determined by Alliance to
have undergone similar credit quality deterioration subsequent to purchase.
Currently, the Fund believes its objectives and policies may best be
implemented by investing at least 65% of its total assets in fixed-income
securities considered investment grade or higher. The remainder of the Fund's
assets may be invested in lower-rated fixed-income securities. See "Risk
Considerations-Securities Ratings," "-Investment in Fixed-Income Securities
Rated Baa and BBB," "-Investment in Lower-Rated Fixed-Income Securities" and
Appendix A. During the fiscal year ended June 30, 1996, on a weighted average
basis, the percentages of the Fund's assets invested in securities rated (or
considered by Alliance to be of equivalent quality to securities rated) in
particular rating categories were 25% in A and above, 41% in Baa or BBB, 11% in
Ba or BB, and 7% in B. The Fund did not invest in securities rated below B by
each of Moody's, S&P, Duff & Phelps and Fitch or, if not rated, considered by
Alliance to be of equivalent quality to securities so rated.

The Fund may invest up to 50% of the value of its total assets in foreign debt
securities which will consist primarily of corporate fixed-income securities
and sovereign debt obligations. Not more than 15% of the Fund's total assets
may be invested in sovereign debt obligations in the form of foreign
government loan participations and assignments, which may be lower rated and
considered to be predominantly speculative as regards the issuer's capacity to
pay interest and repay principal. All of the Fund's investments, whether
foreign or domestic, are U.S. Dollar-denominated.

and of equity securities in order to reflect its assessment of prospective
cyclical changes even if such action may adversely affect current income.
However, substantially all of the Fund's investments will be income producing.
The average weighted maturity of the Fund's portfolio of fixed-income
securities is expected to vary between one year or less and 30 years.

ADDITIONAL INVESTMENT PRACTICES

Some or all of the Funds may engage in the following investment practices to
the extent described in this Prospectus. See the Statement of Additional
Information of each Fund for a further discussion of the uses, risks and costs
of engaging in these practices.

DERIVATIVES. The Funds may use derivatives in furtherance of their investment
objectives. Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. These
assets, rates, and indices may include bonds, stocks, mortgages, commodities,
interest rates, currency exchange rates, bond indices and stock indices.
Derivatives can be used to earn income or protect against risk, or both. For
example, one party with unwanted risk may agree to pass that risk to another
party who is willing to accept the risk, the second party being motivated, for
example, by the desire either to earn income in the form of a fee or premium
from the first party, or to reduce its own unwanted risk by attempting to pass
all or part of that risk to the first party.

Derivatives can be used by investors such as the Funds to earn income and
enhance returns, to hedge or adjust the risk profile of a portfolio, and either
to replace more traditional direct investments or to obtain exposure to
otherwise inaccessible markets. Each of the Funds is permitted to use
derivatives for one or more of these purposes, although most of the Funds
generally use derivatives primarily as direct investments in order to enhance
yields and broaden portfolio diversification. Each of these uses entails
greater risk than if derivatives were used solely for hedging purposes.
Derivatives are a valuable tool which, when used properly, can provide
significant benefit to Fund shareholders. A Fund may take a significant
position in those derivatives that are within its investment policies if, in
Alliance's judgement, this represents the most effective response to current or
anticipated market conditions. The MULTI-MARKET FUNDS and GLOBAL STRATEGIC
INCOME in particular generally make extensive use of carefully selected
forwards and other derivatives to achieve the currency hedging that is an
integral part of their investment strategy. Alliance's use of derivatives is
subject to continuous risk assessment and control from the standpoint of each
Fund's investment objectives and policies.

Derivatives may be (i) standardized, exchange-traded contracts or (ii)
customized, privately negotiated contracts. Exchange-traded derivatives tend to
be more liquid and subject to less credit risk than those that are privately
negotiated.

There are four principal types of derivative instruments-options, futures,
forwards and swaps-from which virtually any type of derivative transaction can
be created.

. OPTIONS-An option, which may be standardized and exchange-traded, or
customized and privately negotiated, is an agreement that, for a premium
payment or fee, gives the option holder (the buyer) the right but not the
obligation to buy or sell the underlying asset (or settle for cash an amount
based on an underlying asset, rate or index) at a specified price (the exercise
price) during a period of time or on a specified date. A call option entitles
the holder to purchase, while a put option entitles the holder to sell, the
underlying asset (or settle for cash an amount based on an underlying asset,
rate or index). Likewise, when an option is exercised the writer of the option
would be obligated to sell (in the case of a call option) or to purchase (in
the case of a put option) the underlying asset (or settle for cash an amount
based on an underlying asset, rate or index).

. FUTURES-A futures contract is an agreement that obligates the buyer to buy
and the seller to sell a specified quantity of an underlying asset (or settle
for cash the value of a contract based on an underlying asset, rate or index)
at a specific price on the contract maturity date. Futures contracts are
standardized, exchange-traded instruments and are fungible (i.e., considered to
be perfect substitutes for each other). This fungibility allows futures
contracts to be readily offset or cancelled through the acquisition of equal
but opposite positions, which is the primary method in which futures contracts
are liquidated. A cash-settled futures contract does not require physical
delivery of the underlying asset but instead is settled for cash equal to the
difference between the values of the contract on the date it is entered into
and its maturity date.

. FORWARDS-A forward contract is an obligation by one party to buy, and the
other party to sell, a specific quantity of an underlying commodity or other
tangible asset for an agreed upon price at a future date. Forward contracts are
customized, privately negotiated agreements designed to satisfy the objectives
of each party. A forward contract usually results in the delivery of the
underlying asset upon maturity of the contract in return for the agreed upon
payment.

. SWAPS-A swap is a customized, privately negotiated agreement that obligates
two parties to exchange a series of cash flows at specified intervals (payment
dates) based upon or calculated by reference to changes in specified prices or
rates (interest rates in the case of interest rate swaps, currency exchange
rates in the case of currency swaps) for a specified amount of an underlying
asset (the "notional" principal amount). The payment flows are netted against
each other, with the difference being paid by one party to the other. Except
for currency swaps, the notional principal amount is used solely to calculate
the payment streams but is not exchanged. With respect to currency swaps,
actual principal amounts of currencies may be exchanged by the counterparties
at the initiation, and again upon the termination, of the transaction.

Debt instruments that incorporate one or more of these building blocks for the
purpose of determining the principal amount of and/or rate of interest payable
on the debt instruments are often referred to as "structured securities." An
example of this type of structured security is indexed commercial paper. The
term is also used to describe certain securities issued in connection with the
restructuring of certain foreign obligations. See "Indexed Commercial Paper"
and "Structured Securities" below. The term "derivative" is also sometimes used
to describe securities involving rights to a portion of the cash flows from an
underlying pool of mortgages or other assets from which payments are passed
through to the owner of, or that collateralize, the securities. These
securities are described below under "Mortgage-Related Securities" and "Other
Asset-Backed Securities."

Derivatives also involve risks different from, and, in certain cases, greater
than, the risks presented by more traditional investments. Following is a
general discussion of important risk factors and issues concerning the use of
derivatives that investors should understand before investing in a Fund.
. MARKET RISK-This is the general risk attendant to all investments that the
value of a particular investment will change in a way detrimental to the Fund's
interest.

. MANAGEMENT RISK-Derivative products are highly specialized instruments that
require investment techniques and risk analyses different from those associated
with stocks and bonds. The use of a derivative requires an understanding not
only of the underlying instrument but also of the derivative itself, without
the benefit of observing the performance of the derivative under all possible
market conditions. In particular, the use and complexity of derivatives require
the maintenance of adequate controls to monitor the transactions entered into,
the ability to assess the risk that a derivative adds to a Fund's portfolio and
the ability to forecast price, interest rate or currency exchange rate
movements correctly.

. CREDIT RISK-This is the risk that a loss may be sustained by a Fund as a
result of the failure of another party to a derivative (usually referred to as
a "counterparty") to comply with the terms of the derivative contract. The
credit risk for exchange-traded derivatives is generally less than for
privately negotiated derivatives, since the clearing house, which is the issuer
or counterparty to each exchange-traded derivative, provides a guarantee of
performance. This guarantee is supported by a daily payment system (i.e.,
margin requirements) operated by the clearing house in order to reduce overall
credit risk. For privately negotiated derivatives, there is no similar clearing
agency guarantee. Therefore, the Funds consider the creditworthiness of each
counterparty to a privately negotiated derivative in evaluating potential
credit risk.

. LIQUIDITY RISK-Liquidity risk exists when a particular instrument is
difficult to purchase or sell. If a derivative transaction is particularly
large or if the relevant market is illiquid (as is the case with many privately
negotiated derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous price.

. LEVERAGE RISK-Since many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, rate or index can result
in a loss substantially greater than the amount invested in the derivative
itself. In the case of swaps, the risk of loss generally is related to a
notional principal amount, even if the parties have not made any initial
investment. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment.

. OTHER RISKS-Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of derivatives to
correlate perfectly with underlying assets, rates and indices. Many
derivatives, in particular privately negotiated derivatives, are complex and
often valued subjectively. Improper valuations can result in increased cash
payment requirements to counterparties or a loss of value to a Fund.
Derivatives do not always perfectly or even highly correlate or track the value
of the assets, rates or indices they are designed to closely track.
Consequently, a Fund's use of derivatives may not always be an effective means
of, and sometimes could be counterproductive to, furthering the Fund's
investment objective.

DERIVATIVES USED BY THE FUNDS. Following is a description of specific
derivatives currently used by one or more of the Funds.

OPTIONS ON SECURITIES. In purchasing an option on securities, a Fund would be
in a position to realize a gain if, during the option period, the price of the
underlying securities increased (in the case of a call) or decreased (in the
case of a put) by an amount in excess of the premium paid; otherwise the Fund
would experience a loss not greater than the premium paid for the option. Thus,
a Fund would realize a loss if the price of the underlying security declined or
remained the same (in the case of a call) or increased or remained the same (in
the case of a put) or otherwise did not increase (in the case of a put) or
decrease (in the case of a call) by more than the amount of the premium. If a
put or call option purchased by a Fund were permitted to expire without being
sold or exercised, its premium would represent a loss to the Fund.

A Fund may write a put or call option in return for a premium, which is
retained by the Fund whether or not the option is exercised. Except with
respect to uncovered call options written for cross-hedging purposes, none of
the Funds will write uncovered call or put options on securities. A call option
written by a Fund is "covered" if the Fund owns the underlying security, has an
absolute and immediate right to acquire that security upon conversion or
exchange of another security it holds, or holds a call option on the underlying
security with an exercise price equal to or less than that of the call option
it has written. A put option written by a Fund is covered if the Fund holds a
put option on the underlying securities with an exercise price equal to or
greater than that of the put option it has written.

The risk involved in writing an uncovered put option is that there could be a
decrease in the market value of the underlying securities. If this occurred, a
Fund could be obligated to purchase the underlying security at a higher price
than its current market value. Conversely, the risk involved in writing an
uncovered call option is that there could be an increase in the market value of
the underlying security, and a Fund could be obligated to acquire the
underlying security at its current price and sell it at a lower price. The risk
of loss from writing an uncovered put option is limited to the exercise price
of the option, whereas the risk of loss from writing an uncovered call option
is potentially unlimited.

A Fund may write a call option on a security that it does not own in order to
hedge against a decline in the value of a security that it owns or has the
right to acquire, a technique referred to as "cross-hedging." A Fund would
write a call option for cross-hedging purposes, instead of writing a covered
call option, when the premium to be received from the cross-hedge transaction
exceeds that to be received from writing a covered call option, while at the
same time achieving the desired hedge. The correlation risk involved in
cross-hedging may be greater than the correlation risk involved with other
hedging strategies.

SHORT-TERM U.S. GOVERNMENT, MORTGAGE SECURITIES INCOME, NORTH AMERICAN
GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT, GLOBAL STRATEGIC INCOME and
CORPORATE BOND generally purchase or write privately negotiated options on
securities. A Fund that purchases or writes privately negotiated options on
securities will effect such transactions only with investment dealers and other
financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by Alliance, and Alliance has adopted
procedures for monitoring the creditworthiness of such counterparties.
Privately negotiated options purchased or written by a Fund may be illiquid,
and it may not be possible for the Fund to effect a closing transaction at an
advantageous time. See "Illiquid Securities" below. Neither MORTGAGE SECURITIES
INCOME nor CORPORATE BOND will purchase an option on a security if, immediately
thereafter, the aggregate cost of all outstanding options purchased by such
Fund would exceed 2% of the Fund's total assets. Nor will either such Fund
write an option if, immediately thereafter, the aggregate value of the Fund's
portfolio securities subject to outstanding options would exceed 15% of the
Fund's total assets.

OPTIONS ON SECURITIES INDICES. An option on a securities index is similar to an
option on a security except that, rather than taking or making delivery of a
security at a specified price, an option on a securities index gives the holder
the right to receive, upon exercise of the option, an amount of cash if the
closing level of the chosen index is greater than (in the case of a call) or
less than (in the case of a put) the exercise price of the option.

OPTIONS ON FOREIGN CURRENCIES. A Fund invests in options on foreign currencies
that are privately negotiated or traded on U.S. or foreign exchanges for the
purpose of protecting against declines in the U.S. Dollar value of foreign
currency denominated portfolio securities and against increases in the U.S.
Dollar cost of securities to be acquired. The purchase of an option on a
foreign currency may constitute an effective hedge against fluctuations in
exchange rates, although if rates move adversely, a Fund may forfeit the entire
amount of the premium plus related transaction costs.

RIGHTS AND WARRANTS. GLOBAL DOLLAR GOVERNMENT may invest in warrants, and
GLOBAL STRATEGIC INCOME may invest in rights and warrants, which are option
securities permitting their holders to subscribe for other securities. GLOBAL
DOLLAR GOVERNMENT may invest in warrants, and GLOBAL STRATEGIC INCOME may
invest in rights and warrants, for debt securities or for equity securities
that are acquired in connection with debt instruments. Rights are similar to
warrants except that they have a substantially shorter duration. Rights and
warrants do not carry with them dividend or voting rights with respect to the
underlying securities, or any rights in the assets of the issuer. As a result,
an investment in rights and warrants may be considered more speculative than
certain other types of investments. In addition, the value of a right or a
warrant does not necessarily change with the value of the underlying
securities, and a right or a warrant ceases to have value if it is not
exercised prior to its expiration date. GLOBAL STRATEGIC INCOME may invest up
to 20% of its total assets in rights and warrants.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Futures contracts that a
Fund may buy and sell may include futures contracts on fixed-income or other
securities or foreign currencies, and contracts based on interest rates or
financial indices, including any index of U.S. Government securities, foreign
government securities or corporate debt securities.

Options on futures contracts are options that call for the delivery upon
exercise of futures contracts. Options on futures contracts written or
purchased by a Fund will be traded on U.S. or foreign exchanges and, except
with respect to SHORT-TERM U.S. GOVERNMENT and GLOBAL STRATEGIC INCOME, will be
used only for hedging purposes.

LIMITED MATURITY GOVERNMENT, WORLD INCOME, SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME and GLOBAL STRATEGIC
INCOME will not enter into a futures contract or option on a futures contract

if immediately thereafter the market values of the outstanding futures
contracts of the Fund and the currencies and futures contracts subject to
outstanding options written by the Fund would exceed 50% of its total assets.
Nor will LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES INCOME, WORLD INCOME,
SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT
INCOME or GLOBAL STRATEGIC INCOME do so if immediately thereafter the aggregate
of initial margin deposits on all the outstanding futures contracts of the Fund
and premiums paid on outstanding options on futures contracts would exceed 5%
of the market value of the total assets of the Fund. In addition, MORTGAGE
SECURITIES INCOME and GLOBAL STRATEGIC INCOME will not enter into (i) any
futures contract other than one on fixed-income securities or based on interest
rates, (ii) any futures contract if immediately thereafter the sum of the then
aggregate futures market prices of financial instruments required to be
delivered under open futures contract sales and the aggregate futures market
prices of instruments required to be delivered under open futures contract
purchases would exceed 30% of the value of the Fund's total assets, or (iii)
options on futures contracts.

EURODOLLAR INSTRUMENTS. Eurodollar instruments are essentially U.S.
Dollar-denominated futures contracts or options thereon that are linked to
LIBOR. Eurodollar futures contracts enable purchasers to obtain a fixed rate
for the lending of funds and sellers to obtain a fixed rate for borrowings.
LIMITED MATURITY GOVERNMENT and GLOBAL STRATEGIC INCOME intend to use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR (to which many short-term borrowings and floating rate securities in
which each Fund invests are linked).

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each Fund that purchases or sells
forward contracts on foreign currencies ("forward contracts") attempts to
minimize the risk to it from adverse changes in the relationship between the
U.S. Dollar and other currencies. A Fund may enter into a forward contract, for
example, when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S. Dollar price
of the security ("transaction hedge"). When a Fund believes that a foreign
currency may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency, or when the Fund believes that the U.S.
Dollar may suffer a substantial decline against a foreign currency, it may
enter into a forward purchase contract to buy that foreign currency for a fixed
dollar amount ("position hedge"). Instead of entering into a position hedge, a
Fund may, in the alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. Dollar amount where the Fund believes that
the U.S. Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar value of the
currency in which portfolio securities of the Fund are denominated
("cross-hedge").

FORWARD COMMITMENTS. Forward commitments are forward contracts for the purchase
or sale of securities, including purchases on a "when-issued" basis or
purchases or sales on a "delayed delivery" basis. In some cases, a forward
commitment may be conditioned upon the occurrence of a subsequent event, such
as approval and consummation of a merger, corporate reorganization or debt
restructuring or approval of a proposed financing by appropriate authorities
(i.e., a "when, as and if issued" trade).

When forward commitments with respect to fixed-income securities are
negotiated, the price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but payment for and delivery of the securities
take place at a later date. Normally, the settlement date occurs within two
months after the transaction, but settlements beyond two months may be
negotiated. Securities purchased or sold under a forward commitment are subject
to market fluctuation, and no interest or dividends accrues to the purchaser
prior to the settlement date. At the time a Fund enters into a forward
commitment, it records the transaction and thereafter reflects the value of the
security purchased or, if a sale, the proceeds to be received, in determining
its net asset value. Any unrealized appreciation or depreciation reflected in
such valuation would be canceled if the required conditions did not occur and
the trade were canceled.

The use of forward commitments helps a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling bond
prices. In periods of falling interest rates and rising bond prices, a Fund
might sell a security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher cash yields. No forward commitments will be made by
LIMITED MATURITY GOVERNMENT, NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR
GOVERNMENT or GLOBAL STRATEGIC INCOME if, as a result, the Fund's aggregate
forward commitments under such transactions would be more than 25% of the total
assets of GLOBAL STRATEGIC INCOME and 30% of the total assets of each of the
other Funds.

A Fund's right to receive or deliver a security under a forward commitment may
be sold prior to the settlement date. The Funds enter into forward commitments,
however, only with the intention of actually receiving securities or delivering
them, as the case may be. If a Fund, however, chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or dispose of its
right to deliver or receive against a forward commitment, it may incur a gain
or loss.

INTEREST RATE TRANSACTIONS (SWAPS, CAPS AND FLOORS). Each Fund that may enter
into interest rate swap, cap or floor transactions expects to do so primarily
for hedging purposes, which may include preserving a return or spread on a
particular investment or portion of its portfolio or protecting against an
increase in the price of securities the Fund anticipates purchasing at a later
date. The Funds do not intend to use these transactions in a speculative manner.

Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of
floating rate payments for fixed rate payments) computed based on a
contractually-based principal (or "notional") amount. Interest rate swaps are
entered into on a net basis (i.e., the two payment streams are netted out, with
the Fund receiving or paying, as the case may be, only the net amount of the
two payments). Interest rate caps and floors are similar to options in that the
purchase of an interest rate cap or floor entitles the purchaser, to the extent
that a specified index exceeds (in the case of a cap) or falls below (in the
case of a floor) a predetermined interest rate, to receive payments of interest
on a notional amount from the party selling the interest rate cap or floor. A
Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities.

There is no limit on the amount of interest rate transactions that may be
entered into by a Fund that is permitted to enter into such transactions.
SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT
INCOME and GLOBAL STRATEGIC INCOME may enter into interest rate swaps involving
payments to the same currency or in different currencies. SHORT-TERM U.S.
GOVERNMENT, LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES INCOME, GLOBAL
DOLLAR GOVERNMENT, GLOBAL STRATEGIC INCOME and CORPORATE BOND will not enter
into an interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is then
rated in the highest rating category of at least one nationally recognized
rating organization. Each of SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY,
NORTH AMERICAN GOVERNMENT INCOME and GLOBAL STRATEGIC INCOME will enter into
interest rate swap, cap or floor transactions with its respective custodian,
and with other counterparties, but only if: (i) for transactions with
maturities under one year, such other counterparty has outstanding prime
commercial paper; or (ii) for transactions with maturities greater than one
year, the counterparty has outstanding high quality debt securities.

The swap market has grown substantially in recent years, with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become well established and relatively liquid. Caps and floors are less liquid
than swaps. These transactions do not involve the delivery of securities or
other underlying assets or principal. Accordingly, unless there is a
counterparty default, the risk of loss to a Fund from interest rate
transactions is limited to the net amount of interest payments that the Fund is
contractually obligated to make.

STANDBY COMMITMENT AGREEMENTS. Standby commitment agreements are similar to put
options that commit a Fund, for a stated period of time, to purchase a stated
amount of a security that may be issued and sold to the Fund at the option of
the issuer. The price and coupon of the security are fixed at the time of the
commitment. At the time of entering into the agreement, the Fund is paid a
commitment fee regardless of whether the security ultimately is issued. The
Funds will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
and unavailable on a firm commitment basis. No Fund will enter into a standby
commitment with a remaining term in excess of 45 days. The Funds will limit
their investments in standby commitments so that the aggregate purchase price
of the securities subject to the commitments does not exceed 20% or 25% with
respect to GLOBAL STRATEGIC INCOME, of their respective assets.

There is no guarantee that the security subject to a standby commitment will be
issued. In addition, the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the security
is at the option of the issuer, a Fund will bear the risk of capital loss in
the event the value of the security declines and may not benefit from an
appreciation in the value of the security during the commitment period if the
issuer decides not to issue and sell the security to the Fund.

INDEXED COMMERCIAL PAPER. Indexed commercial paper may have its principal
linked to changes in foreign currency exchange rates whereby its principal
amount is adjusted upwards or downwards (but not below zero) at maturity to
reflect changes in the referenced exchange rate. Each Fund that invests in such
commercial paper may do so without limitation. A Fund will receive interest and
principal payments on such commercial paper in the currency in which such
commercial paper is denominated, but the amount of principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rates enables a Fund to
hedge (or cross-hedge) against a decline in the U.S. Dollar value of
investments denominated in foreign currencies while providing an attractive
money market rate of return. A Fund will purchase such commercial paper for
hedging purposes only, not for speculation.

U.S. GOVERNMENT SECURITIES. U.S. Government securities may be backed by the
full faith and credit of the United States, supported only by the right of the
issuer to borrow from the U.S. Treasury or backed only by the credit of the
issuing agency itself. These securities include:

(i) the following U.S. Treasury securities, which are backed by the full faith
and credit of the United States and differ only in their interest rates,
maturities and times of issuance: U.S. Treasury bills (maturities of one year
or less with no interest paid and hence issued at a discount and repaid at full
face value upon maturity), U.S. Treasury

notes (maturities of one to ten years with interest payable every six months)
and U.S. Treasury bonds (generally maturities of greater than ten years with
interest payable every six months);

(ii) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are supported by the full faith and credit of the U.S.
Government, such as securities issued by GNMA, the Farmers Home Administration,
the Department of Housing and Urban Development, the Export-Import Bank, the
General Services Administration and the Small Business Administration; and

(iii) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are not supported by the full faith and credit of the
U.S. Government, such as securities issued by FNMA and FHLMC, and governmental
CMOs.

The maturities of the U.S. Government securities listed in paragraphs (i) and
(ii) above usually range from three months to 30 years. Such securities, except
GNMA certificates, normally provide for periodic payments of interest in fixed
amounts with principal payments at maturity or specified call dates. For
information regarding GNMA, FNMA and FHLMC certificates and CMOs, see
"Mortgage-Related Securities" below.

U.S. Government securities also include zero coupon securities and
principal-only securities and certain SMRS. In addition, other U.S. Government
agencies and instrumentalities have issued stripped securities that are similar
to SMRS. Such securities include those that are issued with an IO class and a
PO class. See "Mortgage-Related Securities" below and "Zero Coupon and
Principal-Only Securities" below. Although these stripped securities are
purchased and sold by institutional investors through several investment
banking firms acting as brokers or dealers, these securities were only recently
developed. As a result, established trading markets have not yet developed and,
accordingly, these securities may be illiquid.

Guarantees of securities by the U.S. Government or its agencies or
instrumentalities guarantee only the payment of principal and interest on the
securities, and do not guarantee the securities' yield or value or the yield or
value of the shares of a Fund that holds the securities.

U.S. Government securities are considered among the safest of fixed-income
investments. As a result, however, their yields are generally lower than the
yields available from other fixed-income securities.

MORTGAGE-RELATED SECURITIES. The mortgage-related securities in which a Fund
may invest typically are securities representing interests in pools of mortgage
loans made to home owners. The mortgage loan pools may be assembled for sale to
investors (such as a Fund) by governmental or private organizations.
Mortgage-related securities issued by GNMA are backed by the full faith and
credit of the United States; those issued by FNMA and FHLMC are not so backed.
Mortgage-related securities bear interest at either a fixed rate or an
adjustable rate determined by reference to an index rate. Mortgage-related
securities frequently provide for monthly payments that consist of both
interest and principal, unlike more traditional debt securities, which normally
do not provide for periodic repayments of principal.

Securities representing interests in pools created by private issuers generally
offer a higher rate of interest than securities representing interests in pools
created by governmental issuers because there are no direct or indirect
governmental guarantees of the underlying mortgage payments. However, private
issuers sometimes obtain committed loan facilities, lines of credit, letters of
credit, surety bonds or other forms of liquidity and credit enhancement to
support the timely payment of interest and principal with respect to their
securities if the borrowers on the underlying mortgages fail to make their
mortgage payments. The ratings of such non-governmental securities are
generally dependent upon the ratings of the providers of such liquidity and
credit support and would be adversely affected if the rating of such an
enhancer were downgraded. A Fund may buy mortgage-related securities without
credit enhancement if the securities meet the Fund's investment standards.
Although the market for mortgage-related securities is becoming increasingly
liquid, those of certain private organizations may not be readily marketable.

One type of mortgage-related security is of the "pass-through" variety. The
holder of a pass-through security is considered to own an undivided beneficial
interest in the underlying pool of mortgage loans and receives a pro rata share
of the monthly payments made by the borrowers on their mortgage loans, net of
any fees paid to the issuer or guarantor of the securities. Prepayments of
mortgages resulting from the sale, refinancing or foreclosure of the underlying
properties are also paid to the holders of these securities, which, as
discussed below, frequently causes these securities to experience significantly
greater price and yield volatility than experienced by traditional fixed-income
securities. Some mortgage-related securities, such as securities issued by
GNMA, are referred to as "modified pass-through" securities. The holders of
these securities are entitled to the full and timely payment of principal and
interest, net of certain fees, regardless of whether payments are actually made
on the underlying mortgages. Another form of mortgage-related security is a
"pay-through" security, which is a debt obligation of the issuer secured by a
pool of mortgage loans pledged as collateral that is legally required to be
paid by the issuer regardless of whether payments are actually made on the
underlying mortgages.

Collateralized mortgage obligations (CMOs) are the predominant type of
"pay-through" mortgage-related security. In a CMO, a series of bonds or
certificates is issued in multiple classes. Each class of a CMO, often referred
to as a "tranche," is issued at a specific coupon rate and has a stated
maturity or final distribution date. Principal prepayments on collateral
underlying a CMO may cause it to be retired substantially earlier than the
stated maturities or final distribution dates. The principal and interest on
the underlying mortgages may be

allocated among several classes of a series of a CMO in many ways. In a common
structure, payments of principal, including any principal prepayments, on the
underlying mortgages are applied to the classes of the series of a CMO in the
order of their respective stated maturities or final distribution dates, so
that no payment of principal will be made on any class of a CMO until all other
classes having an earlier stated maturity or final distribution date have been
paid in full. One or more tranches of a CMO may have coupon rates that reset
periodically, or "float", at a specified increment over an index such as LIBOR.
Floating-rate CMOs may be backed by fixed or adjustable rate mortgages. To
date, fixed-rate mortgages have been more commonly utilized for this purpose.
Floating-rate CMOs are typically issued with lifetime caps on the coupon rate
thereon. These caps, similar to the caps on adjustable-rate mortgages described
below, represent a ceiling beyond which the coupon rate on a floating-rate CMO
may not be increased regardless of increases in the interest rate index to
which the floating-rate CMO is tied. The collateral securing the CMOs may
consist of a pool of mortgages, but may also consist of mortgage-backed bonds
or pass-through securities. CMOs may be issued by a U.S. Government
instrumentality or agency or by a private issuer. Although payment of the
principal of, and interest on, the underlying collateral securing privately
issued CMOs may be guaranteed by GNMA, FNMA or FHLMC, these CMOs represent
obligations solely of the private issuer and are not insured or guaranteed by
GNMA, FNMA, FHLMC, any other governmental agency or any other person or entity.

Another type of mortgage-related security, known as adjustable-rate mortgage
securities (ARMS), bears interest at a rate determined by reference to a
predetermined interest rate or index. There are two main categories of rates or
indices: (i) rates based on the yield on U.S. Treasury securities and (ii)
indices derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates. Some rates and indices closely mirror changes
in market interest rate levels, while others tend to lag changes in market rate
levels and tend to be somewhat less volatile.

ARMS may be secured by adjustable-rate mortgages or fixed-rate mortgages. ARMS
secured by fixed-rate mortgages generally have lifetime caps on the coupon
rates of the securities. To the extent that general interest rates increase
faster than the interest rates on the ARMS, these ARMS will decline in value.
The adjustable-rate mortgages that secure ARMS will frequently have caps that
limit the maximum amount by which the interest rate or the monthly principal
and interest payments on the mortgages may increase. These payment caps can
result in negative amortization (i.e., an increase in the balance of the
mortgage loan). Furthermore, since many adjustable-rate mortgages only reset on
an annual basis, the values of ARMS tend to fluctuate to the extent that
changes in prevailing interest rates are not immediately reflected in the
interest rates payable on the underlying adjustable-rate mortgages.

Stripped mortgage-related securities (SMRS) are mortgage-related securities
that are usually structured with two classes of securities collateralized by a
pool of mortgages or a pool of mortgaged-backed bonds or pass-through
securities, with each class receiving different proportions of the principal
and interest payments from the underlying assets. A common type of SMRS has one
class of interest-only securities (IOs) receiving all of the interest payments
from the underlying assets, while the other class of securities, principal-only
securities (POs), receives all of the principal payments from the underlying
assets. IOs and POs are extremely sensitive to interest rate changes and are
more volatile than mortgage-related securities that are not stripped. IOs tend
to decrease in value as interest rates decrease, while POs generally increase
in value as interest rates decrease. If prepayments of the underlying mortgages
are greater than anticipated, the amount of interest earned on the overall pool
will decrease due to the decreasing principal balance of the assets. Changes in
the values of IOs and POs can be substantial and occur quickly, such as
occurred in the first half of 1994 when the value of many POs dropped
precipitously due to increases in interest rates. For this reason, none of the
Funds relies on IOs and POs as the principal means of furthering its investment
objective.

The value of mortgage-related securities is affected by a number of factors.
Unlike traditional debt securities, which have fixed maturity dates,
mortgage-related securities may be paid earlier than expected as a result of
prepayment of the underlying mortgages. If property owners make unscheduled
prepayments of their mortgage loans, these prepayments will result in the early
payment of the applicable mortgage-related securities. In that event a Fund may
be unable to invest the proceeds from the early payment of the mortgage-related
securities in an investment that provides as high a yield as the
mortgage-related securities. Consequently, early payment associated with
mortgage-related securities causes these securities to experience significantly
greater price and yield volatility than experienced by traditional fixed-income
securities. The occurrence of mortgage prepayments is affected by the level of
general interest rates, general economic conditions and other social and
demographic factors. During periods of falling interest rates, the rate of
mortgage prepayments tends to increase, thereby tending to decrease the life of
mortgage-related securities. During periods of rising interest rates, the rate
of mortgage prepayments usually decreases, thereby tending to increase the life
of mortgage-related securities. If the life of a mortgage-related security is
inaccurately predicted, a Fund may not be able to realize the rate of return it
expected.

permitting a Fund to reinvest the prepayment proceeds in investments yielding
the higher current interest rate), as described above the rate of mortgage
prepayments and early payment of mortgage-related securities generally tends to
decline during a period of rising interest rates.

Although the value of ARMS may not be affected by rising interest rates as much
as the value of fixed-rate mortgage securities is affected by rising interest
rates, ARMS may still decline in value as a result of rising interest rates.
Although, as described above, the yield on ARMS varies with changes in the
applicable interest rate or index, there is often a lag between increases in
general interest rates and increases in the yield on ARMS as a result of
relatively infrequent interest rate reset dates. In addition, adjustable-rate
mortgages and ARMS often have interest rate or payment caps that limit the
ability of the adjustable-rate mortgages or ARMS to fully reflect increases in
the general level of interest rates.

OTHER ASSET-BACKED SECURITIES. The securitization techniques used to develop
mortgage-related securities are being applied to a broad range of financial
assets. Through the use of trusts and special purpose corporations, various
types of assets, including automobile loans and leases, credit card
receivables, home equity loans, equipment leases and trade receivables, are
being securitized in structures similar to the structures used in mortgage
securitizations. These asset-backed securities are subject to risks associated
with changes in interest rates and prepayment of underlying obligations similar
to the risks of investment in mortgage-related securities discussed above.

Each type of asset-backed security also entails unique risks depending on the
type of assets involved and the legal structure used. For example, credit card
receivables are generally unsecured obligations of the credit card holder and
the debtors are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance due.
There have also been proposals to cap the interest rate that a credit card
issuer may charge. In some transactions, the value of the asset-backed security
is dependent on the performance of a third party acting as credit enhancer or
servicer. Furthermore, in some transactions (such as those involving the
securitization of vehicle loans or leases) it may be administratively
burdensome to perfect the interest of the security issuer in the underlying
collateral and the underlying collateral may become damaged or stolen.

ZERO COUPON AND PRINCIPAL-ONLY SECURITIES. Zero coupon securities and
principal-only (PO) securities are debt securities that have been issued
without interest coupons or stripped of their unmatured interest coupons, and
include receipts or certificates representing interests in such stripped debt
obligations and coupons. Such a security pays no interest to its holder during
its life. Its value to an investor consists of the difference between its face
value at the time of maturity and the price for which it was acquired, which is
generally an amount significantly less than its face value. Such securities
usually trade at a deep discount from their face or par value and are subject
to greater fluctuations in market value in response to changing interest rates
than debt obligations of comparable maturities and credit quality that make
current distributions of interest. On the other hand, because there are no
periodic interest payments to be reinvested prior to maturity, these securities
eliminate reinvestment risk and "lock in" a rate of return to maturity.

Zero coupon Treasury securities are U.S. Treasury bills issued without interest
coupons. Principal-only Treasury securities are U.S. Treasury notes and bonds
that have been stripped of their unmatured interest coupons, and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Currently the only U.S. Treasury security issued without coupons is
the Treasury bill. Although the U.S. Treasury does not itself issue Treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS program
interest and principal payments on certain long-term Treasury securities may be
maintained separately in the Federal Reserve book entry system and may be
separately traded and owned. In addition, in the last few years a number of
banks and brokerage firms have separated ("stripped") the principal portions
from the coupon portions of U.S. Treasury bonds and notes and sold them
separately in the form of receipts or certificates representing undivided
interests in these instruments (which instruments are generally held by a bank
in a custodial or trust account). The staff of the Commission has indicated
that, in its view, these receipts or certificates should be considered as
securities issued by the bank or brokerage firm involved and, therefore, should
not be included in a Fund's categorization of U.S. Government securities. The
Funds disagree with the staff's position but will not treat such securities as
U.S. Government securities until final resolution of the issue.

Current federal tax law requires that a holder (such as a Fund) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment in cash on the security during the year. As a result, in order to make
the distributions necessary for a Fund not to be subject to federal income or
excise taxes, the Fund might be required to pay out as an income distribution
each year an amount, obtained by liquidation of portfolio securities or
borrowings if necessary, greater than the total amount of cash that the Fund
has actually received as interest during the year. Each Fund believes, however,
that it is highly unlikely that it would be necessary to liquidate portfolio
securities or borrow money in order to make such required distributions or to
meet its investment objective. For a discussion of the tax treatment of zero
coupon Treasury securities, see "Dividends, Distributions and Taxes-Zero Coupon
Treasury Securities" in the Statement of Additional Information of each Fund
that is permitted to invest in such securities.

GLOBAL STRATEGIC INCOME and CORPORATE BOND may also invest in "pay-in-kind"
debentures (i.e., debt obligations the interest on which may be paid in the
form of obligations of the same type rather than cash), which have
characteristics similar to zero coupon securities.

VARIABLE, FLOATING AND INVERSE FLOATING RATE INSTRUMENTS. Fixed-income
securities may have fixed, variable or floating rates of interest. Variable and
floating rate securities pay interest at rates that are adjusted periodically,
according to a specified formula. A "variable" interest rate adjusts at
predetermined intervals (e.g., daily, weekly or monthly), while a "floating"
interest rate adjusts whenever a specified benchmark rate (such as the bank
prime lending rate) changes.

A Fund may invest in fixed-income securities that pay interest at a coupon rate
equal to a base rate, plus additional interest for a certain period of time if
short-term interest rates rise above a predetermined level or "cap." The amount
of such an additional interest payment typically is calculated under a formula
based on a short-term interest rate index multiplied by a designated factor.

Leveraged inverse floating rate debt instruments are sometimes known as inverse
floaters. The interest rate on an inverse floater resets in the opposite
direction from the market rate of interest to which the inverse floater is
indexed. An inverse floater may be considered to be leveraged to the extent
that its interest rate varies by a magnitude that exceeds the magnitude of the
change in the index rate of interest. The higher degree of leverage inherent in
inverse floaters is associated with greater volatility in market value, such
that, during periods of rising interest rates, the market values of inverse
floaters will tend to decrease more rapidly than those of fixed rate securities.

STRUCTURED SECURITIES. Structured securities in which GLOBAL DOLLAR GOVERNMENT,
GLOBAL STRATEGIC INCOME and CORPORATE BOND may invest represent interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations, with respect to
GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC INCOME, or foreign government
securities, with respect to CORPORATE BOND. This type of restructuring involves
the deposit with or purchase by an entity, such as a corporation or trust, of
specified instruments (such as commercial bank loans or Brady Bonds) and the
issuance by that entity of one or more classes of structured securities backed
by, or representing interests in, the underlying instruments. The cash flow on
the underlying instruments may be apportioned among the newly issued structured
securities to create securities with different investment characteristics such
as varying maturities, payment priorities and interest rate provisions, and the
extent of the payments made with respect to structured securities is dependent
on the extent of the cash flow on the underlying instruments. Because
structured securities typically involve no credit enhancement, their credit
risk generally will be equivalent to that of the underlying instruments.
Structured securities of a given class may be either subordinated or
unsubordinated to the right of payment of another class. Subordinated
structured securities typically have higher yields and present greater risks
than unsubordinated structured securities. GLOBAL DOLLAR GOVERNMENT may invest
up to 25% of its total assets, and GLOBAL STRATEGIC INCOME and CORPORATE BOND
may invest without limit, in these types of structured securities.

LOAN PARTICIPATIONS AND ASSIGNMENTS. A Fund's investments in loans are expected
in most instances to be in the form of participations in loans and assignments
of all or a portion of loans from third parties. A Fund's investment in loan
participations typically will result in the Fund having a contractual
relationship only with the lender and not with the borrower. A Fund will
acquire participations only if the lender interpositioned between the Fund and
the borrower is a lender having total assets of more than $25 billion and whose
senior unsecured debt is rated investment grade or higher. When a Fund
purchases a loan assignment from a lender it will acquire direct rights against
the borrower on the loan. Because loan assignments are arranged through private
negotiations between potential assignees and potential assignors, however, the
rights and obligations acquired by a Fund as the purchaser of an assignment may
differ from, and be more limited than, those held by the assigning lender. The
assignability of certain sovereign debt obligations, with respect to GLOBAL
DOLLAR GOVERNMENT and GLOBAL STRATEGIC INCOME, or foreign government
securities, with respect to CORPORATE BOND, is restricted by the governing
documentation as to the nature of the assignee such that the only way in which
the Fund may acquire an interest in a loan is through a participation and not
an assignment. A Fund may have difficulty disposing of assignments and
participations because to do so it will have to assign such securities to a
third party. Because there is no liquid market for such securities, such
securities can probably be sold only to a limited number of institutional
investors. The lack of a liquid secondary market may have an adverse effect on
the value of such securities and a Fund's ability to dispose of particular
assignments or participations when necessary to meet its liquidity needs in
response to a specific economic event such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
assignments and participations also may make it more difficult for the Fund to
assign a value to these securities for purposes of valuing the Fund's portfolio
and calculating its net asset value.

GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC INCOME may invest up to 25%, and
CORPORATE BOND may invest up to 15%, of their total assets, in loan
participations and assignments. The government that is the borrower on the loan
will be considered by a Fund to be the issuer of a loan participation or
assignment for purposes of its fundamental investment policy that it may not
invest 25% or more of its total assets in securities of issuers conducting
their principal business activities in the same industry (i.e., foreign
government).

BRADY BONDS. Brady Bonds are created through the exchange of existing
commercial bank loans to foreign entities for new obligations in connection
with debt restructurings under a plan introduced by former U.S. Secretary of
the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Bonds have been
issued only recently, and, accordingly, do not have a long payment history.
They may be collateralized or uncollateralized and issued in various currencies
(although most are U.S. Dollar-denominated) and they are actively traded in the
over-the-counter secondary market.

U.S. Dollar-denominated, collateralized Brady Bonds, which may be fixed-rate
par bonds or floating rate discount bonds, are generally collateralized in full
as to principal due at maturity by U.S. Treasury zero coupon obligations that
have the same maturity as the Brady Bonds. Interest payments on these Brady
Bonds generally are collateralized by cash or securities in an amount that, in
the case of fixed rate bonds, is equal to at least one year of rolling interest
payments based on the applicable interest rate at that time and is adjusted at
regular intervals thereafter. Certain Brady Bonds are entitled to "value
recovery payments" in certain circumstances, which in effect constitute
supplemental interest payments but generally are not collateralized. Brady
Bonds are often viewed as having up to four valuation components: (i)
collateralized repayment of principal at final maturity, (ii) collateralized
interest payments, (iii) uncollateralized interest payments, and (iv) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute the "residual risk"). In the event of a default with respect
to collateralized Brady Bonds as a result of which the payment obligations of
the issuer are accelerated, the U.S. Treasury zero coupon obligations held as
collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The collateral
will be held by the collateral agent to the scheduled maturity of the defaulted
Brady Bonds, which will continue to be outstanding, at which time the face
amount of the collateral will equal the principal payments that would have then
been due on the Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as
speculative.

CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures,
corporate notes and preferred stocks that are convertible into common stock.
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which provide a stable
stream of income with generally higher yields than those of equity securities
of the same or similar issuers. The price of a convertible security will
normally vary with changes in the price of the underlying stock, although the
higher yield tends to make the convertible security less volatile than the
underlying common stock. As with debt securities, the market value of
convertible securities tends to decline as interest rates increase and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price of
the underlying common stock. Convertible debt securities that are rated Baa or
lower by Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable
unrated securities may share some or all of the risks of debt securities with
those ratings. For a description of these risks, see "Risk
Considerations-Investment in Lower-Rated Fixed-Income Securities."

GLOBAL STRATEGIC INCOME may make a short sale in anticipation that the market
price of that security will decline. When the Fund makes a short sale of a
security that it does not own, it must borrow from a broker-dealer the security
sold short and deliver the security to the broker-dealer upon conclusion of the
short sale. The Fund may be required to pay a fee to borrow particular
securities and is often obligated to pay over any payments received on such
borrowed securities. The Fund's obligation to replace the borrowed security
will be secured by collateral deposited with a broker-dealer qualified as a
custodian and will consist of high grade liquid assets. Depending on the
arrangements the Fund makes with the broker-dealer from which it borrowed the
security regarding remittance of any payments received by the Fund on such
security, the Fund may not receive any payments (including interest) on its
collateral deposited with the broker-dealer.

In order to defer realization of gain or loss for U.S. federal income tax
purposes, GLOBAL STRATEGIC INCOME may also make short sales "against the box."
The Fund may not make a short sale, if as a result, more than 25% of its total
assets would be held as collateral for short sales.

If the price of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a short-term
capital gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. Although a Fund's gain is limited to the
price at which it sold the security short, its potential loss is theoretically
unlimited.

Certain special federal income tax considerations may apply to short sales
entered into by a Fund. See "Dividends, Distributions and Taxes" in the
relevant Fund's Statement of Additional Information.

REPURCHASE AGREEMENTS. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. A Fund requires continual
maintenance of collateral in an amount equal to, or in excess of, the resale
price. If a vendor defaults on its repurchase obligation, a Fund would suffer a
loss to the extent that the proceeds from the sale of the collateral were less
than the repurchase price. If a vendor goes bankrupt, a Fund might be delayed
in, or prevented from, selling the collateral for its benefit. There is no
percentage restriction on any Fund's ability to enter into repurchase
agreements, except that SHORT-TERM U.S. GOVERNMENT may enter into repurchase
agreements on not more than 25% of its total assets. The Funds may enter into
repurchase agreements with member banks of the Federal Reserve System or
"primary dealers" (as designated by the Federal Reserve Bank of New York),
although LIMITED MATURITY GOVERNMENT, WORLD INCOME, SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME and GLOBAL DOLLAR
GOVERNMENT currently enter into repurchase agreements only with their
custodians and such primary dealers.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Reverse repurchase agreements
involve sales by a Fund of portfolio assets concurrently with an agreement by
the Fund to repurchase the same assets at a later date at a fixed price. During
the reverse repurchase agreement period, the Fund continues to receive
principal and interest payments on these securities. Generally, the effect of
such a transaction is that a Fund can recover all or most of the cash invested
in the portfolio securities involved during the term of the reverse repurchase
agreement, while it will be able to keep the interest income associated with
those portfolio securities. Such transactions are advantageous only if the
interest cost to a Fund of the reverse repurchase transaction is less than the
cost of otherwise obtaining the cash.

Dollar rolls involve sales by a Fund of securities for delivery in the current
month and the Fund's simultaneously contracting to repurchase substantially
similar (same type and coupon) securities on a specified future date. During
the roll period, a Fund forgoes principal and interest paid on the securities.
A Fund is compensated by the difference between the current sales price and the
lower forward price for the future purchase (often referred to as the "drop")
as well as by the interest earned on the cash proceeds of the initial sale.

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

Reverse repurchase agreements and dollar rolls are speculative techniques and
are considered borrowings by the Funds. SHORT-TERM U.S. GOVERNMENT may enter
into reverse repurchase agreements with commercial banks and registered
broker-dealers in order to increase income, in an amount up to 33-1/3% of its
total assets. Under normal circumstances, LIMITED MATURITY GOVERNMENT does not
expect to engage in reverse repurchase agreements and dollar rolls with respect
to greater than 50% of its total assets. Reverse repurchase agreements and
dollar rolls together with any borrowings by GLOBAL DOLLAR GOVERNMENT will not
exceed 33% of its total assets less liabilities (other than amounts borrowed).
GLOBAL STRATEGIC INCOME may enter into reverse repurchase agreements with
commercial banks and registered broker-dealers in order to increase income, in
an amount up to 25% of its total assets. Reverse repurchase agreements and
dollar rolls together with any borrowings by GLOBAL STRATEGIC INCOME will not
exceed 25% of its total assets. See "Risk Considerations-Effects of Borrowing."

LOANS OF PORTFOLIO SECURITIES. A Fund may make secured loans of portfolio
securities to brokers, dealers and financial institutions, provided that cash,
liquid high-grade debt securities or bank letters of credit equal to at least
100% of the market value of the securities loaned is deposited and maintained
by the borrower with the Fund. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio securities,
thereby earning additional income, or receive an agreed upon amount of income
from a borrower who has delivered equivalent collateral. Each Fund will have
the right to regain record ownership of loaned securities or equivalent
securities in order to exercise ownership rights such as voting rights,
subscription rights and rights to dividends, interest or distributions. A Fund
may pay reasonable finders', administrative and custodial fees in connection
with a loan. A Fund will not lend portfolio securities in excess of 25%, with
respect to SHORT-TERM U.S. GOVERNMENT and GLOBAL STRATEGIC INCOME, and 20%,
with respect to each of LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES
INCOME, WORLD INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH
AMERICAN GOVERNMENT INCOME and GLOBAL DOLLAR GOVERNMENT, of its total assets,
nor will a Fund lend portfolio securities to any officer, director, employee or
affiliate of the Fund or Alliance.

ILLIQUID SECURITIES. Subject to any more restrictive applicable investment
policies, none of the Funds will maintain more than 15% of its net assets in
illiquid securities. Illiquid securities generally include (i) direct
placements or other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available market (e.g.,
when trading in the security is suspended or, in the case of unlisted
securities,

when market makers do not exist or will not entertain bids or offers),
including many currency swaps and any assets used to cover currency swaps, (ii)
over-the-counter options and assets used to cover over-the-counter options, and
(iii) repurchase agreements not terminable within seven days. Rule 144A
securities that have legal or contractual restrictions on resale but have a
readily available market are not deemed illiquid. Alliance will monitor the
liquidity of each Fund's Rule 144A portfolio securities under the supervision
of the Directors of that Fund. A Fund that invests in illiquid securities may
not be able to sell such securities and may not be able to realize their full
value upon sale.

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

FUTURE DEVELOPMENTS. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently
contemplated for use by the Fund or are not available but may yet be developed,
to the extent such investment practices are consistent with the Fund's
investment objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those involved in the
practices described above.

DEFENSIVE POSITION. For temporary defensive purposes, each Fund may invest in
certain types of short-term, liquid, high grade or high quality (depending on
the Fund) debt securities. These securities may include U.S. Government
securities, qualifying bank deposits, money market instruments, prime
commercial paper and other types of short-term debt securities including notes
and bonds. For Funds that may invest in foreign countries, such securities may
also include short-term, foreign-currency denominated securities of the type
mentioned above issued by foreign governmental entities, companies and
supranational organizations. For a complete description of the types of
securities in which a Fund may invest while in a temporary defensive position,
see the Fund's Statement of Additional Information.

PORTFOLIO TURNOVER. Portfolio turnover rates are set forth under "Financial
Highlights." These rates of portfolio turnover are greater than those of most
other investment companies. A high rate of portfolio turnover involves
correspondingly greater brokerage and other expenses than a lower rate, which
must be borne by the Fund and its shareholders. High portfolio turnover also
may result in the realization of substantial net short-term capital gains. See
"Dividends, Distributions and Taxes" in each Fund's Statement of Additional
Information.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement
of Additional Information.

SHORT-TERM U.S. GOVERNMENT may not (i) invest more than 5% of its total assets
in the securities of any one issuer (other than U.S. Government securities and
repurchase agreements relating thereto), although up to 25% of the Fund's total
assets may be invested without regard to this restriction, or (ii) invest 25%
or more of its total assets in the securities of any one industry.

U.S. GOVERNMENT may not (i) borrow money except from banks for temporary or
emergency purposes and then only in an amount not exceeding 5% of the value of
its total assets at the time the borrowing is made, (ii) make loans to other
persons, (iii) effect a short sale of any security, (iv) purchase securities on
margin, but it may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities, or (v) write, purchase or sell
puts, calls or combinations thereof.

LIMITED MATURITY GOVERNMENT may not (i) invest more than 5% of its total assets
in the securities of any one issuer or own more than 10% of the outstanding
voting securities of such issuer (other than U.S. Government securities),
except that up to 25% of the value of the Fund's total assets may be invested
without regard to the 5% and 10% limitations, (ii) invest 25% or more of its
total assets in securities of companies engaged principally in any one
industry, except that this restriction does not apply to investments in the
mortgage and mortgage-financed industry (in which more than 25% of the value of
the Fund's total assets will, except for temporary defensive positions, be
invested) or U.S. Government securities, (iii) borrow money except from banks
for emergency or temporary purposes in an amount not exceeding 5% of the value
of the total assets of the Fund, except that the Fund may engage in reverse
repurchase agreements and dollar rolls in an amount up to 50% of the Fund's
total assets, and (iv) pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings.

MORTGAGE SECURITIES INCOME may not (i) invest more than 5% of the value of its
total assets in the securities of any one issuer (other than U.S. Government
securities), except that up to 25% of the value of the Fund's total assets may
be invested without regard to this limitation, (ii) invest more than 25% of the
value of its total assets in the securities of issuers conducting their
principal business activities in a single industry, except that this limitation
shall not apply to investments in the mortgage and mortgage-financed industry
(in which more than 25% of the value of the Fund's total assets will, except
for temporary defensive positions, be invested) or U.S. Government securities,
(iii) borrow money except from

banks for temporary or emergency purposes, including the meeting of redemption
requests which might require the untimely disposition of securities, borrowing
in the aggregate may not exceed 15%, and borrowing for purposes other than
meeting redemptions may not exceed 5% of the value of the Fund's total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made, outstanding borrowings in excess
of 5% of the value of the Fund's total assets will be repaid before any
subsequent investments are made, (iv) pledge, hypothecate, mortgage or
otherwise encumber its assets, except in an amount of not more than 15% of the
value of its total assets to secure borrowings for temporary or emergency
purposes and except as provided in (vi) below, provided, however, that this
limitation does not apply to deposits made in connection with the entering into
and holding of interest rate futures contracts, (v) invest more than 10% of the
value of its total assets in the aggregate in illiquid securities or other
illiquid investments and repurchase agreements maturing in more than seven
days, or (vi) lend its portfolio securities if immediately after such a loan
more than 20% of the value of the Fund's total assets would be subject to such
loans.

WORLD INCOME may not (i) invest 25% or more of its total assets in securities
of companies engaged principally in any one industry other than the banking
industry except that this restriction does not apply to U.S. Government
securities, (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests which might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5% of the value of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; securities will not be purchased while borrowings in excess of 5% of the
value of the Fund's total assets are outstanding, or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.

SHORT-TERM MULTI-MARKET may not (i) invest 25% or more of its total assets in
securities of companies engaged principally in any one industry other than the
banking industry, except that this restriction does not apply to U.S.
Government securities, (ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests which might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5% of the value of the Fund's total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at the time the
borrowing is made; securities will not be purchased while borrowings in excess
of 5% of the value of the Fund's total assets are outstanding, or (iii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.

MULTI-MARKET STRATEGY may not (i) invest 25% or more of its total assets in
securities of companies engaged principally in any one industry other than the
banking industry, except that this restriction does not apply to U.S.
Government securities, (ii) borrow money, except the Fund may, in accordance
with provisions of the 1940 Act, (a) borrow from a bank, if after such
borrowing, there is asset coverage of at least 300% as defined in the 1940 Act,
and (b) borrow for temporary or emergency purposes in an amount not exceeding
5% of the value of the total assets of the Fund, or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.

NORTH AMERICAN GOVERNMENT INCOME may not (i) invest 25% or more of its total
assets in securities of companies engaged principally in any one industry
except that this restriction does not apply to U.S. Government securities, (ii)
borrow money, except that the Fund may, in accordance with provisions of the
1940 Act, (a) borrow from a bank, if after such borrowing, there is asset
coverage of at least 300% as defined in the 1940 Act, and (b) borrow for
temporary or emergency purposes in an amount not exceeding 5% of the value of
the total assets of the Fund, or (iii) pledge, hypothecate, mortgage or
otherwise encumber its assets, except to secure permitted borrowings.

GLOBAL DOLLAR GOVERNMENT may not (i) invest 25% or more of its total assets in
the securities of issuers conducting their principal business activities in any
one industry, except that this restriction does not apply to U.S. Government
securities, (ii) purchase more than 10% of any class of the voting securities
of any one issuer, (iii) borrow money, except the Fund may, in accordance with
provisions of the 1940 Act, (a) borrow from a bank, if after such borrowing,
there is asset coverage of at least 300% as defined in the 1940 Act, and (b)
borrow for temporary or emergency purposes in an amount not exceeding 5% of the
value of the total assets of the Fund, (iv) pledge, hypothecate, mortgage or
otherwise encumber its assets, except to secure permitted borrowings, or (v)
purchase a security if, as a result (unless the security is acquired pursuant
to a plan of reorganization or an offer of exchange), the Fund would own more
than 3% of the total outstanding voting stock of any investment company or more
than 5% of the value of the Fund's net assets would be invested in securities
of any one or more investment companies.

GLOBAL STRATEGIC INCOME may not: (i) borrow money, except the Fund may, in
accordance with provisions of the 1940 Act, (a) borrow from a bank, if after
such borrowing there is asset coverage of at least 300% as defined in the 1940
Act, and (b) borrow for temporary or emergency purposes in an amount not
exceeding 5% of the value of the total assets of the Fund, or (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.

CORPORATE BOND may not (i) invest more than 5% of its total assets in the
securities of any one issuer other than U.S. Government securities, or (ii) own
more than 10% of the outstanding voting securities of any issuer.

RISK CONSIDERATIONS

FIXED-INCOME SECURITIES. The value of each Fund's shares will fluctuate with
the value of its investments. The value of each Fund's investments will change
as the general level of interest rates fluctuates. During periods of falling
interest rates, the values of a Fund's securities generally rise. Conversely,
during periods of rising interest rates, the values of a Fund's securities
generally decline. Changes in interest rates have a greater effect on
securities with longer maturities and durations than those with shorter
maturities and durations.

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

U.S. CORPORATE FIXED-INCOME SECURITIES. The U.S. corporate fixed-income
securities in which GLOBAL DOLLAR GOVERNMENT invests may include securities
issued in connection with corporate restructurings such as takeovers or
leveraged buyouts, which may pose particular risks. Securities issued to
finance corporate restructurings may have special credit risks due to the
highly leveraged conditions of the issuer. In addition, such issuers may lose
experienced management as a result of the restructuring. Finally, the market
price of such securities may be more volatile to the extent that expected
benefits from the restructuring do not materialize. The Fund may also invest in
U.S. corporate fixed-income securities that are not current in the payment of
interest or principal or are in default, so long as Alliance believes such
investment is consistent with the Fund's investment objectives. The Fund's
rights with respect to defaults on such securities will be subject to
applicable U.S. bankruptcy, moratorium and other similar laws.

FOREIGN INVESTMENT. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio includes such
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in securities of U.S. companies.
These markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States. Securities settlements may in
some instances be subject to delays and related administrative uncertainties.
Furthermore, foreign investment in the securities markets of certain foreign
countries is restricted or controlled to varying degrees. These restrictions or
controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of a Fund. In addition, the repatriation of
investment income, capital or the proceeds of sales of securities from certain
of the countries is controlled under regulations, including in some cases the
need for certain advance government notification or authority, and if a
deterioration occurs in a country's balance of payments, the country could
impose temporary restrictions on foreign capital remittances. A Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investment. Investing in local markets may require a Fund
to adopt special procedures or seek local governmental approvals or other
actions, any of which may involve additional costs to a Fund. The liquidity of
a Fund's investments in any country in which any of these factors exists could
be affected and Alliance will monitor the effect of any such factor or factors
on a Fund's investments. Furthermore, transaction costs including brokerage
commissions for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the U.S.

Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The reporting, accounting
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less information
may be available to investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available about certain
non-U.S. issuers than is available about U.S. issuers.

The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign country or the
Fund's investments in such country. In the event of expropriation,
nationalization or other confiscation, a Fund could lose its entire investment
in the country involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide less protection
to security holders such as the Fund than that provided by U.S. laws.

WORLD INCOME may invest a portion of its net assets in securities denominated
in the ECU. There are risks associated with concentration of investments in a
particular region of the world such as Western Europe since the economies and
markets of the countries in the region tend to be interrelated and may be
adversely affected by political, economic and other events in a similar manner.

Alliance believes that, except for currency fluctuations between the U.S. Dollar
and the Canadian Dollar, the matters described above are not likely to have a
material adverse effect on NORTH

AMERICAN GOVERNMENT INCOME'S investments in the securities of Canadian issuers
or investments denominated in Canadian issuers or investments denominated in
Canadian Dollars. The factors described above are more likely to have a
material adverse effect on the Fund's investments in the securities of Mexican
and other non-Canadian foreign issuers, including investments in securities
denominated in Mexican Pesos or other non-Canadian foreign currencies. If not
hedged, however, currency fluctuations could affect the unrealized appreciation
and depreciation of Canadian Government securities as expressed in U.S. Dollars.

CURRENCY CONSIDERATIONS. Those Funds that invest some portion of their assets
in securities denominated in, and receive revenues in, foreign currencies will
be adversely affected by reductions in the value of those currencies relative
to the U.S. Dollar. These changes will affect a Fund's net assets,
distributions and income. If the value of the foreign currencies in which a
Fund receives income falls relative to the U.S. Dollar between receipt of the
income and the making of Fund distributions, a Fund may be required to
liquidate securities in order to make distributions if the Fund has
insufficient cash in U.S. Dollars to meet the distribution requirements that
the Fund must satisfy to qualify as a regulated investment company for federal
income tax purposes. Similarly, if an exchange rate declines between the time a
Fund incurs expenses in U.S. Dollars and the time cash expenses are paid, the
amount of the currency required to be converted into U.S. Dollars in order to
pay expenses in U.S. Dollars could be greater than the equivalent amount of
such expenses in the currency at the time they were incurred. In light of these
risks, a Fund may engage in certain currency hedging transactions, which
themselves, involve certain special risks. See "Additional Investment
Practices" above.

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

By investing in sovereign debt obligations, the Funds will be exposed to the
direct or indirect consequences of political, social and economic changes in
various countries. Political changes in a country may affect the willingness of
a foreign government to make or provide for timely payments of its obligations.
The country's economic status, as reflected, among other things, in its
inflation rate, the amount of its external debt and its gross domestic product,
will also affect the government's ability to honor its obligations.

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

The ability of governments to make timely payments on their obligations is
likely to be influenced strongly by the issuer's balance of payments, including
export performance, and its access to international credits and investments. To
the extent that a country receives payment for its exports in currencies other
than dollars, its ability to make debt payments denominated in dollars could be
adversely affected. To the extent that a country develops a trade deficit, it
will need to depend on continuing loans from foreign governments, multi-lateral
organizations or private commercial banks, aid payments from foreign
governments and on inflows of foreign investment. The access of a country to
these forms of external funding may not be certain, and a withdrawal of
external funding could adversely affect the capacity of a government to make
payments on its obligations. In addition, the cost of servicing debt
obligations can be affected by a change in international interest rates since
the majority of these obligations carry interest rates that are adjusted
periodically based upon international rates.

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

commercial bank debt will not contest payments to the holders of securities
issued by foreign governments in the event of default under commercial bank
loan agreements.

EFFECTS OF BORROWING. A Fund's loan agreements provide for additional
borrowings and for repayments and reborrowings from time to time, and each Fund
that may borrow expects to effect borrowings and repayments at such times and
in such amounts as will maintain investment leverage in an amount approximately
equal to its borrowing target. The loan agreements provide for a selection of
interest rates that are based on the bank's short-term funding costs in the
U.S. and London markets.

Borrowings by a Fund result in leveraging of the Fund's shares of common stock.
Utilization of leverage, which is usually considered speculative, however,
involves certain risks to a Fund's shareholders. These include a higher
volatility of the net asset value of a Fund's shares of common stock and the
relatively greater effect on the net asset value of the shares. So long as a
Fund is able to realize a net return on its investment portfolio that is higher
than the interest expense paid on borrowings, the effect of leverage will be to
cause the Fund's shareholders to realize a higher current net investment income
than if the Fund were not leveraged. On the other hand, interest rates on U.S.
Dollar-denominated and foreign currency-denominated obligations change from
time to time as does their relationship to each other, depending upon such
factors as supply and demand forces, monetary and tax policies within each
country and investor expectations. Changes in such factors could cause the
relationship between such rates to change so that rates on U.S.
Dollar-denominated obligations may substantially increase relative to the
foreign currency-denominated obligations in which the Fund may be invested. To
the extent that the interest expense on borrowings approaches the net return on
a Fund's investment portfolio, the benefit of leverage to the Fund's
shareholders will be reduced, and if the interest expense on borrowings were to
exceed the net return to shareholders, a Fund's use of leverage would result in
a lower rate of return than if a Fund were not leveraged. Similarly, the effect
of leverage in a declining market could be a greater decrease in net asset
value per share than if the Fund were not leveraged. In an extreme case if a
Fund's current investment income were not sufficient to meet the interest
expense on borrowings, it could be necessary for the Fund to liquidate certain
of its investments, thereby reducing the net asset value of a Fund's shares.

In the event of an increase in rates on U.S. Government securities or other
changed market conditions, to the point where leverage by MULTI-MARKET
STRATEGY, GLOBAL STRATEGIC INCOME or NORTH AMERICAN GOVERNMENT INCOME could
adversely affect the Funds' shareholders, as noted above, or in anticipation of
such changes, each Fund may increase the percentage of its investment portfolio
invested in U.S. Government securities, which would tend to offset the negative
impact of leverage on Fund shareholders. Each Fund may also reduce the degree
to which it is leveraged by repaying amounts borrowed.

Under the 1940 Act, a Fund is not permitted to borrow unless immediately after
such borrowing there is "asset coverage," as that term is defined and used in
the 1940 Act, of at least 300% for all borrowings of the Fund. In addition,
under the 1940 Act, in the event asset coverage falls below 300%, a Fund must
within three days reduce the amount of its borrowing to such an extent that the
asset coverage of its borrowings is at least 300%. Assuming, for example,
outstanding borrowings representing not more than one-third of a Fund's total
assets less liabilities (other than such borrowings), the asset coverage of the
Fund's portfolio would be 300%; while outstanding borrowings representing 25%
of the Fund's total assets less liabilities (other than such borrowings), the
asset coverage of the Fund's portfolio would be 400%. A Fund will maintain
asset coverage of outstanding borrowings of at least 300% and if necessary
will, to the extent possible, reduce the amounts borrowed by making repayments
from time to time in order to do so. Such repayments could require a Fund to
sell portfolio securities at times considered disadvantageous by Alliance. In
the event that a Fund is required to sell portfolio securities in order to make
repayments, such sales of portfolio securities could cause the Fund to incur
related transaction costs and might cause the Fund to realize gains on
securities held for less than three months. Because not more than 30% of a
Fund's gross income may be derived from the sale or disposition of stocks and
securities held for less than three months to maintain the Fund's tax status as
a regulated investment company, such gains would limit the ability of a Fund to
sell other securities held for less than three months that a Fund might wish to
sell in the ordinary course of its portfolio management and thus might
adversely affect the Fund's yield. See "Dividends, Distributions and Taxes."

GLOBAL STATEGIC INCOME may borrow in order to purchase securities or make other
investments. Each of MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME,
GLOBAL STRATEGIC INCOME and GLOBAL DOLLAR GOVERNMENT may also borrow to
repurchase its shares or to meet redemption requests. In addition, each Fund
may borrow for temporary purposes (including the purposes mentioned in the
preceding sentence) in an amount not exceeding 5% of the value of the assets of
the Fund. Borrowings for temporary purposes are not subject to the 300% asset
average limit described above. See "Certain Fundamental Investment Policies."
SHORT-TERM U.S. GOVERNMENT, MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT
INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STATEGIC INCOME may also borrow
through the use of reverse repurchase agreements, and GLOBAL DOLLAR GOVERNMENT
and GLOBAL STRATEGIC INCOME also through the use of dollar rolls to the extent
permitted by the 1940 Act. See "Investment Objectives and Policies-Reverse
Repurchase Agreements and Dollar Rolls."

INVESTMENT IN THE BANKING INDUSTRY. Due to the investment policies of
MULTI-MARKET STRATEGY, WORLD INCOME and SHORT-TERM MULTI-MARKET with respect to
investments in the banking industry, those Funds will have greater exposure to
the risk factors which are characteristic of such investments. In particular,
the value of and investment return on each Fund's shares will be affected by
economic or regulatory developments in or related to the banking industry.
Sustained increases in interest rates can adversely affect the availability and
cost of funds for a bank's lending activities, and a deterioration in general
economic conditions could increase the exposure to credit losses. The banking
industry is also subject to the effects of: the concentration of loan
portfolios in particular business such as real estate, energy, agriculture or
high technology-related companies; national and local regulation; and
competition within those industries as well as with other types of financial
institutions. In addition, each Fund's investments in commercial banks located
in several foreign countries are subject to additional risks due to the
combination in such banks of commercial banking and diversified securities
activities. As discussed above, however, the Funds will seek to minimize their
exposure to such risks by investing only in debt securities which are
determined to be of high quality.

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

INVESTMENT IN FIXED-INCOME SECURITIES RATED BAA AND BBB. Securities rated Baa
or BBB are considered to have speculative characteristics and share some of the
same characteristics as lower-rated securities, as described below. Sustained
periods of deteriorating economic conditions or of rising interest rates are
more likely to lead to a weakening in the issuer's capacity to pay interest and
repay principal than in the case of higher-rated securities.

INVESTMENT IN LOWER-RATED FIXED-INCOME SECURITIES. Lower-rated securities are
subject to greater risk of loss of principal and interest than higher-rated
securities. They are also generally considered to be subject to greater market
risk than higher-rated securities, and the capacity of issuers of lower-rated
securities to pay interest and repay principal is more likely to weaken than is
that of issuers of higher-rated securities in times of deteriorating economic
conditions or rising interest rates. In addition, lower-rated securities may be
more susceptible to real or perceived adverse economic conditions than
investment grade securities. Securities rated Ba or BB are judged to have
speculative elements or to be predominantly speculative with respect to the
issuer's ability to pay interest and repay principal. Securities rated B are
judged to have highly speculative elements or to be predominantly speculative.
Such securities may have small assurance of interest and principal payments.
Securities rated Baa by Moody's are also judged to have speculative
characteristics.

The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty
in valuing such securities and, in turn, the Fund's assets.

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

NON-RATED SECURITIES. Non-rated securities will also be considered for
investment by NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT,
GLOBAL STRATEGIC INCOME and CORPORATE BOND when Alliance believes that the
financial condition of the issuers of such securities, or the protection
afforded by the terms of the securities themselves, limits the risk to the Fund
to a degree comparable to that of rated securities which are consistent with
the Fund's objective and policies.

NON-DIVERSIFIED STATUS. Each of WORLD INCOME, SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR
GOVERNMENT and GLOBAL STATEGIC INCOME is a "non-diversified" investment
company, which means the Fund is not limited in the proportion of its assets
that may be invested in the securities of a single issuer. However, each Fund
intends to conduct its operations so as to qualify to be taxed as a "regulated
investment company" for purposes of the Code, which will relieve the Fund of
any liability for federal income tax to the extent its earnings are distributed
to shareholders. See "Dividends, Distributions and Taxes" in each Fund's
Statement of Additional Information. To so qualify, among other requirements,
each Fund will limit its investments so that, at the close of each quarter of
the taxable year, (i) not more than 25% of the Fund's total assets will be
invested in the securities of a single issuer, and (ii) with respect to 50% of
its total assets, not more than 5% of its total assets will be invested in the
securities of a single issuer and the Fund will not own more than 10% of the
outstanding voting securities of a single issuer. A Fund's investments in U.S.
Government securities are not subject to these limitations. Because each of
WORLD INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN
GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STATEGIC INCOME is a
non-diversified

investment company, it may invest in a smaller number of individual issuers
than a diversified investment company, and an investment in such Fund may,
under certain circumstances, present greater risk to an investor than an
investment in a diversified investment company.

Foreign government securities are not treated like U.S. Government securities
for purposes of the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the securities of
non-governmental issuers. In this regard sovereign debt obligations issued by
different issuers located in the same country are often treated as issued by a
single issuer for purposes of these diversification tests. Certain issuers of
structured securities and loan participations may be treated as separate
issuers for the purposes of these tests. Accordingly, in order to meet the
diversification tests and thereby maintain its status as a regulated investment
company, each of GLOBAL STRATEGIC INCOME and NORTH AMERICAN GOVERNMENT INCOME
will be required to diversify its portfolio of foreign government securities in
a manner which would not be necessary if the Fund had made similar investments
in U.S. Government securities.

PURCHASE AND SALE OF SHARES
_______________________________________________________________________________

HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers, banks or
other financial intermediaries, or directly through Alliance Fund Distributors,
Inc. ("AFD"), each Fund's principal underwriter. The minimum initial investment
in each Fund (except WORLD INCOME) is $250. The minimum for subsequent
investments in each Fund is $50. Investments of $25 or more are allowed under
the automatic investment program of each Fund. Share certificates are issued
only upon request. See the Subscription Application and Statements of
Additional Information for more information.

Existing shareholders may make subsequent purchases by electronic funds
transfer if they have completed the Telephone Transactions section of the
Subscription Application or the Shareholder Options form obtained from Alliance
Fund Services, Inc. ("AFS"), each Fund's registrar, transfer agent and dividend
disbursing agent. Telephone purchase orders can be made by calling (800)
221-5672, may not exceed $500,000, must be received by the Fund by 3:00 p.m.
Eastern time on a Fund business day and will be made at the next day's net
asset value (less any applicable sales charge).

Each Fund (except WORLD INCOME) offers three classes of shares, Class A, Class
B and Class C. WORLD INCOME offers only one class of shares, which may be
purchased without any initial sales charge or contingent deferred sales charge
("CDSC"). The Funds may refuse any order to purchase shares. In this regard,
the Funds reserve the right to restrict purchases of Fund shares (including
through exchanges) when they appear to evidence a pattern of frequent purchases
and sales made in response to short-term considerations.

CLASS A SHARES-INITIAL SALES CHARGE ALTERNATIVE

You can purchase Class A shares at net asset value plus an initial sales
charge, as follows:

Initial Sales Charge
as % of Commission to
Net Amount as % of Dealer/Agent as %
Amount Purchased Invested Offering Price of Offering Price
------------------------------------------------------------------------------
Less than $100,000 4.44% 4.25% 4.00%
$100,000 to less than $250,000 3.36 3.25 3.00
$250,000 to less than $500,000 2.30 2.25 2.00
$500,000 to less than $1,000,000 1.78 1.75 1.50

On purchases of $1,000,000 or more, you pay no initial sales charge but may pay
a CDSC equal to 1% of the lesser of net asset value at the time of redemption
or original cost if you redeem within one year; Alliance may pay the dealer or
agent a fee of up to 1% of the dollar amount purchased. Certain purchases of
Class A shares may qualify for reduced or eliminated sales charges in
accordance with a Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain Retirement Plans,
Reinstatement Privilege and Sales at Net Asset Value programs. Consult the
Subscription Application and Statements of Additional Information.

CLASS B SHARES-DEFERRED SALES CHARGE ALTERNATIVE

You can purchase Class B shares at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within three years
after purchase. The amount of the CDSC (expressed as a percentage of the lesser
of the current net asset value or original cost) will vary according to the
number of years from the purchase of Class B shares until the redemption of
those shares.

The amount of the CDSC for each Fund is as set forth below. Class B shares of a
Fund purchased prior to the date of this Prospectus may be subject to a
different CDSC schedule, which was disclosed in the Fund's prospectus in use at
the time of purchase and is set forth in the Fund's current Statement of
Additional Information.

Year Since Purchase CDSC
- -------------------------------
First 3.0%
Second 2.0%
Third 1.0%
Thereafter None

Class B shares are subject to higher distribution fees than Class A shares for
a period of six years (after which they convert to Class A shares). The higher
fees mean a higher expense ratio, so Class B shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares.

CLASS C SHARES-ASSET-BASED SALES CHARGE ALTERNATIVE

You can purchase Class C shares without any initial sales charge. A Fund will
thus receive the full amount of your purchase, and, if you hold your shares for
one year or more, you will receive the entire net asset value of your shares
upon redemption. Class C shares incur higher distribution fees than Class A
shares and do not convert to any other class of shares of the Fund. The higher
fees mean a higher expense ratio, so Class C shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares.

Class C shares redeemed within one year of purchase will be subject to a CDSC
equal to 1% of the lesser of their original cost or net asset value at the time
of redemption.

APPLICATION OF THE CDSC

Shares obtained from dividend or distribution reinvestment are not subject to
the CDSC. The CDSC is deducted from the amount of the redemption and is paid to
AFD. The CDSC will be waived on redemptions of shares following the death or
disability of a shareholder, to meet the requirements of certain qualified
retirement plans or pursuant to a monthly, bimonthly or quarterly systematic
withdrawal plan. See the Statements of Additional Information.

HOW THE FUNDS VALUE THEIR SHARES

The net asset value of each class of shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to that class by the outstanding
shares of that class. Shares are valued each day the New York Stock Exchange
(the "Exchange") is open as of the close of regular trading (currently 4:00
p.m. Eastern time). The securities in a Fund are valued at their current market
value determined on the basis of market quotations or, if such quotations are
not readily available, such other methods as the Fund's Directors and Trustees
believe would accurately reflect fair market value.

GENERAL

The decision as to which class of shares is most beneficial to you depends on
the amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider
Class A shares. If you are making a smaller investment, you might consider
Class B shares because 100% of your purchase is invested immediately. If you
are unsure of the length of your investment, you might consider Class C shares
because there is no initial sales charge and, as long as the shares are held
for one year or more, no CDSC. Consult your financial agent. Dealers and agents
may receive differing compensation for selling Class A, Class B or Class C
shares. There is no size limit on purchases of Class A shares. The maximum
purchase of Class B shares is $250,000. The maximum purchase of Class C shares
is $5,000,000.

In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentives to dealers or agents,
including Equico Securities, Inc., an affiliate of AFD, in connection with the
sale of shares of the Funds. Such additional amounts may be utilized, in whole
or in part, in some cases together with other revenues of such dealers or
agents, to provide additional compensation to registered representatives who
sell shares of the Funds. On some occasions, such cash or other incentives will
be conditioned upon the sale of a specified minimum dollar amount of the shares
of a Fund and/or other Alliance Mutual Funds during a specific period of time.
Such incentives may take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel by persons associated with a
dealer or agent and their immediate family members to urban or resort locations
within or outside the United States. Such dealer or agent may elect to receive
cash incentives of equivalent amount in lieu of such payments.

HOW TO SELL SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial intermediary. The
price you will receive is the net asset value (less any applicable CDSC) next
calculated after the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares recently
purchased by check or electronic funds transfer, a Fund will not send proceeds
until it is reasonably satisfied that the check or electronic funds transfer
has been collected (which may take up to 15 days).

SELLING SHARES THROUGH YOUR BROKER

Your broker must receive your request before 4:00 p.m. Eastern time, and your
broker must transmit your request to the Fund by 5:00 p.m. Eastern time, for
you to receive that day's net asset value (less any applicable CDSC). Your
broker is responsible for furnishing all necessary documentation to a Fund and
may charge you for this service.

SELLING SHARES DIRECTLY TO A FUND

Send a signed letter of instruction or stock power form to AFS, along with
certificates, if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member firm of a
national stock exchange or other eligible guarantor institution. Stock power
forms are available from your financial intermediary, AFS, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, intermediaries, fiduciaries and surviving joint owners. For
details contact:

Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672

redemption sent to his or her bank via an electronic funds transfer. Proceeds
of telephone redemptions also may be sent by check to a shareholder's address
of record. Redemption requests by electronic funds transfer may not exceed
$100,000 and redemption requests by check may not exceed $50,000. Telephone
redemption is not available for shares held in nominees or "street name"
accounts or retirement plan accounts or shares held by a shareholder who has
changed his or her address of record within the previous 30 calendar days.

GENERAL

The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained
below $200 for 90 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed.

During drastic economic or market developments, you might have difficulty
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephonic requests to
purchase, sell or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephonic requests. The telephone
service may be suspended or terminated at any time without notice.

SHAREHOLDER SERVICES

AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672. Some
services are described in the attached Application. A shareholder manual
explaining all available services will be provided upon request. To request a
shareholder manual, call 800-227-4618.

HOW TO EXCHANGE SHARES

You may exchange your shares of WORLD INCOME for Class A shares of other
Alliance Mutual Funds and shares of most Alliance money market funds. You may
exchange your shares of any other Fund for shares of the same class of other
Alliance Mutual Funds (including AFD Exchange Reserves, a money market fund
managed by Alliance). Exchanges of shares are made at the net asset values next
determined, without sales or service charges. Exchanges may be made by
telephone or written request. Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that
day's net asset value.

Shares will continue to age without regard to exchanges for the purpose of
determining the CDSC, if any, upon redemption and, in the case of Class B
shares, for the purpose of conversion to Class A shares. After an exchange,
your Class B shares will automatically convert to Class A shares in accordance
with the conversion schedule applicable to the Class B shares of the Alliance
Mutual Fund you originally purchased for cash ("original shares"). When
redemption occurs, the CDSC applicable to the original shares is applied.

Please read carefully the prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended, or terminated on
60 days' written notice.

MANAGEMENT OF THE FUNDS
_______________________________________________________________________________

ADVISER

Alliance, which is a Delaware limited partnership with principal offices at
1345 Avenue of the Americas, New York, New York 10105, has been retained under
an advisory agreement (the "Advisory Agreement") to provide investment advice
and, in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors or Trustees of
the Fund.

Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1996 totaling more than $168 billion (of
which more than $55 billion represented the assets of investment companies).
Alliance's clients are primarily major corporate employee benefit funds, public
employee retirement systems, investment companies, foundations and endowment
funds. The 51 registered investment companies managed by Alliance comprising
more than 100 separate investment portfolios currently have over two million
shareholders. As of June 30, 1996, Alliance was retained as an investment
manager of employee benefit assets for 33 of the Fortune 100 companies.

Alliance Capital Management Corporation ("ACMC"), the sole general partner of,
and the owner of a 1% general partnership interest in, Alliance, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies in the United
States, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA, a French insurance holding
company. Certain information concerning the ownership and control of Equitable
by AXA is set forth in each Fund's Statement of Additional Information under
"Management of the Fund."

The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible, and each person's principal
occupation during the past five years.

Principal occupation
Employee; time period; during the past
Fund title with ACMC five years
- -------------------------------------------------------------------------------
Short-Term U.S. Patricia J. Young since 1995 Associated with Alliance
Government -Senior Vice President since March 1992; prior
thereto, a managing
director and portfolio
manager for Hyperion
Capital since March
1991.

Principal occupation
Employee; time period; during the past
Fund title with ACMC five years
- -------------------------------------------------------------------------------
Paul A. Ullman Associated with Alliance
since 1995-Vice President since March 1992; prior
thereto, a director and
portfolio manager for
Hyperion Capital since
July 1990.

U.S. Government Wayne D. Lyski since 1983 Associated with
-Executive Vice President Alliance.

Paul J. DeNoon since Associated with Alliance
January 1992- since January 1992;
Vice President prior thereto, a
Vice President at
Manufacturers
Hanover Trust.

Limited Maturity Patricia J. Young since (see above)
Government inception -(see above)

Paul A. Ullman since (see above)
inception-(see above)

Mortgage Securities Patricia J. Young since (see above)
Income March 1992-(see above)

Paul A. Ullman since (see above)
March 1992-(see above)

World Income Douglas J. Peebles since Associated with
inception-Vice President Alliance.

Short-Term Douglas J. Peebles since (see above)
Multi-Market 1995-(see above)

Multi-Market Strategy Douglas J. Peebles since (see above)
inception-(see above)

North American Wayne D. Lyski since (see above)
Government Income inception -(see above)

Global Dollar Wayne D. Lyski since (see above)
Government inception -(see above)

Global Strategic Wayne D. Lyski since (see above)
Income inception -(see above)

Douglas J. Peebles since (see above)
inception-(see above)

Corporate Bond Wayne D. Lyski since (see above)
1987-(see above)

Paul J. DeNoon since (see above)
January 1992-(see above)

DISTRIBUTION SERVICES AGREEMENTS

Rule 12b-1 adopted by the Commission under the 1940 Act permits an investment
company to pay expenses associated with the distribution of its shares in
accordance with a duly adopted plan. Each Fund has adopted one or more "Rule
12b-1 plans" (for each Fund, a "Plan") and has entered into a Distribution
Services Agreement (the "Agreement") with AFD. Pursuant to its Plan, a Fund
pays to AFD a Rule 12b-1 distribution services fee, which may not exceed for
each Fund other than WORLD INCOME an annual rate of .30% (.50% with respect to
SHORT-TERM U.S. GOVERNMENT) of the Fund's aggregate average daily net assets
attributable to the Class A shares, 1.00% of the Fund's aggregate average daily
net assets attributable to the Class B shares and 1.00% of the Fund's aggregate
average daily net assets attributable to the Class C shares, and for WORLD
INCOME may not exceed an annual rate of .90% of the Fund's aggregate average
daily net assets, for distribution expenses. The Trustees of SHORT-TERM U.S.
GOVERNMENT currently limit payments with respect to Class A shares under the
Plan to .30% of the Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the distribution services
fee in an amount not to exceed .25% of the aggregate average daily net assets
of each Fund attributable to each of Class A, Class B and Class C shares
constitutes a service fee used for personal service and/or the maintenance of
shareholder accounts.

The Plans provide that AFD will use the distribution services fee received from
a Fund in its entirety for payments (i) to compensate broker-dealers or other
persons for providing distribution assistance, (ii) to otherwise promote the
sale of shares of the Fund, and (iii) to compensate broker-dealers, depository
institutions and other financial intermediaries for providing administrative,
accounting and other services with respect to the Fund's shareholders. In this
regard, some payments under the Plans are used to compensate financial
intermediaries with trail or maintenance commissions in an amount equal to,
with respect to each Fund other than WORLD INCOME, .25%, annualized, with
respect to Class A shares and Class B shares, and 1.00%, annualized, with
respect to Class C shares, and, with respect to WORLD INCOME, .90%, annualized,
of the assets maintained in a Fund by their customers. Distribution services
fees received from WORLD INCOME and the other Funds, except SHORT-TERM U.S.
GOVERNMENT, with respect to Class A shares will not be used to pay any interest
expenses, carrying charges or other financing costs or allocation of overhead
of AFD. Distribution services fees received from the Funds, with respect to
Class B and Class C shares, may be used for these purposes. The Plans also
provide that Alliance may use its own resources to finance the distribution of
each Fund's shares.

The Funds are not obligated under the Plans to pay any distribution services
fee in excess of the amounts set forth above. Except as noted below for
SHORT-TERM U.S. GOVERNMENT, with respect to Class A shares of each Fund,
distribution expenses accrued by AFD in one fiscal year may not be paid from
distribution services fees received from the Fund in subsequent fiscal years.
AFD's compensation with respect to Class B and Class C shares under the Plans
of the other Funds is directly tied to the expenses incurred by AFD. Actual
distribution expenses for Class B and Class C shares for any given year,
however, will probably exceed the distribution services fees payable under the
applicable Plan with respect to the class involved and, in the case of Class B
shares, payments received from CDSCs. The excess will be carried forward by AFD
and reimbursed from distribution services fees payable under the Plan with
respect to the class involved and payments subsequently received through CDSCs,
so long as the Plan is in effect. Since AFD's compensation under the Plan of
SHORT-TERM U.S. GOVERNMENT is not directly tied to its expenses incurred, the
amount of compensation received by it during any year may be more or less than
its actual expenses.

Unreimbursed distribution expenses incurred as of the end of each Fund's most
recently completed fiscal year, and carried over for reimbursement in future
years in respect of the Class B and Class C shares for all Funds (except
SHORT-TERM U.S. GOVERNMENT), were, as of that time, as follows:

Amount of Unreimbursed Distribution Expenses
(as % of Net Assets of Class)
--------------------------------------------
Class B Class C
- -------------------------------------------------------------------------------
Short-Term U.S. Government $ 468,418 (6.91%) $ 686,992 (14.17%)
U.S. Government $10,771,067 (1.71%) $2,913,843 (1.75%)
Limited Maturity Government $ 785,406 (.93%) $2,304,343 (3.37%)
Mortgage Securities Income $15,837,781 (2.15%) $2,076,306 (4.56%)
Short-Term Multi-Market $28,259,365 (5.40%) $1,036,535 (30.35%)
Multi-Market Strategy $10,014,626 (8.59%) $ 330,171 (42.03%)
North American Government Income $36,368,974 (3.24%) $2,736,736 (1.25%)
Global Dollar Government $ 1,921,057 (2.28%) $ 294,686 (2.03%)
Corporate Bond $ 6,818,208 (2.02%) $ 895,197 (1.08%)

The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to
.75% and .25%, respectively, of the average annual net assets attributable to
that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.

The Glass-Steagall Act and other applicable laws may limit the ability of a
bank or other depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Funds' management, based on the
advice of counsel, these laws do not prohibit such depository institutions from
providing services for investment companies such as the administrative,
accounting and other services referred to in the Agreements. In the event that
a change in these laws prevented a bank from providing such services, it is
expected that other service arrangements would be made and that shareholders
would not be adversely affected. The State of Texas requires that shares of a
Fund may be sold in that state only by dealers or other financial institutions
that are registered there as broker-dealers.

DIVIDENDS, DISTRIBUTIONS AND TAXES
_______________________________________________________________________________

DIVIDENDS AND DISTRIBUTIONS

Dividends on shares of a Fund will be declared on each Fund business day from
the Fund's net investment income. Dividends on shares for Saturdays, Sundays
and holidays will be declared on the previous business day. Each Fund pays
dividends on its shares after the close of business on the twentieth day of
each month or, if such day is not a business day, the first business day
thereafter. At your election (which you may change at least 30 days prior to
the record date for a particular dividend or distribution), dividends and
distributions are paid in cash or reinvested without charge in additional
shares of the same class having an aggregate net asset value as of the payment
date of the dividend or distribution equal to the cash amount thereof.

If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of that Fund without charge by returning
to Alliance, with appropriate instructions, the check representing such
dividend or distribution. Thereafter, unless you otherwise specify, you will be
deemed to have elected to reinvest all subsequent dividends and distributions
in shares of that Fund.

Cash dividends can be paid by check or, if the shareholder so elects,
electronically via the ACH network. There is no sales or other charge in
connection with the reinvestment of dividends and capital gains distributions.
Dividends paid by a Fund, if any, with respect to Class A, Class B and Class C
shares will be calculated in the same manner at the same time on the same day
and will be in the same amount, except that the higher distribution services
fees applicable to Class B and Class C shares, and any incremental transfer
agency costs relating to Class B shares, will be borne exclusively by the class
to which they relate.

While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and timing of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital
gains from investments. There is no fixed dividend rate, and there can be no
assurance that a Fund will pay any dividends or realize any capital gains.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.

FOREIGN INCOME TAXES

Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits or deductions for foreign
income taxes paid, but there can be no assurance that any Fund will be able to
do so.

U.S. FEDERAL INCOME TAXES

Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. To the extent that a Fund distributes its taxable income and
net capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it pays out to its
shareholders. Dividends out of net ordinary income and distributions of net
short-term capital gains are taxable to the recipient shareholders as ordinary
income. In the case of corporate shareholders, such dividends from certain
Funds may be eligible for the dividends-received deduction, but only to the
extent of qualifying dividends received by the Fund.

The excess of net long-term capital gains over the net short-term capital
losses realized and distributed by each Fund to its shareholders as capital
gains distributions is taxable to the shareholders as long-term capital gains,
irrespective of the length of time a shareholder may have held his or her
stock. Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.

Under the current federal tax law the amount of an income dividend or capital
gains distribution declared by a Fund during October, November or December of a
year to shareholders of record as of a specified date in such a month that is
paid during January of the following year is includable in the prior year's
taxable income of shareholders that are calendar year taxpayers.

Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of such shares by the amount of
such dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder, although in effect
a return of capital to that particular shareholder, would be taxable to him or
her as described above. If a shareholder held shares six months or less and
during that period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the sale of such shares during
such six-month period would be a long-term capital loss to the extent of such
distribution.

A dividend or capital gains distribution with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual retirement account,
403(b)(7) retirement plan or corporate pension or profit-sharing plan, will not
be taxable to the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard to the
character of the income earned by the qualified plan.

Distributions by a Fund may be subject to state and local taxes. U.S.
GOVERNMENT, LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES INCOME, WORLD
INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN
GOVERNMENT INCOME and CORPORATE BOND are qualified to do business in the
Commonwealth of Pennsylvania and, therefore, are subject to the Pennsylvania
foreign franchise and corporate net income tax in respect of their business
activities in Pennsylvania. Accordingly, shares of such Funds are exempt from
Pennsylvania personal property taxes. These Funds anticipate continuing such
business activities but reserve the right to suspend them at any time,
resulting in the termination of the exemptions.

A Fund will be required to withhold 31% of any payments made to a shareholder
if the shareholder has not provided a certified taxpayer identification number
to the Fund, or the Secretary of the Treasury notifies a Fund that a
shareholder has not reported all interest and dividend income required to be
shown on the shareholder's Federal income tax return.

Under certain circumstances, if a Fund realizes losses from fluctuations in
currency exchange rates after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. See
"Dividends, Distributions and Taxes" in the Statement of Additional
Information. Shareholders will be advised annually as to the federal tax status
of dividends and capital gains distributions made by a Fund for the preceding
year. Shareholders are urged to consult their tax advisers regarding their own
tax situation.

Shareholders will be advised annually as to the federal tax status of dividends
and capital gains distributions made by a Fund for the preceding year.
Shareholders are urged to consult their tax advisers regarding their own tax
situation.

GENERAL INFORMATION
_______________________________________________________________________________

PORTFOLIO TRANSACTIONS

Consistent with the Conduct Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best price and execution, a
Fund may consider sales of its shares as a factor in the selection of dealers
to enter into portfolio transactions with the Fund.

ORGANIZATION

Each of the following Funds is a Maryland corporation organized in the year
indicated: U.S. GOVERNMENT PORTFOLIO and CORPORATE BOND PORTFOLIO (each a
series of Alliance Bond Fund, Inc.) (1973), ALLIANCE LIMITED MATURITY
GOVERNMENT FUND, INC. (1992), ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
(1983), ALLIANCE WORLD INCOME TRUST, INC. (1990), ALLIANCE SHORT-TERM
MULTI-MARKET TRUST, INC. (1989), ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
(1991), ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC. (1992), ALLIANCE
GLOBAL DOLLAR GOVERNMENT FUND, INC. (1993), and ALLIANCE GLOBAL STRATEGIC
INCOME TRUST, INC. (1995). Prior to March 1, 1996, ALLIANCE LIMITED MATURITY
GOVERNMENT FUND, INC. was known as Alliance Mortgage Strategy Trust, Inc. Prior
to January 4, 1993, CORPORATE BOND PORTFOLIO was known as Monthly Income
Portfolio. ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND is a series of The Alliance
Portfolios, a Massachusetts business trust that was organized in 1987. Prior to
August 2, 1993, The Alliance Portfolios was known as The Equitable Funds and
SHORT-TERM U.S. GOVERNMENT was known as The Equitable Short-Term U.S.
Government Fund.

It is anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal, or in the case
of the Funds organized as Maryland corporations, state law. Shareholders have
available certain procedures for the removal of Directors or Trustees.

A shareholder in a Fund will be entitled to share pro rata with other holders
all dividends and distributions arising from the Fund's assets and, upon
redeeming shares, will receive the then current net asset value of the Fund
represented by the redeemed shares less any applicable CDSC. The Funds are
empowered to establish, without shareholder approval, additional portfolios,
which may have different investment objectives, and additional classes of
shares. If an additional portfolio or class were established in a Fund, each
share of the portfolio or class would normally be entitled to one vote for all
purposes. Generally, shares of each portfolio and class would vote together as
a single class on matters, such as the election of Directors or Trustees, that
affect each portfolio and class in substantially the same manner. Class A,
Class B and Class C shares have identical voting, dividend, liquidation and
other rights, except that each class bears its own distribution and transfer
agency expenses. Each class of shares votes separately with respect to a Fund's
Rule 12b-1 distribution plan and other matters for which separate class voting
is appropriate under applicable law. Shares are freely transferable, are
entitled to dividends as determined by the Directors and Trustees and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.
Since this Prospectus sets forth information about all the Funds, it is
theoretically possible that a Fund might be liable for any materially
inaccurate or incomplete disclosure in this Prospectus concerning another Fund.
Based on the advice of counsel, however, the Funds believe that the potential
liability of each Fund with respect to the disclosure in this Prospectus
extends only to the disclosure relating to that Fund. Certain additional
matters relating to a Fund's organization are discussed in its Statement of
Additional Information.

PENDING LEGAL PROCEEDINGS INVOLVING NORTH AMERICAN GOVERNMENT INCOME

On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") styled IN RE ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST,
INC. SECURITIES LITIGATION was filed in the United States District Court for
the Southern District of New York against the Fund, Alliance, ACMC, AFD, The
Equitable Companies Incorporated, a parent of Alliance, certain officers of the
Fund, certain current and former directors of the Fund, certain current and
former officers of ACMC and certain directors of ACMC, alleging violations of
federal securities laws, fraud and breach of fiduciary duty in connection with
the Fund's investments in Mexican and Argentine securities. The Complaint seeks
certification of a plaintiff class of all persons who purchased or owned Class
A, B or C shares of the Fund from March 27, 1992 through December 23, 1994. The
Complaint alleges that as of the date of the Complaint, the Fund's losses
exceeded $750,000,000. The Complaint seeks as relief unspecified damages, costs
and attorneys' fees.

The principal allegations of the Complaint are that upon the advice of Alliance
the Fund purchased debt securities issued by the Mexican and Argentine
governments in amounts that were not permitted by the Fund's investment
objective, and that there was no shareholder vote to change the investment
objective to permit purchases in such amounts. The Complaint further alleges
that the decline in the value of the Mexican and Argentine securities held by
the Fund caused the Fund's net asset value to decline to the detriment of the
Fund's shareholders.

On September 26, 1995, defendants jointly filed a motion to dismiss the
Complaint in its entirety. On September 26, 1996, the District Court granted
defendants' motion to dismiss the Complaint as to all claims asserted by
plaintiffs. On October 11, 1996, plaintiffs filed a motion for reconsideration
of the District Court's decision. The Fund and Alliance believe that the
allegations in the Complaint are without merit and intend to vigorously defend
against these claims.

REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT

AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer
agent and dividend-disbursing agent for a fee based upon the number of
shareholder accounts maintained for the Fund. The transfer agency fee with
respect to Class B shares will be higher than the transfer agency fee with
respect to Class A shares or Class C shares.

PRINCIPAL UNDERWRITER

AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.

PERFORMANCE INFORMATION

From time to time, the Funds advertise their "yield" and "total return," which
are computed separately for Class A, Class B and Class C shares. A Fund's yield
for any 30-day (or one-month) period is computed by dividing the net investment
income per share earned during such period by the maximum public offering price
per share on the last day of the period, and then annualizing such 30-day (or
one-month) yield in accordance with a formula prescribed by the Commission
which provides for compounding on a semi-annual basis. A Fund may also state in
sales literature an "actual distribution rate" for each class which is computed
in the same manner as yield except that actual income dividends declared per
share during the period in question are substituted for net investment income
per share. The actual distribution rate is computed separately for Class A,
Class B and Class C shares. Advertisements of a Fund's total return disclose
its average annual compounded total return for the periods prescribed by the
Commission. A Fund's total return for each such period is computed by finding,
through the use of a formula prescribed by the Commission, the average annual
compounded rate of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of computing total return, income dividends and capital gains
distributions paid on shares of a Fund are assumed to have been reinvested when
paid and the maximum sales charges applicable to purchases and redemptions of a
Fund's shares are assumed to have been paid. A Fund's advertisements may quote
performance rankings or ratings of a Fund by financial publications or
independent organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc. or compare a Fund's performance to various indices.

ADDITIONAL INFORMATION
This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Funds with the Commission under the
Securities Act. Copies of the Registration Statements may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at
the offices of the Commission in Washington, D.C.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

THIS PROSPECTUS IS INTENDED TO CONSTITUTE AN OFFER BY EACH FUND ONLY OF THE
SECURITIES OF WHICH IT IS THE ISSUER AND IS NOT INTENDED TO CONSTITUTE AN OFFER
BY ANY FUND OF THE SECURITIES OF ANY OTHER FUND WHOSE SECURITIES ARE ALSO
OFFERED BY THIS PROSPECTUS. NO FUND INTENDS TO MAKE ANY REPRESENTATION AS TO
THE ACCURACY OR COMPLETENESS OF THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
ANY OTHER FUND. SEE "GENERAL INFORMATION-ORGANIZATION."

APPENDIX A: BOND RATINGS
_______________________________________________________________________________

MOODY'S INVESTORS SERVICE, INC.

Aaa-Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa-Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.

A-Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa-Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payment and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba-Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C-Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Absence of Rating-When no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not published
in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.

Note-Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

STANDARD & POOR'S

AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA-Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB-Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C-Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and
CCC the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions.

A-1

CI-The rating CI is reserved for income bonds on which no interest is being
paid.

D-Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-)-The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NR-Not rated.

DUFF & PHELPS CREDIT RATING CO.

AAA-Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+,AA, AA- -High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.

A+, A, A- -Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- -Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB, BB- -Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.

B+, B, B- -Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctutate widely according
to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a higher
or lower rating grade

CCC-Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal or interest. Protection factors are narrow and
risk can be substantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.

DD-Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.

FITCH INVESTORS SERVICE, INC.

AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA-Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F- 1+.

A-Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.

BBB-Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB-Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B-Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.

CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default.

The ability to meet obligations requires an advantageous business and economic
environment.

CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C-Bonds are in imminent default in payment of interest or principal.

DDD, DD, D-Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) Minus (-)-Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA, DDD, DD or D categories.

NR-Indicates that Fitch does not rate the specific issue.

A-2

APPENDIX B:
GENERAL INFORMATION
ABOUT CANADA, MEXICO AND ARGENTINA
_______________________________________________________________________________

GENERAL INFORMATION ABOUT CANADA

Canada consists of a federation of ten Provinces and two federal territories
(which generally fall under federal authority) with a constitutional division
of powers between the federal and Provincial governments. The Parliament of
Canada has jurisdiction over all areas not assigned exclusively to the
Provincial legislatures, and has jurisdiction over such matters as the federal
public debt and property, the regulation of trade and commerce, currency and
coinage, banks and banking, national defense, the postal services, navigation
and shipping and unemployment insurance.

The Canadian economy is based on the free enterprise system, with business
organizations ranging from small owner-operated businesses to large
multinational corporations. Manufacturing and resource industries are large
contributors to the country's economic output, but as in many other highly
developed countries, there has been a gradual shift from a largely
goods-producing economy to a predominantly service-based one. Agriculture and
other primary production play a small but key role in the economy. Canada is
also an exporter of energy to the United States in the form of natural gas (of
which Canada has substantial reserves) and hydroelectric power, and has
significant mineral resources.

Canadian Dollars are fully exchangeable into U.S. Dollars without foreign
exchange controls or other legal restriction. Since the major developed-country
currencies were permitted to float freely against one another, the range of
fluctuation in the U.S. Dollar/Canadian Dollar exchange rate has been narrower
than the range of fluctuation between the U.S. Dollar and most other major
currencies. During the last several years, Canada has experienced a weakening
of its currency. In January 1995, the Canadian Dollar fell to a nine-year low
against the U.S. Dollar, decreasing in value compared to the U.S. Dollar by
approximately 25% from October 1991, but from January 20, 1995, through October
25, 1996, the Canadian Dollar increased in value by approximately 5.9% against
the U.S. Dollar. The range of fluctuation that occurred in the past is not
necessarily indicative of the range of fluctuation that will occur in the
future. Future rates of exchange cannot be accurately predicted.

GENERAL INFORMATION ABOUT THE UNITED MEXICAN STATES

The United Mexican States ("Mexico") is a nation formed by 31 states and a
Federal District (Mexico City). The Political Constitution of Mexico, which
took effect on May 1, 1917, established Mexico as a Federal Republic and
provides for the separation of executive, legislative and judicial branches.
The President and the members of the General Congress are elected by popular
vote.

While in recent years the Mexican economy has experienced improvement in a
number of areas, including seven consecutive years (1987-1994) of growth in
gross domestic product and a substantial reduction in the rate of inflation and
in public sector financial deficit, beginning in 1994, Mexico has experienced
an economic crisis that led to the devaluation of the Peso in December 1994.
Much of the past improvement in the Mexican economy has been attributable to a
series of economic policy initiatives initiated by the Mexican government over
the past decade, which seek to modernize and reform the Mexican economy,
control inflation, reduce the financial deficit, increase public revenues
through the reform of the tax system, establish a competitive and stable
currency exchange rate, liberalize trade restrictions and increase investment
and productivity, while reducing the government's role in the economy. In this
regard, the Mexican government has been proceeding with a program for
privatizing certain state owned enterprises, developing and modernizing the
securities markets, increasing investment in the private sector and permitting
increased levels of foreign investment. The adoption effective January 1, 1994
by Canada, the United States and Mexico of the North American Free Trade
Agreement could also contribute to the growth of the Mexican economy.

In 1994 Mexico faced internal and external conditions that resulted in an
economic crisis that continues to affect the Mexican economy adversely. Growing
trade and current account deficits, which could no longer be financed by
inflows of foreign capital, were factors contributing to the crisis. A
weakening economy and unsettling political and social developments caused
investors to lose confidence in the Mexican economy. This resulted in a large
decline in foreign reserves followed by a sharp and rapid devaluation of the
Mexican Peso. The ensuing economic and financial crisis resulted in higher
inflation and domestic interest rates, a contraction in real gross domestic
product and a liquidity crisis.

In response to the adverse economic conditions that developed at the end of
1994, the Mexican government instituted a new economic program; and a new
social accord among the government, business and labor sectors of the country
was entered into in an effort to stabilize the economy and the financial
markets. To help relieve Mexico's liquidity crisis and restore financial
stability to Mexico's economy, the Mexican government also obtained financial
assistance from the United States, other countries and certain international
agencies conditioned upon the implementation and continuation of the economic
reform program.

While the Mexican economy has stabilized, it is just beginning to emerge from a
recession and continues to suffer from high inflation and high interest rates.
Its gross domestic product grew in the second quarter of 1996 after declining
for five consecutive quarters. In October 1995, the Mexican government
announced a new accord designed to encourage economic growth and reduce
inflation. It cannot be accurately predicted whether this accord will achieve
its purpose. Mexico's economy may also be influenced by international economic
conditions, particularly those in the United States, and by world prices for
oil and other commodities. The recovery of the economy will require

B-1

continued economic and fiscal discipline as well as stable political and social
conditions. There is no assurance that Mexico's economic policy initiatives
will be successful or that succeeding administrations will continue these
initiatives.

In August 1976, the Mexican government established a policy of allowing the
Mexican Peso to float against the U.S. Dollar and other currencies. Under this
policy, the value of the Mexican Peso consistently declined against the U.S.
Dollar. Under economic policy initiatives implemented since December 1987, the
Mexican government introduced a series of schedules allowing for the gradual
devaluation of the Mexican Peso against the U.S. Dollar. These gradual
devaluations continued until December 1994. On December 20, 1994, the Mexican
government announced a new policy that would allow a more substantial yet still
controlled devaluation of the Mexican Peso. On December 22, 1994, the Mexican
government announced that it would not continue with the policy announced two
days earlier and would instead permit the Peso to float against other
currencies, resulting in a continued decline against the U.S. Dollar. From
December 22, 1994 through October 25, 1996, the Mexican Peso decreased in value
compared to the U.S. Dollar by approximately 64%.

In 1982, Mexico imposed strict foreign exchange controls which shortly
thereafter were relaxed and were eliminated in 1991. There is no assurance that
future regulatory actions in Mexico would not affect the Fund's ability to
obtain U.S. Dollars in exchange for Mexican Pesos.

GENERAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA

The Republic of Argentina ("Argentina") consists of 23 provinces and the
federal capital of Buenos Aires. Its federal constitution provides for an
executive branch headed by a President, a legislative branch and a judicial
branch. Each province has its own constitution, and elects its own governor,
legislators and judges, without the intervention of the federal government.

The military has intervened in the political process on several occasions since
the 1930's and has ruled the country for 22 of the past 65 years. The most
recent military government ruled the country from 1976 to 1983. Four
unsuccessful military uprisings have occurred since 1983, the most recent in
December 1990.

Shortly after taking office in 1989, the country's current President adopted
market-oriented and reformist policies, including a large privatization
program, a reduction in the size of the public sector and an opening of the
economy to international competition.

In the decade prior to the current announcement of a new economic plan in March
1991, the Argentine economy was characterized by low and erratic growth,
declining investment rates and rapidly worsening inflation. Despite its
strengths, which include a well-balanced natural resource base and a high
literacy rate, the Argentine economy failed to respond to a series of economic
plans in the 1980's. The 1991 economic plan represented a pronounced departure
from its predecessors in calling for raising revenues, cutting expenditures and
reducing the public deficit. The extensive privatization program commenced in
1989 was accelerated, the domestic economy deregulated and opened up to foreign
trade and the frame-work for foreign investment reformed. As a result of the
economic stabilization reforms, gross domestic product increased for four
consecutive years before declining in 1995 and the rate of inflation has
continued to decrease.

Significant progress was also made between 1991 and 1994 in rescheduling
Argentina's debt with both external and domestic creditors, which improved
fiscal cash flows in the medium terms and allowed a return to voluntary credit
markets. Further reforms are currently being implemented in order to sustain
and continue the progress to date. There is no assurance that Argentina's
economic policy initiatives will be successful or that succeeding
administrations will continue these initiatives.

In 1995 economic policy was directed toward the effects of the Mexican currency
crisis. The Mexican currency crisis led to a run on bank deposits, which has
been brought under control by a series of measures designed to strengthen the
financial system. The measures included the "dollarization" of banking
reserves, the establishment of two trust funds and strengthening bank reserve
requirements.

In 1991 the Argentine government enacted currency reforms, which required the
domestic currency to be fully backed by international reserves, in an effort to
make the Argentine Peso fully convertible into the U.S. Dollar at a rate of one
to one.

The Argentine Peso has been the Argentine currency since January 1, 1992. Since
that date, the rate of exchange from the Argentine Peso to the U.S. Dollar has
remained approximately one to one. The fixed exchange rate has been
instrumental in stabilizing the economy, but has not reduced pressures from a
slow-growth economy and high rates of unemployment. It is not clear that the
government will be able to resist pressure to devalue the currency. However,
the historic range is not necessarily indicative of fluctuations that may occur
in the exchange rate over time and future rates of exchange cannot be
accurately predicted. The Argentine foreign exchange market was highly
controlled until December 1989, when a free exchange rate was established for
all foreign currency transactions. Argentina has eliminated restrictions on
foreign direct investment and capital repatriation. On September 8, 1993,
legislation was adopted abolishing previous requirements of a three-year
waiting period for capital repatriation. Under the new legislation, foreign
investors will be permitted to remit profits at any time.

B-2

ALLIANCE SUBSCRIPTION APPLICATION
_______________________________________________________________________________

THE ALLIANCE BOND FUNDS

SHORT-TERM U.S. GOVERNMENT FUND
U.S. GOVERNMENT PORTFOLIO
LIMITED MATURITY GOVERNMENT FUND
MORTGAGE SECURITIES INCOME FUND
WORLD INCOME TRUST
SHORT-TERM MULTI-MARKET TRUST
MULTI-MARKET STRATEGY TRUST
NORTH AMERICAN GOVERNMENT INCOME TRUST
GLOBAL DOLLAR GOVERNMENT FUND
GLOBAL STRATEGIC INCOME
CORPORATE BOND PORTFOLIO

INFORMATION AND INSTRUCTIONS
_______________________________________________________________________________

TO OPEN YOUR NEW ALLIANCE ACCOUNT...
Please complete the application and mail it to:
ALLIANCE FUND SERVICES, INC.
P.O. BOX 1520
SECAUCUS, NEW JERSEY 07096-1520

For certified or overnight deliveries, send to:
ALLIANCE FUND SERVICES, INC.
500 PLAZA DRIVE
SECAUCUS, NEW JERSEY 07094

SECTION 1 YOUR ACCOUNT REGISTRATION (REQUIRED)

Complete one of the available choices. To ensure proper tax reporting to the
IRS:

> Individuals, Joint Tenants and Gift/Transfer to a Minor:
. Indicate your name(s) exactly as it appears on your social security card.

> Trust/Other:
. Indicate the name of the entity exactly as it appeared on the notice you
received from the IRS when your Employer Identification number was
assigned.

SECTION 2 YOUR ADDRESS (REQUIRED)

Complete in full.

SECTION 3 YOUR INITIAL INVESTMENT (REQUIRED)

For each fund in which you are investing: 1) Write the dollar amount of your
initial purchase in the column corresponding to the class of shares you have
chosen (If you are eligible for a reduced sales charge, you must also complete
Section 4F) 2) Circle a distribution option for your dividends 3) Circle a
distribution option for your capital gains. All distributions (dividends and
capital gains) will be reinvested into your fund account unless you direct
otherwise. If you want distributions sent directly to your bank account, then
you must complete Section 4D and attach a voided check for that account. If
you want your distributions sent to a third party you must complete Section 4E.

SECTION 4 YOUR SHAREHOLDER OPTIONS (COMPLETE ONLY THOSE OPTIONS YOU WANT)

A. AUTOMATIC INVESTMENT PLANS (AIP) - You can make periodic investments into
any of your Alliance Funds in one of three ways. First, by a periodic
withdrawal ($25 minimum) directly from your bank account and invested into an
Alliance Fund. Second, you can direct your distributions (dividends and
capital gains) from one Alliance Fund into another Fund. Or third, you can
automatically exchange monthly ($25 minimum) shares of one Alliance Fund for
shares of another Fund. To elect one of these options, complete the
appropriate portion of Section 4A.

B. SYSTEMATIC WITHDRAWAL PLANS (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be
made via Electronic Funds Transfer (EFT) to your bank account or by check.

C. TELEPHONE TRANSACTIONS VIA EFT - Complete this option if you would like to
be able to transact via telephone between your fund account and your bank
account.

D. BANK INFORMATION - If you have elected any options that involve
transactions between your bank account and your fund account or have elected
cash distribution options and would like the payments sent to your bank
account, please tape a pre-printed VOIDED CHECK of the account you wish to use
to this section of the application.

E. THIRD PARTY PAYMENT DETAILS - If you have chosen cash distributions and/or
a Systematic Withdrawal Plan and would like the payments sent to a person
and/or address other than those provided in section 1 or 2, complete this
option.

F. REDUCED CHARGES (CLASS A ONLY) - Complete if you would like to link fund
accounts that have combined balances that might exceed $100,000 so that future
purchases will receive discounts. Complete if you intend to purchase over
$100,000 within 13 months.

SECTION 5 SHAREHOLDER AUTHORIZATION (REQUIRED)

All owners must sign. If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.
Investments made by check or EFT will not be made available for up to 15
CALENDAR DAYS, following the purchase date.

IF WE CAN ASSIST YOU IN ANY WAY, PLEASE DO NOT HESITATE TO CALL US AT: (800)
221-5672.

SUBSCRIPTION APPLICATION
_______________________________________________________________________________

THE ALLIANCE BOND FUNDS
(SEE INSTRUCTIONS AT THE FRONT OF THE APPLICATION)

1. YOUR ACCOUNT REGISTRATION (PLEASE PRINT)
_______________________________________________________________________________

__ INDIVIDUAL OR JOINT ACCOUNT

_______________________________________________________________________________
Owner's Name (First Name) (MI) (Last Name)

_________________________________________________
Social Security Number (Required to open account)

_______________________________________________________________________________
Joint Owner's Name* (First Name ) (MI) (Last Name)

*JOINT TENANTS WITH RIGHT OF SURVIVORSHIP UNLESS ALLIANCE FUND SERVICES IS
INFORMED OTHERWISE.

__ GIFT/TRANSFER TO A MINOR

_______________________________________________________________________________
Custodian - One Name Only (First Name) (MI) (Last Name)

_______________________________________________________________________________
Minor (First Name) (MI) (Last Name)

___________________________________________________________
Minor's Social Security Number (Required to open account)

Under the State of____(Minor's Residence) Uniform Gifts/Transfer to Minor's Act

__ TRUST ACCOUNT

_______________________________________________________________________________
Name of Trustee

_______________________________________________________________________________
Name of Trust

_______________________________________________________________________________
Name of Trust (cont'd)

_______________________________________________________________________________
Trust Dated Tax ID or Social Security Number (Required to open account)

__ OTHER

_______________________________________________________________________________
Name of Corporation,Partnership,Investment only retirement plan or other Entity

__________________________ __________________________________________________
Tax ID Number Trustee Name (Retirement Plans Only)

2. YOUR ADDRESS
_______________________________________________________________________________

_______________________________________________________________________________
Street

_______________________________________________________________________________
City State Zip Code

_______________________________________________________________________________
If Non-U.S., Specify Country

_____________________________________ _______________________________________
Daytime Phone Evening Phone

I am a: __ U.S. Citizen __ Non-Resident Alien
__ Resident Alien __ Other

FOR ALLIANCE USE ONLY

3. YOUR INITIAL INVESTMENT
_______________________________________________________________________________

THE MINIMUM INVESTMENT IS $250 PER FUND. THE MAXIMUM INVESTMENT IN CLASS B IS
$250,000; CLASS C IS $5,000,000.

I hereby subscribe for shares of the following Alliance Bond Fund(s) and elect
distribution options as indicated.

DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS:

R REINVEST DISTRIBUTIONS into my fund account.

C SEND MY DISTRIBUTIONS IN CASH to the address I have provided in Section 2.
(Complete Section 4D for direct deposit to your bank account. Complete Section
4E for payment to a third party)

D DIRECT MY DISTRIBUTIONS TO ANOTHER ALLIANCE FUND. Complete the appropriate
portion of Section 4A to direct your distributions (dividends and capital
gains) to another Alliance Fund (the $250 minimum investment requirement
applies to Funds into which distributions are directed).

BROKER/DEALER USE ONLY
WIRE CONFIRM #

CLASS OF SHARES
----------------------------------------
CONTINGENT DISTRIBUTIONS OPTIONS
MAKE ALL CHECKS PAYABLE TO: INITIAL DEFERRED ASSET-BASED *CIRCLE*
ALLIANCE FUND SERVICES SALES CHARGE SALES CHARGE SALES CHARGE ------------------------
ALLIANCE FUND NAME A B C DIVIDENDS CAPITAL GAINS
- --------------------------- ------------ ------------ ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
Short-Term U.S. Government $ (37) $ (51) $ (337) R C D R C D
U.S. Government (46) (76) (346) R C D R C D
Limited Maturity Gov't. (88) (89) (388) R C D R C D
Mortgage Securities Income (52) (63) (352) R C D R C D
World Income (54) not offered not offered R C D R C D
Short-Term Multi-Market (70) (68) (370) R C D R C D
Multi-Market Strategy (22) (23) (322) R C D R C D
North American Government (55) (56) (355) R C D R C D
Global Dollar Government (166) (266) (366) R C D R C D
Global Strategic Income (124) (224) (324) R C D R C D
Corporate Bond+ (95) (295) (395) R C D R C D
TOTAL INVESTMENT $ $ $
</TABLE>

FOR CLASS A AND CLASS C ONLY:
To apply for checkwriting privileges, please complete the signature card to the
left. The minimum amount any check can be written for is $500. The
checkwriting privilege is not transferable to any other fund account. If the
account registration is changed, the check writing privilege terminates and
must be reapplied for.

+ Checkwriting service not offered on Corporate Bond Fund and World Income
Trust.

A contingent deferred sales charge may be assessed on check amounts written
against your account.

SIGNATURE CARD NAME OF FUND:
CLASS A OR CLASS C ACCOUNT #
(if known)
________________________________ _____________________

ACCOUNT NAME(S) AS REGISTERED
_________________________________________________________

SOCIAL SECURITY NUMBER
_________________________________________________________

AUTHORIZED SIGNATURE(S) - for joint accounts, all owners, or their legal
representatives, must sign this card.

1. _______________________________________________________

2. _______________________________________________________

3. _______________________________________________________

Check One Box
__All the above signatures are required on checks written against this account.
__Any one signature is acceptable on checks written against this account.
__A combination of signatures is required (specify number).

SUBJECT TO CONDITIONS PRINTED ON REVERSE SIDE. STATE STREET BANK AND TRUST
COMPANY

MY SOCIAL SECURITY (TAX IDENTIFICATION ) NUMBER IS: __________________________

4. YOUR SHAREHOLDER OPTIONS
_______________________________________________________________________________

A. AUTOMATIC INVESTMENT PLANS (AIP)

__ WITHDRAW FROM MY BANK ACCOUNT*

I authorize Alliance to draw on my bank account for investment in my fund
account(s) as indicated below (Complete Section 4D also for the bank account
you wish to use and attach a voided check).

Monthly Dollar
Amount Day of Withdrawal
Fund Name ($25 minimum) (1st thru 31st) Circle "all" or applicable months
- -------------------------------------------------------------------------------
__________ ______________ _________________ All J F M A M J J A S O N D
__________ ______________ _________________ All J F M A M J J A S O N D
__________ ______________ _________________ All J F M A M J J A S O N D
__________ ______________ _________________ All J F M A M J J A S O N D

Your bank must be a member of the National Automated Clearing House Association
(NACHA).

__ DIRECT MY DISTRIBUTIONS

As indicated in Section 3, I would like my dividends and/or capital gains
directed to another Alliance fund within the same class of shares.

From" Fund Account "To" Fund Account #
"From" Fund Name #" (if existing) "To" Fund Name (if existing)
- -------------------------------------------------------------------------------
__ New
_________________ __________________ _________________ __ Existing
__ New
_________________ __________________ _________________ __ Existing
__ New
_________________ __________________ _________________ __ Existing
__ New
_________________ __________________ _________________ __ Existing

__ EXCHANGE SHARES MONTHLY

I authorize Alliance to transact monthly exchanges between my fund accounts as
listed below.

<TABLE>
<CAPTION>
"From" Fund Account # Dollar Amount Day of Exchange** "To" Fund Account #
"From" Fund Name (if existing) ($25 minimum) (1st thru 31st) "To" Fund Name (if existing)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
__ New
________________ _____________________ ______________ _________________ _______________ __ Existing
__ New
________________ _____________________ ______________ _________________ _______________ __ Existing
__ New
________________ _____________________ ______________ _________________ _______________ __ Existing
__ New
________________ _____________________ ______________ _________________ _______________ __ Existing
</TABLE>

**Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the exchange
transaction will be processed on the next fund business day). The exchange
privilege is not available if stock certificates have been issued. Only
available within the same class of shares.

B. SYSTEMATIC WITHDRAWAL PLANS (SWP)

In order to establish a SWP, you must reinvest all dividends and capital gains
and own or purchase shares of the Fund having a current net asset value of at
least:
.$10,000 for monthly payments,
.$5,000 for bi-monthly payments,
.$4,000 for quarterly or less frequent payments

__ I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.

Fund Name and Dollar Amount Circle "all" or
Class of Shares ($50 minimum) applicable months
- -------------------------------------------------------------------------------
____________________ ______________________ All J F M A M J J A S O N D
____________________ ______________________ All J F M A M J J A S O N D
____________________ ______________________ All J F M A M J J A S O N D
____________________ ______________________ All J F M A M J J A S O N D

PLEASE SEND MY SWP PROCEEDS TO:

__ MY CHECKING ACCOUNT (VIA EFT) - Currently Class A and Class C only

I would like to have these payments occur on or about the _________(1st-31st)
of the months circled above. (Complete Section 4D for the bank account you
wish to use and attach a voided check)

__ MY ADDRESS OF RECORD (VIA CHECK)

__ THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (VIA CHECK)

60042GEN-BONDApp

C. PURCHASES AND REDEMPTIONS VIA EFT
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.

Instructions:
. Review the information in the Prospectus about telephone transaction
services.

. If you select the telephone purchase or redemption privilege, you must write
"VOID" across the face of a check from the bank account you wish to use and
attach it to Section 4D of this application.

PURCHASES AND REDEMPTIONS VIA EFT

__ I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to withdraw
money or credit money for such shares via EFT from the bank account I have
selected. In the case of shares purchased by check, redemption proceeds may not
be made available until the Fund is reasonably assured that the check has
cleared, normally 15 calendar days after the purchase date.

D. BANK INFORMATION

This bank account information will be used for:
__ Distributions (Section 3) __ Automatic Investments (Section 4A)
__ Systematic Withdrawals (Section 4B) __ Telephone Transactions (Section 4C)

Please attach a voided check:

Tape Pre-printed Voided Check Here.
We Cannot Establish These Services Without it.

Your bank must be a member of the National Automated Clearing House Association
(NACHA) in order to have EFT transactions processed to your fund account.

For EFT transactions, the fund requires signatures of bank account owners
exactly as they appear on bank records.

E. THIRD PARTY PAYMENT DETAILS

This third party payee information will be used for:
__ Distributions (Section 3) __ Systematic Withdrawals (Section 4B)

_______________________________________________________________________________
Name

_______________________________________________________________________________
Address - Line 1

_______________________________________________________________________________
Address - Line 2

_______________________________________________________________________________
Address - Line 3

F. REDUCED CHARGES (CLASS A ONLY)

If you, your spouse or minor children own shares in other Alliance funds, you
may be eligible for a reduced sales charge. Please complete the Right of
Accumulation section or the Statement of Intent section.

A. RIGHT OF ACCUMULATION
__ Please link the tax identification numbers or account numbers listed below
for Right of Accumulation privileges, so that this and future purchases will
receive any discount for which they are eligible.

B. STATEMENT OF INTENT
__ I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
__ $100,000 __ $250,000 __ $500,000 __ $1,000,000

If the full amount indicated is not purchased within 13 months, I understand
that an additional sales charge must be paid from my account.

_________________________ __________________________ ________________________
Tax ID or Account # Tax ID or Account # Tax ID or Account #

5. SHAREHOLDER AUTHORIZATION THIS SECTION MUST BE COMPLETED
_______________________________________________________________________________

TELEPHONE EXCHANGES AND REDEMPTIONS BY CHECK
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an authorized
employee of an investment dealer or agent requesting a redemption or exchange
on my behalf. (NOTE: Telephone exchanges may only be processed between
accounts that have identical registrations.) Telephone redemption checks will
only be mailed to the name and address of record; and the address must have no
change within the last 30 days. The maximum telephone redemption amount is
$50,000. This service can be enacted once every 30 days.

__ I do NOT elect the telephone exchange service.
__ I do NOT elect the telephone redemption by check service.

I CERTIFY UNDER PENALTY OF PERJURY THAT THE NUMBER SHOWN IN SECTION 1 OF THIS
FORM IS MY CORRECT TAX IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER AND THAT
I HAVE NOT BEEN NOTIFIED THAT THIS ACCOUNT IS SUBJECT TO BACKUP WITHHOLDING.

By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my
behalf, that the Fund reasonably believes to be genuine, and that neither the
Fund nor any such party will be responsible for the authenticity of such
telephone instructions. I understand that any or all of these privileges may
be discontinued by me or the Fund at any time. I understand and agree that the
Fund reserves the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.

For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.

I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.

THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.

_______________________________________________________________________________
Signature Date

_______________________________________________________________________________
Signature Date Acceptance Date

DEALER/AGENT AUTHORIZATION FOR SELECTED DEALERS OR AGENTS ONLY.
_______________________________________________________________________________

We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee
the signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.

_______________________________________________________________________________
Dealer/Agent Firm Authorized Signature

_______________________________________________________________________________
Representative First Name MI Last Name

_______________________________________________________________________________
Representative Number

_______________________________________________________________________________
Branch Office Address

_______________________________________________________________________________
City State Zip Code

_______________________________________________________________________________
Branch Number Branch Phone

The payment of funds is authorized by the signature(s) appearing on the reverse
side.

If this card is signed by more than one person, all checks will require all
signatures appearing on the reverse side unless a lesser number is indicated.
If no indication is given, all checks will require all signatures. Each
signatory guarantees the genuineness of the other signatures.

The Bank is hereby appointed agent by the person(s) signing this card (the
"Depositor[s]") and, as agent, is authorized and directed to present checks
drawn on this checking account to Alliance __________________________________
("the Fund") or its transfer agent as requests to redeem shares of "the Fund"
registered in the name of the Depositor(s) in the amounts of such checks and to
deposit the proceeds of such redemptions in this checking account. The Bank
shall be liable only for its own negligence.

The Depositor(s) agrees to be subject to the rules and regulations of the Bank
pertaining to this checking account as amended from time to time. The Bank and
"the Fund" reserve the right to change, modify or terminate this checking
account and authorization at any time.

CHECKS MAY NOT BE FOR LESS THAN $500 or such other minimum amount as may from
time to time be established by "the Fund" upon prior written notice to its
shareholders. Shares purchased by check (including certified or cashier's
check) will not be redeemed within 15 calendar days of such purchase by
checkwriting or any other method of redemption.

No checkwriting available on Alliance World Income and Alliance Corporate Bond.

ENCLOSE THIS CARD WITH THE APPLICATION FORM

<PAGE>

THE ALLIANCE BOND FUNDS
_______________________________________________________________________________

P.O. BOX 1520, SECAUCUS, NEW JERSEY 07096-1520
TOLL FREE (800) 221-5672
FOR LITERATURE: TOLL FREE (800) 227-4618

PROSPECTUS AND APPLICATION
(ADVISOR CLASS)
NOVEMBER 1, 1996

U.S. GOVERNMENT FUNDS GLOBAL BOND FUNDS
- - -ALLIANCE SHORT-TERM U.S. -ALLIANCE NORTH AMERICAN
GOVERNMENT FUND GOVERNMENT INCOME TRUST
- - -U.S. GOVERNMENT -ALLIANCE GLOBAL DOLLAR
PORTFOLIO GOVERNMENT FUND
- - -ALLIANCE LIMITED MATURITY -ALLIANCE GLOBAL STRATEGIC
GOVERNMENT FUND INCOME TRUST

MORTGAGE FUND CORPORATE BOND FUND
- - -ALLIANCE MORTGAGE -CORPORATE BOND PORTFOLIO
SECURITIES INCOME FUND

MULTI-MARKET FUNDS
- - -ALLIANCE SHORT-TERM
MULTI-MARKET TRUST
- - -ALLIANCE MULTI-MARKET
STRATEGY TRUST

TABLE OF CONTENTS PAGE
The Funds at a Glance 2
Expense Information 4
Glossary 7
Description of the Funds 8
Investment Objectives and Policies 8
Additional Investment Practices 15
Certain Fundamental Investment Policies 26
Risk Considerations 27
Purchase and Sale of Shares 32
Management of the Funds 33
Dividends, Distributions and Taxes 34
General Information. 35
Appendix A: Bond Ratings A-1
Appendix B: General Information About Canada,
Mexico and Argentina B-1

Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105

Each fund or portfolio (each a 'Fund') is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A 'Statement of Additional Information' for each Fund that provides
further information regarding certain matters discussed in this Prospectus and
other matters that may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, write Alliance Fund Services, Inc. at the indicated address or
call the 'For Literature' telephone number shown above.

This Prospectus offers the Advisor Class shares of each Fund which may be
purchased at net asset value without any initial or contingent deferred sales
charges and without ongoing distribution expenses. Advisor Class shares are
offered solely to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors, Inc., each Fund's
principal underwriter, and (ii) participants in self-directed defined
contribution employee benefit plans (e.g., 401(k) plans) that meet certain
minimum standards. See 'Purchase and Sale of Shares.'

INVESTORS ARE ADVISED TO READ THIS PROSPECTUS CAREFULLY AND TO RETAIN IT FOR
FUTURE REFERENCE.

ALLIANCE
MUTUAL FUNDS WITHOUT THE MYSTERY.

R/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.

THE FUNDS AT A GLANCE

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

THE FUNDS' INVESTMENT ADVISER IS . . .
Alliance Capital Management L.P. ('Alliance'), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including 107 mutual funds. Since 1971, Alliance has earned
a reputation as a leader in the investment world with over $156 billion in
assets under management as of March 1, 1996. Alliance provides investment
management services to 34 of the FORTUNE 100 companies.

U.S. GOVERNMENT FUNDS

SHORT-TERM U.S. GOVERNMENT FUND
SEEKS . . . High current income consistent with preservation of capital.

INVESTS PRIMARILY IN . . . A diversified portfolio of U.S. Government
securities.

U.S. GOVERNMENT PORTFOLIO
SEEKS . . . As high a level of current income as is consistent with safety of
principal.

INVESTS SOLELY IN . . . A diversified portfolio of U.S. Government securities
backed by the full faith and credit of the United States.

LIMITED MATURITY GOVERNMENT FUND
SEEKS . . . The highest level of current income, consistent with low volatility
of net asset value.

INVESTS PRIMARILY IN . . . U.S. Government securities, including
mortgage-related securities, and repurchase agreements relating to U.S.
Government securities.

MORTGAGE FUND

MORTGAGE SECURITIES INCOME FUND
SEEKS . . . A high level of current income consistent with prudent investment
risk.

INVESTS PRIMARILY IN . . . A diversified portfolio of mortgage-related
securities.

MULTI-MARKET FUNDS

MULTI-MARKET STRATEGY TRUST
SEEKS . . . The highest level of current income that is available from a
portfolio of high-quality debt securities having remaining maturities of not
more than five years.

GLOBAL BOND FUNDS

INVESTS PRIMARILY IN . . . A non-diversified portfolio of government securities
denominated in the U.S. Dollar, the Canadian Dollar and the Mexican Peso, and
expects to maintain at least 25% of its assets in securities denominated in the
U.S. Dollar. In addition, the Fund may invest up to 25% of its total assets in
debt securities issued by governmental entities in Argentina.

GLOBAL DOLLAR GOVERNMENT FUND
SEEKS . . . Primarily a high level of current income and, secondarily, capital
appreciation.

GLOBAL STRATEGIC INCOME TRUST
SEEKS . . . Primarily a high level of current income and secondarily capital
appreciation.

INVESTS PRIMARILY IN . . . a non-diversified portfolio of fixed-income
securities of U.S. and non-U.S. issuers.

CORPORATE BOND FUND

CORPORATE BOND PORTFOLIO
SEEKS . . . Primarily to maximize income over the long term; secondarily, the
Fund will attempt to increase its capital through appreciation of its
investments.

INVESTS PRIMARILY IN . . . A diversified portfolio of U.S. Dollar-denominated
corporate bonds issued by domestic and foreign issuers that give promise of
relatively attractive yields.

A WORD ABOUT RISK . . .
The prices of the shares of the Alliance Bond Funds will fluctuate as the daily
prices of the individual bonds in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
Price fluctuations may be caused by changes in the general level of interest
rates or changes in bond credit quality ratings. Changes in interest rates have
a greater effect on bonds with longer maturities than those with shorter
maturities. Some of the Funds invest in high-yield, high-risk bonds that are
rated below investment grade and are considered to have predominantly
speculative characteristics. The prices of non-U.S. Dollar denominated bonds
also fluctuate with changes in foreign exchange rates. Investment in the Global
Bond Funds, the Multi-Market Funds and any other Fund that may invest a
significant amount of its assets in non-U.S. securities involves risks not
associated with Funds that invest primarily in securities of U.S. issuers.
While the Funds invest principally in fixed-income securities, in order to
achieve their investment objectives, the Funds may at times use certain types
of derivative instruments, such as options, futures, forwards and swaps. These
instruments involve risks different from, and, in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in this Prospectus. See 'Description of the Funds-Additional
Investment Practices' and '-Risk Considerations.'

GETTING STARTED . . .
Shares of the Funds are available through your financial representative. Each
Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares may be purchased at net asset
value without any initial or contingent deferred sales charges and without
ongoing distribution fees. Advisor Class shares may be purchased solely by
investors (i) through accounts established under a fee-based program, sponsored
and maintained by a registered broker-dealer or other financial intermediary
and approved by Alliance Fund Distributors, Inc., each Fund's principal
underwriter, pursuant to which each investor pays an asset-based fee at an
annual rate of at least .50% of the assets in the investor's account, to the
broker-dealer or financial intermediary, or its affiliate or agent, for
investment advisory or administrative services, or (ii) through a self-directed
defined contribution employee benefit plan (e.g., a 401(k) plan) that has at
least 1,000 participants or $25 million in assets. Shares of each Fund can be
purchased for a minimum initial investment of $250, and subsequent investments
can be made for as little as $50. Fee-based programs through which Advisor
Class shares may be purchased may impose different requirements with respect to
minimum initial and subsequent investment levels than described above. For
detailed information about purchasing and selling shares, see 'Purchase and
Sale of Shares.' Be sure to ask your financial representative about:

Alliance
Mutual funds without the Mystery.

R/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.

EXPENSE INFORMATION
_______________________________________________________________________________

SHAREHOLDER TRANSACTION EXPENSES are one of several factors to consider when
you invest in a Fund. The following tables summarize your maximum transaction
costs from investing in the Advisor Class shares each Fund and estimated annual
expenses for Advisor Class of shares of each Fund. For each Fund, the
'Examples' below show the cumulative expenses attributable to a hypothetical
$1,000 investment, assuming a 5% annual return, in Advisor Class shares for the
periods specified.

ADVISOR CLASS SHARES
--------------------
Maximum sales charge imposed on purchases None
Sales charge imposed on dividend reinvestments None
Deferred sales charge None
Exchange fee None

ANNUAL OPERATING EXPENSES EXAMPLES
- - ---------------------------------------------- ------------------------
SHORT-TERM U.S.
GOVERNMENT ADVISOR CLASS ADVISOR CLASS
- ---------------- ------------- -------------
Management fees(b)(after waiver) None After 1 year $11
Other expenses(a) 1.10% After 3 years $36
Total fund operating expenses 1.10%

U.S. GOVERNMENT ADVISOR CLASS ADVISOR CLASS
- ---------------- ------------- -------------
Management fees .53% After 1 year $ 7
Other expenses(a) .18% After 3 years $23
Total fund operating expenses .71%

LIMITED MATURITY
GOVERNMENT ADVISOR CLASS ADVISOR CLASS
- ---------------- ------------- -------------
Management fees .65% After 1 year $19
Other expenses After 3 years $58
Interest expense .73%
Other operating expenses(a) .46%
Total other expenses 1.19%
Total fund operating expenses 1.84%

MORTGAGE SECURITIES
INCOME ADVISOR CLASS ADVISOR CLASS
- --------------------- ------------- -------------
Management fees .51% After 1 year $14
Other expenses After 3 years $43
Interest expense .63%
Other operating expenses(a) .22%
Total other expenses .85%
Total fund operating expenses 1.36%

SHORT-TERM
MULTI-MARKET ADVISOR CLASS ADVISOR CLASS
- ---------------- ------------- -------------
Management fees .55% After 1 year $ 9
Other expenses(a) .38% After 3 years $30
Total fund operating expenses .93%

PLEASE REFER TO THE FOOTNOTES ON PAGE [ ] AND THE DISCUSSION FOLLOWING THESE
TABLES ON PAGE [ ].

ANNUAL OPERATING EXPENSES EXAMPLES
- ------------------------------------------------- ---------------------
MULTI-MARKET STRATEGY ADVISOR CLASS ADVISOR CLASS
- ------------------ ------------- -------------
Management fees .60% After 1 year $13
Other expenses After 3 years $41
Interest expense .05%
Other operating expenses(a) .65%
Total other expenses .70%
Total fund operating expenses 1.30%

NORTH AMERICAN
GOVERNMENT INCOME ADVISOR CLASS ADVISOR CLASS
- - ----------------- ------------- -------------
Management fees(c) .65% After 1 year $24
Other expenses After 3 years $72
Interest expense 1.11%
Other operating expenses(a) .56%
Total other expenses 1.67%
Total fund operating expenses 2.32%

GLOBAL DOLLAR GOVERNMENT ADVISOR CLASS ADVISOR CLASS
- - ------------------------ ------------- -------------
Management fees .75% After 1 year $15
Other expenses(a) .73% After 3 years $47
Total fund operating expenses 1.48%

GLOBAL STRATEGIC INCOME ADVISOR CLASS ADVISOR CLASS
- - ----------------------- ------------- -------------
Management fees .75% After 1 year $14
Other expenses(a) .64% After 3 years $44
Total fund operating expenses 1.39%

CORPORATE BOND ADVISOR CLASS ADVISOR CLASS
- - --------------- ------------- -------------
Management fees .63% After 1 year $ 9
Other expenses(a) .27% After 3 years $29
Total fund operating expenses .90%

(A) THESE EXPENSES INCLUDE A TRANSFER AGENCY FEE PAYABLE TO ALLIANCE FUND
SERVICES, INC., AN AFFILIATE OF ALLIANCE, BASED ON A FIXED DOLLAR AMOUNT
CHARGED TO THE FUND FOR EACH SHAREHOLDER'S ACCOUNT.

(B) NET OF VOLUNTARY FEE WAIVER AND EXPENSE REIMBURSEMENT. IN THE ABSENCE
OF SUCH WAIVER AND EXPENSE REIMBURSEMENT, THE MANAGEMENT FEE WOULD BE
.55%, OTHER EXPENSES WOULD BE 2.33% AND TOTAL FUND OPERATING EXPENSES
WOULD BE 2.88%.

The purpose of the tables on pages 4 and 5 is to assist the investor in
understanding the various costs and expenses that an investor in a Fund will
bear directly or indirectly. The examples do not reflect any charges or
expenses imposed by your financial representative or your employee benefit
plan. The management fee rate of GLOBAL DOLLAR GOVERNMENT and GLOBAL
STRATEGIC INCOME TRUST are higher than that paid by most other investment
companies, but Alliance believes the fee is comparable to those paid by
investment companies of similar investment orientation. 'Other Expenses'
are based on estimated amounts for that Fund's current fiscal year. The
Examples set forth above assume reinvestment of all dividends and
distributions and utilize a 5% annual rate of return as mandated by
Commission regulations. THE EXAMPLES SHOULD NOT BE CONSIDERED
REPRESENTATIVE OF FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN.

GLOSSARY
_______________________________________________________________________________

The following terms are frequently used in this Prospectus. Many of these terms
are explained in greater detail under 'Description of the Funds-Additional
Investment Practices' and in Appendix A.

BONDS are fixed, floating and variable rate debt obligations.

DEBT SECURITIES are bonds, debentures, notes, bills and repurchase agreements.

FIXED-INCOME SECURITIES are debt securities, convertible securities and
preferred stocks and include floating rate and variable rate instruments.
Fixed-income securities may be rated (or if unrated, for purposes of the Funds'
investment policies may be determined by Alliance to be of equivalent quality
to those rated) TRIPLE-A (Aaa or AAA), HIGH QUALITY (Aa or AA or above), HIGH
GRADE (A or above) or INVESTMENT GRADE (Baa or BBB or above) by, as the case
may be, Moody's, S&P, Duff & Phelps or Fitch, or may be lower-rated securities,
as defined below. In the case of 'split-rated' fixed-income securities (i.e.,
securities assigned non-equivalent credit quality ratings, such as Baa by
Moody's but BB by S&P, or, to take another example, Ba by Moody's and BB by S&P
but B by Fitch), a Fund will use the rating deemed by Alliance to be the most
appropriate under the circumstances.

LOWER-RATED SECURITIES are fixed-income securities rated Ba and BB or below, or
determined by Alliance to be of equivalent quality, and are commonly referred
to as 'junk bonds.'
EQUITY SECURITIES are common and preferred stocks, securities convertible into
common and preferred stocks and rights and warrants to subscribe for the
purchase of common and preferred stocks.

CONVERTIBLE SECURITIES are bonds, debentures, corporate notes and preferred
stocks that are convertible into common and preferred stock.

ARMS, which are adjustable-rate mortgage securities,

SMRS, which are stripped mortgage-related securities,

CMOS, which are collateralized mortgage obligations,

GNMA CERTIFICATES, which are securities issued by the Government National
Mortgage Association,

FNMA CERTIFICATES, which are securities issued by the Federal National
Mortgage Association, and

FHLMC CERTIFICATES, which are securities issued by the Federal Home Loan
Mortgage Corporation.

INTEREST-ONLY or IO securities are debt securities that receive only the
interest payments on an underlying debt that has been structured to have two
classes, one of which is the IO class and another of which is the
PRINCIPAL-ONLY or PO class, which class receives only the principal payments on
the underlying debt obligation. POs are similar to, and are sometimes referred
to as, ZERO COUPON SECURITIES, which are debt securities issued without
interest coupons.

WORLD BANK is the commonly used name for the International Bank for
Reconstruction and Development.

LIBOR is the London Interbank Offered Rate.

MOODY'S is Moody's Investors Service, Inc.

S&P is Standard & Poor's Ratings Services.

DUFF & PHELPS is Duff & Phelps Credit Rating Co.

FITCH is Fitch Investors Service, Inc.

RULE 144A SECURITIES are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the 'SECURITIES ACT').

1940 ACT is the Investment Company Act of 1940, as amended.

CODE is the Internal Revenue Code of 1986, as amended.

COMMISSION is the Securities and Exchange Commission.

DESCRIPTION OF THE FUNDS
_______________________________________________________________________________

Except as noted, (i) the Funds' investment objectives are 'fundamental' and
cannot be changed without a shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder
vote. No Fund will change a non-fundamental objective or policy without
notifying its shareholders. There is no guarantee that any Fund will achieve
its investment objective.

INVESTMENT OBJECTIVES AND POLICIES

U.S. GOVERNMENT FUNDS
The U.S. Government Funds are diversified investment companies that have been
designed to offer investors high current income consistent with preservation of
capital by investing primarily in U.S. Government securities.

ALLIANCE SHORT-TERM U.S. GOVERNMENT FUND
Alliance Short-Term U.S. Government Fund ('Short-Term U.S. Government') seeks
high current income consistent with preservation of capital by investing
primarily in a portfolio of U.S. Government securities. Under normal
circumstances, the Fund maintains an average dollar-weighted portfolio maturity
of not more than three years and invests at least 65% of its total assets in
U.S. Government securities and repurchase agreements and forward commitments
relating to U.S. Government securities. The Fund's investment objective is not
fundamental.

The Fund may also (i) invest in certain SMRS, (ii) invest in variable, floating
and inverse floating rate instruments, (iii) make short sales 'against the
box,' (iv) enter into various hedging transactions, such as interest rate
swaps, caps and floors, (v) enter into reverse repurchase agreements, (vi)
purchase and sell futures contracts for hedging purposes, (vii) purchase and
sell call and put options on futures contracts or on securities, for hedging
purposes or to earn additional income, (viii) make secured loans of portfolio
securities, (ix) enter into repurchase agreements, and (x) purchase securities
for future delivery. The Fund may not invest more than 5% of its total assets
in securities the disposition of which is restricted under Federal securities
laws (excluding, to the extent permitted by applicable law, Rule 144A
securities). For additional information on the use, risks and costs of these
practices, see 'Additional Investment Practices.'

U.S. GOVERNMENT PORTFOLIO
U.S. Government Portfolio ('U.S. Government') seeks as high a level of current
income as is consistent with safety of principal. As a matter of fundamental
policy, the Fund pursues its objective by investing solely in U.S. Government
securities that are backed by the full faith and credit of the U.S. Government.
These include U.S. Treasury securities, including zero coupon Treasury
securities, and GNMA certificates, including certain SMRS and variable and
floating rate instruments. The average weighted maturity of the Fund's
portfolio of U.S. Government securities is expected to vary between one year or
less and 30 years. For additional information on the use, risks and cost of
these practices, see 'Additional Investment Practices.' The Fund's investment
objective is not fundamental.

Counsel to the Fund has advised the Fund that, in their view, shares of the
Fund are a legal investment for, among other investors, (i) savings and loan
associations and commercial banks chartered under the laws of the United
States, (ii) savings and loan associations chartered under the laws of Arizona,
Arkansas, California, Colorado, Delaware, Florida, Illinois, Indiana, Kansas,
Louisiana, Maine, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New
Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee,
Texas, Utah and Washington, (iii) credit unions chartered under the laws of
California, Florida*, Kentucky, Maine, Maryland*, Minnesota, Nevada, New York,
Ohio*, Pennsylvania*, Rhode Island, Tennessee, Utah and West Virginia, and (iv)
commercial banks chartered under the laws of Alabama, Alaska, Arizona,
California, Colorado, Delaware, Florida, Hawaii*, Illinois, Indiana, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York,
North Carolina*, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island,
Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming. Institutions
in the asterisked(*) states should obtain prior state regulatory approval
before investing in shares of the Fund. In addition, the Fund believes that it
is currently a legal investment for savings and loan associations, credit
unions and commercial banks chartered under the laws of certain other states.

ALLIANCE LIMITED MATURITY GOVERNMENT FUND
Alliance Limited Maturity Government Fund, Inc. ('Limited Maturity Government')
seeks the highest level of current income, consistent with low volatility of
net asset value. As a matter of fundamental policy, the Fund normally has at
least 65% of the value of its total assets invested in U.S. Government
securities, including mortgage-related securities, and repurchase agreements
relating to U.S. Government securities. For a description of these securities,
see 'Additional Investment Practices.'

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
final maturity of not more than 10 years or a duration not exceeding that of a
10-year Treasury note. Duration is a measure that relates the price volatility
of a security to changes in interest rates. The duration of a debt security is
the weighted average term to maturity, expressed in years, of the present value
of all future cash flows, including coupon payments and principal repayments.
Thus, by definition, duration is always less than or equal to full maturity.

MORTGAGE FUND

ALLIANCE MORTGAGE SECURITIES INCOME FUND
Alliance Mortgage Securities Income Fund, Inc. ('Mortgage Securities Income')
is a diversified investment company that seeks a high level of current income
to the extent consistent with prudent investment risk. The Fund invests
primarily in a diversified portfolio of mortgage-related securities, including
CMOs, and, as a matter of fundamental policy, maintains at least 65% of its
total assets in mortgage-related securities.

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 such new types of securities. The
Fund may invest up to 20% of its total assets in lower-rated mortgage-related
securities. See 'Risk Considerations-Securities Ratings' and '-Investment in
Lower-Rated Fixed-Income Securities.' The average weighted maturity of the
Fund's portfolio of fixed-income securities is expected to vary between two and
ten years.

MULTI-MARKET FUNDS
The Multi-Market Funds are non-diversified investment companies that have been
designed to offer investors a higher yield than a money market fund and less
fluctuation in net asset value than a longer-term bond fund.

ALLIANCE SHORT-TERM MULTI-MARKET TRUST

ALLIANCE MULTI-MARKET STRATEGY TRUST
Alliance Short-Term Multi- Market Trust, Inc. ('Short-Term Multi-Market') and
Alliance Multi-Market Strategy Trust, Inc. ('Multi-Market Strategy') each seek
the highest level of current income, consistent with what Alliance considers to
be prudent investment risk, that is available from a portfolio of high quality
debt securities having remaining maturities of not more than, with respect to
SHORT-TERM MULTI-MARKET, three years, and with respect to MULTI-MARKET
STRATEGY, five years. Each Fund seeks

high current yields by investing in a portfolio of debt securities denominated
in the U.S. Dollar and selected foreign currencies. The Multi-Market Funds seek
investment opportunities in foreign, as well as domestic, securities markets.
SHORT-TERM MULTI-MARKET will normally maintain a substantial portion of its
assets in debt securities denominated in foreign currencies but will invest at
least 25% of its net assets in U.S. Dollar-denominated securities. MULTI-MARKET
STRATEGY normally expects to maintain at least 70% of its assets in debt
securities denominated in foreign currencies.

In pursuing their investment objectives, the Multi-Market Funds seek to
minimize credit risk and fluctuations in net asset value by investing only in
short-term debt securities. Normally, a high proportion of these Funds'
portfolios consists of money market instruments. Alliance actively manages the
Multi-Market Funds' portfolios in accordance with a multi-market investment
strategy, allocating a Fund's investments among securities denominated in the
U.S. Dollar and the currencies of a number of foreign countries and, within
each such country, among different types of debt securities. Alliance adjusts
each Multi-Market Fund's exposure to each currency such that the percentage of
assets invested in securities of a particular country or denominated in a
particular currency varies in accordance with Alliance's assessment of the
relative yield and appreciation potential of such securities and the relative
strength of a country's currency. Fundamental economic strength, credit quality
and interest rate trends are the principal factors considered by Alliance in
determining whether to increase or decrease the emphasis placed upon a
particular type of security or industry sector within the Fund's investment
portfolio. Neither of the Multi-Market Funds invests more than 25% of its net
assets in debt securities denominated in a single currency other than the U.S.
Dollar.

The returns available from short-term foreign currency-denominated debt
instruments can be adversely affected by changes in exchange rates. Alliance
believes that the use of foreign currency hedging techniques, including
'cross-hedges' (see 'Additional Investment Practices-Forward Foreign Currency
Exchange Contracts'), can help protect against declines in the U.S. Dollar
value of income available for distribution to shareholders and declines in the
net asset value of a Fund's shares resulting from adverse changes in currency
exchange rates. For example, the return available from securities denominated
in a particular foreign currency would diminish in the event the value of the
U.S. Dollar increased against such currency. Such a decline could be partially
or completely offset by an increase in value of a cross-hedge involving a
forward exchange contract to sell a different foreign currency, where such
contract is available on terms more advantageous to a Fund than a contract to
sell the currency in which the position being hedged is denominated. It is
Alliance's belief that cross-hedges can therefore provide significant
protection of net asset value in the event of a general rise in the U.S. Dollar
against foreign currencies. However, a cross-hedge cannot protect against
exchange rate risks perfectly, and if Alliance is incorrect in its judgment of
future exchange rate relationships, a Fund could be in a less advantageous
position than if such a hedge had not been established.

Each Multi-Market Fund invests in debt securities denominated in the currencies
of countries whose governments are considered stable by Alliance. In addition
to the U.S. Dollar, such currencies include, among others, the Australian
Dollar, Austrian Schilling, British Pound Sterling, Canadian Dollar, Danish
Krone, Dutch Guilder, European Currency Unit ('ECU'), French Franc, Irish
Pound, Italian Lira, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian
Krone, Spanish Peseta, Swedish Krona, Swiss Franc and German Mark.

An issuer of debt securities purchased by a Multi-Market Fund may be domiciled
in a country other than the country in whose currency the instrument is
denominated. In addition, the Funds may purchase debt securities (sometimes
referred to as 'linked' securities) that are denominated in one currency while
the principal amounts of, and value of interest payments on, such securities
are determined with reference to another currency. In this regard, as of the
date of this Prospectus each Fund has invested in U.S. Dollar denominated
securities issued by Mexican issuers and/or Peso-linked securities. The value
of these investments may fluctuate inversely in correlation with changes in the
Peso-Dollar exchange rate and with the general level of interest rates in
Mexico. For a general description of Mexico, see Appendix B and each
Multi-Market Fund's Statement of Additional Information.

Each Multi-Market Fund may invest in debt securities denominated in the ECU,
which is a 'basket' consisting of specified amounts of the currencies of
certain of the member states of the European Union, a fifteen-nation
organization engaged in cooperative economic activities. The specific amounts
of currencies comprising the ECU may be adjusted by the Council of Ministers of
the European Union to reflect changes in relative values of the underlying
currencies.

Each Multi-Market Fund seeks to minimize investment risk by limiting its
portfolio investments to debt securities of high quality. Accordingly, the
Multi-Market Funds' portfolio securities will consist of (i) U.S. Government
securities, (ii) high quality foreign government securities, (iii) obligations
issued by supranational entities and corporate debt securities having a high
quality rating, (iv) certificates of deposit and bankers' acceptances issued or
guaranteed by, or time deposits maintained at, banks (including foreign
branches of foreign banks) having total assets of more than $500 million and

determined by Alliance to be of high quality, and (v) prime commercial paper
or, if not rated, determined by Alliance to be of equivalent quality and issued
by U.S. or foreign companies having outstanding: in the case of MULTI-MARKET
STRATEGY, high quality debt securities; and in the case of SHORT-TERM
MULTI-MARKET, high grade debt securities.

As a matter of fundamental policy, each Multi-Market Fund concentrates at least
25% of its total assets in debt instruments issued by domestic and foreign
companies engaged in the banking industry, including bank holding companies.
Such investments may include certificates of deposit, time deposits, bankers'
acceptances, and obligations issued by bank holding companies, as well as
repurchase agreements entered into with banks (as distinct from non-banks) in
accordance with the policies set forth with respect to the Funds in 'Additional
Investment Practices-Repurchase Agreements.' See 'Risk
Considerations-Investment in the Banking Industry.'

Each Multi-Market Fund may also (i) invest in indexed commercial paper, (ii)
enter into futures contracts and purchase and write options on futures
contracts, (iii) purchase and write put and call options on foreign currencies,
(iv) purchase or sell forward foreign currency exchange contracts, (v) enter
into interest rate swaps, caps and floors, (vi) invest in variable, floating
and inverse floating rate instruments, (vii) make secured loans of its
portfolio securities, and (viii) enter into repurchase agreements. A
Multi-Market Fund will not invest in illiquid securities if, as a result, more
than 10% of its assets would be so invested. For additional information on the
use, risks and costs of these practices, see 'Additional Investment Practices.'
MULTI-MARKET STRATEGY maintains borrowings of approximately 25% of its total
assets less liabilities (other than the amount borrowed). See 'Risk
Considerations-Effects of Borrowing.'

GLOBAL BOND FUNDS
The Global Bond Funds are non-diversified investment companies that have been
designed to offer investors a high level of current income through investments
primarily in foreign government securities.

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
Alliance North American Government Income Trust, Inc. ('North American
Government Income') seeks the highest level of current income, consistent with
what Alliance considers to be prudent investment risk, that is available from a
portfolio of debt securities issued or guaranteed by the United States, Canada
and Mexico, their political subdivisions (including Canadian provinces but
excluding states of the United States), agencies, instrumentalities or
authorities ('Government securities'). The Fund invests in investment grade
securities denominated in the U.S. Dollar, the Canadian Dollar and the Mexican
Peso and expects to maintain at least 25% of its assets in securities
denominated in the U.S. Dollar. In addition, the Fund may invest up to 25% of
its total assets in debt securities issued by governmental entities of
Argentina ('Argentine Government securities'). The Fund expects that it will
not retain a debt security which is down-graded below BBB or Baa, or, if
unrated, determined by Alliance to have undergone similar credit quality
deterioration, subsequent to purchase by the Fund. There may be circumstances,
however, such as the downgrading to below investment grade of all of the
securities of a governmental issuer in one of the countries in which the Fund
has substantial investments, under which the Fund, after considering all the
circumstances, would conclude that it is in the best interests of the
shareholders to retain its holdings in securities of that issuer. The average
weighted maturity of the Fund's portfolio of fixed-income securities is
expected to vary between one year or less and 30 years.

The Fund may invest up to 25% of its total assets in Argentine Government
securities that are denominated and payable in the Argentine Peso. Argentine
Government securities include (i) Bono de Inversion y Crecimiento ('BIC'),
which are investment and growth bonds issued directly by the Argentine
Government with maturities of up to ten years, (ii) Bono de Consolidacion
Economica ('BOCON'), which are economic consolidation bonds issued directly by
the Argentine Government with maturities of up to ten years and (iii) Bono de
Credito a la Exportacion ('BOCREX'), which are export credit bonds issued
directly by the Argentine government with maturities of up to four years. To
date, Argentine Government securities are not rated by either S&P, Moody's,
Duff & Phelps or Fitch. Alliance, however, believes, that there are Argentine
Government securities that are of investment grade quality.

The Fund may also (i) enter into futures contracts and purchase and write
options on futures contracts for hedging purposes, (ii) purchase and write put
and call options on foreign currencies, (iii) purchase or sell forward foreign
currency exchange contracts, (iv) write covered put and call options and
purchase put and call options on U.S. Government and foreign government
securities traded on U.S. and foreign securities exchanges, and write put and
call options for cross-hedging purposes, (v) enter into interest rate swaps,
caps and floors, (vi) enter into forward commitments for the purchase or sale
of securities, (vii) invest in variable, floating and inverse floating rate
instruments, (viii) make secured loans of its portfolio securities, and (ix)
enter into repurchase agreements. The Fund will not invest in illiquid
securities if, as a result, 10% of its net assets would be so invested. For
additional information on the use, risks and costs of these practices, see
'Additional Investment Practices.' The Fund also maintains borrowings of
approximately one-third of the Fund's total assets less liabilities (other than
the amount borrowed). See 'Risk Considerations-Effects of Borrowing.'

ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND
Alliance Global Dollar Government Fund, Inc. ('Global Dollar Government') seeks
primarily a high level of current income, and secondarily capital appreciation.
In seeking to achieve these objectives, the Fund invests at least 65% of its
total assets in sovereign debt obligations. The Fund's investments in sovereign
debt obligations will emphasize obligations of a type customarily referred to
as 'Brady Bonds' that are issued as part of debt restructurings and that are
collateralized in full as to principal due at maturity by zero coupon U.S.
Government securities ('collateralized Brady Bonds'). See 'Additional
Investment Practices-Brady Bonds.' The Fund may also invest up to 35% of its
total assets in U.S. and non-U.S. corporate fixed-income securities. See 'Risk
Considerations-U.S. Corporate Fixed-Income Securities.' The Fund will limit its
investments in sovereign debt obligations and U.S. and non-U.S. corporate
fixed-income securities to U.S. Dollar-denominated securities. Alliance expects
that, based upon current market conditions, the Fund's portfolio of U.S.
fixed-income securities will have an average maturity range of approximately
nine to 15 years and the Fund's portfolio of non-U.S. fixed-income securities
will have an average maturity range of approximately 15 to 25 years. Alliance
anticipates that the Fund's portfolio of sovereign debt obligations will have a
longer average maturity.

Substantially all of the Fund's assets will be invested in lower-rated
securities, which may include securities having the lowest rating for
non-subordinated debt instruments (i.e., rated C by Moody's or CCC or lower by
S&P, Duff & Phelps and Fitch) and unrated securities of comparable investment
quality. These securities are considered to have extremely poor prospects of
ever attaining any real investment standing, to have a current identifiable
vulnerability to default, to be unlikely to have the capacity to pay interest
and repay principal when due in the event of adverse business, financial or
economic conditions, and/or to be in default or not current in the payment of
interest or principal. For a description of bond ratings, see Appendix A. The
Fund may also invest in investment grade securities. Unrated securities will be
considered for investment by the Fund when Alliance believes that the financial
condition of the issuers of such obligations and the protection afforded by the
terms of the obligations themselves limit the risk to the Fund to a degree
comparable to that of rated securities which are

consistent with the Fund's investment objectives and policies. As of August 31,
1995, the percentages of the Fund's assets invested in securities rated (or
considered by Alliance to be of equivalent quality to securities rated) in
particular rating categories were 3% in A and above, 57% in Ba or BB, 34% in B,
4% in Caa or CCC, and 2% in non-rated. See 'Risk Considerations-Securities
Ratings,' '-Investment in Fixed-Income Securities Rated Baa and BBB,'
'-Investment in Lower-Rated Fixed-Income Securities' and Appendix A.

With respect to its investments in sovereign debt obligations and non-U.S.
corporate fixed-income securities, the Fund will emphasize investments in
countries that are considered at the time of purchase to be emerging or
developing countries by the World Bank. A substantial part of the Fund's
initial investment focus is expected to be in securities or obligations of
Argentina, Brazil, Mexico, Morocco, the Philippines and Venezuela because these
countries are now, or are expected by Alliance at a future date to be, the
principal participants in debt restructuring programs (including, in the case
of Argentina, Mexico, the Philippines and Venezuela, issuers of currently
outstanding Brady Bonds) that, in Alliance's opinion, will provide the most
attractive investment opportunities for the Fund. See Appendix A to the Fund's
Statement of Additional Information for information about those six countries.
Alliance anticipates that other countries that will provide initial investment
opportunities for the Fund include, among others, Bolivia, Costa Rica, the
Dominican Republic, Ecuador, Jordan, Nigeria, Panama, Peru, Poland, Thailand,
Turkey and Uruguay. See 'Additional Investment Practices-Brady Bonds.'

The Fund may invest up to 30% of its total assets in the sovereign debt
obligations and corporate fixed-income securities of issuers in any one of
Argentina, Brazil, Mexico, Morocco, the Philippines or Venezuela, each of which
is an emerging market country, and the Fund will limit investments in the
sovereign debt obligations of each such country (or of any other single foreign
country) to less than 25% of its total assets. The Fund expects that it will
not invest more than 10% of its total assets in the sovereign debt obligations
and corporate fixed-income securities of issuers in any other single foreign
country and is not required to invest any minimum amount of its assets in the
securities or obligations of issuers located in any particular country.

A substantial portion of the Fund's investments will be in (i) securities which
were initially issued at discounts from their face values ('Discount
Obligations') and (ii) securities purchased by the Fund at a price less than
their stated face amount or, in the case of Discount Obligations, at a price
less than their issue price plus the portion of 'original issue discount'
previously accrued thereon, i.e., purchased at a 'market discount.'

The Fund may also (i) invest in structured securities, (ii) invest in fixed and
floating rate loans that are arranged through private negotiations between an
issuer of sovereign debt obligations and one or more financial institutions and
in participations in and assignments of these types of loans, (iii) invest in
other investment companies, (iv) invest in warrants, (v) enter into interest
rate swaps, caps and floors, (vi) enter into forward commitments for the
purchase or sale of securities, (vii) make secured loans of its portfolio
securities, (viii) enter into repurchase agreements pertaining to the types of
securities in which it invests, (ix) use reverse repurchase agreements and
dollar rolls, (x) enter into standby commitment agreements, (xi) make short
sales of securities or maintain a short position, (xii) write put and call
options on securities of the types in which it is permitted to invest and write
call options for cross-hedging purposes, (xiii) purchase and sell
exchange-traded options on any securities index composed of the types of
securities in which it may invest, and (xiv) invest in variable, floating and
inverse floating rate instruments. The Fund may also at any time, with respect
to up to 35% of its total assets, temporarily invest funds awaiting
reinvestment or held for reserves for dividends and other distributions to
shareholders in U.S. Dollar-denominated money market instruments. For
additional information on the use, risks and costs of these practices, see
'Additional Investment Practices.' While the Fund does not currently intend to
do so, it reserves the right to borrow an amount not to exceed one-third of the
Fund's assets less liabilities (other than the amount borrowed). See 'Risk
Considerations-Effects of Borrowing.'

ALLIANCE GLOBAL STRATEGIC INCOME TRUST
Alliance Global Strategic Income Trust ('Global Strategic Income') is a
non-diversified investment company that seeks primarily a high level of current
income and secondarily capital appreciation. The Fund pursues its investment
objectives by investing primarily in a portfolio of fixed-income securities of
U.S. and non-U.S. companies and U.S. Government and foreign government
securities and supranational entities, including lower-rated securities. The
Fund may also use derivative instruments to attempt to enhance income. The
average weighted maturity of the Fund's portfolio of fixed-income securities is
expected to vary between 5 years and 30 years in accordance with Alliance's
changing perceptions of the relative attractiveness of various maturity ranges.

The Fund will maintain at least 65% of the value of its total assets in
investment grade securities and may maintain not more that 35% of the value of
its total assets in lower-rated securities. See 'Additional Risk
Considerations-Securities Ratings' and '-Investment in Lower-Rated Fixed-Income

Securities.' Unrated securities will be considered for investment by the Fund
when Alliance believes that the financial condition of the issuers of such
obligations and the protection afforded by the terms of the obligations
themselves limit the risk to the Fund to a degree comparable to that of rated
securities which are consistent with the Fund's investment objectives and
policies. Lower-rated securities in which the Fund may invest include Brady
Bonds and fixed-income securities of issuers located in emerging markets. There
is no minimum rating requirement applicable to the Fund's investments in
lower-rated fixed-income securities.

The Fund may also: (i) invest in foreign currencies, (ii) purchase and write
put and call options on securities and foreign currencies, (iii) purchase or
sell forward foreign exchange contracts, (iv) invest in variable, floating and
inverse floating rate instruments, (v) invest in indexed commercial paper, (vi)
invest in structured securities, (vii) lend portfolio securities amounting to
not more than 25% of its total assets, (viii) enter into repurchase agreements
pertaining to the types of securities in which it invests, (ix) use reverse
repurchase agreements and dollar rolls, (x) purchase and sell securities on a
forward commitment basis, (xi) enter into standby commitments, (xii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, foreign government
securities or common stock, and purchase and write options on futures
contracts, (xiii) invest in Eurodollar instruments, (xiv) enter into interest
rate swaps, caps and floors, and (xv) make short sales of securities or
maintain a short position. For additional information on the use, risks and
costs of these policies and practices see 'Additional Investment Practices and
Risks.' The Fund currently intends to limit its ability to borrow to an amount
not to exceed 25% of its total assets. See 'Additional Risk
Considerations-Effect of Borrowing.'

CORPORATE BOND FUND

CORPORATE BOND PORTFOLIO
Corporate Bond Portfolio ('Corporate Bond') is a diversified investment company
that seeks primarily to maximize income over the long term consistent with
providing reasonable safety in the value of each shareholder's investment, and
secondarily to increase its capital through appreciation of its investments in
order to preserve and, if possible, increase the purchasing power of each
shareholder's investment. In pursuing these objectives, the Fund's policy is to
invest in readily marketable securities which give promise of relatively
attractive yields, but which do not involve substantial risk of loss of
capital. The Fund follows a policy of maintaining at least 65% of its net
assets invested in debt securities. Such objectives and policies cannot be
changed without the approval of the shareholders. Although the Fund also
follows a policy of maintaining at least 65% of its total assets invested in
corporate bonds, it is permitted to invest in securities of non-corporate
issuers.

The Fund follows an investment strategy which in certain respects can be
regarded as somewhat more aggressive than the strategies of many other funds
investing primarily in corporate bonds. In this regard, the Fund's investment
portfolio normally tends to have a relatively long average maturity and
duration, and to place significant emphasis on both foreign corporate and
sovereign debt obligations and corporate bonds that are expected to benefit
from improvement in their issuers' credit fundamentals. Consequently, in recent
years the Fund frequently has experienced greater net asset value volatility
than most other corporate bond funds. Prospective investors in the Fund should
therefore be prepared to accept the degree of volatility associated with its
investment strategy. See 'Risk Considerations'.

There is no minimum rating requirement applicable to the Fund's investments in
fixed-income securities, except the Fund expects that it will not retain a
security that is downgraded below B, or if unrated, determined by Alliance to
have undergone similar credit quality deterioration subsequent to purchase.
Currently, the Fund believes its objectives and policies may best be
implemented by investing at least 65% of its total assets in fixed-income
securities considered investment grade or higher. The remainder of the Fund's
assets may be invested in lower-rated fixed-income securities. See 'Risk
Considerations-Securities Ratings,' '-Investment in Fixed-Income Securities
Rated Baa and BBB,' '-Investment in Lower-Rated Fixed-Income Securities' and
Appendix A. During the fiscal year ended June 30, 1995, on a weighted average
basis, the percentages of the Fund's assets invested in securities rated (or
considered by Alliance to be of equivalent quality to securities rated) in
particular rating categories were 23% in A and above, 44% in Baa or BBB, 25% in
Ba or BB, and 8% in B. The Fund did not invest in securities rated below B by
each of Moody's, S&P, Duff & Phelps and Fitch or, if not rated, considered by
Alliance to be of equivalent quality to securities so rated.

The Fund may invest up to 50% of the value of its total assets in foreign debt
securities which will consist primarily of corporate fixed-income securities
and sovereign debt obligations. Not more than 15% of the Fund's total assets
may be invested in these other sovereign debt obligations, which may be lower
rated and considered to be predominantly speculative as regards the issuer's
capacity to pay interest and repay principal. All of the Fund's investments,
whether foreign or domestic, are U.S. Dollar-denominated.

Within the foregoing limitations, the Fund has complete flexibility as to the
types of securities in which it will invest and the relative proportions
thereof, and the Fund plans to vary the proportions of its holdings of long-
and short-term fixed-income securities and of equity securities in order to
reflect its assessment of prospective cyclical changes even if such action may
adversely affect current income. However, substantially all of the Fund's
investments will be income producing. The average weighted maturity of the
Fund's portfolio of fixed-income securities is expected to vary between one
year or less and 30 years.

The Fund may also (i) invest in structured securities, (ii) invest in fixed and
floating rate loans that are arranged through

private negotiations between an issuer of sovereign debt obligations and one or
more financial institutions and in participations in and assignments of these
type of loans, (iii) for hedging purposes, purchase put and call options
written by others and write covered put and call options on the types of
securities in which the Fund may invest, (iv) for hedging purposes, enter into
various hedging transactions, such as interest rate swaps, caps and floors, (v)
invest in variable, floating and inverse floating rate instruments, (vi) invest
in zero coupon and pay-in-kind securities, and (vii) invest in CMOs and
multi-class pass-through. As a matter of fundamental policy, the Fund will not
purchase illiquid securities. For additional information on the use, risks and
costs of these practices, see 'Additional Investment Practices.'

ADDITIONAL INVESTMENT PRACTICES

Derivatives can be used by investors such as the Funds to earn income and
enhance returns, to hedge or adjust the risk profile of a portfolio, and either
in place of more traditional direct investments or to obtain exposure to
otherwise inaccessible markets. Each of the Funds is permitted to use
derivatives for one or more of these purposes, although most of the Funds
generally use derivatives primarily as direct investments in order to enhance
yields and broaden portfolio diversification. Each of these uses entails
greater risk than if derivatives were used solely for hedging purposes.
Derivatives are a valuable tool which, when used properly, can provide
significant benefit to Fund shareholders. Alliance is not an aggressive user of
derivatives with respect to any of the Funds. However, a Fund may take a
significant position in those derivatives that are within its investment
policies if, in Alliance's judgement, this represents the most effective
response to current or anticipated market conditions. The MULTI-MARKET FUNDS
and GLOBAL STRATEGIC INCOME in particular generally make extensive use of
carefully selected forwards and other derivatives to achieve the currency
hedging that is an integral part of their investment strategy. Alliance's use
of derivatives is subject to continuous risk assessment and control from the
standpoint of each Fund's investment objectives and policies.

There are four principal types of derivative instruments-options, futures,
forwards and swaps-from which virtually any type of derivative transaction can
be created.

principal amount). The payment flows are netted against each other, with the
difference being paid by one party to the other. Except for currency swaps, the
notional principal amount is used solely to calculate the payment streams but
is not exchanged. With respect to currency swaps, actual principal amounts of
currencies may be exchanged by the counterparties at the initiation, and again
upon the termination, of the transaction.

Debt instruments that incorporate one or more of these building blocks for the
purpose of determining the principal amount of and/or rate of interest payable
on the debt instruments are often referred to as 'structured securities.' An
example of this type of structured security is indexed commercial paper. The
term is also used to describe certain securities issued in connection with the
restructuring of certain foreign obligations. See 'Indexed Commercial Paper'
and 'Structured Securities' below. The term 'derivative' is also sometimes used
to describe securities involving rights to a portion of the cash flows from an
underlying pool of mortgages or other assets from which payments are passed
through to the owner of, or that collateralize, the securities. These
securities are described below under 'Mortgage-Related Securities' and 'Other
Asset-Backed Securities.'

While the judicious use of derivatives by highly experienced investment
managers such as Alliance can be quite beneficial, derivatives also involve
risks different from, and, in certain cases, greater than, the risks presented
by more traditional investments. Following is a general discussion of important
risk factors and issues concerning the use of derivatives that investors should
understand before investing in a Fund.

. MARKET RISK-This is the general risk attendant to all investments that the
value of a particular investment will change in a way detrimental to the Fund's
interest.

. CREDIT RISK-This is the risk that a loss may be sustained by a Fund as a
result of the failure of another party to a derivative (usually referred to as
a 'counterparty') to comply with the terms of the derivative contract. The
credit risk for exchange-traded derivatives is generally less than for
privately negotiated derivatives, since the clearing house, which is the issuer
or counterparty to each exchange-traded derivative, provides a guarantee of
performance. This guarantee is supported by a daily payment system (i.e.,
margin requirements) operated by the clearing house in order to reduce overall
credit risk. For privately negotiated derivatives, there is no similar clearing
agency guarantee. Therefore, the Funds consider the creditworthiness of each
counterparty to a privately negotiated derivative in evaluating potential
credit risk.

DERIVATIVES USED BY THE FUNDS. Following is a description of specific
derivatives currently used by one or more of the Funds.

uncovered call or put options on securities. A call option written by a Fund is
'covered' if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of another
security it holds, or holds a call option on the underlying security with an
exercise price equal to or less than that of the call option it has written. A
put option written by a Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.

A Fund may write a call option on a security that it does not own in order to
hedge against a decline in the value of a security that it owns or has the
right to acquire, a technique referred to as 'cross-hedging.' A Fund would
write a call option for cross-hedging purposes, instead of writing a covered
call option, when the premium to be received from the cross-hedge transaction
exceeds that to be received from writing a covered call option, while at the
same time achieving the desired hedge. The correlation risk involved in
cross-hedging may be greater than the correlation risk involved with other
hedging strategies.

SHORT-TERM U.S. GOVERNMENT, MORTGAGE SECURITIES INCOME, NORTH AMERICAN
GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT, GLOBAL STRATEGIC INCOME and
CORPORATE BOND generally purchase or write privately negotiated options on
securities. A Fund that purchases or writes privately negotiated options on
securities will effect such transactions only with investment dealers and other
financial institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by Alliance, and Alliance has adopted
procedures for monitoring the creditworthiness of such counterparties.
Privately negotiated options purchased or written by a Fund may be illiquid,
and it may not be possible for the Fund to effect a closing transaction at an
advantageous time. See 'Illiquid Securities' below. Neither MORTGAGE SECURITIES
INCOME nor CORPORATE BOND will purchase an option on a security if, immediately
thereafter, the aggregate cost of all outstanding options purchased by such
Fund would exceed 2% of the Fund's total assets. Nor will either such Fund
write an option if, immediately thereafter, the aggregate value of the Fund's
portfolio securities subject to outstanding options would exceed 15% of the
Fund's total assets.

RIGHTS AND WARRANTS. GLOBAL DOLLAR GOVERNMENT may invest in warrants, and
GLOBAL STRATEGIC INCOME may invest in rights and warrants, which are option
securities permitting their holders to subscribe for other securities. GLOBAL
DOLLAR GOVERNMENT may invest in warrants, and GLOBAL STRATEGIC INCOME may
invest in rights and warrants, for debt securities or for equity securities
that are acquired in connection with debt instruments. Rights are similar to
warrants except that they have a substantially shorter duration. Rights and
warrants do not carry with them dividend or voting rights with respect to the
underlying securities, or any rights in the assets of the issuer. As a result,
an investment in rights and warrants may be considered more speculative than
certain other types of investments. In addition, the value of a right or
warrant does not necessarily change with the value of the underlying
securities, and a right or warrant ceases to have value if it is not exercised
prior to its expiration date. GLOBAL STRATEGIC INCOME may invest up to 20% of
its total assets in rights and warrants.

LIMITED MATURITY GOVERNMENT, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY,
NORTH AMERICAN GOVERNMENT INCOME and GLOBAL STRATEGIC INCOME will not enter
into a futures contract or option on a futures contract if immediately
thereafter the market values of the outstanding futures contracts of the Fund
and the currencies and futures contracts subject to outstanding options written
by the Fund would exceed 50% of its total assets. Nor will LIMITED MATURITY
GOVERNMENT, MORTGAGE SECURITIES INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET

STRATEGY, NORTH AMERICAN GOVERNMENT INCOME or GLOBAL STRATEGIC INCOME do so if
immediately thereafter the aggregate of initial margin deposits on all the
outstanding futures contracts of the Fund and premiums paid on outstanding
options on futures contracts would exceed 5% of the market value of the total
assets of the Fund. In addition, MORTGAGE SECURITIES INCOME and GLOBAL
STRATEGIC INCOME will not enter into (i) any futures contract other than one on
fixed-income securities or based on interest rates, (ii) any futures contract
if immediately thereafter the sum of the then aggregate futures market prices
of financial instruments required to be delivered under open futures contract
sales and the aggregate futures market prices of instruments required to be
delivered under open futures contract purchases would exceed 30% of the value
of the Fund's total assets, or (iii) options on futures contracts.

EURODOLLAR INSTRUMENTS. Eurodollar instruments are essentially U.S.
Dollar-denominated futures contracts or options thereon that are linked to
LIBOR. Eurodollar futures contracts enable purchasers to obtain a fixed rate
for the lending of funds and sellers to obtain a fixed rate for borrowings.
LIMITED MATURITY GOVERNMENT and GLOBAL STRATEGIC INCOME intends to use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR (to which many short-term borrowings and floating rate securities in
which the Fund invests are linked).

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each Fund that purchases or sells
forward contracts on foreign currencies ('forward contracts') attempts to
minimize the risk to it from adverse changes in the relationship between the
U.S. Dollar and other currencies. A Fund may enter into a forward contract, for
example, when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to 'lock in' the U.S. Dollar price
of the security ('transaction hedge'). When a Fund believes that a foreign
currency may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency, or when the Fund believes that the U.S.
Dollar may suffer a substantial decline against a foreign currency, it may
enter into a forward purchase contract to buy that foreign currency for a fixed
dollar amount ('position hedge'). Instead of entering into a position hedge, a
Fund may, in the alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. Dollar amount where the Fund believes that
the U.S. Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar value of the
currency in which portfolio securities of the Fund are denominated
('cross-hedge').

FORWARD COMMITMENTS. Forward commitments are forward contracts for the purchase
or sale of securities, including purchases on a 'when-issued' basis or
purchases or sales on a 'delayed delivery' basis. In some cases, a forward
commitment may be conditioned upon the occurrence of a subsequent event, such
as approval and consummation of a merger, corporate reorganization or debt
restructuring or approval of a proposed financing by appropriate authorities
(i.e., a 'when, as and if issued' trade).

Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of
floating rate payments for fixed

rate payments) computed based on a contractually-based principal (or
'notional') amount. Interest rate swaps are entered into on a net basis (i.e.,
the two payment streams are netted out, with the Fund receiving or paying, as
the case may be, only the net amount of the two payments). Interest rate caps
and floors are similar to options in that the purchase of an interest rate cap
or floor entitles the purchaser, to the extent that a specified index exceeds
(in the case of a cap) or falls below (in the case of a floor) a predetermined
interest rate, to receive payments of interest on a notional amount from the
party selling the interest rate cap or floor. A Fund may enter into interest
rate swaps, caps and floors on either an asset-based or liability-based basis,
depending upon whether it is hedging its assets or liabilities.

STANDBY COMMITMENT AGREEMENTS. Standby commitment agreements are similar to put
options that commit a Fund, for a stated period of time, to purchase a stated
amount of a security that may be issued and sold to the Fund at the option of
the issuer. The price and coupon of the security are fixed at the time of the
commitment. At the time of entering into the agreement, the Fund is paid a
commitment fee regardless of whether the security ultimately is issued. The
Funds will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
and unavailable on a firm commitment basis. No Fund will enter into a standby
commitment with a remaining term in excess of 45 days. The Funds will limit
their investments in standby commitments so that the aggregate purchase price
of the securities subject to the commitments does not exceed 20%, 25% with
respect to GLOBAL STRATEGIC INCOME, of their respective assets.

(I) the following U.S. Treasury securities, which are backed by the full faith
and credit of the United States and differ only in their interest rates,
maturities and times of issuance: U.S. Treasury bills (maturities of one year
or less with no interest paid and hence issued at a discount and repaid at full
face value upon maturity), U.S. Treasury notes (maturities of one to ten years
with interest payable every six months) and U.S. Treasury bonds (generally
maturities of greater than ten years with interest payable every six months);

U.S. Government securities also include zero coupon securities and
principal-only securities and certain SMRS. In addition, other U.S. Government
agencies and instrumentalities have issued stripped securities that are similar
to SMRS. Such securities include those that are issued with an IO class and a
PO class. See 'Mortgage-Related Securities' below and 'Zero Coupon and
Principal-Only Securities' below. Although these stripped securities are
purchased and sold by institutional investors through several investment
banking firms acting as brokers or dealers, these securities were only recently
developed. As a result, established trading markets have not yet developed and,
accordingly, these securities may be illiquid.

One type of mortgage-related security is of the 'pass-through' variety. The
holder of a pass-through security is considered to own an undivided beneficial
interest in the underlying pool of mortgage loans and receives a pro rata share
of the monthly payments made by the borrowers on their mortgage loans, net of
any fees paid to the issuer or guarantor of the securities. Prepayments of
mortgages resulting from the sale, refinancing or foreclosure of the underlying
properties are also paid to the holders of these securities, which, as
discussed below, frequently causes these securities to experience significantly
greater price and yield volatility than experienced by traditional fixed-income
securities. Some mortgage-related securities, such as securities issued by
GNMA, are referred to as 'modified pass-through' securities. The holders of
these securities are entitled to the full and timely payment of principal and
interest, net of certain fees, regardless of whether payments are actually made
on the underlying mortgages. Another form of mortgage-related security is a
'pay-through' security, which is a debt obligation of the issuer secured by a
pool of mortgage loans pledged as collateral that is legally required to be
paid by the issuer regardless of whether payments are actually made on the
underlying mortgages.

Collateralized mortgage obligations (CMOs) are the predominant type of
'pay-through' mortgage-related security. In a CMO, a series of bonds or
certificates is issued in multiple classes. Each class of a CMO, often referred
to as a 'tranche,' is issued at a specific coupon rate and has a stated
maturity or final distribution date. Principal prepayments on collateral
underlying a CMO may cause it to be retired substantially earlier than the
stated maturities or final distribution dates. The principal and interest on
the underlying mortgages may be allocated among several classes of a series of
a CMO in many ways. In a common structure, payments of principal, including any
principal prepayments, on the underlying mortgages are applied to the classes
of the series of a CMO in the order of their respective stated maturities or
final distribution dates, so that no payment of principal will be made on any
class of a CMO until all other classes having an earlier stated maturity or

final distribution date have been paid in full. One or more tranches of a CMO
may have coupon rates that reset periodically, or 'float', at a specified
increment over an index such as LIBOR. Floating-rate CMOs may be backed by
fixed or adjustable rate mortgages. To date, fixed-rate mortgages have been
more commonly utilized for this purpose. Floating-rate CMOs are typically
issued with lifetime caps on the coupon rate thereon. These caps, similar to
the caps on adjustable-rate mortgages described below, represent a ceiling
beyond which the coupon rate on a floating-rate CMO may not be increased
regardless of increases in the interest rate index to which the floating-rate
CMO is tied. The collateral securing the CMOs may consist of a pool of
mortgages, but may also consist of mortgage-backed bonds or pass-through
securities. CMOs may be issued by a U.S. Government instrumentality or agency
or by a private issuer. Although payment of the principal of, and interest on,
the underlying collateral securing privately issued CMOs may be guaranteed by
GNMA, FNMA or FHLMC, these CMOs represent obligations solely of the private
issuer and are not insured or guaranteed by GNMA, FNMA, FHLMC, any other
governmental agency or any other person or entity.

As with fixed-income securities generally, the value of mortgage-related
securities can also be adversely affected by increases in general interest
rates relative to the yield provided by such securities. Such adverse effect is
especially possible with fixed-rate mortgage securities. If the yield available
on other investments rises above the yield of the fixed-rate mortgage
securities as a result of general increases in interest rate levels, the value
of the mortgage-related securities will decline. Although the negative effect
could be lessened if the mortgage-related securities were to be paid earlier
(thus permitting a Fund to reinvest the prepayment proceeds in investments
yielding the higher current interest rate), as described above the rate of
mortgage prepayments and early payment of mortgage-related securities generally
tends to decline during a period of rising interest rates.

Although the value of ARMS may not be affected by rising interest rates as much
as the value of fixed-rate mortgage

securities is affected by rising interest rates, ARMS may still decline in
value as a result of rising interest rates. Although, as described above, the
yield on ARMS varies with changes in the applicable interest rate or index,
there is often a lag between increases in general interest rates and increases
in the yield on ARMS as a result of relatively infrequent interest rate reset
dates. In addition, adjustable-rate mortgages and ARMS often have interest rate
or payment caps that limit the ability of the adjustable-rate mortgages or ARMS
to fully reflect increases in the general level of interest rates.

Zero coupon Treasury securities are U.S. Treasury bills issued without interest
coupons. Principal-only Treasury securities are U.S. Treasury notes and bonds
that have been stripped of their unmatured interest coupons, and receipts or
certificates representing interests in such stripped debt obligations and
coupons. Currently the only U.S. Treasury security issued without coupons is
the Treasury bill. Although the U.S. Treasury does not itself issue Treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS program
interest and principal payments on certain long-term Treasury securities may be
maintained separately in the Federal Reserve book entry system and may be
separately traded and owned. In addition, in the last few years a number of
banks and brokerage firms have separated ('stripped') the principal portions
from the coupon portions of U.S. Treasury bonds and notes and sold them
separately in the form of receipts or certificates representing undivided
interests in these instruments (which instruments are generally held by a bank
in a custodial or trust account). The staff of the Commission has indicated
that, in its view, these receipts or certificates should be considered as
securities issued by the bank or brokerage firm involved and, therefore, should
not be included in a Fund's categorization of U.S. Government securities. The
Funds disagree with the staff's position but will not treat such securities as
U.S. Government securities until final resolution of the issue.

Current federal tax law requires that a holder (such as a Fund) of a zero
coupon security accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment in cash on the security during the year. As a result, in order to make
the distributions necessary for a Fund not to be subject to federal income or
excise taxes, the Fund might be required to pay out as an income distribution
each year an amount, obtained by liquidation of portfolio securities or
borrowings if necessary, greater than the total amount of cash that the Fund
has actually received as interest during the year. Each Fund believes, however,
that it is highly unlikely that it would be necessary to liquidate portfolio
securities or borrow money in order to make such required distributions or to
meet its investment objective. For a discussion of the tax treatment of zero
coupon Treasury securities, see 'Dividends, Distributions and Taxes-Zero Coupon
Treasury Securities' in the Statement of Additional Information of each Fund
that is permitted to invest in such securities.

GLOBAL STRATEGIC INCOME and CORPORATE BOND may also invest in 'pay-in-kind'
debentures (i.e., debt obligations the interest on which may be paid in the
form of obligations of the same type rather than cash), which have
characteristics similar to zero coupon securities.

specified formula. A 'variable' interest rate adjusts at predetermined
intervals (e.g., daily, weekly or monthly), while a 'floating' interest rate
adjusts whenever a specified benchmark rate (such as the bank prime lending
rate) changes.

A Fund may invest in fixed-income securities that pay interest at a coupon rate
equal to a base rate, plus additional interest for a certain period of time if
short-term interest rates rise above a predetermined level or 'cap.' The amount
of such an additional interest payment typically is calculated under a formula
based on a short-term interest rate index multiplied by a designated factor.

BRADY BONDS. Brady Bonds are created through the exchange of existing
commercial bank loans to foreign entities for new obligations in connection
with debt restructurings under a plan introduced by former U.S. Secretary of
the Treasury, Nicholas F. Brady (the 'Brady Plan'). Brady Bonds have been
issued only recently, and, accordingly, do not have a long payment history.
They may be collateralized or uncollateralized and issued in various currencies
(although most are U.S. Dollar-denominated) and they are actively traded in the
over-the-counter secondary market.

U.S. Dollar-denominated, collateralized Brady Bonds, which may be fixed-rate
par bonds or floating rate discount bonds, are

generally collateralized in full as to principal due at maturity by U.S.
Treasury zero coupon obligations that have the same maturity as the Brady
Bonds. Interest payments on these Brady Bonds generally are collateralized by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of rolling interest payments based on the applicable
interest rate at that time and is adjusted at regular intervals thereafter.
Certain Brady Bonds are entitled to 'value recovery payments' in certain
circumstances, which in effect constitute supplemental interest payments but
generally are not collateralized. Brady Bonds are often viewed as having up to
four valuation components: (i) collateralized repayment of principal at final
maturity, (ii) collateralized interest payments, (iii) uncollateralized
interest payments, and (iv) any uncollateralized repayment of principal at
maturity (these uncollateralized amounts constitute the 'residual risk'). In
the event of a default with respect to collateralized Brady Bonds as a result
of which the payment obligations of the issuer are accelerated, the U.S.
Treasury zero coupon obligations held as collateral for the payment of
principal will not be distributed to investors, nor will such obligations be
sold and the proceeds distributed. The collateral will be held by the
collateral agent to the scheduled maturity of the defaulted Brady Bonds, which
will continue to be outstanding, at which time the face amount of the
collateral will equal the principal payments that would have then been due on
the Brady Bonds in the normal course. In addition, in light of the residual
risk of Brady Bonds and, among other factors, the history of defaults with
respect to commercial bank loans by public and private entities of countries
issuing Brady Bonds, investments in Brady Bonds are to be viewed as speculative.

CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures,
corporate notes and preferred stocks that are convertible into common stock.
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which provide a stable
stream of income with generally higher yields than those of equity securities
of the same or similar issuers. The price of a convertible security will
normally vary with changes in the price of the underlying stock, although the
higher yield tends to make the convertible security less volatile than the
underlying common stock. As with debt securities, the market value of
convertible securities tends to decline as interest rates increase and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price of
the underlying common stock. Convertible debt securities that are rated Baa or
lower by Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable
unrated securities may share some or all of the risks of debt securities with
those ratings. For a description of these risks, see 'Risk
Considerations-Investment in Lower-Rated Fixed-Income Securities.'

SHORT SALES. A short sale is effected by selling a security that a Fund does
not own, or if the Fund owns the security, it is not to be delivered upon
consummation of the sale. A short sale is 'against the box' if a Fund owns or
has the right to obtain without payment securities identical to those sold
short. SHORT-TERM U.S. GOVERNMENT and GLOBAL DOLLAR GOVERNMENT each may make
short sales only against the box and only for the purpose of deferring
realization of gain or loss for U.S. federal income tax purposes. In addition,
each of these Funds may not make a short sale if, as a result, more than 10% of
net assets (taken at market value), with respect to GLOBAL DOLLAR GOVERNMENT,
and 10% of total assets, with respect to SHORT-TERM U.S. GOVERNMENT, would be
held as collateral for short sales. If the price of the security sold short
increases between the time of the short sale and the time a Fund replaces the
borrowed security, the Fund will incur a loss; conversely, if the price
declines, the Fund will realize a capital gain. GLOBAL STRATEGIC INCOME may
make a short sale in anticipation that the market price of that security will
decline. When the Fund makes a short sale of a security that it does not own,
it must borrow from a broker-dealer the security sold short and deliver the
security to the broker-dealer upon conclusion of the short sale. The Fund may
be required to pay a fee to borrow particular securities and is often obligated
to pay over any payments received on such borrowed securities. The Fund's
obligation to replace the borrowed security will be secured by collateral
deposited with a broker-dealer qualified as a custodian and will consist of
cash or highly liquid securities similar to those borrowed. Depending on the
arrangements the Fund makes with the broker-dealer from which it borrowed the
security regarding remittance of any payments received by the Fund on such
security, the Fund may not receive any payments (including interest) on its
collateral deposited with the broker-dealer.

If the price of the security sold short increases between the time of the short
sale and the time GLOBAL STRATEGIC INCOME replaces the borrowed security, the
Fund will incur a loss; conversely, if the price declines, the Fund will
realize a short-term capital gain. Any gain will be decreased, and any loss
increased, by the transaction costs described above. Although the Fund's gain
is limited to the price at which it sold the security short, its potential loss
is theoretically unlimited.

In order to defer realization of gain or loss for U.S. federal income tax
purposes, GLOBAL STRATEGIC INCOME may also make short sales 'against the box.'
The Fund may not make a short sale if, as a result, more than 25% of its total
assets would be held as collateral for short sales.

Certain special federal income tax considerations may apply to short sales
entered into by a Fund. See 'Dividends, Distributions and Taxes' in the
relevant Fund's Statement of Additional Information.

agreements permit a Fund to keep all of its assets at work while retaining
'overnight' flexibility in pursuit of investments of a longer-term nature. A
Fund requires continual maintenance of collateral in an amount equal to, or in
excess of, the resale price. If a vendor defaults on its repurchase obligation,
a Fund would suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If a vendor goes bankrupt, a
Fund might be delayed in, or prevented from, selling the collateral for its
benefit. There is no percentage restriction on any Fund's ability to enter into
repurchase agreements, except that SHORT-TERM U.S. GOVERNMENT may enter into
repurchase agreements on not more than 25% of its total assets. The Funds may
enter into repurchase agreements with member banks of the Federal Reserve
System or 'primary dealers' (as designated by the Federal Reserve Bank of New
York), although LIMITED MATURITY GOVERNMENT, SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME and GLOBAL DOLLAR
GOVERNMENT currently enter into repurchase agreements only with their
custodians and such primary dealers.

Dollar rolls involve sales by a Fund of securities for delivery in the current
month and the Fund's simultaneously contracting to repurchase substantially
similar (same type and coupon) securities on a specified future date. During
the roll period, a Fund forgoes principal and interest paid on the securities.
A Fund is compensated by the difference between the current sales price and the
lower forward price for the future purchase (often referred to as the 'drop')
as well as by the interest earned on the cash proceeds of the initial sale.

LOANS OF PORTFOLIO SECURITIES. A Fund may make secured loans of portfolio
securities to brokers, dealers and financial institutions, provided that cash,
liquid high-grade debt securities or bank letters of credit equal to at least
100% of the market value of the securities loaned is deposited and maintained
by the borrower with the Fund. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio securities,
thereby earning additional income, or receive an agreed upon amount of income
from a borrower who has delivered equivalent collateral. Each Fund will have
the right to regain record ownership of loaned securities or equivalent
securities in order to exercise ownership rights such as voting rights,
subscription rights and rights to dividends, interest or distributions. A Fund
may pay reasonable finders', administrative and custodial fees in connection
with a loan. A Fund will not lend portfolio securities in excess of 25%, with
respect to SHORT-TERM U.S. GOVERNMENT and GLOBAL STRATEGIC INCOME, and 20%,
with respect to each of LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES
INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN
GOVERNMENT INCOME and GLOBAL DOLLAR GOVERNMENT, of its total assets, nor will a
Fund lend portfolio securities to any officer, director, employee or affiliate
of the Fund or Alliance.

offers), including many currency swaps and any assets used to cover currency
swaps, (ii) over-the-counter options and assets used to cover over-the-counter
options, and (iii) repurchase agreements not terminable within seven days. Rule
144A securities that have legal or contractual restrictions on resale but have
a readily available market are not deemed illiquid. Alliance will monitor the
liquidity of each Fund's Rule 144A portfolio securities under the supervision
of the Directors of that Fund. A Fund that invests in illiquid securities may
not be able to sell such securities and may not be able to realize their full
value upon sale.

PORTFOLIO TURNOVER. Alliance anticipates that the annual turnover rate will not
exceed 300% for SHORT-TERM U.S. GOVERNMENT, SHORT-TERM MULTI-MARKET, NORTH
AMERICAN GOVERNMENT INCOME and GLOBAL DOLLAR GOVERNMENT; 400% for U.S.
GOVERNMENT; 500% for LIMITED MATURITY GOVERNMENT and GLOBAL STRATEGIC INCOME;
and 600% for MORTGAGE SECURITIES INCOME, MULTI-MARKET STRATEGY and CORPORATE
BOND. A 300%, 400%, 500% and 600% annual turnover rate would occur, for
example, when all of the securities in a Fund's portfolio are replaced three,
four, five and six times, respectively, in a period of one year. These rates of
portfolio turnover are greater than those of most other investment companies. A
high rate of portfolio turnover involves correspondingly greater brokerage and
other expenses than a lower rate, which must be borne by the Fund and its
shareholders. High portfolio turnover also may result in the realization of
substantial net short-term capital gains. See 'Dividends, Distributions and
Taxes' in each Fund's Statement of Additional Information.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement
of Additional Information.

without regard to this limitation, (ii) invest more than 25% of the value of
its total assets in the securities of issuers conducting their principal
business activities in a single industry, except that this limitation shall not
apply to investments in the mortgage and mortgage-financed industry (in which
more than 25% of the value of the Fund's total assets will, except for
temporary defensive positions, be invested) or U.S. Government securities,
(iii) borrow money except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might require the untimely
disposition of securities, borrowing in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting redemptions may not exceed 5% of the
value of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made, outstanding borrowings in excess of 5% of the value of the Fund's total
assets will be repaid before any subsequent investments are made, (iv) pledge,
hypothecate, mortgage or otherwise encumber its assets, except in an amount of
not more than 15% of the value of its total assets to secure borrowings for
temporary or emergency purposes and except as provided in (vi) below, provided,
however, that this limitation does not apply to deposits made in connection
with the entering into and holding of interest rate futures contracts, (v)
invest more than 10% of the value of its total assets in the aggregate in
illiquid securities or other illiquid investments and repurchase agreements
maturing in more than seven days, or (vi) lend its portfolio securities if
immediately after such a loan more than 20% of the value of the Fund's total
assets would be subject to such loans.

GLOBAL STRATEGIC INCOME may not : (i) borrow money, except the Fund may, in
accordance with provisions of the 1940 Act, (a) borrow from a bank, if after
such borrowing there is asset coverage of at least 300% as defined in the 1940
Act, and (b) borrow for temporary or emergency purposes in an amount not
exceeding 5% of the value of the total assets of the Fund, or (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.

RISK CONSIDERATIONS
FIXED-INCOME SECURITIES. The value of each Fund's shares will fluctuate with
the value of its investments. The value of each Fund's investments will change
as the general level of interest rates fluctuates. During periods of falling
interest rates, the values of a Fund's securities generally rise. Conversely,
during periods of rising interest rates, the values of a Fund's securities
generally decline. Changes in interest rates have a greater effect on
securities with longer maturities and durations than those with shorter
maturities and durations.

Alliance believes that, except for currency fluctuations between the U.S.
Dollar and the Canadian Dollar, the matters described above are not likely to
have a material adverse effect on NORTH AMERICAN GOVERNMENT INCOME'S
investments in the securities of Canadian issuers or investments denominated in
Canadian issuers or investments denominated in Canadian Dollars. The factors
described above are more likely to have a material adverse effect on the Fund's
investments in the securities of Mexican and other non-Canadian foreign
issuers, including investments in securities denominated in Mexican Pesos or
other non-Canadian foreign currencies. If not hedged, however, currency
fluctuations could affect the unrealized appreciation and depreciation of
Canadian Government securities as expressed in U.S. Dollars.

to the U.S. Dollar. These changes will affect a Fund's net assets,
distributions and income. If the value of the foreign currencies in which a
Fund receives income falls relative to the U.S. Dollar between receipt of the
income and the making of Fund distributions, a Fund may be required to
liquidate securities in order to make distributions if the Fund has
insufficient cash in U.S. Dollars to meet the distribution requirements that
the Fund must satisfy to qualify as a regulated investment company for federal
income tax purposes. Similarly, if an exchange rate declines between the time a
Fund incurs expenses in U.S. Dollars and the time cash expenses are paid, the
amount of the currency required to be converted into U.S. Dollars in order to
pay expenses in U.S. Dollars could be greater than the equivalent amount of
such expenses in the currency at the time they were incurred. In light of these
risks, a Fund may engage in certain currency hedging transactions, which
themselves, involve certain special risks. See 'Additional Investment
Practices' above.

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

By investing in sovereign debt obligations, the Fund will be exposed to the
direct or indirect consequences of political, social and economic changes in
various countries. Political changes in a country may affect the willingness of
a foreign government to make or provide for timely payments of its obligations.
The country's economic status, as reflected, among other things, in its
inflation rate, the amount of its external debt and its gross domestic product,
will also affect the government's ability to honor its obligations.

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

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

Borrowings by a Fund result in leveraging of the Fund's shares of common stock.
Utilization of leverage, which is usually considered speculative, however,
involves certain risks to a

Fund's shareholders. These include a higher volatility of the net asset value
of a Fund's shares of common stock and the relatively greater effect on the net
asset value of the shares. So long as a Fund is able to realize a net return on
its investment portfolio that is higher than the interest expense paid on
borrowings, the effect of leverage will be to cause the Fund's shareholders to
realize a higher current net investment income than if the Fund were not
leveraged. On the other hand, interest rates on U.S. Dollar-denominated and
foreign currency-denominated obligations change from time to time as does their
relationship to each other, depending upon such factors as supply and demand
forces, monetary and tax policies within each country and investor
expectations. Changes in such factors could cause the relationship between such
rates to change so that rates on U.S. Dollar-denominated obligations may
substantially increase relative to the foreign currency-denominated obligations
in which the Fund may be invested. To the extent that the interest expense on
borrowings approaches the net return on a Fund's investment portfolio, the
benefit of leverage to the Fund's shareholders will be reduced, and if the
interest expense on borrowings were to exceed the net return to shareholders, a
Fund's use of leverage would result in a lower rate of return than if a Fund
were not leveraged. Similarly, the effect of leverage in a declining market
could be a greater decrease in net asset value per share than if the Fund were
not leveraged. In an extreme case if a Fund's current investment income were
not sufficient to meet the interest expense on borrowings, it could be
necessary for the Fund to liquidate certain of its investments, thereby
reducing the net asset value of a Fund's shares.

In the event of an increase in rates on U.S. Government securities or other
changed market conditions, to the point where leverage by either MULTI-MARKET
STRATEGY or NORTH AMERICAN GOVERNMENT INCOME could adversely affect the Funds'
shareholders, as noted above, or in anticipation of such changes, either Fund
may increase the percentage of its investment portfolio invested in U.S.
Government securities, which would tend to offset the negative impact of
leverage on Fund shareholders. Either Fund may also reduce the degree to which
it is leveraged by repaying amounts borrowed.

Under the 1940 Act, a Fund is not permitted to borrow unless immediately after
such borrowing there is 'asset coverage,' as that term is defined and used in
the 1940 Act, of at least 300% for all borrowings of the Fund. In addition,
under the 1940 Act, in the event asset coverage falls below 300%, a Fund must
within three days reduce the amount of its borrowing to such an extent that the
asset coverage of its borrowings is at least 300%. Assuming, for example,
outstanding borrowings representing not more than one-third of a Fund's total
assets less liabilities (other than such borrowings), the asset coverage of the
Fund's portfolio would be 300%; while outstanding borrowings representing 25%
of the Fund's total assets less liabilities (other than such borrowings), the
asset coverage of the Fund's portfolio would be 400%. A Fund will maintain
asset coverage of outstanding borrowings of at least 300% and if necessary
will, to the extent possible, reduce the amounts borrowed by making repayments
from time to time in order to do so. Such repayments could require a Fund to
sell portfolio securities at times considered disadvantageous by Alliance. In
the event that a Fund is required to sell portfolio securities in order to make
repayments, such sales of portfolio securities could cause the Fund to incur
related transaction costs and might cause the Fund to realize gains on
securities held for less than three months. Because not more than 30% of a
Fund's gross income may be derived from the sale or disposition of stocks and
securities held for less than three months to maintain the Fund's tax status as
a regulated investment company, such gains would limit the ability of a Fund to
sell other securities held for less than three months that a Fund might wish to
sell in the ordinary course of its portfolio management and thus might
adversely affect the Fund's yield. See 'Dividends, Distributions and Taxes.'

GLOBAL STRATEGIC INCOME may borrow in order to purchase securities or make
other investments. Each of MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT
INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC INCOME may also borrow to
repurchase its shares or to meet redemption requests. In addition, each Fund
may borrow for temporary purposes (including the purposes mentioned in the
preceding sentence) in an amount not exceeding 5% of the value of the assets of
the Fund. Borrowings for temporary purposes are not subject to the 300% asset
average limit described above. See 'Certain Fundamental Investment Policies.'
SHORT-TERM U.S. GOVERNMENT, MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT
INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC INCOME may also borrow
through the use of reverse repurchase agreements, and GLOBAL DOLLAR GOVERNMENT
also through the use of dollar rolls to the extent permitted by the 1940 Act.
See 'Investment Objectives and Policies-Reverse Repurchase Agreements and
Dollar Rolls.'

INVESTMENT IN THE BANKING INDUSTRY. Due to the investment policies of
MULTI-MARKET STRATEGY and SHORT-TERM MULTI-MARKET with respect to investments
in the banking industry, those Funds will have greater exposure to the risk
factors which are characteristic of such investments. In particular, the value
of and investment return on each Fund's shares will be affected by economic or
regulatory developments in or related to the banking industry. Sustained
increases in interest rates can adversely affect the availability and cost of
funds for a bank's lending activities, and a deterioration in general economic
conditions could increase the exposure to credit losses. The banking industry
is also subject to the effects of: the concentration of loan portfolios in
particular business such as real estate, energy, agriculture or high
technology-related companies; national and local regulation; and competition
within those industries as well as with other types of financial institutions.
In addition, each Fund's investments in commercial banks located in several
foreign countries are subject to additional risks due to the combination in
such banks of commercial banking and diversified securities

activities. As discussed above, however, the Funds will seek to minimize their
exposure to such risks by investing only in debt securities which are
determined to be of high quality.

INVESTMENT IN LOWER-RATED FIXED-INCOME SECURITIES. Lower-rated securities are
subject to greater risk of loss of principal and interest than higher-rated
securities. They are also generally considered to be subject to greater market
risk than higher-rated securities, and the capacity of issuers of lower-rated
securities to pay interest and repay principal is more likely to weaken than is
that of issuers of higher-rated securities in times of deteriorating economic
conditions or rising interest rates. In addition, lower-rated securities may be
more susceptible to real or perceived adverse economic conditions than
investment grade securities, although the market values of securities rated
below investment grade and comparable unrated securities tend to react less to
fluctuations in interest rate levels than do those of higher-rated securities.
Securities rated Ba or BB are judged to have speculative elements or to be
predominantly speculative with respect to the issuer's ability to pay interest
and repay principal. Securities rated B are judged to have highly speculative
elements or to be predominantly speculative. Such securities may have small
assurance of interest and principal payments. Securities rated Baa by Moody's
are also judged to have speculative characteristics.

NON-RATED SECURITIES. Non-rated securities will also be considered for
investment by NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT and
CORPORATE BOND when Alliance believes that the financial condition of the
issuers of such securities, or the protection afforded by the terms of the
securities themselves, limits the risk to the Fund to a degree comparable to
that of rated securities which are consistent with the Fund's objective and
policies.

NON-DIVERSIFIED STATUS. Each of SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY,
NORTH AMERICAN GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC
INCOME is a 'non-diversified' investment company, which means the Fund is not
limited in the proportion of its assets that may be invested in the securities
of a single issuer. However, each Fund intends to conduct its operations so as
to qualify to be taxed as a 'regulated investment company' for purposes of the
Code, which will relieve the Fund of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See 'Dividends,
Distributions and Taxes' in each Fund's Statement of Additional Information. To
so qualify, among other requirements, each Fund will limit its investments so
that, at the close of each quarter of the taxable year, (i) not more than 25%
of the Fund's total assets will be invested in the securities of a single
issuer, and (ii) with respect to 50% of its total assets, not more than 5% of
its total assets will be invested in the securities of a single issuer and the
Fund will not own more than 10% of the outstanding voting securities of a
single issuer. A Fund's investments in U.S. Government securities are not
subject to these limitations. Because each of SHORT-TERM MULTI-MARKET,
MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME and GLOBAL DOLLAR
GOVERNMENT is a non-diversified investment company, it may invest in a smaller
number of individual issuers than a diversified investment company, and an
investment in such Fund may, under certain circumstances, present greater risk
to an investor than an investment in a diversified investment company.

and loan participations may be treated as separate issuers for the purposes of
these tests. Accordingly, in order to meet the diversification tests and
thereby maintain its status as a regulated investment company, NORTH AMERICAN
GOVERNMENT INCOME will be required to diversify its portfolio of foreign
government securities in a manner which would not be necessary if the Fund had
made similar investments in U.S. Government securities.

PURCHASE AND SALE OF SHARES
_______________________________________________________________________________

HOW TO BUY SHARES
Each Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares of each Fund may be purchased
through your financial representative at net asset value without any initial or
contingent deferred sales charges and without ongoing distribution expenses.
Advisor Class shares may be purchased soley by investors (i) through accounts
established under a fee-based program, sponsored and maintained by a registered
broker-dealer or other financial intermediary and approved by Alliance Fund
Distributors, Inc. ('AFD'), each Fund's principal underwriter, pursuant to
which each investor pays an asset-based fee at an annual rate of at least .50%
of the assets in the investor's account to the broker-dealer or financial
intermediary, or its affiliate or agent, for investment advisory or
administrative services, or (ii) through a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least 1,000
participants or $25 million in assets. The minimum initial investment in each
Fund is $250. The minimum for subsequent investments in each Fund is $50.
Investments of $25 or more are allowed under the automatic investment program
of each Fund and under a 403(b)(7) retirement plan. Share certificates are
issued only upon request. See the Subscription Application and Statements of
Additional Information for more information.

The Funds may refuse any order to purchase Advisor Class shares. In this
regard, the Funds reserve the right to restrict purchases of Advisor Class
shares (including exchanges) when there appears to be evidence of a pattern
of frequent purchases and sales made in response to short-term fluctuations in
share price.

HOW THE FUNDS VALUE THEIR SHARES
The net asset value of Advisor Class shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to the Advisor Class by the
outstanding shares of the Advisor Class. Shares are valued each day the New
York Stock Exchange (the 'Exchange') is open as of the close of regular trading
(currently 4:00 p.m. Eastern time). The securities in a Fund are valued at
their current market value determined on the basis of market quotations or, if
such quotations are not readily available, such other methods as the Fund's
Directors and Trustees believe would accurately reflect fair market value.

HOW TO SELL SHARES
You may 'redeem', i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial representative. The
price you will receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check or
electronic funds transfer, a Fund will not send proceeds until it is reasonably
satisfied that the check or electronic funds transfer has been collected (which
may take up to 15 days). If you are in doubt what documents are required by
your fee-based program or employee benefit plan, you should contact your
financial representative.

SELLING SHARES THROUGH YOUR FINANCIAL REPRESENTATIVE
Your financial representative must receive your request before 4:00 p.m.
Eastern time, and your financial representative must transmit your request to
the Fund by 5:00 p.m. Eastern time, for you to receive that day's net asset
value. Your financial representative is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service.

SELLING SHARES DIRECTLY TO A FUND
Send a signed letter of instruction or stock power form to Alliance Fund
Services, Inc. ('AFS'), along with certificates, if any, that represent the
shares you want to sell. For your protection, signatures must be guaranteed by
a bank, a member firm of a national stock exchange or other eligible guarantor
institution. Stock power forms are available from your financial
representative, AFS, and many commercial banks. Additional documentation is
required for the sale of shares by corporations, intermediaries, fiduciaries
and surviving joint owners. For details contact:

Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672

Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to 800-221-5672.
Telephone redemption requests must be made by 4 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value and, except for
certain omnibus accounts, may be made only once in any 30 day period. A
shareholder who has completed the Telephone Transactions section of the
Subscription Application, or the Shareholder Options form obtained from AFS,
can elect to have the proceeds of their redemption sent to their bank via an
electronic funds transfer. Proceeds of telephone redemptions also may be sent
by check to a shareholder's address of record. Except for certain omnibus
accounts, redemption requests by electronic funds transfer may not exceed
$100,000 and redemption requests by check may not exceed $50,000. Telephone
redemption is not available for shares held in nominees or 'street name'
accounts or retirement plan accounts or shares held by a shareholder who has
changed his or her address of record within the previous 30 calendar days.

GENERAL
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained
below $200 for 90 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed.

SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672.

HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of any other Fund for Advisor Class
shares of other Alliance Mutual Funds (including AFD Exchange Reserves, a money
market fund managed by Alliance). Exchanges of shares are made at the net asset
values next determined, without sales or service charges. Exchanges may be made
by telephone or written request. Telephone exchange requests must be received
by AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive
that day's net asset value.

GENERAL
If you are a Fund shareholder through an account established under a fee-based
program, your fee-based program may impose requirements with respect to the
purchase, sale or exchange of Advisor Class shares of a Fund that are different
from those described in this Prospectus. A transaction fee may be charged by
your financial representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.

Each Fund offers three classes of shares other than the Advisor Class, which
are Class A, Class B and Class C. All classes of shares of a Fund have a common
investment objective and investment portfolio. Class A shares are offered with
an initial sales charge and pay a distribution services fee. Class B shares
have a contingent deferred sales charge (a 'CDSC') and also pay a distribution
services fee. Class C shares have no initial sales charge or CDSC but pay a
distribution services fee. Because Advisor Class shares have no initial sales
charge or CDSC and pay no distribution services fee, Advisor Class shares are
expected to have different performance from Class A, Class B or Class C
shares. You may obtain more information about Class A, Class B and Class C
shares, which are not offered by this Prospectus, by contacting AFS by
telephone at 1-800-221-5672 or by contacting your financial representative.

MANAGEMENT OF THE FUNDS
_______________________________________________________________________________

ADVISER
Alliance, which is a Delaware limited partnership with principal offices at
1345 Avenue of the Americas, New York, New York 10105, has been retained under
an advisory agreement (the 'Advisory Agreement') to provide investment advice
and, in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors or Trustees of
the Fund.

Alliance is a leading international investment manager supervising client
accounts with assets as of March 1, 1996 totaling more than $156 billion
(of which more than $48 billion represented the assets of investment
companies). Alliance's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations
and endowment funds. The 50 registered investment companies managed by Alliance
comprising 107 separate investment portfolios currently have over two million
shareholders. As of March 1, 1996, Alliance was retained as an investment
manager for 34 of the Fortune 100 companies.

Alliance Capital Management Corporation ('ACMC'), the sole general partner of,
and the owner of a 1% general partnership interest in, Alliance, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ('Equitable'), one of the largest life insurance companies in the United
States, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA, a French insurance holding
company. Certain information concerning the ownership and control of Equitable
by AXA is set forth in each Fund's Statement of Additional Information under
'Management of the Fund.'

Principal occupation
Employee; time period; during the past
Fund title with ACMC five years
- - -------------------------------------------------------------------------
Short-Term U.S. Patricia J. Young since 1995 Associated with
Government -Senior Vice President Alliance since
March 1992; prior
thereto, a managing
director and portfolio
manager for Hyperion
Capital since March 1991
and a managing director
with Fischer, Francis,
Trees & Watts

Principal occupation
Employee; time period; during the past
Fund title with ACMC five years
- - -------------------------------------------------------------------------
Paul A. Ullman Associated with
since 1995-Vice President Alliance since
March 1992; prior
thereto, a director and
portfolio manager for
Hyperion Capital since
July 1990 and a
Vice President at
Salomon Brothers Inc.

U.S. Government Wayne D. Lyski since 1983 Associated with Alliance
-Executive Vice President

Paul J. DeNoon since Associated with Alliance
January 1992- since January 1992;
Vice President prior thereto, a
Vice President at
Manufacturers
Hanover Trust

Limited Maturity Patricia J. Young (see above)
Government since inception -(see above)

Paul A. Ullman (see above)
since inception-(see above)

Mortgage Securities Patricia J. Young since (see above)
Income March 1992-(see above)

Paul A. Ullman since (see above)
March 1992-(see above)

Short-Term Douglas J. Peebles since Associated with
Multi-Market 1995-Vice President Alliance

Multi-Market Douglas J. Peebles since (see above)
Strategy inception-(see above)

North American Wayne D. Lyski since inception (see above)
Government Income -(see above)

Global Dollar Wayne D. Lyski since inception (see above)
Government -(see above)

Global Strategic Wayne D. Lyski since inception (see above)
Income -(see above)

Douglas J. Peebles since (see above)
inception-(see above)

Corporate Bond Wayne D. Lyski since (see above)
1987-(see above)

Paul J. DeNoon since (see above)
January 1992-(see above)

DISTRIBUTION SERVICES AGREEMENTS
Each Fund has entered into a Distribution Services Agreement (the 'Agreement')
with AFD with respect to Advisor Class shares. The Glass-Steagall Act and other
applicable laws may limit the ability of a bank or other depository institution
to become an underwriter or distributor of securities. However, in the opinion
of the Funds' management, based on the advice of counsel, these laws do not
prohibit such depository institutions from providing services for investment
companies such as the administrative, accounting and other services referred to
in the Agreements. In the event that a change in these laws prevented a bank
from providing such services, it is expected that other service arrangements
would be made and that shareholders would not be adversely affected. The State
of Texas requires that shares of a Fund may be sold in that state only by
dealers or other financial institutions that are registered there as
broker-dealers.

DIVIDENDS, DISTRIBUTIONS AND TAXES
_______________________________________________________________________________

DIVIDENDS AND DISTRIBUTIONS
Dividends on shares of a Fund will be declared on each Fund business day from
the Fund's net investment income. Dividends on shares for Saturdays, Sundays
and holidays will be declared on the previous business day. Each Fund pays
dividends on its shares after the close of business on the twentieth day of
each month or, if such day is not a business day, the first business day
thereafter. At your election (which you may change at least 30 days prior to
the record date for a particular dividend or distribution), dividends and
distributions are paid in cash or reinvested without charge in additional
shares of the same class having an aggregate net asset value as of the payment
date of the dividend or distribution equal to the cash amount thereof.

If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.

FOREIGN INCOME TAXES
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes

withheld at the source. To the extent that any Fund is liable for foreign
income taxes withheld at the source, each Fund intends, if possible, to operate
so as to meet the requirements of the Code to 'pass through' to the Fund's
shareholders credits for foreign income taxes paid, but there can be no
assurance that any Fund will be able to do so.

U.S. FEDERAL INCOME TAXES
Each Fund intends to qualify to be taxed as a 'regulated investment company'
under the Code. To the extent that a Fund distributes its taxable income and
net capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it pays out to its
shareholders. Dividends out of net ordinary income and distributions of net
short-term capital gains are taxable to the recipient shareholders as ordinary
income. In the case of corporate shareholders, such dividends from certain
Funds may be eligible for the dividends-received deduction, except that the
amount eligible for the deduction is limited to the amount of qualifying
dividends received by the Fund. A corporation's dividends-received deduction
will be disallowed unless the corporation holds shares in the Fund at least 46
days. Furthermore, the dividends-received deduction will be disallowed to the
extent a corporation's investment in shares of a Fund is financed with
indebtedness.

Distributions by a Fund may be subject to state and local taxes. U.S.
GOVERNMENT, LIMITED MATURITY GOVERNMENT, MORTGAGE SECURITIES INCOME, SHORT-TERM
MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME and
CORPORATE BOND are qualified to do business in the Commonwealth of Pennsylvania
and, therefore, are subject to the Pennsylvania foreign franchise and corporate
net income tax in respect of their business activities in Pennsylvania.
Accordingly, shares of such Funds are exempt from Pennsylvania personal
property taxes. These Funds anticipate continuing such business activities but
reserve the right to suspend them at any time, resulting in the termination of
the exemptions.

GENERAL INFORMATION
_______________________________________________________________________________

PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, a
Fund may consider sales of its shares as a factor in the selection of dealers
to enter into portfolio transactions with the Fund.

ORGANIZATION
Each of the following Funds is a Maryland corporation organized in the year
indicated: U.S. GOVERNMENT PORTFOLIO and CORPORATE BOND PORTFOLIO (each a
series of Alliance Bond Fund, Inc.) (1973), ALLIANCE LIMITED MATURITY
GOVERNMENT FUND, INC. (1992), ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
(1983), ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC. (1989), ALLIANCE
MULTI-MARKET STRATEGY TRUST, INC. (1991), ALLIANCE NORTH AMERICAN GOVERNMENT
INCOME TRUST, INC. (1992) and ALLIANCE GLOBAL DOLLAR GOVERNMENT FUND, INC.
(1993). Prior to March 1, 1996, ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC.
was known as Alliance Mortgage Strategy Trust, Inc. Prior to January 4, 1993,
CORPORATE BOND PORTFOLIO was known as Monthly Income Portfolio. ALLIANCE
SHORT-TERM U.S. GOVERNMENT FUND is a series of The Alliance Portfolios, a
Massachusetts business trust that was organized in 1987. Prior to August 2,
1993, The Alliance Portfolios was known as The Equitable Funds and SHORT-TERM
U.S. GOVERNMENT was known as The Equitable Short-Term U.S. Government Fund.

A shareholder in a Fund will be entitled to his or her pro rata share of all
dividends and distributions arising from the Fund's assets and, upon redeeming
shares, will receive the then current net asset value of the Fund represented
by the redeemed shares. The Funds are empowered to establish, without
shareholder approval, additional portfolios, which may have different
investment objectives, and additional classes of shares. If an additional
portfolio or class were established in a Fund, each share of the portfolio or
class would normally be entitled to one vote for all purposes. Generally,
shares of each portfolio and class would vote together as a single class on
matters, such as the election of Directors or Trustees, that affect each
portfolio and class in substantially the same manner. Advisor Class, Class A,
Class B and Class C shares have identical voting, dividend, liquidation and
other rights, except that each class bears its own transfer agency expenses and
each of Class A, Class B and Class C shares bears its own distribution
expenses. Each class of shares votes separately with respect to matters for
which separate class voting is appropriate under applicable law. Shares are
freely transferable, are entitled to dividends as determined by the Directors
and Trustees and, in liquidation of a Fund, are entitled to receive the net
assets of the Fund. Since this Prospectus sets forth information about all the
Funds, it is theoretically possible that a Fund might be liable for any
materially inaccurate or incomplete disclosure in this Prospectus concerning
another Fund. Based on the advice of counsel, however, the Funds believe that
the potential liability of each Fund with respect to the disclosure in this
Prospectus extends only to the disclosure relating to that Fund. Certain
additional matters relating to a Fund's organization are discussed in its
Statement of Additional Information.

PENDING LEGAL PROCEEDINGS INVOLVING NORTH AMERICAN GOVERNMENT INCOME
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
('Complaint') styled IN RE ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST,
INC. SECURITIES LITIGATION was filed in the United States District Court for
the Southern District of New York against the Fund, Alliance, ACMC, AFD, The
Equitable Companies Incorporated, a parent of Alliance, certain officers of the
Fund, certain current and former directors of the Fund, certain current and
former officers of ACMC and certain directors of ACMC, alleging violations of
federal securities laws, fraud and breach of fiduciary duty in connection with
the Fund's investments in Mexican and Argentine securities. The Complaint seeks
certification of a plaintiff class of all persons who purchased or owned Class
A, B or C shares of the Fund from March 27, 1992 through December 23, 1994. The
Complaint alleges that as of the date of the Complaint, the Fund's losses
exceeded $750,000,000. The Complaint seeks as relief unspecified damages, costs
and attorneys' fees.

On September 26, 1995, defendants jointly filed a motion to dismiss the
Complaint in its entirety. The Fund and Alliance believe that the allegations
in the Complaint are without merit and intend to vigorously defend against
these claims.

REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer
agent and dividend-disbursing agent for a fee based upon the number of
shareholder accounts maintained for the Fund.

PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.

PERFORMANCE INFORMATION
From time to time, the Funds advertise their 'yield' and 'total return,' which
are computed separately for each class of shares, including Advisor Class
shares. A Fund's yield for any 30-day (or one-month) period is computed by
dividing the net investment income per share earned during such period by the
maximum public offering price per share on the last day of the period, and then
annualizing such 30-day (or one-month) yield in accordance with a formula
prescribed by the Commission which provides for compounding on a semi-annual
basis. A Fund may also state in sales literature an 'actual distribution rate'
for each class which is computed in the same manner as yield except that actual
income dividends declared per share during the period in question are
substituted for net investment income per share. The actual distribution rate
is computed separately for each class of shares, including Advisor Class
shares. Advertisements of a Fund's total return disclose its average annual
compounded total return for the periods prescribed by the Commission. A Fund's
total return for each such period is computed by finding, through the use of a
formula prescribed by the Commission, the average annual compounded rate of
return over the period that would equate an assumed initial amount invested to
the value of the investment at the end of the period. For purposes of computing
total return, income dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to

purchases and redemptions of a Fund's shares are assumed to have been paid. A
Fund's advertisements may quote performance rankings or ratings of a Fund by
financial publications or independent organizations such as Lipper Analytical
Services, Inc. and Morningstar, Inc. or compare a Fund's performance to various
indices.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

APPENDIX A: BOND RATINGS
_______________________________________________________________________________

MOODY'S INVESTORS SERVICE, INC.
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge.' Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca-Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C-Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Absence of Rating-When no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not published
in Moody's publications.

STANDARD & POOR'S RATINGS SERVICES
AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA-Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

A-1

CI-The rating CI is reserved for income bonds on which no interest is being
paid.

Plus (+) or Minus (-)-The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NR-Not rated.

DUFF & PHELPS CREDIT RATING CO.
AAA-Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+,AA, AA- -High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.

A+, A, A- -Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- -Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

DD-Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.

FITCH INVESTORS SERVICE, INC.
AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default.

The ability to meet obligations requires an advantageous business and economic
environment.

CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C-Bonds are in imminent default in payment of interest or principal.

NR-Indicates that Fitch does not rate the specific issue.

A-2

APPENDIX B: GENERAL INFORMATION ABOUT CANADA, MEXICO AND ARGENTINA
_______________________________________________________________________________

GENERAL INFORMATION ABOUT CANADA
Canada consists of a federation of ten Provinces and two federal territories
(which generally fall under federal authority) with a constitutional division
of powers between the federal and Provincial governments. The Parliament of
Canada has jurisdiction over all areas not assigned exclusively to the
Provincial legislatures, and has jurisdiction over such matters as the federal
public debt and property, the regulation of trade and commerce, currency and
coinage, banks and banking, national defense, the postal services, navigation
and shipping and unemployment insurance.

Canadian Dollars are fully exchangeable into U.S. Dollars without foreign
exchange controls or other legal restriction. Since the major developed-country
currencies were permitted to float freely against one another, the range of
fluctuation in the U.S. Dollar/Canadian Dollar exchange rate has been narrower
than the range of fluctuation between the U.S. Dollar and most other major
currencies. During the last several years, Canada has experienced a weakening
of its currency. In January 1995, the Canadian Dollar fell to a nine-year low
against the U.S. Dollar, decreasing in value compared to the U.S. Dollar by
approximately 25% from October 1991, but from January 20, 1995, through
February 15, 1996, the Canadian Dollar increased in value by approximately 3.4%
against the U.S. Dollar. The range of fluctuation that occurred in the past is
not necessarily indicative of the range of fluctuation that will occur in the
future. Future rates of exchange cannot be accurately predicted.

GENERAL INFORMATION ABOUT THE UNITED MEXICAN STATES
The United Mexican States ('Mexico') is a nation formed by 31 states and a
Federal District (Mexico City). The Political Constitution of Mexico, which
took effect on May 1, 1917, established Mexico as a Federal Republic and
provides for the separation of executive, legislative and judicial branches.
The President and the members of the General Congress are elected by popular
vote.

While in recent years the Mexican economy has experienced improvement in a
number of areas, including seven consecutive years (1987-1994) of growth in
gross domestic product and a substantial reduction in the rate of inflation and
in public sector financial deficit, beginning in 1994, Mexico has experienced
an economic crisis that led to the devaluation of the Peso in December 1994.
Much of the past improvement in the Mexican economy has been attributable to a
series of economic policy initiatives initiated by the Mexican government over
the past decade, which seek to modernize and reform the Mexican economy,
control inflation, reduce the financial deficit, increase public revenues
through the reform of the tax system, establish a competitive and stable
currency exchange rate, liberalize trade restrictions and increase investment
and productivity, while reducing the government's role in the economy. In this
regard, the Mexican government has been proceeding with a program for
privatizing certain state owned enterprises, developing and modernizing the
securities markets, increasing investment in the private sector and permitting
increased levels of foreign investment. The recent adoption by Canada, the
United States and Mexico of the North American Free Trade Agreement could also
contribute to the growth of the Mexican economy.

While the Mexican economy has stabilized, it is still in a recession and
suffers from high inflation and high interest rates. In October 1995, the
Mexican government announced a new accord designed to encourage economic growth
and reduce inflation. It cannot be accurately predicted whether this accord
will achieve its purpose. Mexico's economy may also be influenced by
international economic conditions, particularly those in the United States, and
by world prices for oil and other commodities. The recovery of the economy will
require

B-1

In August 1976, the Mexican government established a policy of allowing the
Mexican Peso to float against the U.S. Dollar and other currencies. Under this
policy, the value of the Mexican Peso consistently declined against the U.S.
Dollar. Under economic policy initiatives implemented since December 1987, the
Mexican government introduced a series of schedules allowing for the gradual
devaluation of the Mexican Peso against the U.S. Dollar. These gradual
devaluations continued until December 1994. On December 20, 1994, the Mexican
government announced a new policy that would allow a more substantial yet still
controlled devaluation of the Mexican Peso. On December 22, 1994, the Mexican
government announced that it would not continue with the policy announced two
days earlier and would instead permit the Peso to float against other
currencies, resulting in a continued decline against the U.S. Dollar. From
December 22, 1994 through February 15, 1996, the Mexican Peso decreased in
value compared to the U.S. Dollar by approximately 60%.

GENERAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA
The Republic of Argentina ('Argentina') consists of 23 provinces and the
federal capital of Buenos Aires. Its federal constitution provides for an
executive branch headed by a President, a legislative branch and a judicial
branch. Each province has its own constitution, and elects its own governor,
legislators and judges, without the intervention of the federal government.

The military has intervened in the political process on several occasions since
the 1930's and has ruled the country for 22 of the past 62 years. The most
recent military government ruled the country from 1976 to 1983. Four
unsuccessful military uprisings have occurred since 1983, the most recent in
December 1990.

In the decade prior to the current announcement of a new economic plan in March
1991, the Argentine economy was characterized by low and erratic growth,
declining investment rates and rapidly worsening inflation. Despite its
strengths, which include a well-balanced natural resource base and a high
literacy rate, the Argentine economy failed to respond to a series of economic
plans in the 1980's. The Economy Minister's plan represented a pronounced
departure from its predecessors in calling for raised revenues, reduced
expenditures and a reduced public deficit. The extensive privatization program
commenced in 1989 was accelerated, the domestic economy deregulated and opened
up to foreign trade and the frame-work for foreign investment reformed. As a
result of the economic stabilization reforms, gross domestic product has
increased and inflation has decreased.

Significant progress was also made in 1992 in rescheduling Argentina's debt
with both external and domestic creditors, which improved fiscal cash flows in
the medium terms and allowed a return to voluntary credit markets. Further
reforms are currently being implemented in order to sustain and continue the
progress to date. There is no assurance that Argentina's economic policy
initiatives will be successful or that succeeding administrations will continue
these initiatives.

In 1995 economic policy was directed toward the effects of the Mexican currency
crisis. The Mexican currency crisis led to a run on bank deposits, which was
brought under control by a series of measures designed to strengthen the
financial system. The measures included the 'dollarization' of banking
reserves, the establishment of two trust funds, and the implementation of
limited deposit insurance.

In 1991 the Argentine government enacted currency reforms, which required the
domestic currency to be fully backed by foreign exchange reserves, in an effort
to make the Argentine Peso fully convertible into the U.S. Dollar at a rate of
one to one.

The Argentine Peso has been the Argentine currency since January 1, 1992. Since
that date, the rate of exchange from the Argentine Peso to the U.S. Dollar has
remained approximately one to one. The fixed exchange rate has been
instrumental in stabilizing the economy, but has not reduced pressures from a
slow-growth economy and record unemployment. It is not clear that the
government will be able to resist pressure to devalue the currency. However,
the historic range is not necessarily indicative of fluctuations that may occur
in the exchange rate over time and future rates of exchange cannot be
accurately predicted. The Argentine foreign exchange market was highly
controlled until December 1989, when a free exchange rate was established for
all foreign currency transactions. Argentina has eliminated restrictions on
foreign direct investment and capital repatriation. On September 8, 1993,
legislation was adopted abolishing previous requirements of a three-year
waiting period for capital repatriation. Under the new legislation, foreign
investors will be permitted to remit profits at any time.

B-2

<PAGE>

(LOGO) ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, NC.

_________________________________________________________________
Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
March 1, 1996 (as amended November 1, 1996)
_________________________________________________________________

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus that offers Class A, Class B and Class C shares of the
Fund, and if the Fund begins to offer Advisor Class shares, the
Prospectus that offers the Advisor Class shares of the Fund (the
"Advisor Class Prospectus" and, together with any Prospectus that
offers the Class A, Class B and Class C shares, the
"Prospectus(es)"). The Fund currently does not offer Advisor
Class Shares. Copies of the Prospectus(es) of the Fund may be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "For Literature" telephone number shown above.

TABLE OF CONTENTS

PAGE

Description of the Fund

Additional Information About Canada, the United
Mexican States and the Republic of Argentina

Management of the Fund

Expenses of the Fund

Purchase of Shares

Redemption and Repurchase of Shares

Shareholder Services

Net Asset Value

Dividends, Distributions and Taxes

Portfolio Transactions

General Information

<PAGE>

Report of Independent Auditors and Financial
Statements

Appendix A (Bond Ratings) A-1

Appendix B (Obligations of U.S. Government
Agencies or Instrumentalities) B-1

Appendix C (Futures Contracts and Options on
Futures Contracts and Foreign Currencies) C-1

____________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

________________________________________________________________

DESCRIPTION OF THE FUND
_________________________________________________________________

Except as otherwise indicated, the investment policies
of Alliance North American Government Income Trust, Inc. (the
"Fund") are not designated "fundamental policies" and may,
therefore, be changed by the Fund's Board of Directors without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to its
shareholders. The Fund's investment objective may not be changed
without shareholder approval. There can be, of course, no
assurance that the Fund will achieve its investment objective.

INVESTMENT OBJECTIVE

The Fund is a non-diversified, open-end management
investment company which seeks the highest level of current
income, consistent with what Alliance Capital Management L.P.
(the "Adviser"), the Fund's investment adviser, considers to be
prudent investment risk, that is available from a portfolio of
debt securities issued or guaranteed by the governments of the
United States, Canada and Mexico, their political subdivisions
(including Canadian Provinces but excluding States of the United
States), agencies, instrumentalities or authorities ("Government
Securities"). The Fund seeks high current yields by investing in
Government Securities denominated in the U.S. Dollar, the
Canadian Dollar and the Mexican Peso (including the Mexican New
Peso). Normally, the Fund expects to maintain at least 25% of
its assets in securities denominated in the U.S. Dollar. The
Fund is permitted to utilize certain other investment techniques,
including options and futures.

The Adviser believes that the increasingly integrated
economic relationship among the United States, Canada and Mexico,
characterized by the reduction and projected elimination of most
barriers to free trade among the three nations and the growing
coordination of their fiscal and monetary policies, will over the
long term benefit the economic performance of all three countries
and promote greater correlation of currency fluctuation among the
U.S. and Canadian Dollars and the Mexican Peso notwithstanding
the recent economic crisis and Peso devaluation in Mexico. See
"Additional Information About Canada, the United Mexican States
and the Republic of Argentina--Additional Information about
Mexico."

<PAGE>

HOW THE FUND PURSUES ITS OBJECTIVE

The Fund may invest its assets in Government Securities
considered investment grade or higher (i.e., securities rated at
least BBB by Standard & Poor's Ratings Services ("S&P"), Duff &
Phelps Credit Rating Co. ("Duff & Phelps") or Fitch Investors
Service, Inc. ("Fitch") or at least Baa by Moody's Investors
Service, Inc. ("Moody's") or, if not so rated, of equivalent
investment quality as determined by the Adviser.

See "Additional Investment Considerations--Securities
Ratings," below. For a description of bond ratings, see
Appendix A.

The Adviser will actively manage the Fund's assets in
relation to market conditions and general economic conditions in
the United States, Canada and Mexico and elsewhere, and will
adjust the Fund's investments in Government Securities based on
its perception of which Government Securities will best enable
the Fund to achieve its investment objective of seeking the
highest level of current income, consistent with what the Adviser
considers to be a prudent investment risk. In this regard,
subject to the limitations described above, the percentage of
assets invested in a particular country or denominated in a
particular currency will vary in accordance with the Adviser's
assessment of the relative yield and appreciation potential of
such securities and the relationship of the country's currency to
the U.S. Dollar.

The Fund will invest at least, and normally
substantially more than, 65% of its total assets in Government
Securities. To the extent that its assets are not invested in
Government Securities, however, the Fund may invest the balance
of its total assets in debt securities issued by the governments
of countries located in Central and South America or any of their
political subdivisions, agencies, instrumentalities or
authorities, provided that such securities are denominated in
their local currencies and are rated investment grade or, if not
so rated, are of equivalent investment quality as determined by
the Adviser. The Fund will not invest more than 10% of its total
assets in debt securities issued by the governmental entities of
any one such country, except that the Fund may invest up to 25%
of its total assets in debt securities issued by governmental
entities of Argentina ("Argentine Government Securities"). Under
normal market conditions, the Fund will invest at least 65% of
its total assets in income-producing securities (including zero
coupon securities and other discount obligations).

The following investment policies and restrictions
supplement, and should be read in conjunction with, the
information set forth in the Fund's Prospectus under the heading

<PAGE>

"Description of the Fund." The Fund's investment policies are
not designated "fundamental policies" within the meaning of the
Investment Company Act of 1940 (the "1940 Act") and may be
changed by the Fund's Board of Directors without shareholder
approval. However, the Fund will not change its investment
policies without contemporaneous written notice to shareholders.

U.S. GOVERNMENT SECURITIES. Securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities include: (i) U.S. Treasury obligations, which
differ only in their interest rates, maturities and times of
issuance: U.S. Treasury bills (maturity of one year or less),
U.S. Treasury notes (maturities of one to 10 years), and U.S.
Treasury bonds (generally maturities of greater than 10 years),
all of which are backed by the full faith and credit of the
United States, and (ii) obligations issued or guaranteed by U.S.
Government agencies or instrumentalities, including government
guaranteed mortgage-related securities. Some such obligations
are backed by the full faith and credit of the U.S. Treasury,
e.g., direct pass-through certificates of the Government National
Mortgage Association ("GNMA"); some are supported by the right of
the issuer to borrow from the U.S. Government, e.g., obligations
of Federal Home Loan Banks; and some are backed only by the
credit of the issuer itself, e.g., obligations of the Student
Loan Marketing Association.

U.S. Government Securities do not generally involve the
credit risks associated with other types of interest bearing
securities, although, as a result, the yields available from U.S.
Government Securities are generally lower than the yields
available from other interest bearing securities. Like other
fixed-income securities, however, the values of U.S. Government
Securities change as interest rates fluctuate.

See Appendix B for a general description of obligations
issued or guaranteed by U.S. Government agencies or
instrumentalities.

U.S. GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES--
GENERAL. Mortgages backing the U.S. Government guaranteed
mortgage-related securities purchased by the Fund include, among
others, conventional thirty-year fixed-rate mortgages, graduated
payment mortgages, fifteen year mortgages and adjustable rate
mortgages. All of these mortgages can be used to create pass-
through securities. A pass-through security is formed when
mortgages are pooled together and undivided interests in the pool
or pools are sold. The cash flow from the mortgages is passed
through to the holders of the securities in the form of periodic
payments of interest, principal and prepayments (net of a service
fee). Prepayments occur when the holder of an individual
mortgage prepays the remaining principal before the mortgage's

<PAGE>

scheduled maturity date. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-
backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the
prepayment characteristics of the underlying mortgages vary, it
is not possible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates.
Prepayment rates are important because of their effect on the
yield and price of the securities. Accelerated prepayments
adversely impact yields for pass-throughs purchased at a premium
(i.e., a price in excess of principal amount) and may involve
additional risk of loss of principal because the premium may not
have been fully amortized at the time the obligation is repaid.
The opposite is true for pass-throughs purchased at a discount.
The Fund may purchase mortgage-related securities at a premium or
at a discount. Principal and interest payments on the mortgage-
related securities are government guaranteed to the extent
described below. Such guarantees do not extend to the value or
yield of the mortgage-related securities themselves or of the
Fund's shares of common stock.

GNMA CERTIFICATES. Certificates of the Government
National Mortgage Association ("GNMA Certificates") are mortgage-
backed securities, which evidence an undivided interest in a pool
or pools of mortgages. GNMA certificates that the Fund purchases
are the "modified pass-through" type, which entitle the holder to
receive timely payment of all interest and principal payments due
on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether or not the mortgagor actually makes the
payment.

The National Housing Act authorizes GNMA to guarantee
the timely payment of principal and interest on securities backed
by a pool of mortgages insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full
faith and credit of the United States. The GNMA is also
empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.

The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures will usually result in the
return of the greater part of principal investment long before
the maturity of the mortgages in the pool. Foreclosures impose
no risk to principal investment because of the GNMA guarantee,
except to the extent that the Fund has purchased the certificates
above par in the secondary market.

<PAGE>

FHLMC SECURITIES. The Federal Home Loan Mortgage
Corporation ("FHLMC") was created in 1970 through enactment of
Title III of the Emergency Home Finance Act of 1970. Its purpose
is to promote development of a nationwide secondary market in
conventional residential mortgages.

FHLMC issues two types of mortgage pass-through
securities ("FHLMC Certificates"), mortgage participation
certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC
represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FHLMC guarantees
timely monthly payment of interest on PCs and the ultimate
payment of principal.

GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually
and return principal once a year in guaranteed minimum payments.
The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith
and credit of the United States.

FNMA SECURITIES. The Federal National Mortgage
Association ("FNMA") was established in 1938 to create a
secondary market in mortgages insured by the FHA.

FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro
rata share of all interest and principal payments made and owed
on the underlying pool. FNMA guarantees timely payment of
interest and principal on FNMA Certificates. The FNMA guarantee
is not backed by the full faith and credit of the United States.

ZERO COUPON TREASURY SECURITIES. U.S. Government
Securities in which the Fund may invest also include "zero
coupon" Treasury securities, which are U.S. Treasury bills which
are issued without interest coupons, U.S. Treasury notes and
bonds which have been stripped of their unmatured interest
coupons, and receipts or certificates representing interests in
such stripped debt obligations and coupons. A zero coupon
security pays no interest to its holder during its life. Its
value to an investor consists of the difference between its face
value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than
its face value. Accordingly, such securities usually trade at a
deep discount from their face or par value and will be subject to
greater fluctuations of market value in response to changing
interest rates than debt obligations of comparable maturities
which make current distributions of interest. On the other hand,
because there are no periodic interest payments to be reinvested

<PAGE>

prior to maturity, zero coupon securities eliminate reinvestment
risk and lock in a rate of return to maturity.

Current federal tax law requires that a holder (such as
the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year
even though the Fund receives no interest payment in cash on the
security during the year. For a discussion of the tax treatment
of "zero coupon" Treasury securities see "Taxation--Zero Coupon
Securities." Currently the only U.S. Treasury security issued
without coupons is the Treasury bill. Although the U.S. Treasury
does not itself issue Treasury notes and bonds without coupons,
under the U.S. Treasury STRIPS program interest and principal
payments on certain long term treasury securities may be
maintained separately in the Federal Reserve book entry system
and may be separately traded and owned. In addition, in the last
few years a number of banks and brokerage firms have separated
("stripped") the principal portions ("corpus") from the coupon
portions of the U.S. Treasury bonds and notes and sold them
separately in the form of receipts or certificates representing
undivided interests in these instruments (which instruments are
generally held by a bank in a custodial or trust account). The
staff of the Securities and Exchange Commission has indicated
that, in its view, these receipts or certificates should be
considered as securities issued by the bank or brokerage firm
involved and, therefore, should not be included in the Fund's
categorization of U.S. Government Securities. The Fund disagrees
with the staff's interpretation but has undertaken that it will
not invest in such securities until final resolution of the
issue. If such securities are deemed to be U.S. Government
Securities the Fund will not be subject to any limitations on
their purchase.

CANADIAN GOVERNMENT SECURITIES. Canadian Government
Securities include the sovereign debt of Canada or any of its
Provinces (Alberta, British Columbia, Manitoba, New Brunswick,
Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec
and Saskatchewan). Canadian Government Securities in which the
Fund may invest include government of Canada bonds and government
of Canada Treasury bills. The Bank of Canada, acting on behalf
of the federal government, is responsible for the distribution of
these bonds and Treasury bills. The Bank of Canada offers new
issues, as approved by the Government, to specific investment
dealers and banks. Government of Canada Treasury bills are debt
obligations with maturities of less than one year. A new issue
of Government of Canada bonds frequently consists of several
different bonds with various maturity dates representing
different segments of the yield curve with maturities ranging
from one to 25 years. The Bank of Canada usually purchases a
pre-determined amount of each issue.

<PAGE>

All Canadian Provinces have outstanding bond issues and
several Provinces also guarantee bond issues of Provincial
authorities, agents and Crown corporations. Each new issue yield
is based upon a spread from an outstanding Government of Canada
issue of comparable term and coupon. Spreads in the marketplace
are determined by various factors, including the relative supply
and the rating assigned by the rating agencies.

Many Canadian municipalities, municipal financial
authorities and Crown corporations raise funds through the bond
market in order to finance capital expenditures. Unlike U.S.
municipal securities, which have special tax status, Canadian
municipal securities have the same tax status as other Canadian
Government Securities and trade similarly to such securities.
The Canadian municipal market may be less liquid than the
Provincial bond market.

Canadian Government Securities in which the Fund may
invest include a modified pass-through vehicle issued pursuant to
the program (the "NHA MBS Program") established under the
National Housing Act of Canada ("NHA"). Certificates issued
pursuant to the NHA MBS Program ("NHA Mortgage-Related
Securities") benefit from the guarantee of the Canada Mortgage
and Housing Corporation ("CMHC"), a federal Crown corporation
that is (except for certain limited purposes) an agency of the
Government of Canada whose guarantee (similar to that of GNMA in
the United States) is an unconditional obligation of the
Government of Canada except as described below. The NHA
currently provides that the aggregate principal amount of all
issues of NHA Mortgage Related Securities in respect of which
CMHC may give a guarantee must not exceed C$60 billion.

NHA Mortgage-Related Securities are backed by a pool of
insured mortgages that satisfy the requirements established by
the NHA. Issuers that wish to issue NHA Mortgage-Related
Securities must meet the status and other requirements of CMHC
and submit the necessary documentation to become an "approved
issuer". When an approved issuer wishes to issue NHA Mortgage
Related Securities in respect of a particular pool of mortgages,
it must seek the approval of CMHC. Such mortgages must, among
other things, be first mortgages that are insured under the NHA,
not be in default and provide for equal monthly payments
throughout their respective terms.

The mortgages in each NHA Mortgage-Related Securities
pool are assigned to CMHC which, in turn, issues a guarantee of
timely payment of principal and interest that is shown on the
face of the certificates representing the NHA Mortgage-Related
Securities (the "NHA MBS Certificates"). NHA Mortgage-Related
Securities do not constitute any liability of, nor evidence any
recourse against, the issuer of the NHA Mortgage-Related

<PAGE>

Securities, but in the event of any failure, delay or default
under the terms of NHA MBS Certificates, the holder has recourse
to CMHC in respect of its guarantee set out on the NHA MBS
Certificates.

In any legal action or proceeding or otherwise, CMHC has
agreed not to contest or defend against a demand for the timely
payment of the amount set forth and provided for in, and unpaid
on, any duly and validly issued NHA MBS Certificate, provided
that such payment is sought and claimed by or on behalf of a bona
fide purchaser of and investor in such security, without actual
notice at the time of the purchase of the basis or grounds for
contesting or defending against that demand for timely payment.

While most Canadian Mortgage-Related Securities are
subject to voluntary prepayments, some pools are not and function
more like a traditional bond. The typical maturity of Canadian
Mortgage-Related Securities is five years as most Canadian
residential mortgages provide for a five-year maturity with equal
monthly blended payments of interest and principal based on a
twenty-five year amortization schedule. Pursuant to recent
changes adopted by CMHC, maturities of NHA Mortgaged-Related
Securities may be as short as six months or as long as eighteen
years.

MEXICAN GOVERNMENT SECURITIES. The Fund may invest in
Mexican Government Securities of investment grade quality. As of
the date of this Statement of Additional Information, the only
Mexican Government Securities denominated in the Mexican Peso
that have been rated by either S&P or Moody's are Cetes rated A-
1+ by S&P. The Adviser, however, believes that there are other
Peso-denominated Mexican Government Securities that are of
investment grade quality. Currently there are no Mexican
Government Securities denominated in the U.S. Dollar which
qualify for investment by the Fund. If qualified investments of
this nature appear in the future, the Fund will consider them for
investment.

Mexican Government Securities denominated and payable in
the Mexican Peso include: (i) Cetes, which are book-entry
securities sold directly by the Mexican government on a discount
basis and with maturities that range from seven to 364 days;
(ii) Bonds, which are long-term development bonds issued directly
by the Mexican government with a minimum term of 364 days; and
(iii) Ajustabonos, which are adjustable bonds with a minimum
three-year term issued directly by the Mexican government with
the face amount adjusted each quarter by the quarterly inflation
rate as of the end of the preceding month.

ARGENTINE GOVERNMENT SECURITIES. The Fund may invest up
to 25% of its total assets in Argentine Government Securities

<PAGE>

that are denominated and payable in the Argentine Peso.
Argentine Government Securities include: (i) Bono de Inversion y
Crecimiento, which are investment and growth bonds issued
directly by the Argentine government with maturities of ten
years; (ii) Bono de Consolidacion Economica, which are economic
consolidation bonds issued directly by the Argentine government
with maturities of ten years and (iii) Bono de Credito a la
Exportacion, which are export credit bonds issued directly by the
Argentine government with maturities of four years. To
date,Argentine Government Securities are not rated by either S&P
or Moody's. The Adviser, however, believes that there are
Argentine Government Securities that are of investment grade
quality.

GENERAL INFORMATION ABOUT CANADA. Canada consists of a
federation of ten Provinces and two federal territories (which
generally fall under federal authority) with a constitutional
division of powers between the federal and Provincial
governments. The Parliament of Canada has jurisdiction over all
areas not assigned exclusively to the Provincial legislatures,
and has jurisdiction over such matters as the federal public debt
and property, the regulation of trade and commerce, currency and
coinage, banks and banking, national defense, the postal
services, navigation and shipping and unemployment insurance.

The Canadian economy is based on the free enterprise
system, with business organizations ranging from small owner-
operated businesses to large multinational corporations.
Manufacturing and resource industries are large contributors to
the country's economic output, but as in many other highly
developed countries, there has been a gradual shift from a
largely goods-producing economy to a predominantly service-based
one. Agriculture and other primary production play a small but
key role in the economy. Canada is also an exporter of energy to
the United States in the form of natural gas (of which Canada has
substantial reserves) and hydroelectric power, and has
significant mineral resources.

Canadian Dollars are fully exchangeable into U.S.
Dollars without foreign exchange controls or other legal
restriction. Since the major developed-country currencies were
permitted to float freely against one another, the range of
fluctuation in the U.S. Dollar/Canadian Dollar exchange rate has
been narrower than the range of fluctuation between the U.S.
Dollar and most other major currencies. During the last several
years, Canada has experienced a weakening of its currency. In
January 1995, the Canadian Dollar fell to a nine-year low against
the U.S. Dollar decreasing in value compared to the U.S. Dollar
by approximately 25% from October 1991, but from January 20, 1995
through February 15, 1996, the Canadian Dollar increased in value
by approximately 3.4% against the U.S. Dollar. The range of

<PAGE>

fluctuation that occurred in the past is not necessarily
indicative of the range of fluctuation that will occur in the
future. Future rates of exchange cannot be accurately predicted.

GENERAL INFORMATION ABOUT THE UNITED MEXICAN STATES.
The United Mexican States ("Mexico") is a nation formed by 31
states and a Federal District (Mexico City). The Political
Constitution of Mexico, which took effect on May 1, 1917,
established Mexico as a Federal Republic and provides for the
separation of executive, legislative and judicial branches. The
President and the members of the General Congress are elected by
popular vote.

While in recent years the Mexican economy has
experienced improvement in a number of areas, including seven
consecutive years (1987-1994) of growth in gross domestic product
and a substantial reduction in the rate of inflation and in
public sector financial deficit, beginning in 1994, Mexico has
experienced an economic crisis that led to the devaluation of the
Peso in December 1994. Much of the past improvement in the
Mexican economy has been attributable to a series of economic
policy initiatives initiated by the Mexican government over the
past decade, which seek to modernize and reform the Mexican
economy, control inflation, reduce the financial deficit,
increase public revenues through the reform of the tax system,
establish a competitive and stable currency exchange rate,
liberalize trade restrictions and increase investment and
productivity, while reducing the government's role in the
economy. In this regard, the Mexican government has been
proceeding with a program for privatizing certain state owned
enterprises, developing and modernizing the securities markets,
increasing investment in the private sector and permitting
increased levels of foreign investment. The recent adoption by
Canada, the United States and Mexico of the North American Free
Trade Agreement could also contribute to the growth of the
Mexican economy.

In 1994, Mexico faced internal and external conditions
that resulted in an economic crisis that continues to affect the
Mexican economy adversely. Growing trade and current account
deficits, which could no longer be financed by inflows of foreign
capital, were factors contributing to the crisis. A weakening
economy and unsettling political and social developments caused
investors to lose confidence in the Mexican economy. This
resulted in a large decline in foreign reserves followed by a
sharp and rapid devaluation of the Mexican Peso. The ensuing
economic and financial crisis resulted in higher inflation and
domestic interest rates, a contraction in real gross domestic
product and a liquidity crisis.

<PAGE>

In response to the adverse economic conditions that
developed at the end of 1994, the Mexican government instituted a
new economic program; and a new social accord among the
government, business and labor sectors of the country was entered
into in an effort to stabilize the economy and the financial
markets. To help relieve Mexico's liquidity crisis and restore
financial stability to Mexico's economy, the Mexican government
also obtained financial assistance from the United States, other
countries and certain international agencies conditioned upon the
implementation and continuation of the economic reform program.

While the Mexican economy has stabilized, it is still in
a recession and suffers from high inflation and high interest
rates. In October 1995, the Mexican Government announced a new
accord designed to encourage economic growth and reduce
inflation. It cannot be accurately predicted whether this accord
will achieve its purpose. Mexico's economy may also be
influenced by international economic conditions, particularly
those in the United States, and by world prices for oil and other
commodities. The recovery of the economy will require continued
economic and fiscal discipline as well as stable political and
social conditions. There is no assurance that Mexico's economic
policy initiatives will be successful or that succeeding
administrations will continue these initiatives.

In August 1976, the Mexican government established a
policy of allowing the Mexican Peso to float against the U.S.
Dollar and other currencies. Under this policy, the value of the
Mexican Peso consistently declined against the U.S. Dollar.
Under economic policy initiatives implemented since December
1987, the Mexican government introduced a series of schedules
allowing for the gradual devaluation of the Mexican Peso against
the U.S. Dollar. These gradual devaluations continued until
December 1994. On December 20, 1994, the Mexican government
announced a new policy that would allow a more substantial yet
still controlled devaluation of the Mexican Peso. On December
22, 1994, the Mexican government announced that it would not
continue with the policy announced two days earlier and would
instead permit the Peso to float against other currencies,
resulting in a continued decline against the U.S. dollar. From
December 22, 1994 through February 15, 1996, the Mexican Peso
decreased in value compared to the U.S. Dollar by approximately
60%.

In 1982, Mexico imposed strict foreign exchange controls
which shortly thereafter were relaxed and were eliminated in
1991. There is no assurance that future regulatory actions in
Mexico would not affect the Fund's ability to obtain U.S. Dollars
in exchange for Mexican Pesos.

<PAGE>

GENERAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA.
The Republic of Argentina ("Argentina") consists of 23 provinces
and the federal capital of Buenos Aires. Its federal
constitution provides for an executive branch headed by a
President, a legislative branch and a judicial branch. Each
province has its own constitution, and elects its own governor,
legislators and judges, without the intervention of the federal
government.

The military has intervened in the political process on
several occasions since the 1930's and has ruled the country for
22 of the past 62 years. The most recent military government
ruled the country from 1976 to 1983. Four unsuccessful military
uprisings have occurred since 1983, the most recent in December
1990.

Shortly after taking office in 1989, the country's
current President adopted market-oriented and reformist policies,
including a large privatization program, a reduction in the size
of the public sector and an opening of the economy to
international competition.

In the decade prior to the current announcement of a new
economic plan in March 1991, the Argentine economy was
characterized by low and erratic growth, declining investment
rates and rapidly worsening inflation. Despite its strengths,
which include a well-balanced natural resource base and a high
literacy rate, the Argentine economy failed to respond to a
series of economic plans in the 1980's. The Economy Minister's
plan represented a pronounced departure from its predecessors in
calling for raised revenues, reduced expenditures and a reduced
public deficit. The extensive privatization program commenced in
1989 was accelerated, the domestic economy deregulated and opened
up to foreign trade and the framework for foreign investment
reformed. As a result of the economic stabilization reforms,
gross domestic product has increased and inflation has decreased.

Significant progress was also made in 1992 in
rescheduling Argentina's debt with both external and domestic
creditors, which improved fiscal cash flows in the medium term
and allowed a return to voluntary credit markets. Further
reforms are currently being implemented in order to sustain and
continue the progress to date. There is no assurance that
Argentina's economic policy initiatives will be successful or
that succeeding administrations will continue these initiatives.

In 1995, economic policy was directed toward the effects
of the Mexican currency crisis. The Mexican currency crisis led
to a run on bank deposits, which was brought under control by a
series of measures designed to strengthen the financial system.
The measures included the "dollarization" of banking reserves,

<PAGE>

the establishment of two trust funds, and the implementation of
limited deposit insurance.

In 1991 the Argentine government enacted currency
reforms, which required the domestic currency to be fully backed
by foreign exchange reserves, in an effort to make the Argentine
Peso fully convertible into the U.S. Dollar at a rate of one to
one.

The Argentine Peso has been the Argentine currency since
January 1, 1992. Since that date, the rate of exchange from the
Argentine Peso to the U.S. Dollar has remained approximately one
to one. The fixed exchange rate has been instrumental in
stabilizing the economy, but has not reduced pressures from a
slow-growth economy and record unemployment. It is not clear
that the government will be able to resist pressure to devalue
the currency. However, the historic range is not necessarily
indicative of fluctuations that may occur in the exchange rate
over time and future rates of exchange cannot be accurately
predicted. The Argentine foreign exchange market was highly
controlled until December 1989, when a free exchange rate was
established for all foreign currency transactions. Argentina has
eliminated restrictions on foreign direct investment and capital
repatriation. On September 8, 1993, legislation was adopted
abolishing previous requirements of a three-year waiting period
for capital repatriation. Under the new legislation, foreign
investors will be permitted to remit profits at any time.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

The following additional investment policies supplement
those set forth above.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Fund may enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices including any index of U.S.
Government Securities or foreign government securities ("futures
contracts") and may purchase and write put and call options to
buy or sell futures contracts ("options on futures contracts"). A
"sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities or foreign
currencies called for by the contract at a specified price on a
specified date. A "purchase" of a futures contract means the
incurring of a contractual obligation to acquire the securities
or foreign currencies called for by the contract at a specified
price on a specified date. The purchaser of a futures contract
on an index agrees to take or make delivery of an amount of cash
equal to the difference between a specified dollar multiple of
the value of the index on the expiration date of the contract and
the price at which the contract was originally struck. Options

<PAGE>

on futures contracts to be written or purchased by the Fund will
be traded on U.S. or foreign exchanges or over-the-counter.

The Board of Directors has adopted the requirement that
futures contracts and options on futures contracts only be used
as a hedge and not for speculation. In addition to this
requirement, the Board of Directors has also adopted two
percentage restrictions on the use of futures contracts.

The Fund will not (i) enter into any futures contracts
or options on futures contracts if immediately thereafter the
aggregate of margin deposits on all the outstanding futures
contracts of the Fund and premiums paid on outstanding options on
futures contracts would exceed 5% of the market value of the
total assets of the Fund, or (ii) enter into any futures
contracts or options on futures contracts if the aggregate of the
market value of the outstanding futures contracts of the Fund and
the market value of the currencies and futures contracts subject
to outstanding options written by the Fund would exceed 50% of
the market value of the total assets of the Fund. Neither of
these restrictions will be changed by the Fund's Board of
Directors without considering the policies and concerns of the
various applicable federal and state regulatory agencies.

See Appendix C for further discussion of the use, risks
and costs of futures contracts and options on futures contracts.

OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase
and write put and call options on foreign currencies for the
purpose of protecting against declines in the U.S. Dollar value
of foreign currency-denominated portfolio securities and against
increases in the U.S. Dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, the
writing of an option on a foreign currency will constitute only a
partial hedge, up to the amount of the premium received, and the
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Fund's position, it
may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written
or purchased by the Fund will be traded on U.S. and foreign
exchanges or over-the-counter. There is no specific percentage
limitation on the Fund's investments in options on foreign
currencies.

See Appendix C for further discussion of the use, risks
and costs of options on foreign currencies.

<PAGE>

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund
may purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
of adverse changes in the relationship between the U.S. Dollar
and other currencies. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded
by currency traders and their customers.

The Fund may enter into a forward contract, for example,
when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in"
the U.S. Dollar price of the security ("transaction hedge").
Additionally, for example, when the Fund believes that a foreign
currency may suffer a substantial decline against the U.S.
Dollar, it may enter into a forward sale contract to sell an
amount of that foreign currency approximating the value of some
or all of the Fund's portfolio securities denominated in such
foreign currency, or, when the Fund believes that the U.S. Dollar
may suffer a substantial decline against a foreign currency, it
may enter into a forward purchase contract to buy that foreign
currency for a fixed U.S. Dollar amount ("position hedge"). In
this situation the Fund may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed
U.S. Dollar amount where the Fund believes that the U.S. Dollar
value of the currency to be sold pursuant to the forward contract
will fall whenever there is a decline in the U.S. Dollar value of
the currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). To the extent required by
applicable law, the Fund's Custodian will place liquid assets in
a segregated account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward
contracts entered into with respect to position hedges and cross-
hedges. If the value of the assets placed in the segregated
account declines, additional liquid assets or securities will be
placed in the account on a daily basis so that the value of the
account will equal the amount of the Fund's commitments with
respect to such contracts. As an alternative to maintaining all
or part of the segregated account, the Fund may purchase a call
option permitting the Fund to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Fund may purchase a
put option permitting the Fund to sell the amount of foreign
currency subject to a forward purchase contract at a price as
high or higher than the forward contract price. In addition, the
Fund may use such other methods of "cover" as are permitted by
applicable law.

While these contracts are not presently regulated by the
Commodity Futures Trading Commission ("CFTC"), the CFTC may in
the future assert authority to regulate forward contracts. In

<PAGE>

such event the Fund's ability to utilize forward contracts in the
manner set forth in the Prospectus may be restricted. Forward
contracts will reduce the potential gain from a positive change
in the relationship between the U.S. Dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not
entered into such contracts. The use of foreign currency forward
contracts will not eliminate fluctuations in the underlying U.S.
Dollar equivalent value of the proceeds of or rates of return on
the Fund's foreign currency denominated portfolio securities and
the use of such techniques will subject the Fund to certain
risks.

The matching of the increase in value of a forward
contract and the decline in the U.S. Dollar equivalent value of
the foreign currency denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Fund may
not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's
ability to use such contracts to hedge its assets.

OPTIONS ON U.S. AND FOREIGN GOVERNMENT SECURITIES. In
an effort to increase current income and to reduce fluctuations
in net asset value, the Fund intends to write covered put and
call options and purchase put and call options on U.S. Government
Securities and foreign government securities that are traded on
United States and foreign securities exchanges. The Fund also
intends to write call options for cross-hedging purposes. There
are no specific limitations on the Fund's writing and purchasing
of options.

The purchaser of an option, upon payment of a premium,
obtains, in the case of a put option, the right to deliver to the
writer of the option, and, in the case of a call option, the
right to call upon the writer to deliver a specified amount of a
security on or before a fixed date at a predetermined price. A
call option written by the Fund is "covered" if the Fund (i) owns
the underlying security covered by the call, (ii) has an absolute
and immediate right to acquire that security without additional
cash consideration (or for additional cash consideration held in
a segregated account by its Custodian) upon conversion or
exchange of other portfolio securities, or (iii) holds a call on
the same security and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to
or less than the exercise price of the call written or (b) is
greater than the exercise price of the call written if the
difference is maintained by the Fund in cash and liquid high-
grade Government Securities in a segregated account with its
Custodian. A put option written by the Fund is "covered" if the
Fund maintains cash not available for investment or liquid high-
grade Government Securities with a value equal to the exercise

<PAGE>

price in a segregated account with its Custodian, or else holds a
put on the same security in the same principal amount as the put
written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.

A call option is written for cross-hedging purposes if
the Fund does not own the underlying security but seeks to
provide a hedge against a decline in value in another security
which the Fund owns or has the right to acquire. In such
circumstances, the Fund collateralizes its obligation under the
option (which is not covered) by maintaining in a segregated
account with its Custodian cash or liquid high-grade Government
Securities in an amount not less than the market value of the
underlying security, marked to market daily.

In purchasing a call option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the underlying security increased by an amount in excess
of the premium paid. It would realize a loss if the price of the
underlying security declined or remained the same or did not
increase during the period by more than the amount of the
premium. In purchasing a put option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the underlying security declined by an amount in excess
of the premium paid. It would realize a loss if the price of the
underlying security increased or remained the same or did not
decrease during that period by more than the amount of the
premium. If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium
would be lost by the Fund.

The risk involved in writing a put option is that there
could be a decrease in the market value of the underlying
security. If this occurred, the option could be exercised and
the underlying security would then be sold by the option holder
to the Fund at a higher price than its current market value. The
risk involved in writing a call option is that there could be an
increase in the market value of the underlying security. If this
occurred, the option could be exercised and the underlying
security would then be sold by the Fund at a lower price than its
current market value. These risks could be reduced by entering
into a closing transaction as discussed in Appendix C. The Fund
retains the premium received from writing a put or call option
whether or not the option is exercised.

The Fund may purchase or write options on securities of
the types in which it is permitted to invest in privately
negotiated transactions. The Fund will effect such transactions
only with investment dealers and other financial institutions
(such as commercial banks or savings and loan institutions)
deemed creditworthy by the Adviser, and the Adviser has adopted

<PAGE>

procedures for monitoring the creditworthiness of such entities.
Options purchased or written by the Fund in negotiated
transactions are illiquid and it may not be possible for the Fund
to effect a closing transaction at a time when the Adviser
believes it would be advantageous to do so. See "Illiquid
Securities," below.

See Appendix C for a further discussion of the use,
risks and costs of options in U.S. Government and foreign
government securities.

INTEREST RATE TRANSACTIONS. The Fund may, without
limit, enter into interest rate swaps and may purchase or sell
interest rate caps and floors. The Fund expects to enter into
these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio. The Fund may
also enter into these transactions to protect against any
increase in the price of securities the Fund anticipates
purchasing at a later date. The Fund does not intend to use
these transactions in a speculative manner. Interest rate swaps
involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments. The
exchange commitments can involve payments to be made in the same
currency or in different currencies. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payments
of interest on a contractually-based principal amount from the
party selling such interest rate cap. The purchase of an
interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to
receive payments on a contractually-based principal amount from
the party selling such interest rate floor.

The Fund may enter into interest rate swaps, caps and
floors on either an asset-based or liability-based basis
depending on whether it is hedging its assets or its liabilities,
and will usually enter into interest rate swaps on a net basis,
i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of
the two payments. Inasmuch as these hedging transactions are
entered into for good faith hedging purposes, the Adviser and the
Fund believe such obligations do not constitute senior securities
and, accordingly, will not treat them as being subject to its
borrowing restrictions. The net amount of the excess, if any, of
the Fund's obligations over its entitlements with respect to each
interest rate swap will be accrued daily and an amount of cash or
liquid securities having an aggregate net asset value at least
equal to the accrued excess will be maintained in a segregated
account by the Fund's Custodian. If the Fund enters into an
interest rate swap on other than a net basis, the Fund will

<PAGE>

maintain in a segregated account with its Custodian the full
amount, accrued daily, of the Fund's obligations with respect to
the swap. The Fund will enter into interest rate swap, cap or
floor transactions with its Custodian, and with other
counterparties, but only if: (i) for transactions with maturities
under one year, such other counterparty has outstanding short-
term paper rated at least A-1 by S&P or Prime-1 by Moody's or
(ii) for transactions with maturities greater than one year, the
counterparty has outstanding debt securities rated at least AA by
S&P or Aa by Moody's. If there is a default by the other party
to such a transaction, the Fund will have contractual remedies.
The swap market has grown substantially in recent years, with a
large number of banks and investment banking firms acting both as
principals and agents utilizing standardized swap documentation.
As a result, the swap market has become well established and
provides a degree of liquidity. Caps and floors are more recent
innovations for which documentation is not as standardized and,
accordingly, they are less liquid than swaps. To the extent the
Fund sells (i.e., writes) caps and floors it will maintain in a
segregated account with its Custodian cash or liquid securities
having an aggregate net asset value at least equal to the full
amount, accrued daily, of the Fund's obligations with respect to
any caps and floors.

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

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

The use of forward commitments enables the Fund to
protect against anticipated changes in interest rates and prices.

<PAGE>

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

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

GENERAL. The successful use of the foregoing investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
Adviser's ability to forecast interest rate and currency exchange
rate movements correctly. Should interest or exchange rates move
in an unexpected manner, the Fund may not achieve the anticipated
benefits of futures contracts, options, interest rate
transactions or forward contracts or may realize losses and thus
be in a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and
adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation
between movements in the prices of such instruments and movements
in the price of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.

<PAGE>

The Fund's ability to dispose of its positions in
futures contracts, options, interest rate transactions and
forward contracts will depend on the availability of liquid
markets in such instruments. Markets in options and futures with
respect to a number of fixed-income securities and currencies are
relatively new and still developing. It is impossible to predict
the amount of trading interest that may exist in various types of
futures contracts, options and forward contracts. If a secondary
market does not exist with respect to an option purchased or
written by the Fund over-the-counter, it might not be possible to
effect a closing transaction in the option (i.e., dispose of the
option) with the result that (i) an option purchased by the Fund
would have to be exercised in order for the Fund to realize any
profit and (ii) the Fund may not be able to sell currencies or
portfolio securities covering an option written by the Fund until
the option expires or it delivers the underlying futures contract
or currency upon exercise. Therefore, no assurance can be given
that the Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, the
Fund's ability to engage in options and futures transactions may
be limited by tax considerations. See "Dividends, Distributions
and Taxes--U.S. Federal Income Taxes."

LOANS OF PORTFOLIO SECURITIES. The Fund may make
secured loans of its portfolio securities to brokers, dealers and
financial institutions provided that cash, U.S. Government
Securities or bank letters of credit equal to at least 100% of
the market value of the securities loaned is deposited and
maintained by the borrower with the Fund. The risks in lending
portfolio securities, as with other extensions of credit, consist
of possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities to a
particular borrower, the Adviser (subject to review by the Board
of Directors) will consider all relevant facts and circumstances,
including the creditworthiness of the borrower. While securities
are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an
agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Fund may pay reasonable finders',
administrative and custodial fees in connection with a loan. The
Fund will not lend portfolio securities in excess of 20% of the
value of its total assets, nor will the Fund lend its portfolio
securities to any officer, director, employee or affiliate of
either the Fund or the Adviser. The Board of Directors will
monitor the Fund's lending of portfolio securities.

REPURCHASE AGREEMENTS. The Fund may enter into
"repurchase agreements" pertaining to the types of securities in
which it may invest with member banks of the Federal Reserve
System or "primary dealers" (as designated by the Federal Reserve

<PAGE>

Bank of New York) in such securities. There is no percentage
restriction on the Fund's ability to enter into repurchase
agreements. Currently the Fund enters into repurchase agreements
only with its Custodian and such primary dealers. A repurchase
agreement arises when a buyer such as the Fund purchases a
security and simultaneously agrees to resell it to the vendor at
an agreed- upon future date, normally one day or a few days
later. The resale price is greater than the purchase price,
reflecting an agreed-upon interest rate which is effective for
the period of time the buyer's money is invested in the security
and which is not related to the coupon rate on the purchased
security. Such agreements permit the Fund to keep all of its
assets at work while retaining "overnight" flexibility in pursuit
of investments of a longer-term nature. The Fund requires
continual maintenance for its account in the Federal
Reserve/Treasury Book Entry System of collateral in an amount
equal to, or in excess of, the market value of the securities
which are the subject of the agreement. In the event a vendor
defaulted on its repurchase obligation, the Fund might suffer a
loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. In the event of
a vendor's bankruptcy, the Fund might be delayed in, or prevented
from, selling the collateral for the Fund's benefit. The Fund's
Board of Directors has established procedures, which are
periodically reviewed by the Board, pursuant to which the Adviser
monitors the creditworthiness of the dealers with which the Fund
enters into repurchase agreement transactions.

ILLIQUID SECURITIES. The Fund has adopted the following
investment policy which may be changed by the vote of the Board
of Directors.

The Fund will not invest in illiquid securities if
immediately after such investment more than 10% of the Fund's net
assets (taken at market value) would be invested in such
securities. In addition, the Fund will not maintain more than
15% of its net assets in illiquid securities. For this purpose,
illiquid securities include, among others (a) direct placements
or other securities which are subject to legal or contractual
restrictions on resale or for which there is no readily available
market (e.g., trading in the security is suspended or, in the
case of unlisted securities, market makers do not exist or will
not entertain bids or offers), (b) options purchased by the Fund
over-the-counter and the cover for options written by the Fund
over-the-counter, and (c) repurchase agreements not terminable
within seven days.

Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of
1933, as amended ("Securities Act"), securities which are

<PAGE>

otherwise not readily marketable and repurchase agreements having
a maturity of longer than seven days. Securities which have not
been registered under the Securities Act are referred to as
private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual
funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations
on resale may have an adverse effect on the marketability of
portfolio securities and a mutual fund might be unable to dispose
of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days. A mutual fund might
also have to register such restricted securities in order to
dispose of them resulting in additional expense and delay.
Adverse market conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.

Rule 144A under the Securities Act allows a broader
institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act for resales of certain securities to qualified
institutional buyers. An insufficient number of qualified
institutional buyers interested in purchasing certain restricted
securities held by the Fund, however, could affect adversely the
marketability of such portfolio securities and the Fund might be
unable to dispose of such securities promptly or at reasonable
prices. Rule 144A has already produced enhanced liquidity for
many restricted securities, and market liquidity for such
securities may continue to expand as a result of this regulation
and the consequent inception of the PORTAL System, an automated
system for the clearance and settlement of transactions in
unregistered securities of domestic and foreign issuers,
sponsored by the National Association of Securities Dealers, Inc.

The Adviser, acting under the supervision of the Board
of Directors, will monitor the liquidity of restricted securities
in the Fund's portfolio. In reaching liquidity decisions, the

<PAGE>

Adviser will consider, among others, the following factors:
(1) the frequency of trades and quotes for the security; (2) the
number of dealers making quotations to purchase or sell the
security; (3) the number of other potential purchasers of the
security; (4) the number of dealers undertaking to make a market
in the security; (5) the nature of the security and the nature of
the marketplace for the security (e.g., the time needed to
dispose-of the security, the method of soliciting offers and the
mechanics of the transfer); and (6) any applicable Securities and
Exchange Commission interpretation or position with respect to
such type of securities.

PORTFOLIO TURNOVER. The Fund may engage in active
short-term trading to benefit from yield disparities among
different issues of securities, to seek short-term profits during
periods of fluctuating interest rates or for other reasons. Such
trading will increase the Fund's rate of turnover and the
incidence of short-term capital gain taxable as ordinary income.
Management anticipates that the annual turnover in the Fund will
not be in excess of 400%. An annual turnover rate of 400%
occurs, for example, when all of the securities in the Fund's
portfolio are replaced four times in a period of one year. A
high rate of portfolio turnover involves correspondingly greater
expenses than a lower rate, which expenses must be borne by the
Fund and its shareholders. High portfolio turnover also may
result in the realization of substantial net short-term capital
gains. See Dividends, Distributions and Taxes" and "General
Information-Portfolio Transactions."

For the fiscal years ended in 1994 and 1995, the
portfolio turnover rates of the securities of the Fund were 131%,
and 180%, respectively. The portfolio turnover rate for the
fiscal period ended May 31, 1996 was 162%.

SPECIAL BORROWING CONSIDERATIONS

EFFECTS OF BORROWING. The Fund maintains borrowings
from banks unaffiliated with the Fund or the Adviser in an amount
of money representing approximately one-third of the Fund's total
assets less liabilities (other than the amount borrowed). The
Fund's loan agreements provide for additional borrowings and for
repayments and reborrowings from time to time, and the Fund
expects to effect borrowings and repayments at such times and in
such amounts as will maintain investment leverage in an amount
approximately equal to its borrowing target. The loan agreements
provide for a selection of interest rates that are based on the
bank's short-term funding costs in the U.S. and London markets.

Borrowings by the Fund result in leveraging of the
Fund's shares of common stock. The proceeds of such borrowings
will be invested in Government Securities in accordance with the

<PAGE>

Fund's investment objective and policies. The Adviser
anticipates that the difference between the interest expense paid
by the Fund on borrowings and the rates received by the Fund from
its investments in Government Securities of non-U.S. issuers will
provide the Fund's shareholders with a potentially higher yield.

Utilization of leverage, which is usually considered
speculative, however, involves certain risks to the Fund's
shareholders. These include a higher volatility of the net asset
value of the Fund's shares of common stock and the relatively
greater effect on the net asset value of the shares caused by
favorable or adverse changes in currency exchange rates. So long
as the Fund is able to realize a net return on the leveraged
portion of its investment portfolio that is higher than the
interest expense paid on borrowings, the effect of leverage will
be to cause the Fund's shareholders to realize higher current net
investment income than if the Fund were not leveraged. However,
to the extent that the interest expense on borrowings approaches
the net return on the leveraged portion of the Fund's investment
portfolio, the benefit of leverage to the Fund's shareholders
will be reduced, and if the interest expense on borrowings were
to exceed the net return to shareholders, the Fund's use of
leverage would result in a lower rate of return than if the Fund
were not leveraged. Similarly, the effect of leverage in a
declining market could be a greater decrease in net asset value
per share than if the Fund were not leveraged. In an extreme
case, if the Fund's current investment income were not sufficient
to meet the interest expense on borrowings, it could be necessary
for the Fund to liquidate certain of its investments, thereby
reducing the net asset value of the Fund's shares.

PORTFOLIO MANAGEMENT AND OTHER CONSIDERATIONS. In the
event of an increase in rates on U.S. Government Securities
obligations or other changed market conditions, to the point
where the Fund's leverage could adversely affect the Fund's
shareholders, as noted above, or in anticipation of such changes,
the Fund may increase the percentage of its investment portfolio
invested in U.S. Government Securities, which would tend to
offset the negative impact of leverage on Fund shareholders. The
Fund may also reduce the degree to which it is leveraged by
repaying amounts borrowed.

Under the 1940 Act, the Fund is not permitted to borrow
unless immediately after such borrowing there is "asset
coverage," as that term is defined and used in the 1940 Act, of
at least 300% for all borrowings of the Fund. In addition, under
the 1940 Act, in the event asset coverage falls below 300%, the
Fund must within three days reduce the amount of its borrowing to
such an extent that the asset coverage of its borrowings is at
least 300%. Assuming outstanding borrowings representing not
more than one-third of the Fund's total assets less liabilities

<PAGE>

(other than such borrowings), the asset coverage of the Fund's
portfolio would be 300%. The Fund will maintain asset coverage
of outstanding borrowings of at least 300% and if necessary will,
to the extent possible, reduce the amounts borrowed by making
repayments from time to time in order to do so. Such repayments
could require the Fund to sell portfolio securities at times
considered disadvantageous by the Adviser, and if such securities
have been held for less than three months, such sales may risk
impairing the Fund's tax status as a regulated investment
company. See "Dividends, Distributions and Taxes."

OTHER BORROWINGS. The Fund may also borrow to
repurchase its shares or to meet redemption requests. In
addition, the Fund may borrow for temporary purposes (including
the purposes mentioned in the preceding sentence) in an amount
not exceeding 5% of the value of the total assets of the Fund.
Borrowings for temporary purposes are not subject to the 300%
asset coverage limit described above. See "Certain Fundamental
Investment Policies."

ADDITIONAL INVESTMENT CONSIDERATIONS

RISKS OF INVESTMENTS IN FOREIGN SECURITIES. Investing
in securities issued by foreign governments involves
considerations and possible risks not typically associated with
investing in U.S. Government Securities. The values of foreign
investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including
withholding taxes, changes in governmental administration or
economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Costs are
incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are
generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States.
Investments in foreign countries could be affected by other
factors not present in the United States, including
expropriation, confiscatory taxation, lack of uniform accounting
and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended
settlement periods. The Fund believes that, except for currency
fluctuations between the U.S. Dollar and the Canadian Dollar, the
matters described above are not likely to have a material adverse
effect on the Fund's investments in the securities of Canadian
issuers or investments denominated in Canadian Dollars. The
factors described above are more likely to have a material
adverse effect on the Fund's investments in the securities of
Mexican and other non-Canadian foreign issuers, including
investments in securities denominated in Mexican Pesos or other
non-Canadian foreign currencies. If not hedged, however,

<PAGE>

currency fluctuations could affect the unrealized appreciation
and depreciation of Canadian Government Securities as expressed
in U.S. Dollars.

CURRENCY RISKS. Because Fund assets will be invested in
fixed income securities denominated in the Canadian Dollar, the
Mexican Peso and other foreign currencies and because a
substantial portion of the Fund's revenues will be received in
currencies other than the U.S. Dollar, the U.S. Dollar equivalent
of the Fund's net assets and distributions will be adversely
affected by reductions in the value of certain foreign currencies
relative to the U.S. Dollar. These changes will also affect the
Fund's income. If the value of the foreign currencies in which
the Fund receives income falls relative to the U.S. Dollar
between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash
in U.S. Dollars to meet the distribution requirements that the
Fund must satisfy to qualify as a regulated investment company
for federal income tax purposes. Similarly, if the value of a
particular foreign currency declines between the time the Fund
incurs expenses in U.S. Dollars and the time cash expenses are
paid, the amount of the currency required to be converted into
U.S. Dollars in order to pay expenses in U.S. Dollars could be
greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these
risks, the Fund may engage in certain currency hedging
transactions, which themselves, involve certain special risks.
See "Additional Investment Policies and Practices," above.

SECURITIES RATINGS. The ratings of fixed-income
securities by S&P and Moody's are a generally accepted barometer
of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating of an
issuer is heavily weighted by past developments and does not
necessarily reflect probable future conditions. There is
frequently a lag between the time a rating is assigned and the
time it is updated. In addition, there may be varying degrees of
difference in credit risk of securities within each rating
category. Securities rated BBB by S&P or Baa by Moody's are
considered to be investment grade, but to have speculative
characteristics. Sustained periods of deteriorating economic
conditions or rising interest rates are more likely to lead to a
weakening in the issuer's capacity to pay interest and repay
principal than in the case of higher-rated securities. The Fund
expects that it will not retain a debt security which is
downgraded below BBB or Baa, or, if unrated, determined by the
Adviser to have undergone similar credit quality deterioration,
subsequent to purchase by the Fund. See Appendix A for a
description of such ratings.

<PAGE>

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

DEBT SECURITIES. The net asset value of the Fund's
shares will change as the general levels of interest rates
fluctuate. When interest rates decline, the value of a portfolio
primarily invested in debt securities can be expected to rise.
Conversely, when interest rates rise, the value of a portfolio
primarily invested in debt securities can be expected to decline.

NON-DIVERSIFIED STATUS. The Fund is a "non-diversified"
investment company, which means the Fund is not limited in the
proportion of its assets that may be invested in the securities
of a single issuer. Because the Fund may invest in a smaller
number of individual issuers than a diversified investment
company, an investment in the Fund may, under certain
circumstances, present greater risk to an investor than an
investment in a diversified company. However, the Fund intends
to conduct its operations so as to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code
(the "Code"). See "Dividends, Distributions and Taxes--U.S.
Federal Income Taxes." To so qualify, among other requirements,
the Fund will limit its investments so that, at the close of each
quarter of the taxable year, (i) not more than 25% of the market
value of the Fund's total assets will be invested in the
securities of a single issuer and (ii) with respect to 50% of the
market value of its total assets, not more than 5% of the market
value of its total assets will be invested in the securities of a
single issuer and the Fund will not own more than 10% of the
outstanding voting securities of a single issuer. The Fund's
investments in U.S. Government Securities are not subject to
these limitations. However, in order to meet the diversification
tests and thereby maintain its status as a regulated investment
company, the Fund will be required to diversify its portfolio of
Canadian Government Securities, Mexican Government Securities and
other foreign government securities in a manner which would not
be necessary if the Fund had made similar investments in U.S.
Government Securities.

FUNDAMENTAL INVESTMENT POLICIES

The following restrictions, which supplement those set
forth in the Fund's Prospectus, may not be changed without
shareholder approval, which means the affirmative vote of the
holders of (i) 67% or more of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented,

<PAGE>

or (ii) more than 50% of the outstanding shares, whichever is
less.

The Fund may not:

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

2. Participate on a joint or joint and several basis
in any securities trading account;

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

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

5. Purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Fund would own any securities of an open-
end investment company or more than 3% of the total outstanding
voting stock of any closed-end investment company or more than 5%
of the value of the Fund's total assets would be invested in
securities of any one or more closed-end investment companies; or

6. (i) Purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or purchase and sell securities of companies which deal in
real estate or interests therein; (ii) purchase or sell
commodities or commodity contracts (except currencies, futures
contracts on currencies and related options, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options, futures contracts and options on
futures contracts and other similar contracts); (iii) invest in
interests in oil, gas, or other mineral exploration or
development programs; (iv) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (v) act as an underwriter of securities,
except that the Fund may acquire restricted securities under
circumstances in which, if such securities were sold, the Fund

<PAGE>

might be deemed to be an underwriter for purposes of the
Securities Act.

To maintain portfolio diversification and reduce
investment risk, as a matter of fundamental policy, the Fund may
not: (a) invest 25% or more of its total assets in securities of
companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;
(b) borrow money, except that the Fund may, in accordance with
provisions of the 1940 Act, (i) borrow from a bank, if after such
borrowing, there is asset coverage of at least 300% as defined in
the 1940 Act and (ii) borrow for temporary or emergency purposes
in an amount not exceeding 5% of the value of the total assets of
the Fund; or (c) pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure permitted borrowings.

In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Fund may not invest in warrants if such
warrants, valued at the lower of cost or market, would exceed 5%
of the value of the Fund's net assets. Included within such
amount, but not to exceed 2% of the Fund's net assets, may be
warrants which are not listed on the New York Stock Exchange or
the American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities may be deemed to be without
value. The Fund will also not purchase puts, calls, straddles,
spreads and any combination thereof if by reason thereof the
value of its aggregate investment in such classes of securities
will exceed 5% of its total assets.

Whenever any investment policy or restriction states a
minimum or maximum percentage of the Fund's assets which may be
invested in any security or other asset, it is intended that such
minimum or maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such security or other asset. Accordingly, any late increase or
decrease in percentage beyond the specified limitations resulting
from a change in value or net assets will not be considered a
violation.

_________________________________________________________________

ADDITIONAL INFORMATION ABOUT CANADA,
THE UNITED MEXICAN STATES AND THE REPUBLIC OF ARGENTINA
_________________________________________________________________

The information in this section is based on material
obtained by the Fund from various Canadian, Mexican and Argentine
governmental and other economic sources believed to be accurate
but has not been independently verified by the Fund or the
Adviser. It is not intended to be a complete description of

<PAGE>

Canada, Mexico or Argentina, their economies, or the consequences
of investing in Mexican Government Securities, Canadian
Government Securities or Argentine Government Securities.

________________________________________________________________

ADDITIONAL INFORMATION ABOUT CANADA
________________________________________________________________

Territory and Population

Canada is the second largest country in the world in
terms of land mass with an area of 9.22 million square kilometers
(3.85 million square miles). It is located north of the
continental United States of America and east of Alaska. Canada
comprises ten provinces (Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward
Island, Quebec and Saskatchewan) and two territories (the
Northwest Territories and the Yukon Territory). Its population
is approximately 29 million.

Government

Canada is a constitutional monarchy with Queen Elizabeth
II of the United Kingdom its nominal head of state. The Queen is
represented by the Canadian governor-general, appointed on the
recommendation of the Canadian prime minister. Canada's
government has a federal structure, with a federal government and
ten provincial governments. Its Parliament consists of a House
of Commons and a Senate. Members of the House of Commons are
elected by Canadian citizens over 18 years of age. Senators are
appointed on a regional basis by the Prime Minister. The federal
government is headed by the Prime Minister who is chosen from the
party that has won the majority of seats in the House of Commons.
The provincial governments each have a Legislative Assembly and a
Premier.

Legislative authority resides in the federal parliament
and the ten provincial legislative assemblies. Provinces have
extensive power with specific areas of jurisdiction. The federal
government has defined areas of jurisdiction and the power to act
in areas declared by Parliament to be for the general advantage
of Canada. This general power has been used to justify federal
action in certain areas of provincial jurisdiction. Concurrent
federal and provincial jurisdiction exists in certain matters,
including agriculture, immigration and pensions. The power-
sharing issue between the federal government and provincial
governments has been contentious and has proven to be a central
issue in the process of constitutional reform.

<PAGE>

Politics

Since World War II, the federal government has been
formed by either the Liberal Party or the Progressive
Conservative Party. In October 1993, the Liberal Party under the
leadership of Mr. Jean Chretien, won 178 of the 295 seats in the
Canadian House of Commons ending nine years of rule by the
Progressive Conservative Party. He remains popular and unless
the Liberal Party calls for an earlier election, the next general
election will take place in October 1998.

Canada has had three major developments regarding unity
and constitutional reform in recent years. The first two major
developments were the rejection of the Meech Lake Agreement in
1990 and the Charlottetown Accord in 1992. Those reforms would
have given Quebec constitutional recognition as a distinct
society, transferred powers from the federal to the provincial
governments and reformed the Senate by providing for more equal
representation among the provinces.

The third major development was the possibility of
Quebec's independence. On September 12, 1994, the Quebec
separatist party, Parti Quebecois under the leadership of Jacques
Parizeau won 77 seats in the provincial election with 44.7% of
the vote. The Liberal Party won 47 seats with 44.3% of the vote.
The Parti Quebecois' agenda included a call for a referendum
supporting independence. If the referendum had been approved,
Quebec would have become a separate country, but would have
retained formal political and economic links with Canada similar
to those that join members of the European Union. On October 30,
1995, the referendum was defeated in a close ballot, in which
50.6% voted against secession and 49.4% voted for secession. It
is expected that the closeness of the vote will result in
federally-sponsored legislation or the proposal of constitutional
amendments with regard to the relationship between the federal
government and the provinces. It is also a possibility that
another referendum will take place within the next few years.
Therefore, it is expected that Quebec's position within Canada
will continue to dominate political debate.

Monetary and Banking System

The central bank of Canada is the Bank of Canada. Its
main functions are to advise on the formulation and execution of
monetary policy, supervising commercial bank acting as a fiscal
agent to the federal government managing the foreign exchange
fund. The currency unit of Canada is the Canadian dollar.
Canada does not impose foreign exchange controls on capital
receipts or payments by residents or non-residents.

<PAGE>

North American Free Trade Agreement

Canada and the United States are each other's largest
trading partners and, as a result there is a significant linkage
between the two economies. Bilateral trade between Canada and
the United States, in 1993, was larger than between any other two
countries in the world. On January 2, 1988, Canada and the
United States signed the Free Trade Agreement (the "FTA"), which
was ratified by the Canadian Parliament and the United States
Senate. In the summer of 1991, the United States, Canada and
Mexico began negotiating the North American Free Trade Agreement
("NAFTA"). NAFTA was signed on December 17, 1992 at separate
ceremonies in Washington D.C., Mexico City and Ottawa. On
December 30, 1993, after the Legislatures in the United States
and Mexico had ratified NAFTA, the Canadian government announced
that it had proclaimed NAFTA into law and had exchanged the
written notifications with the United States and Mexico needed to
bring NAFTA into force. As a result, NAFTA effectively replaced
the FTA. Talks between Chile and the three existing NAFTA
partners were formally started on June 7, 1995. It is expected
that Chile will become a party to the agreement. When fully-
implemented, NAFTA is designed to create a North America Free
Trade Area, expand the flow of goods, services and investment,
and eventually eliminate tariff barriers, import quotas and
technical barriers among Canada, the United States, Mexico and
future parties to NAFTA.

Economic Information Regarding Canada

Canada experienced rapid economic expansion during most
of the 1980's. Its economy, like many other industrialized
nations fell into a recession from late 1990 through 1992. The
1990-1992 recession partly created and partly highlighted some
difficulties which the present government is attempting to
resolve. The relatively low level of economic activity during
this period reduced the growth of tax receipts with the result
that the already high levels of government debt increased.

RECENT DEVELOPMENTS. The deterioration in the
government's fiscal position, which started during the 1990-1992
recession, has since been aggravated by a reluctance to decrease
expenditures or increase taxes. In its 1995 budget, the Liberal
Party introduced new spending cuts, the largest in over thirty
years, to reduce Canada's budget deficit. Canada's budget
deficit is one of the largest for any of the Organization for
Economic Cooperation and Development ("OECD") members. For the
fiscal year 1994-95, its budget deficit is estimated to be more
than 5% of gross domestic product ("GDP"), compared to 2.5% for
the United States. The Government has stated its commitment to
reduce the deficit to approximately 3% of GDP in the 1996-1997
fiscal year. While the Government's budget deficit objectives

<PAGE>

can be achieved, it will require continued economic growth, lower
interest rates and additional reductions in government spending.

In addition to the growth of the federal government
deficit, provincial government debt has risen rapidly. Several
developments, including increased spending on social services at
the provincial level, were responsible for a significant amount
of the growth of public debt from 1990-1992. In response to the
increase in provincial debt, a number of rating agencies
downgraded some provincial debt ratings. All provinces now have
plans to balance their respective budgets. This may prove to be
difficult considering the federal government's plan to reduce
certain transfers to the provinces.

During 1994, despite growing output and low inflation,
concern over the country's deficit and the uncertainty associated
with Quebec's status within Canada lead to a weakening of its
currency and higher interest rates. During the first two
quarters of 1995, however, in an attempt to increase domestic
growth, the Bank of Canada decreased interest rates. The easing
of monetary policy has also been facilitated by a renewed
strength in the Canadian dollar. This decrease in interest rates
since the beginning of 1995 has improved the government's
prospects of meeting its fiscal targets. From October 1991
through February 15, 1996, the Canadian Dollar decreased in value
compared to the U.S. Dollar by approximately 18%. On January 20,
1995, the Canadian dollar fell to 70.2, its lowest rate in almost
nine years and close to its record low of 69.2. The Bank of
Canada responded by increasing rates on Treasury bills and
selling U.S. dollars. The Canadian dollar has increased in value
from 70.2 against the U.S. Dollar on January 20, 1995 to 72.5 on
February 15, 1996.

The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Canadian Dollar, information concerning
inflation rates, historical information regarding the Canadian
GDP and information concerning yields on certain Canadian
Government Securities. Historical figures are not necessarily
indicative of future fluctuations.

CURRENCY EXCHANGE RATES. The exchange rate between the
U.S. Dollar and the Canadian Dollar is at any moment related to
the supply of and demand for the two currencies, and changes in
the rate result over time from the interaction of many factors
directly or indirectly affecting economic conditions in the
United States and Canada, including economic and political
developments in other countries and government policy and
intervention in the money markets.

<PAGE>

Despite the recent drop in value of the Canadian dollar,
the range of fluctuation in the U.S. Dollar/Canadian Dollar
exchange rate has been narrower than the range of fluctuation
between the U.S. Dollar and most other major currencies.
However, the range that occurred in the past is not necessarily
indicative of fluctuations in that rate that may occur over time
which may be wider or more confined than the range that occurred
over an historic period of comparable length. Future rates of
exchange cannot be predicted, particularly over extended periods
of time.

The following table sets forth, for each year indicated,
the annual average of the daily noon buying rates in New York for
cable transfers in U.S. Dollars for one Canadian Dollar as
certified by the Federal Reserve Bank of New York:

U.S. Dollars

1981 0.83
1982 0.81
1983 0.81
1984 0.77
1985 0.73
1986 0.72
1987 0.75
1988 0.81
1989 0.84
1990 0.86
1991 0.87
1992 0.83
1993 0.78
1994 0.73
1995 0.73

Source: Federal Reserve Bulletin

INFLATION RATE OF THE CANADIAN CONSUMER PRICE INDEX.
Inflation has remained below 2% since 1991 and the Government and
the Bank of Canada have reaffirmed the target of holding
inflation inside a band of 1-3% for 1995.

The following table sets forth for each year indicated
the average change in the Canadian consumer price index for the
twelve months ended December 31 for the years 1981 through 1994
and for the eight months ended August 31, 1995 (1986 = 100).

National Consumer
Price Index

1981 . . . . . . . . . . . . . . . 12.4%
1982 . . . . . . . . . . . . . . . 10.9

<PAGE>

1983 . . . . . . . . . . . . . . . 5.7
1984 . . . . . . . . . . . . . . . 4.4
1985 . . . . . . . . . . . . . . . 3.9
1986 . . . . . . . . . . . . . . . 4.2
1987 . . . . . . . . . . . . . . . 4.4
1988 . . . . . . . . . . . . . . . 4.0
1989 . . . . . . . . . . . . . . . 5.0
1990 . . . . . . . . . . . . . . . 4.8
1991 . . . . . . . . . . . . . . . 5.6
1992 . . . . . . . . . . . . . . . 1.5
1993 . . . . . . . . . . . . . . . 1.8
1994 . . . . . . . . . . . . . . . 0.2
1995(1). . . . . . . . . . . . . . 2.3(2)

(1) For the eight months ended August 31.
(2) Annualized.

Source: BANK OF CANADA REVIEW Autumn 1995; Statistics Canada.

CANADIAN GROSS DOMESTIC PRODUCT. The following table
sets forth Canada's GDP for the years 1981 through 1994 at
historical and constant prices.

Gross Domestic Change from
Gross Domestic Product at 1986 Prior Year at
Product Prices Constant Prices

(millions of Canadian Dollars) (%)

1981 355,994 440,127 3.7%
1982 374,442 425,970 (3.2)
1983 405,717 439,448 3.2
1984 444,735 467,167 6.3
1985 477,988 489,437 4.8
1986 505,666 505,666 3.3
1987 551,597 526,730 4.2
1988 605,906 552,958 5.0
1989 650,748 566,486 2.4
1990 669,467 565,155 (0.2)
1991 676,477 555,052 (1.8)
1992 690,122 559,305 0.8
1993 712,855 571,722 2.2
1994 750,053 597,936 4.6

Source: BANK OF CANADA REVIEW Autumn 1995; Statistics Canada.

YIELDS ON CANADIAN GOVERNMENT TREASURY BILLS AND BONDS. The
following table sets forth the average monthly yield on 3-month
and 6-month government of Canada Treasury bills and 5-year and
10-year Canada Benchmark Bonds from January 1994 through
September 1995.

<PAGE>

Treasury Bills Benchmark Bonds
1994 3 Months 6 Months 5 Years 10 Years

January 3.63% 3.71% 5.40% 6.39%
February 3.84 4.17 6.12 6.94
March 5.47 6.04 7.47 7.95
April 5.86 6.28 7.44 7.95
May 6.14 6.55 8.01 8.41
June 6.38 7.29 8.82 9.11
July 5.76 6.64 8.96 9.36
August 5.52 5.79 8.32 8.74
September 5.20 5.69 8.36 8.88
October 5.39 6.04 8.55 9.14
November 5.86 6.52 8.81 9.16
December 7.14 8.12 8.99 9.07

1995

January 8.10 8.47 9.18 9.34
February 8.11 8.15 8.46 8.76
March 8.29 8.35 8.23 8.57
April 7.87 7.87 7.93 8.31
May 7.40 7.36 7.41 7.88
June 6.73 6.65 7.33 7.81
July 6.65 6.87 7.79 8.27
August 6.34 6.62 7.58 8.00
September 6.58 6.80 7.54 7.89

Source: BANK OF CANADA REVIEW Autumn 1995; Statistics Canada.

______________________________________________________________

ADDITIONAL INFORMATION ABOUT THE UNITED MEXICAN STATES
______________________________________________________________

Territory and Population

The United Mexican States ("Mexico") occupies a
territory of approximately 1.97 million square kilometers (759
thousand square miles). To the north, Mexico shares a border
with the United States of America, and to the south it has
borders with Guatemala and Belize. Its coastline is along both
the Gulf of Mexico and the Pacific Ocean. Mexico comprises 31
states and a Federal District (Mexico City). It is the second
most populous nation in Latin America, with an estimated
population of 92 million.

Mexico's three largest cities are Mexico City,
Guadalajara and Monterrey, with estimated populations in 1990 of
15 million, 2.8 million and 2.5 million, respectively. In the

<PAGE>

1980s, Government efforts concerning family planning and birth
control, together with declining birth rates among women under 35
and those living in urban areas have resulted in a reduction of
such rate to a projected 1.7% in 1995.

Government

The present form of government was established by the
Constitution, which took effect on May 1, 1917. The Constitution
established Mexico as a Federal Republic and provides for the
separation of the executive, legislative and judicial branches.
The President and the members of Congress are elected by popular
vote of Mexican citizens over 18 years of age.

Executive authority is vested in the President, who is
elected for a single six-year term. The executive branch
consists of 17 Ministries, the office of the Attorney General,
the Federal District Department and the office of the Attorney
General of Mexico City.

Legislative authority is vested in the Congress, which
is composed of the Senate and the Chamber of Deputies. Senators
serve a six-year term. Deputies serve a three-year term, and
neither Senators nor Deputies may serve consecutive terms in the
same chamber. The Senate has 128 members, four from each state
and four from the Federal District. The Chamber of Deputies has
500 members, of whom 300 are elected by direct vote from the
electoral districts, and 200 are selected by a system of
proportional representation. The Constitution provides that the
President may veto bills and that Congress may override such
vetoes with a two-thirds majority of each Chamber.

Judicial authority is vested in the Supreme Court of
Justice, the Circuit and District courts, and the Federal
Judicial Board. The Supreme Court has 11 members who are
selected by the Senate from a pool of candidates nominated by the
President. Its members serve for 15 year terms, except for the
current members of the Court, whose appointments range from eight
to 20 years.

Mexico has diplomatic relations with more than 170
countries. It is a charter member of the United Nations, a
founding member of the Organization of American States, the IMF
and the World Bank. Mexico became a member of the Organization
for Economic Cooperation and Development on April 14, 1994 and
the World Trade Organization ("WTO") on January 1, 1995 (the date
on which the WTO superseded the General Agreement on Trade and
Tariffs ("GATT")).

<PAGE>

Politics

The Partido Revolucionario Instituctional ("PRI") is the
dominant political party in Mexico. Since 1929 the PRI has won
all presidential elections and has held a majority in General
Congress. Until 1989 it had also won all of the state
governorships. The oldest opposition party in Mexico is the
Partido Accion Nacional ("PAN"). As of December 1995, the PAN
held four governorships. The third major party in Mexico is the
Partido de la Revolucion Democratica ("PRD").

On August 21, 1994, elections were held to select a new
President of Mexico for a six-year term beginning on December 1,
1994. In addition, elections were held for three-quarters of the
Senate and the entire Chamber of Deputies. The candidate of the
PRI, Ernesto Zedillo Ponce de Leon, won the Presidential election
with 48.77% of the votes, the candidate of the PAN was second
with 25.94% of the votes and the PRD candidate was third with
16.6% of the votes. With respect to the Congressional elections,
the PRI maintained its majority in both chambers, with 93 seats
in the Senate and 298 seats in the Chamber of Deputies. The PAN
had the second largest representation with 25 seats in the Senate
and 118 seats in the Chamber of Deputies and the PRD the third
largest representation with 10 seats in the Senate and 70 seats
in the Chamber of Deputies. The PRI won two seats pursuant to
proportional representation and the PAN and the PRD each won one
seat in extraordinary elections held on April 30, 1995.

In January 1994, an area in the southern state of
Chiapas experienced civil unrest, including armed attacks on
several villages. The Federal Government responded immediately
by providing support to the local authorities, agreeing to
accelerate the disbursement of expenditures in connection with
social programs that were provided for in the 1994 budget and
publicly offering to negotiate a peaceful resolution that would
address the underlying concerns of the local population. Despite
the Federal Government's attempt to resolve the situation,
sporadic attacks have continued and the area of conflict expanded
in December 1994. In addition, in December 1994, the PRI
candidate, Mr. Eduardo Robledo Rincon, became the Governor of
Chiapas amid speculations of election fraud. His election and
subsequent actions, before his resignation in February 1995, led
to more tension between the rebels and the Government. In
February 1995, the Mexican military, conducted an operation to
restore order in Chiapas. After restoring order, President
Zedillo ordered the military to halt its offensive, offered
amnesty to the rebels and urged them to return to negotiating a
peaceful settlement. On April 9, 1995, representatives of the
insurgents and Government representatives held meetings. In mid-
February 1996, representatives of the Zapatista National

<PAGE>

Liberation Army and the federal government signed an agreement
recognizing new rights for indigenous communities in Mexico.

In addition to the civil unrest in Chiapas, certain
national developments have led to disillusionment among the
electorate with the institutions of government. These events
were the assassination of Luis Donaldo Colosio, the likely
successor to former President Salinas and the murder of Mr. Jose
Francisco Ruiz Massieu, a high-ranking PRI official. The
investigation into the death of Ruiz Massieu has led to Mr. Raul
Salinas, a former president's brother, being accused of offering
a large sum of money to a PRI deputy to kill Mr. Massieu.
Investigations into both murders are still continuing.

Continuing the reform of the political system, and in
response to the civil unrest in Chiapas and the economic turmoil
facing Mexico resulting from the devaluation of the Peso (as
described below), the Mexican Government and leaders of the PRI
signed an agreement with the opposition parties on January 17,
1995 to continue to democratize the country's political system.
Changes would include controls on fund-raising and campaign
spending, full access to the media for the opposition parties and
the complete independence of the federal elections agency.

On February 13, 1995, the PRI suffered its worst
election defeat in sixty years when the PAN won almost every
major elective office in the state of Jalisco. It was only the
third time in the PRI's history that it accepted a defeat in a
state- wide election. Two gubernatorial elections were held on
May 28, 1995 with the PRI and the PAN each winning one election.

Money and Banking

Banco de Mexico, chartered in 1925, is the central bank
of Mexico. It is the Federal Government's primary instrument for
the execution of monetary policy and the regulation of currency
and credit. It is authorized by law to regulate interest rates
payable on time deposits, to establish minimum reserve
requirements for credit institutions and to provide discount
facilities for certain types of bank loans. The currency unit of
Mexico is the Peso. Mexico repealed its exchange control rules
in 1991 and now maintains only a market exchange rate.

A constitutional amendment relating to Banco de Mexico's
activities and role within the Mexican economy became effective
on August 23, 1993. The amendment's purpose was to reinforce the
independence of Banco de Mexico, which may in the future act as a
counterbalance to the executive and legislative branches in
fiscal policy matters. The amendment significantly strengthens
Banco de Mexico's authority with respect to monetary policy,
foreign exchange and related activities and the regulation of the

<PAGE>

financial services industry. On April 1, 1994, a new law
governing the activities of Banco de Mexico became effective.
The new law was intended to put into effect the greater degree of
autonomy granted to Banco de Mexico under the constitutional
amendment described above and also established a Foreign Exchange
Commission charged with determining the nation's exchange rate
policies.

Trade Reform

Mexico has been a member of GATT since 1986 and a member
of the WTO since January 1, 1995. Mexico has also entered into
NAFTA with the United States and Canada. In addition, Mexico
signed a framework for a free trade agreement in 1992 with Costa
Rica, El Salvador, Guatemala, Honduras and Nicaragua and entered
into a definitive free trade agreement with Costa Rica in April
1994. A free trade agreement between Mexico and Chile went into
effect on January 1, 1992. A free trade agreement with Colombia
and Venezuela was signed in June 1994 and a similar agreement
with Bolivia was signed in September 1994; both agreements
entered into force in January 1995. In connection with the
implementation of NAFTA, amendments to several laws relating to
financial services (including the Banking Law and the Securities
Market Law) became effective on January 1, 1994. These measures
permit non-Mexican financial groups and financial intermediaries,
through Mexican subsidiaries, to engage in various activities in
the Mexican financial system, including banking and securities
activities.

Economic Information Regarding Mexico

During the period from World War II through the mid-
1970's, Mexico experienced sustained economic growth. During the
mid 1970's, Mexico experienced high inflation and, as a result,
the government embarked on a high-growth strategy based on oil
exports and external borrowing. The economy suffered a set back
in 1981 because of a severe drop in oil prices and high interest
rates that substantially increased the country's external debt
service obligations. With no new lending from international
creditors, the Peso was devalued and inflation again rose
sharply. Through much of the 1980's, the Mexican economy
continued to experience high inflation and large foreign
indebtedness. In February 1990, Mexico became the first Latin
American country to reach an agreement with external creditor
banks and multi-national agencies under the U.S. Treasury's
approach to debt reduction known as the "Brady Plan." As part of
the Brady Plan, commercial banks and Mexico agreed to debt
reduction and new financing in a set of agreements comprising the
1989-1992 Financing Package. The implementation of this package
resulted in a substantial reduction in Mexico's foreign debt and
debt service obligations.

<PAGE>

The value of Peso has been central to the performance of
the Mexican economy. From late 1982 until November 11, 1991,
Mexico maintained a dual foreign exchange rate system, with a
"controlled" rate and a "free market" rate. The controlled
exchange rate applied to certain imports and exports of goods,
advances and payments of registered foreign debt and funds used
in connection with the in-bond industry (the industry is
comprised of companies which import raw materials without paying
a duty), funds used for payments of royalties and technical
assistance under registered agreements requiring such payments.
The free market rate was used for all other types of
transactions. The dual system assisted in controlling the value
of the Mexican Peso, particularly from 1983 to 1985. In later
years the difference between the two rates was not significant.
Mexico has since repealed the controlled rate.

Under economic policy initiatives implemented since
December 1987, the Mexican government introduced a schedule of
gradual devaluations of the Mexican Peso that initially amounted
to an average depreciation of the Mexican Peso against the U.S.
Dollar of one Mexican Peso per day. On May 28, 1990, the Mexican
Peso began devaluing by an average of .80 Mexican Pesos per day
instead of one Mexican Peso per day. On November 12, 1990 this
average was decreased to .40 Mexican Pesos per day and on
November 11, 1991 the daily devaluation rate was lowered to .20
Mexican Pesos per day.

On January 1, 1993, the Mexican Government introduced a
new currency, the New Peso. Each New Peso is worth 1,000 old
Mexican Pesos. The New Pesos and old Mexican Pesos were to
continue to be circulated for at least a year with Mexican
businesses being required to post prices in both pesos. At that
time, the Mexican government stated that the New Peso
(hereinafter, the "Peso") was not a devaluation but a move to
simplify the Mexican currency.

Throughout 1993 and most of 1994, the U.S. Dollar
exchange rate was allowed to fluctuate within a band that widened
daily. The ceiling of the band, which is the maximum selling
rate, depreciated at a daily rate of 0.0004 Pesos (equal to
approximately 4.5% per year), while the minimum buying rate
remained fixed.

RECENT DEVELOPMENTS. On December 20, 1994, the Mexican
Government announced a new policy that would allow a more
substantial yet still controlled devaluation of the Mexican Peso.
On December 22, 1994 the Mexican Government announced that it
would not continue with the policy announced two days earlier and
it would instead permit the Peso to float against other
currencies, resulting in a continued decline against the U.S.
Dollar. On December 23, 1994 the exchange rate was 4.67 Pesos to

<PAGE>

the U.S. Dollar, and on January 4, 1995 it had fallen further to
5.57 to the U.S. Dollar.

On January 12, 1995, President Clinton proposed a plan
to help stabilize the Mexican economy. Under terms of the
proposal, the United States would guarantee $40 billion in new
loans to Mexico to be used in the event of a default on
outstanding bonds or loans. In response to President Clinton's
plan, the Peso gained approximately 8% in one day against the
U.S. Dollar. During the next two weeks as it appeared the plan
would not be approved by Congress, the Peso fell again, reaching
a new low on January 31, 1995 of 6.35 Pesos to the U.S. Dollar or
an effective devaluation of approximately 40% since December 20,
1994.

With foreign exchange reserves down from an estimated
$30 billion in February 1994 to $6 billion in December 1994 and
$3.5 billion at the end of January 1995, there existed
significant concern about the possibility of a Mexican government
default on the approximately $11 billion in Tesobonos maturing
from February to April 1995. Tesobonos are U.S. dollar-
denominated Mexican Government bonds with a face value of $1,000.
The purchase price of a Tesobono is the Peso equivalent of $1,000
on the day the bond is acquired. On the date the bond matures,
an amount equal to the principal plus interest will be paid in
Pesos at the exchange rate in effect on the date the bond
matures.

During January 1995, with foreign investors estimated to
be holding 70% of outstanding Cetes and 80% of outstanding
Tesobonos, it became imperative that Mexico restore foreign
investor confidence. The obligation to repay the Tesobonos was a
significant cause of Mexico's economic turmoil, both because of
the size of the debt and the continuing devaluation of the Peso.
On January 24, 1995, demand for Tesobonos fell dramatically from
the previous week, with interest rates rising to more than 26%.
During this same time, the prices of Mexican Brady Bonds had
decreased by approximately 23%.

On January 31, 1995, President Clinton announced a new
plan that would not require Congressional approval in order to be
implemented. Under the plan, the United States will exchange up
to $20 billion in foreign exchange reserves for Dollars, which,
in turn, will be swapped for Pesos. Mexico has an obligation to
return the Dollars within three to five years. The Federal
Reserve will make available to Mexico up to $6 billion in short-
term loans. The International Monetary Fund will provide $17.8
billion in five-year loans and the Bank for International
Settlements will provide $10 billion in credit to Mexico. In
addition, Canada pledged $1 billion and Latin American nations
pledged $1 billion in credit to Mexico. Under the terms of the

<PAGE>

plan, Mexico has an obligation to pay fees for the use of the
loan guarantees and has pledged oil revenues as collateral for
loan guarantees from the United States. In addition, Mexico will
be required to adhere to a program of economic reform, which will
include a reduction in government spending, slowing the growth of
the money-supply and the privatization of more industries. As of
July 1995, of the approximately $40 billion made available to
Mexico under the international support package, approximately $22
billion is outstanding and approximately $18 billion is available
for future use.

The effects of the government's response to the economic
crisis and the devaluation of the Mexican Peso are reflected in
the performance of the Mexican economy during the first six
months of 1995, with improvements in the trade balance, current
account deficit, the level of Tesobonos debt and international
reserves. The stabilization of the economy is reflected by the
reduction in the principal amount of Tesobonos outstanding from
approximately $29.2 billion on December 31, 1994 to approximately
$3.1 billion on August 31, 1995, the increase of international
gross reserves from approximately $3.5 billion on March 31, 1995
to approximately $15.1 billion on August 31, 1995 and the
increase of value of the Mexican Peso against the U.S. Dollar
from 7.588 on March 31, 1995 to 6.276 on August 31, 1995.
Nonetheless, the economy is still suffering from a decrease in
GDP, increased unemployment and inflation and a reduction in the
availability of credit.

On May 31, 1995, President Zedillo announced the 1995-
2000 National Development Plan, which continues the economic
policy initiatives of promoting vigorous and sustainable economic
growth. The Plan calls for measures to increase domestic savings
and to encourage more direct foreign investment. The Plan
further requires that the Mexican government seek to maintain
fiscal discipline and maintain an exchange rate policy that
avoids overvaluation and is conducive to price stability.
Although the Mexican economy has stabilized, there can be no
assurance that the government's plan will lead to a full
recovery.

Statistical and Related Information
Concerning Mexico

The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Mexican Peso, information concerning
inflation rates, historical information regarding the Mexican GDP
and information concerning interest rates on certain Mexican
Government Securities. Historical information is not necessarily
indicative of future fluctuations or exchange rates. In 1982,

<PAGE>

Mexico imposed strict foreign exchange controls which shortly
thereafter were relaxed and were eliminated in 1991.

CURRENCY EXCHANGE RATES. There is no assurance that
future regulatory actions in Mexico will not affect the Fund's
ability to obtain U.S. Dollars in exchange for Mexican Pesos.

The following table sets forth the exchange rates of the
Mexican Peso to the U.S. Dollar with respect to each year from
1981 to 1994 and for each of the eleven months ended November
1995.

<PAGE>

Free Market Rate Controlled Rate

End of End of
Period Average Period Average

1981. . . . . . . 26 24 -- --
1982. . . . . . . 148 57 96 57
1983. . . . . . . 161 150 143 120
1984. . . . . . . 210 185 192 167
1985. . . . . . . 447 310 371 256
1986. . . . . . . 915 637 923 611
1987. . . . . . . 2.209 1.378 2.198 1.366
1988. . . . . . . 2.281 2.273 2.257 2.250
1989. . . . . . . 2.681 2.483 2.637 2.453
1990. . . . . . . 2.943 2.838 2.939 2.807
1991. . . . . . . 3.075 3.016 3.065* 3.07*
1992. . . . . . . 3.119 3.094 -- --
1993. . . . . . . 3.192 3.155 -- --
1994. . . . . . . 5.325 3.222 -- --

1995
January . . . . . 5.695 5.513 -- --
February. . . . . 5.838 5.685 -- --
March . . . . . . 6.818 6.702 -- --
April . . . . . . 5.785 6.300 -- --
May . . . . . . . 6.178 5.963 -- --
June. . . . . . . 6.309 6.223 -- --
July. . . . . . . 6.088 6.139 -- --
August. . . . . . 6.311 6.191 -- --
September . . . . 6.420 6.302 -- --
October . . . . . 7.172 6.691 -- --
November. . . . . 7.652 7.658 -- --

* Through November 10, 1991.

Source: Banco de Mexico.

<PAGE>

INFLATION AND CONSUMER PRICES. Through much of the
1980's, the Mexican economy continued to be affected by high
inflation, low growth and high levels of domestic and foreign
indebtedness. The annual inflation rate, as measured by the
consumer price index, rose from 28.7% in December 1981 to 159.2%
in December 1987. In December 1987, the Mexican Government
agreed with labor and business to curb the economy's inflationary
pressures by freezing the surge in wages and prices. The Pacto
de Solidaridad Economica (Pact for Economic Solidarity, the
"PSE") was announced in December 1987 and included the
implementation of restrictive fiscal and monetary policies, the
elimination of trade barriers and the reduction of import
tariffs. The PSE was renamed the Pacto para las Estabilidad y el
Crecimiento Economica (Pact for Stability and Economic Growth,
the "PECE") in November 1988. The PECE has been extended on five
occasions. After substantive increases in public sector prices
and utility rates, price controls were introduced. These
policies lowered the consumer inflation rate from 159.2% in
1987,to 19.7% in 1989, 29.9% in 1990, 18.8% in 1991, 11.9% in
1992, 8.0% in 1993, and 7.1% in 1994.

Under the PECE, the prices of certain goods and services
provided by the public sector (particularly gasoline, energy for
industrial use and utility services) were increased. The private
sector agreed to accept the increases without increasing private
sector prices. Furthermore, the government committed itself to
implementing measures to reduce agricultural sector costs.

On October 3, 1993, the 1993-94 PECE went into effect.
The purposes of that PECE, which was effective through
December 31, 1994, were essentially the same as those of its
predecessor pacts. The Government promised to maintain fiscal
discipline and a balanced budget. Mexico's foreign exchange
policy remains unchanged. The 1993-94 PECE set an inflation
target of 5% for 1994. In addition, the Government agreed to
reduce the highest income tax rate from 35% to 34% and to reduce
(for the next two years) the withholding tax applicable to
interest payments on external debt payable to certain financial
institutions and on publicly issued external debt from 15% to
4.9%. In order to assure industry of stable prices for certain
factors of production, the government has agreed to limit annual
increases in the price of gasoline (except in the border region
with the United States) to a maximum of 5% annually. Commercial
and residential electricity rate increases were also limited to
5%. As the Mexican economy stabilized, there has been a gradual
reduction in the number of goods and services whose prices are
covered by the original PECE, the 1992-93 PECE and the 1993-94
PECE.

On September 24, 1994, the government, together with the
business and labor sectors, entered into a new agreement that

<PAGE>

extends the 1993-94 PECE for 1995. That agreement became
effective on January 1, 1995. Its main points are as follows:
(i) an inflation target of 4% for 1995; (ii) a 4% GDP growth
target for 1995; (iii) an increase in salaries by 4%, together
with a productivity increase, the terms of which are yet to be
determined; (iv) the maintenance of the current foreign exchange
policy; (v) the creation of an investment fund to be financed
with the proceeds of privatizations in order to encourage the
participation of the private sector in infrastructure projects;
(vi) gradual increases in the prices of gasoline and electricity,
in amounts not to exceed a 4% increase in 1995; (vii) the
creation of tax benefits for workers receiving certain minimum
salaries; and (viii) a reduction of asset taxes to 1.8% (together
with other benefits relating to asset taxes).

On January 2, 1995, in response to the economic turmoil
following the devaluation of the Peso, President Zedillo
announced an emergency economic plan. The plan reiterates most
of the projections contained in the 1993-94 PECE, but modifies
the inflation projection (increased to 20%) and lowers GDP growth
target (to approximately 1%) for 1995. In addition, President
Zedillo reiterated that taxes would not be increased, Government
spending would decrease by approximately 1.3% of GDP, wages would
be allowed to increase by no more than 7% and a Fiscal Advisory
Committee would be created to examine Mexico's fiscal
legislation.

On March 9, 1995, President Zedillo announced a
modification of the plan adopted on January 2, 1995. The major
provisions of the plan as modified are: maintenance of the
floating exchange rate policy announced in December 1994; an
inflation target of 42% for 1995, a projected current account
account deficit of $2.4 billion and a decline in real GDP of 2%
during 1995; a commitment in principle by business to increase
prices only to the extent that products sold in Mexico comprise
imported components; a commitment by the Government to take the
steps necessary to increase public revenues and decrease public
expenditures with a view to achieving a budget surplus of 0.5% of
GDP and sharply lowering the current account deficit and
mitigating the inflationary impact of the devaluation; and an
increase in the minimum wage by 12%.

On October 29, 1995, the Mexican government announced a
new accord among business, labor and the government that
establishes certain guidelines for the Mexican economy for the
next fourteen months. The government is seeking to encourage
economic growth by providing tax incentives for business and
controlling wage increases and government spending. The accord,
known as the Alliance for Economic Recuperation, projects
economic growth of 3% and inflation of 20% during 1996.

<PAGE>

The accord provides investment tax credits to certain
businesses and tax incentives for companies that hire more
workers between the date of the accord and the end of 1996 than
they did during the first 10 months of 1995. The accord also
increases the minimum wage by 20% during the next 14 months. The
wage increase will occur in two stages, with a 10% increase in
December and another 10% increase in April 1995. In the accord,
the government pledged to maintain a balanced budget by reducing
spending by 4.75% in real terms during 1996. The government also
renewed its commitment to maintaining a floating exchange rate.
It is unclear what effect, if any, these policies will have on
the Mexican economy.

CONSUMER PRICE INDEX. The following table sets forth
the changes in the Mexican consumer price index for the year
ended December 31 for the years 1981 through 1994 and for the ten
months ended October 31, 1995.

Annual
Increases in
National Consumer
Price Index

1981. . . . . . . . . . . . . . . . . 28.7%
1982. . . . . . . . . . . . . . . . . 98.9
1983. . . . . . . . . . . . . . . . . 80.8
1984. . . . . . . . . . . . . . . . . 59.2
1985. . . . . . . . . . . . . . . . . 63.7
1986. . . . . . . . . . . . . . . . . 105.7
1987. . . . . . . . . . . . . . . . . 159.2
1988. . . . . . . . . . . . . . . . . 51.7
1989. . . . . . . . . . . . . . . . . 19.7
1990. . . . . . . . . . . . . . . . . 29.9
1991. . . . . . . . . . . . . . . . . 18.8
1992. . . . . . . . . . . . . . . . . 11.9
1993. . . . . . . . . . . . . . . . . 8.0
1994. . . . . . . . . . . . . . . . . 7.1
1995(1) . . . . . . . . . . . . . . . 37.2

(1) For the ten months ended October 31.

Source: Banco de Mexico.

MEXICAN GROSS DOMESTIC PRODUCT. The following table
sets forth certain information concerning Mexico's GDP for the
years 1990 through 1994 and for the nine months ended
September 30, 1995 at historical and constant prices.

<PAGE>

Gross Change from
Gross Domestic Product Prior Year at
Domestic Product at 1980 Prices(1) Constant Prices

(millions of Mexican New Pesos) (percentage)

1990. . . . 686,406 5,272 4.4
1991. . . . 865,166 5,463 3.6
1992. . . . 1,019,156 5,616 2.8
1993. . . . 1,146,382 5,659 0.7
1994(2) . . 1,272,798 5,858 3.5
1995(2)(3). 1,511.921 5,475 (7.0)

(1) Constant peso with purchasing power at December 31, 1980,
expressed in new pesos.
(2) Preliminary.
(3) Annualized.

Source: Banco de Mexico.

INTEREST RATES. The following table sets forth the
average yield as of the date of issuance on 28-day and 91-day
Cetes and Tesobonos for the periods listed below:

Average Cetes and Tesobonos Rates

28-Day 91-Day 28-Day 91-Day
Cetes Cetes Tesobonos Tesobonos

1989:
Jan.-June 51.1% 51.5% --- ---
July-Dec. 38.9 38.0 --- 15.1%
1990:
Jan.-June 41.2 40.7 --- ---
July-Dec. 28.3 29.4 12.0% ---
1991:
Jan.-June 21.2 21.7 --- ---
July-Dec. 17.3 18.0 9.1 ---
1992:
Jan.-June 13.8 13.8 7.5 ---
July-Dec. 17.4 18.0 4.9 4.0
1993:
Jan.-June 16.4 17.3 4.1 5.8
July-Dec. 13.5 13.6 4.0 5.1
1994:
Jan.-June 13.0 13.5 7.0 6.0
July-Dec. 15.2 15.7 --- 8.0
1995:
January 37.3 39.2 --- 25.0
February 41.7 41.7 ---(1) 17.0(1)

<PAGE>

March 69.5 71.2 --- --- ___
April 74.8 71.5 --- --- ___
May 59.2 54.7 --- --- ___
June 47.3 47.3 --- --- ---
July 40.9 39.7 --- --- ---
August 35.1 35.9 --- ---
September 33.5 34.3 --- ---
October 40.3 41.2 --- ---
November 53.2 54.2 --- ---

(1) February 28 was the last date Tesobonos were issued.

Source: Banco de Mexico

________________________________________________________________

ADDITIONAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA
________________________________________________________________

Territory and Population

The Republic of Argentina ("Argentina") is the second
largest country in Latin America, occupying a territory of 2.8
million square kilometers (1.1 million square miles) (3.8 million
square kilometers (1.5 million square miles) if territorial
claims in the Antarctic and certain South Atlantic islands are
included). It is located at the extreme south of the South
American continent, bordered by Chile, Bolivia, Paraguay, Brazil,
Uruguay and the South Atlantic Ocean. Argentina consists of 23
provinces and the federal capital of Buenos Aires. It has a
population of approximately 35 million.

The most densely inhabited areas and the traditional
agricultural wealth are on the wide temperate belt that stretches
from east to west in central Argentina. About one-third of the
population lives in the greater Buenos Aires area. Five other
urban centers, Cordoba, Rosario, Mendoza, San Miguel de Tucuman
and La Plata, have a population of over 500,000 each.
Approximately 79% of the country's population is urban. During
the period 1980-1990, Argentina's population grew at a 1.4%
average annual rate.

Government

The Argentine federal constitution (the "Constitution"),
was promulgated on August 24, 1994 and became effective
immediately. The Constitution retains the basic principles of
the Constitution first established in 1853. The Constitution
provides for a tripartite system of government: an executive
branch headed by a President; a legislative branch made up of a
bicameral congress; and a judicial branch, of which the Supreme

<PAGE>

Court is the highest body of authority. The President is
directly elected by the voters and may serve for two consecutive
three-year terms. The next election for the Presidency is
scheduled to take place in 1999. The President directs the
general administration of the country and has the power to veto
laws in whole or in part, although Congress may override a veto
by a two-thirds vote.

The Congress is made up of the Senate and the Chamber of
Deputies. The 72-member Senate consists of three Senators
selected by each provincial legislature and by the electoral
college in the case of the federal capital of Buenos Aires.
Senators are elected for six-year terms, and serve in staggered
terms so that one-third of the Senate's seats are subject to
elections every two years. The Chamber of Deputies consists of
257 seats which are allocated according to each province's
population and elected by popular vote. Representatives are
elected for four-year staggered terms so that one-half of the
Chamber is subject to elections every two years.

The judicial system comprises federal and provincial
trial courts, courts of appeal and supreme courts. The supreme
judicial power of the Republic is vested in the Supreme Court of
Justice, which has nine members who are appointed for life by the
President (subject to ratification by the Senate). In addition,
in 1994 Argentina's two largest political parties entered into an
agreement whereby future Supreme Court justices will be selected
from a list of nominees mutually agreed upon by both parties.

Each province has its own constitution, and elects its
own governor, legislators and judges, without the intervention of
the federal government.

Politics

The two largest political parties in Argentina are the
Partido Justicialista or Peronist Party ("PJ"), which evolved out
of Juan Peron's efforts to expand the role of labor in the
political process in the 1940s, and the Union Civica Radical or
Radical Civic Union ("UCR"), founded at the end of the nineteenth
century. Traditionally, the UCR has had more urban middle-class
support and the PJ more labor support. At present, support for
both parties is broadly based, with the PJ having substantial
support from the business community. Smaller parties occupy
varied political positions on both sides of the political
spectrum and some are active only in certain provinces. As of
December 10, 1995, the date new Deputies take office, the PJ held
130 seats and the UCR held 70 seats in the Chamber of Deputies
and 36 seats and 14 seats in the Senate, respectively.

<PAGE>

Since the 1930's, Argentina's political parties have had
difficulty in resolving the inter-group conflicts arising out of
the Great Depression, the deepening social divisions that
occurred under the Peron Government and the economic stagnation
of the past several decades. As a result, the military
intervened in the political process on several occasions and
ruled the country for 22 of the past 62 years. Poor economic
management by the military in the early 1960's and 1970's and the
loss of a brief war with the United Kingdom over the Malvinas
(Falkland Islands) led in 1983 to the end of the most recent
military government, which had ruled the country since 1976.

Four military uprisings have occurred since 1983, the
most recent in December 1990. The uprisings, which were led by a
small group of officers failed due to a lack of support from the
public and the military as a whole.

Since 1983, Argentina has had two successive elected
civilian presidents. Raul Alfonsin, elected in 1983, was the
first civilian president in six decades to stay in office until
the scheduled election of a successor. His UCR Government
reestablished civilian rule, including a functioning Congress.
The current president, Carlos Menem, won the presidential
election in May 1989 and took office in July 1989, several months
ahead of the scheduled inauguration, in the midst of an economic
crisis.

President Menem, the leader of the PJ, was elected with
the backing of organized labor and business interests that
traditionally supported a closed economy and a large public
sector. Shortly after taking office, however, President Menem
adopted market-oriented and reformist policies, including a large
privatization program, a reduction in the size of the public
sector and an opening of the economy to international
competition. President Menem won reelection in May 1995.

Argentina has diplomatic relations with more than 135
countries. It is a charter member of the United Nations, a
founding member of the Organization of American States. It is
also a member of the IMF and the World Bank. Argentina became a
member of the World Trade Organization ("WTO") on January 1, 1995
(the date on which the WTO superseded the General Agreement on
Trade and Tariffs ("GATT")).

Monetary and Banking System

The central bank of Argentina is the Banco Central de la
Republica Argentina ("Central Bank of Argentina"). Its primary
functions include the administration of the financial sector,
note issue, credit control and regulation of foreign exchange
markets. The currency unit of Argentina is the Peso. There is a

<PAGE>

unified foreign exchange market free of government intervention
and regulations. The unified floating exchange rate is
determined by supply and demand.

Economic Information Regarding Argentina

The Argentina economy has many strengths including a
well balanced natural resource base and a high literacy rate.
Since World War II, however, it has had a record of erratic
growth, declining investment rates and rapid inflation. Since
the implementation of the current reform program in March 1991,
significant progress has been made in reducing inflation and
increasing real GDP growth.

DEREGULATION OF THE ECONOMY AND PRIVATIZATIONS.
Deregulation of the domestic economy, liberalization of trade and
reforms of investment regulations are prominent features of
Argentina's structural adjustment program. In order to achieve
the free functioning of markets, the Government has undertaken an
extensive program for the removal of economic restrictions and
regulations and the promotion of competition.

In 1989 and 1990, the initial steps were taken to
liberalize industrial and consumer prices previously subject to
various restrictions as a consequence of hyperinflation, and to
encourage international trade by the elimination of controls.
Restrictions were removed in order to allow the private sector to
provide certain public services, such as telephone, electricity
and natural gas, subject to governmental regulation.

On October 31, 1991, the Argentine government
promulgated its principal deregulation legislation which
deregulated the domestic market for goods, services and
transportation, abolished restrictions on imports and exports,
abolished or simplified a number of regulatory agencies and
allowed free wage bargaining in the private sector. In the
financial sector, this legislation abolished all stamp taxes
relating to publicly offered securities, all capital gains taxes
on stocks and bonds held by non-resident investors and fixed
commissions on the stock exchanges.

In addition, Argentina has eliminated restrictions on
foreign direct investment and capital repatriation. In late
1993, legislation was adopted abolishing previous requirements of
a three-year waiting period for capital repatriation. Under the
new legislation, foreign investors will be permitted to remit
profits at any time and to organize their companies and make use
of domestic credit under the same rights and under the same
conditions as local firms. The process of deregulation and
liberalization is continuing through the privatization process,

<PAGE>

the proposed reform of the social security system, regional
integration and further labor law reforms.

In 1989, the State Reform Law declared certain
enterprises eligible for privatization. In addition to increasing
the efficiency of services provided by public sector enterprises,
the privatizations have also served to reduce outstanding debt
(by applying cash proceeds and through the selective use of debt-
to- equity conversions), increase reserves and increase tax
revenues from the new owners of the enterprises. The
privatization program has also served as an important conduit for
direct foreign investment into Argentina attracting interested
investors from Asia, Europe, North America and Latin America.
The Government completed 32 major privatizations in 1993, and 11
additional privatizations in 1994. On August 31, 1994, Economy
Minister Cavallo announced the start of a round of privatizations
and state reforms, in which the Government planned to sell all
remaining major state-owned concerns.

The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Argentine Peso, information concerning
inflation rates, historical information concerning the Argentine
GDP and information concerning interest rates on certain
Argentine Government Securities. Historical figures are not
necessarily indicative of future fluctuations.

CURRENCY EXCHANGE RATES. The Argentine foreign exchange
market was highly controlled until December 1989, when a free
exchange rate was established for all foreign transactions.
Since the institution of the Convertibility Law on April 1, 1991,
the Argentine currency has been tied to the U.S. Dollar. Under
the Convertibility Law, the Central Bank of Argentina must
maintain a reserve in foreign currencies, gold and certain public
bonds denominated in foreign currencies equal to the amount of
outstanding Argentine currency and is obliged to sell dollars to
any person who so requires at a rate of one peso to one dollar.
From April 1, 1991 through the end of 1991, the exchange rate was
approximately 10,000 Australes (the predecessor to the Argentine
Peso) per U.S. Dollar. On January 1, 1992 the Argentine Peso
equal to 10,000 Australes was introduced. Since January 1, 1992,
the rate of exchange from Argentine Peso to U.S. Dollar has been
approximately one to one. However, the historic range is not
necessarily indicative of fluctuations that may occur in the
exchange rate over time which may be wider or more confined than
recorded previously over a comparable period. Future rates of
exchange cannot be predicted, of course, particularly over
extended periods of time.

<PAGE>

The following table sets forth, for each year indicated,
the nominal exchange rates of Argentine Peso to U.S. Dollar as of
the last day of the period indicated.

Free Rate

1990 . . . . . . . . . . . . .5590
1991 . . . . . . . . . . . . .9990
1992 . . . . . . . . . . . . .9990
1993 . . . . . . . . . . . . .9990
1994 . . . . . . . . . . . . 1.0000
1995(1). . . . . . . . . . . 1.0000

(1) Through October 31.
Source: Banco Central de la Republica Argentina

WAGES AND PRICES. Prior to the appointment of Economy
Minister Domingo F. Cavallo and the announcement of his new
economic plan in March 1991, the Argentine economy was
characterized by low and erratic growth, declining investment
rates and rapid inflation. Argentina's high inflation rates and
balance of payments imbalances during the period from 1975 to
1990 resulted mainly from a lack of control over fiscal policy
and the money supply. Large subsidies to state-owned enterprises
and an inefficient tax collection system led to large persistent
public-sector deficits which were financed in large part through
increases in the money supply and external financings. Due to
the lag which typically occurs between the accrual and receipt of
taxes, inflation tended to reduce the value of tax collections
and increase the size of the deficit, further fueling the
inflationary cycle. Inflation accelerated on several occasions
and turned into hyperinflation in 1989 and the end of 1990, with
prices rising at an annual rate of 1,000% or more.

During the 1980's and in 1990, the Argentine government
instituted several economic plans to stabilize the economy and
foster real growth, all of which failed after achieving initial
success mainly because the government was unable to sustain
reductions in the public deficit. The government's initial
stabilization efforts included a devaluation of the Austral, a
fixed exchange rate, wage and price controls and a sharp rise in
public utility rates.

The government's efforts proved inadequate, however, and
foreign exchange markets declined sharply in anticipation of a
new bout of hyperinflation. The government adopted a new set of
stabilization measures in December 1989 which abandoned attempts
to control wages, prices and the exchange rate and sought to
restrain the public deficit which was believed to be the
principal cause of Argentina's chronic inflation. The new
stabilization plan (called the Bonex Plan) featured, among other

<PAGE>

things, tax reforms, a tighter rein on public enterprises and
restrictions on lending activities of the public sector banks
(which had been financing provincial government deficits through
loans which were in turn financed with discounts from the Central
Bank), government personnel cuts and a reliance on cash income
generated by privatizations to reduce the public sector deficit.
The plan also eliminated all restrictions on foreign exchange
transactions. In addition, the plan froze fixed-rate short-term
bank deposits pursuant to which holders of 7- to 30-day deposits
were permitted to withdraw no more than the equivalent of
approximately U.S. $1000 from their accounts, and the balance was
made payable only in 10-year U.S. Dollar denominated government
bonds (Bonex 89). The plan also provided for the compulsory
exchange of certain domestic currency denominated bonds for Bonex
89.

The stabilization effort succeeded in ending temporarily
the period of hyperinflation, but not in ending the Argentine
economy's susceptibility to inflation. In late 1990, a
deterioration in the finances of the social security system and
provincial governments led to an expansion of Central Bank
credit. The Central Bank loaned funds to the social security
system to allow it to meet year-end payments and also funded
provincial banks suffering deposit runs. The provincial banks
continued to lend to finance provincial government deficits. The
credit expansion led to downward market pressure on the Austral,
and a resurgence of price inflation. During 1990, the CPI rose
1,343.9%, which was significantly less than the 4,923.6% increase
in 1989, but was still an unacceptably high inflation rate. The
government responded by installing a new economic team headed by
Economy Minister Cavallo, which acted to reduce the public sector
deficit by increasing public utility rates and taxes and by
developing a new stabilization program.

The Argentine government's current stabilization program
is built around the plan announced by Economy Minister Cavallo on
March 20, 1991 (the "Convertibility Plan", as amended and
supplemented), and approved by Congress through passage of the
Convertibility Law. The Convertibility Plan has sought to reduce
inflation and restore economic growth by addressing underlying
structural problems that had distorted fiscal and monetary policy
through reforms relating to the tax system, privatizations and
the opening of the economy.

The Convertibility Plan is centered on the two following
fundamental principles:

(1) Full international reserve backing for the monetary
base. The monetary base (consisting of currency in circulation
and Peso deposits of financial entities with the Central Bank) is
not to exceed the Central Bank's gross international assets as a

<PAGE>

fixed rate of one Argentine Peso per U.S. Dollar. This
effectively means that the money supply can be increased only
when backed by increases in the level of international reserves,
and not whenever the public sector deficit or the financial
sector needs to be financed. Gross international assets include
the Central Bank's holdings of gold, foreign exchange (including
short-term investments), U.S. Dollar denominated Argentine
government bonds (in an amount not to exceed 30% of total assets)
and its net Asociacion Latinoamericana de Integraction ("ALADI")
claims (except overdue claims) all freely available and valued at
market prices. Under this arrangement, in which the Argentine
Peso is fully convertible into the U.S. Dollar, no increase in
the domestic monetary base can occur without an equivalent
increase in gross international assets at the one Argentine Peso
per U.S. Dollar rate; and

(2) the elimination of the fiscal deficit and the
achievement of a surplus in the primary balance to provide funds
for the government to service its debt and thereby eliminate the
need for further borrowings.

The International Monetary Fund ("IMF") has supported
the implementation of the Convertibility Plan and designed a
financial program for the Argentine public sector. In the event
of any noncompliance with the program, Argentina is required to
consult in the first instance with the IMF in order to obtain a
waiver and, if required, revise the program to remedy the
situation. In the second half of 1994, the Government decided to
seek private financing rather than utilize its EFF allotment for
that period. After the onset of the Mexican currency crisis,
however, the Government determined that it was necessary to seek
further funding through the EFF program, including drawing down
on its unused quota for the later part of 1994. Negotiations
with the IMF lead to approval in April 1995 of economic
performance waivers for the last two quarters of 1994, an
extension of the EFF credit for a fourth year through March 30,
1996, and an increase in the amount of the EFF credit by the
equivalent of approximately US $2.4 billion to a total of
approximately US $6.3 billion.

The Convertibility Plan has simplified fiscal and market
regulations and reallocated state activities to the private
sector, thereby reducing state expenditures, increasing the
amount of federal revenues and at the same time encouraging
domestic private sector initiative and foreign investment. Since
the Convertibility Plan was introduced in March 1991, inflation
as measured by the consumer price index declined from a 27.0%
monthly rate in February 1991 to a 0.3% monthly rate in December
1992 and resulted in a 17.5% annual rate for 1992. Inflation has
continued to decrease to 7.4% in 1993 and 3.9% in 1994. There is

<PAGE>

no assurance, however, that in the future, the Convertibility
Plan will not be modified or abandoned.

CONSUMER PRICE INDEX. The following table sets forth
for each year indicated the change in Argentine Consumer Prices
for the twelve months ended December 31, of such year.

1989. . . . . . . . . . . . 4,923.6
1990. . . . . . . . . . . . 1,343.9
1991. . . . . . . . . . . . 84.0
1992. . . . . . . . . . . . 17.5
1993. . . . . . . . . . . . 7.4
1994. . . . . . . . . . . . 3.9
1995(1) . . . . . . . . . . 1.8(2)

(1) Through October 31.
(2) Annualized.

___________________

Source: Banco Central de la Republica Argentina

ARGENTINE GROSS DOMESTIC PRODUCT. The following table
sets forth Argentina's GDP for the years 1989 through 1994 at
historical and constant prices.
Gross Change from
Gross Domestic Product Prior Year at
Domestic Product at 1980 Prices(1) Constant Prices

(millions of Mexican New Pesos) (percentage)

1990 686,406 5,272 4.4
1989 3,244 9,424 (6.2)
1990 68,921 9,430 .1
1991 180,898 10,270 8.9
1992 226,847 11,159 8.7
1993 257,570 11,832 6.0
1994 281,650 12,710 7.4

___________________

Source: Banco Central de la Republica Argentina

_________________________________________________________________

MANAGEMENT OF THE FUND
_________________________________________________________________

<PAGE>

ADVISER

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

The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of more than $168 billion (of which more than $55 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included as of June 30, 1996,
33 of the FORTUNE 100 companies. As of that date, the Adviser
and its subsidiaries employed approximately 1,450 employees who
operated out of domestic offices and the overseas offices of
subsidiaries in Bombay, Istanbul, London, Paris, Sao Paolo,
Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The
51 registered investment companies managed by the Adviser
comprising more than 100 separate investment portfolios currently
have more than two million shareholders.

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of June 30, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of June 30, 1996, approximately 33% and
10% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Directors of the Fund.

As of September 6, 1996, AXA and its subsidiaries own
approximately 60.7% of the issued and outstanding shares of
capital stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically, with activities

<PAGE>

in France, the United States, Australia, the United Kingdom,
Canada and other countries, principally in Europe and the
Asia/Pacific area. AXA is also engaged in asset management,
investment banking, securities trading, brokerage, real estate
and other financial services activities in the United States,
Europe and the Asia/Pacific area.

Based on information provided by AXA, as of September 9,
1996, 36.3% of the issued ordinary shares (representing 49.1% of
the voting power) of AXA were owned directly or indirectly by
Finaxa, a French holding company ("Finaxa"). As of September 6,
1996, 61.3% of the voting shares (representing 73.5% of the
voting power) of Finaxa were owned by five French mutual
insurance companies (the "Mutuelles AXA") (one of which, AXA
Assurances I.A.R.D. Mutuelle, owned 34.8% of the voting shares
representing 40.6% of the voting power), and 23.7% of the voting
shares of Finaxa (representing 15.0% of the voting power) were
owned by Banque Paribas, a French bank. Including the ordinary
shares directly or indirectly owned by Finaxa, the Mutuelles AXA
directly or indirectly owned 42.0% of the issued ordinary shares
(representing 56.8% of the voting power) of AXA as of September
9, 1996. Acting as a group, the Mutuelles AXA control AXA and
Finaxa. In addition, as of September 9, 1996, 7.8% of the issued
ordinary shares of AXA without the power to vote were owned by
subsidiaries of AXA.

Under the Advisory Agreement, the Adviser provides
investment advisory services and other placement facilities for
the Fund and pays all compensation of Directors and officers of
the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnishes the Fund, without charge,
management supervision and assistance and office facilities and
provide persons satisfactory to the Fund's Board of Directors to
serve as the Fund's officers.

The Advisory Agreement is terminable without penalty by
a vote of a majority of the Fund's outstanding voting securities
or by a vote of a majority of the Fund's Directors on 60 days'
written notice, or by the Adviser on 60 days' written notice, and
will automatically terminate in the event of its assignment. The
Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder,
the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.

The Advisory Agreement became effective on July 22,
1992. The Advisory Agreement was approved by the unanimous vote,
cast in person, by the Fund's Directors (including the Directors
who are not parties to the Advisory Agreement or "interested
persons", as defined in the 1940 Act, of any such party) at a

<PAGE>

meeting called for that purpose held on February 21, 1992, and by
the Fund's sole shareholder on February 21, 1992. The Advisory
Agreement continues in force for successive twelve-month periods
(computed from each November 1), provided that such continuance
is specifically approved at least annually by the Fund's
Directors or by a majority vote of the holders of the outstanding
voting securities of the Fund, and, in either case, by a majority
of the Directors who are not parties to the Advisory Agreement or
interested persons as defined in the 1940 Act of any such party.
Most recently, the continuance of the Advisory Agreement until
October 31, 1997 was approved by a vote, cast in person, of the
Directors, including a majority of the Directors who are not
parties to the Advisory Agreement or interested persons of any
such party, at a meeting called for that purpose and held on
September 10, 1996.

For the services rendered by the Adviser under the
Advisory Agreement, the Fund pays the Adviser a monthly fee at an
annual rate of .65 of 1% of the average daily value of the Fund's
adjusted total assets (i.e., the average daily value of the total
assets of the Fund, minus the sum of accrued liabilities of the
Fund, other than the principal amount of money borrowed). For
the fiscal years of the Fund ended in 1993, 1994, and 1995 the
Adviser received from the Fund advisory fees of $6,172,486,
$16,529,719, and $11,774,101, respectively.

The Advisory Agreement provides that the Adviser will
reimburse the Fund to the extent, if any, that its ordinary
operating expenses for the preceding year (exclusive of interest,
taxes, brokerage and other expenditures that are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses) exceed the limits prescribed by any state
in which the Fund's shares are qualified for sale. The Fund may
not qualify its shares for sale in every state. The Fund believes
that at present the most restrictive state expense ratio
limitation imposed by any state in which the Fund has qualified
its shares for sale is 2.5% of the first $30 million of the
mutual fund's average net assets, 2.0% of the next $70 million of
its average net assets and 1.5% of its average net assets in
excess of $100 million. For the fiscal years ended in 1993, 1994
and 1995 no reimbursements were required to be made pursuant to
the most restrictive expense limitation.

Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of a particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity.

<PAGE>

It is the policy of the Adviser to allocate advisory
recommendations and the placing of orders in a manner which is
deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the
Adviser (including the Fund) are purchasing or selling the same
security on a given day from the same broker-dealer, such
transactions may be averaged as to price.

The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to ACM Institutional Reserves, Inc.,
AFD Exchange Reserves, The Alliance Fund, Inc., Alliance All-Asia
Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves, Alliance Developing
Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance Growth
and Income Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance New
Europe Fund, Inc., Alliance North American Government Income
Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance Quasar
Fund, Inc., Alliance Real Estate Investment Fund, Inc.,
Alliance/Regent Sector Opportunity Fund, Inc., Alliance Short-
Term Multi-Market Trust, Inc., Alliance Technology Fund, Inc.,
Alliance Utility Income Fund, Inc., Alliance Variable Products
Series Fund, Inc., Alliance World Income Trust, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Portfolios,
Fiduciary Management Associates and The Hudson River Trust, all
registered open-end investment companies; and to ACM Government
Income Fund, Inc., ACM Government Securities Fund, Inc., ACM
Government Spectrum Fund, Inc., ACM Government Opportunity Fund,
Inc., ACM Managed Income Fund, Inc., ACM Managed Dollar Income
Fund, Inc., ACM Municipal Securities Income Fund, Inc., Alliance
All-Market Advantage Fund, Inc., Alliance Global Environment
Fund, Inc., Alliance World Dollar Government Fund, Inc., Alliance
World Dollar Government Fund II, Inc., The Austria Fund, Inc.,
The Korean Investment Fund, Inc., The Southern Africa Fund, Inc.
and The Spain Fund, Inc., all registered closed-end investment
companies.

DIRECTORS AND OFFICERS

The Directors and officers of the Fund, their ages and
their principal occupations during the past five years are set
forth below. Each such Director and officer is also a trustee,
director or officer of other registered investment companies
sponsored by the Adviser. Unless otherwise specified, the

<PAGE>

address of each such person is 1345 Avenue of the Americas, New
York, New York 10105.

DIRECTORS

JOHN D. CARIFA,1 51, Chairman and President of the Fund,
is the President and Chief Operating Officer and a Director of
ACMC with which he has been associated since prior to 1991.

RUTH BLOCK, 65, was formerly an Executive Vice President
and the Chief Insurance Officer of Equitable. She is a Director
of Ecolab Incorporated (specialty chemicals) and Amoco
Corporation (oil and gas). Previously, she Her address is P.O.
Box 4653, Stamford, Connecticut 06903.

DAVID H. DIEVLER, 67, was formerly a Senior Vice
President of ACMC with which he had been associated since prior
to 1991 through 1994. He is currently an independent consultant.
His address is P.O. Box 167, Spring Lake New Jersey 07762.

JOHN H. DOBKIN, 54, has been President of Historic
Hudson Valley (historic preservation) since prior to 1991.
Previously he was a Director of the National Academy of Design.
From 1987 to 1992 he was a Director of ACMC. His address is
Historic Hudson Valley, 150 White Plains Rd., New York, New York
10591.

WILLIAM H. FOULK, JR., 64, is an Investment Adviser and
an Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associate since prior to 1991. His address is
2 Hekma Road, Greenwich, Connecticut 06831.

DR. JAMES M. HESTER, 72, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide Corporation
with which he has been associated since prior to 1991. He was
formerly President of New York University, the New York Botanical
Garden and Rector of the United Nations University. His address
is 45 East 89th Street, New York, New York 10128.

CLIFFORD L. MICHEL, 57, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1991. He is President and Chief Executive Officer of
Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining), Tempo Technology Corporation
(manufacturer of abrasives), and Faber Castell Corporation
(writing products). His address is St. Bernard's Road,
Gladstone, New Jersey 07934.
______________________________

1 An "interested person" as defined in the 1940 Act.

<PAGE>

DONALD J. ROBINSON, 62, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently of counsel to
that firm. His address is 599 Lexington Avenue, 26th Floor, New
York, New York 10022.

ROBERT C. WHITE, 75, is currently an Independent
Consultant. He was formerly a Vice President and Chief Financial
Officer of the Howard Hughes Medical Institute with which he had
been associated since prior to 1991. He is also a Trustee of St.
Clair Fixed-Income Fund, St. Clair Tax-Free Fund and St. Clair
Equity Fund (registered investment companies) and a Director of
MEDSTAAT Systems, Inc. His address is 30835 River Crossing,
Bingham Farms, Michigan 48025.

OFFICERS

JOHN D. CARIFA, Chairman and President, see biography,
above.

WAYNE D. LYSKI, 53, Senior Vice President, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1991.

KATHLEEN A. CORBET, 35, Senior Vice President, has been
a Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1991.

EDMUND P. BERGAN, JR., 46, Secretary, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. and Alliance Fund Services, Inc. and is a Vice President and
Assistant General Counsel of ACMC with which he has been
associated since prior to 1991.

ANDREW L. GANGOLF, 41, Assistant Secretary, has been a
Vice President and Assistant General Counsel of Alliance Fund
Distributors, Inc. since December 1994. Prior thereto he was a
Vice President and Assistant Secretary of Delaware Management
Company, Inc. since October 1992 and a Vice President and Counsel
to Equitable Life Assurance Society of the United States since
prior to 1991.

MARK D. GERSTEN, 45, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc. with which he has been associated since prior to 1991.

<PAGE>

JUAN J. RODRIGUEZ, 38, Controller, is an Assistant Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1991.

CARLA LAROSE, 33, Assistant Controller, is a Manager of
Alliance Fund Services, Inc., with which she has been associated
since 1991.

JOSEPH J. MANTINEO, 37, Assistant Controller, is a Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1991.

VINCENT S. NOTO, 31, Assistant Controller, is an
Assistant Vice President of Alliance Fund Services, Inc., with
which he has been associated since prior to 1991.

The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended November 30, 1995, the
aggregate compensation paid to each of the Directors during
calendar year 1995 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex"), and the total number of registered
investment companies in the Alliance Fund Complex with respect to
which each of the Directors serves as a director or trustee, are
set forth below. Neither the Fund nor any fund in the Alliance
Fund Complex provides compensation in the form of pension or
retirement benefits to any of its directors or trustees. Each of
the Directors is a director or trustee of one or more other
registered investment companies in the Alliance Fund Complex.

Total Number
of Funds in
the Alliance
Total Complex,
Compensation Including the
From the Fund, as to
Aggregate Alliance Fund which the
Compensation Complex, Trustee is a
Name of Director from the Including the Trustee or
of the Fund Fund Fund Director

John D. Carifa $-0- $-0- 50
Ruth Block $4,717 $159,000 37
David H. Dievler $3,967 $183,500 43
John H. Dobkin $4,729 $117,200 30
William H. Foulk, Jr. $4,729 $143,500 31
Dr. James M. Hester $4,717 $156,000 38
Clifford L. Michel $4,467 $133,750 37
Donald J. Robinson $-0- $ 66,500 38
Robert C. White $4,717 $133,200 37

<PAGE>

As of October 11, 1996, the Directors and officers of
the Fund as a group owned less than 1% of the shares of the
Fund.
_________________________________________________________________

EXPENSES OF THE FUND
_________________________________________________________________

DISTRIBUTION SERVICES AGREEMENT

The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Principal Underwriter to distribute
the Fund's shares and to permit the Fund to pay distribution
service fees to defray expenses associated with the distribution
of its Class A, Class B and Class C shares in accordance with a
plan of distribution which is included in the Agreement and has
been duly adopted and approved in accordance with Rule 12b-1
adopted by the Securities and Exchange Commission under the 1940
Act (the "Rule 12b-1 Plan").

Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and at the same time to permit the
Principal Underwriter to compensate broker-dealers in connection
with the sale of such shares. In this regard, the purpose and
function of the combined respective contingent deferred sales
charges and respective distribution services fees on the Class B
shares, and the distribution services fee on the Class C shares
are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the relevant
class of the Fund's shares.

Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund for their review on a quarterly basis. Also, the Agreement
provides that the selection and nomination of Directors who are
not interested persons of the Fund (as defined in the 1940 Act)
are committed to the discretion of such disinterested Directors
then in office.

The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of an
additional class of shares, Class C shares. The amendment to the

<PAGE>

Agreement was approved by the unanimous vote, cast in person, of
the disinterested Directors at a meeting called for that purpose
and held on February 23, 1993, and by the initial holder of
Class C shares of the Fund on April 30, 1993. The Agreement
became effective on September 30, 1996 with respect to Advisor
Class shares.

In approving the Agreement, the Directors of the Fund
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders.
Information with respect to distribution services fees and other
revenues and expenses of the Principal Underwriter will be
presented to the Directors each year for their consideration in
connection with their deliberations as to the continuance of the
Agreement. In their review of the Agreement, the Directors will
be asked to take into consideration separately with respect to
each class the distribution expenses incurred with respect to
such class. The distribution services fee of a particular class
will not be used to subsidize the provision of distribution
services with respect to any other class.

The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Securities and Exchange Commission make payments for distribution
services to the Principal Underwriter; the latter may in turn pay
part or all of such compensation to brokers or other persons for
their distribution assistance.

During the Fund's fiscal year ended November 30, 1995,
with respect to Class A shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $679,389 which constituted approximately .30%
of the average daily net assets attributable to the Class A
shares during the period and the Adviser made payments from its
own resources, as described above, aggregating $703,325. Of the
$1,382,714 paid by the Fund and the Adviser under the Plan with
respect to the Class A shares, $92,674 was spent on advertising,
$37,689 on printing and mailing of prospectuses for persons other
than current shareholders, $763,260 for compensation to broker-
dealers and other financial intermediaries (including $208,433 to
the Fund's Principal Underwriter), $112,187 for compensation to
sales personnel and $376,904 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

During the Fund's fiscal year ended November 30, 1995,
with respect to Class B shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $11,098,575 which constituted approximately
1.00% of the average daily net assets attributable to the Class B
shares during the period and the Adviser made payments from its

<PAGE>

own resources, as described above, aggregating $-0-. Of the
$10,423,168 paid by the Fund and the Adviser under the Plan,
$171,430 was spent on advertising, $74,933 on printing and
mailing of prospectuses for persons other than current
shareholders, $3,377,205 for compensation to broker-dealers and
other financial intermediaries (including $376,669 to the Fund's
Principal Underwriter), $218,840 for compensation to sales
personnel and $719,296 was spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses, and $5,861,464 in interest on Class B shares financing.
The additional $675,407 in payments to the Principal Underwriter
will be carried forward and offset against future distribution
service fees payable under the Plan.

During the Fund's fiscal year ended November 30, 1995,
with respect to Class C shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $2,250,854 which constituted approximately
1.00% of the average daily net assets attributable to the Class C
shares during the period and the Adviser made payments from its
own resources, as described above, aggregating $381,178. Of the
$2,632,032 paid by the Fund and the Adviser under the Plan, with
respect to Class C shares $42,903 was spent on advertising,
$21,909 on printing and mailing of prospectuses for persons other
than current shareholders, $2,333,107 for compensation to broker-
dealers and other financial intermediaries (including $96,952
to the Fund's Principal Underwriter), $46,395 for compensation to
sales personnel and $187,718 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

The Agreement will continue in effect for successive
twelve-month periods (computed from each November 1), provided,
however, that such continuance is specifically approved at least
annually by the Directors of the Fund or by vote of the holders
of a majority of the outstanding voting securities (as defined in
the 1940 Act) of that class, and, in either case, by a majority
of the Directors of the Fund who are not parties to the Agreement
or interested persons, as defined in the 1940 Act, of any such
party (other than as Directors of the Fund) and who have no
direct or indirect financial interest in the operation of the
Rule 12b-1 Plan or any agreement related thereto. Most recently
the continuance of the Agreement until October 31, 1997 was
approved by a vote, cast in person, of the Directors, including a
majority of the Directors who are not "interested persons," as
defined in the 1940 Act, at their meeting held on September 10,
1996.

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than

<PAGE>

current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.

All material amendments to the Agreement must be
approved by a vote of the Directors or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Directors, cast
in person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class, may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the Fund or the
class or classes of the Fund affected. The Agreement may be
terminated (a) by the Fund without penalty at any time by a
majority vote of the holders of the outstanding voting securities
of the Fund, voting separately by class or by a majority vote of
the Directors who are not "interested persons" as defined in the
1940 Act, or (b) by the Principal Underwriter. To terminate the
Agreement, any party must give the other parties 60 days' written
notice; to terminate the Rule 12b-1 Plan only, the Fund need give
no notice to the Principal Underwriter. The Agreement will
terminate automatically in the event of its assignment.

TRANSFER AGENCY AGREEMENT

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of the Class A shares, Class B shares, Class C
shares and Advisor Class shares of the Fund, plus reimbursement
for out-of-pocket expenses. The transfer agency fee with respect
to the Class B shares and Class C shares is higher than the
transfer agency fee with respect to the Class A shares and
Advisor Class shares. For the fiscal year ended November 30,
1995, the Fund paid Alliance Fund Services, Inc. $2,093,295 for
transfer agency services.

________________________________________________________________

PURCHASE OF SHARES
________________________________________________________________

The following information supplements that set forth in
the Prospectus(es) under "Purchase and Sale of Shares -- How To
Buy Shares."

<PAGE>

GENERAL

Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered
into selected agent agreements with the Principal Underwriter
("selected agents") and (iii) the Principal Underwriter.

Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, pursuant to which each investor pays an asset-based
fee at an annual rate of at least .50% of the assets in the
investor's account, to the sponsor, or its affiliate or agent,
(ii) through self-directed defined contribution employee benefit
plans (e.g., 401(k) plans) that have at least 1,000 participants
or $25 million in assets or (iii) by the categories of investors
described in clauses (i), (ii) and (iii) below under
"--Sales at Net Asset Value" (other than officers, directors and
present and full-time employees of selected dealers or agents, or
relatives of such person, or any trust, individual retirement
account or retirement plan account for the benefit of such
relative, none of whom is eligible on the basis solely of such
status to purchase and hold Advisor Class shares).

If you are a Fund shareholder through an account
established under a fee-based program, your fee-based program may
impose requirements with respect to the purchase, sale or
exchange of Advisor Class shares of the Fund that are different
from those described in the Advisor Class Prospectus and this
Statement of Additional Information. A transaction fee may be
charged by your financial representative with respect to the
purchase, sale or exchange of Advisor Class shares made through
such financial representative.

Investors may purchase shares of the Fund either through
selected dealers, agents or financial representatives or directly
through the Principal Underwriter. Sales personnel of selected

<PAGE>

dealers and agents distributing the Funds shares may receive
differing compensation for selling Class A, Class B, Class C or
Advisor Class shares.

Shares may also be sold in foreign countries where
permissible. The Fund may refuse any order for the purchase of
shares. The Fund reserves the right to suspend the sale of its
shares to the public in response to conditions in the securities
markets or for other reasons.

The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"Class A Shares". On each Fund business day on which a purchase
or redemption order is received by the Fund and trading in the
types of securities in which the Fund invests might materially
affect the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any day on which the Exchange is open for
trading.

The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset values
of the Class A and Advisor Class shares as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.

The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers, agents or financial representatives, as
applicable, the applicable public offering price will be the net

<PAGE>

asset value as so determined, but only if the selected dealer,
agent or financial representative receives the order prior to the
close of regular trading on the Exchange and transmits it to the
Principal Underwriter prior to 5:00 p.m. Eastern time. The
selected dealer, agent or financial representative, as
applicable, is responsible for transmitting such orders by
5:00 p.m. If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.

Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by Electronic
Funds Transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.

Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.

In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents,
including EQ Financial Consultants, Inc., formerly Equico
Securities, Inc., an affiliate of the Principal Underwriter, in

<PAGE>

connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, cash or other incentives
will be conditioned upon the sale of a specified minimum dollar
amount of the shares of the Fund and/or other Alliance Mutual
Funds, as defined below, during a specific period of time. On
some occasions, such cash or other incentives will take the form
of payment for attendance at seminars, meals, sporting events or
theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel taken by persons
associated with a dealer or agent and their immediate family
members to urban or resort locations within or outside the United
States. Such dealer or agent may elect to receive cash
incentives of equivalent amount in lieu of such payments.

Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
Fund, have the same rights and are identical in all respects,
except that (i) Class A shares bear the expense of the initial
sales charge (or contingent deferred sales charge, when
applicable) and Class B and Class C shares bear the expense of
the deferred sales charge, (ii) Class B shares and Class C shares
each bear the expense of a higher distribution services fee than
that borne by Class A shares, and Advisor Class shares do not
bear such a fee, (iii) Class B and Class C shares bear higher
transfer agency costs than that borne by Class A and Advisor
Class shares; (iv) each of Class A, Class B and Class C shares
has exclusive voting rights with respect to provisions of the
Rule 12b-1 Plan pursuant to which its distribution services fee
is paid and other matters for which separate class voting is
appropriate under applicable law, provided that, if the Fund
submits to a vote of the Class A shareholders, an amendment to
the Rule 12b-1 Plan that would materially increase the amount to
be paid thereunder with respect to the Class A shares, then such
amendment will also be submitted to the Class B and Advisor Class
shareholders and the Class A shareholders, the Class B
shareholders and the Advisor Class shareholders will vote
separately by class, and (v) Class B and Advisor Class shares are
subject to a conversion feature. Each class has different
exchange privileges and certain different shareholder service
options available.

The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B, Class C and Advisor Class shares. On an ongoing basis,
the Directors of the Fund, pursuant to their fiduciary duties
under the 1940 Act and state law, will seek to ensure that no
such conflict arises.

<PAGE>

Alternative Retail Purchase Arrangements -- Class A, Class B
and Class C Shares2

The alternative purchase arrangements available with
respect to Class A shares, Class B shares and Class C shares
permit an investor to choose the method of purchasing shares that
is most beneficial given the amount of purchase, the length of
time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated
distribution services fee and contingent deferred sales charge on
Class B shares prior to conversion, or the accumulated
distribution services fee and contingent deferred sales charge on
Class C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on
Class A shares, as described below. In this regard, the
Principal Underwriter will reject any order (except orders from
certain retirement plans) for more than $250,000 for Class B
shares. Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject
any order for more than $5,000,000 for Class C shares.

Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.

Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and
______________________________

2 Advisor Class shares are sold only to investors described
above in this section under "--General."

<PAGE>

being subject to a contingent deferred sales charge for a three-
year period and one-year period, respectively. For example,
based on current fees and expenses, an investor subject to the
4.25% initial sales charge would have to hold his or her
investment approximately seven years for the Class C distribution
services fee to exceed the initial sales charge plus the
accumulated distribution services fee of Class A shares. In this
example, an investor intending to maintain his or her investment
for a longer period might consider purchasing Class A shares.
This example does not take into account the time value of money,
which further reduces the impact of the Class C distribution
services fees on the investment, fluctuations in net asset value
or the effect of different performance assumptions.

Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
three-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.

During the fiscal years ended in 1993, 1994, and 1995
the aggregate amount of underwriting commission payable with
respect to shares of the Fund was $7,548,144, $12,194,935, and
$4,384,448, respectively. Of those amounts, the Principal
Underwriter received the amounts of $23,371, $348,161, and
$167,547, respectively, representing that portion of the sales
charges paid on shares of the Fund sold during the year which was
not reallowed to selected dealers (and was, accordingly, retained
by the Principal Underwriter). During the Fund's fiscal year
ended in 1995, the Principal Underwriter received $3,776,823 in
contingent deferred sales charges with respect to Class B shares.

CLASS A SHARES

The public offering price of Class A shares is the net asset
value plus a sales charge, as set forth below.

SALES CHARGE

Discount or
Commission
As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price Price

Less than
$100,000 4.44% 4.25% 4.00%
$100,000 but

<PAGE>

less than
$250,000 3.36 3.25 3.00
$250,000 but
less than
$500,000 2.30 2.25 2.00
$500,000 but
less than
$1,000,000* 1.78 1.75 1.50

____________________

*There is no initial sales charge on transactions of $1,000,000
or more.

With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
Shares". In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers or agents for selling Class A
shares. With respect to purchases of $1,000,000 or more made
through selected dealers or agents, the Adviser may, pursuant to
the Distribution Services Agreement described above, pay such
dealers or agents from its own resources a fee of up to 1% of the
amount invested to compensate such dealers or agents for their
distribution assistance in connection with such purchases.

No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "Combined Purchase Privilege" below), except that

<PAGE>

an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge or (iii) upon the automatic conversion of Class B
shares or Advisor Class shares as described below under "--Class
B Shares Conversion Feature" and "--Conversion of Advisor Class
Shares to Class A Shares". The Fund receives the entire net
asset value of its Class A shares sold to investors. The
Principal Underwriter's commission is the sales charge shown
above less any applicable discount or commission "reallowed" to
selected dealers and agents. The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities
Act.

Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on May 31, 1996.

Net Asset Value per Class A
Share at May 31, 1996 $7.31

Per Share Sales Charge - 4.25%
of offering price (4.44% of
net asset value per share) $ .32

Class A Per Share Offering Price
to the Public $7.63

Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but be subject in most such cases to a contingent
deferred sales charge) or (ii) a reduced initial sales charge.
The circumstances under which investors may pay a reduced initial
sales charge are described below.

COMBINED PURCHASE PRIVILEGE. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase," if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in

<PAGE>

the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:

AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-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

<PAGE>

-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Strategic Balanced Fund
-Alliance Short-Term U.S. Government Fund

Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the front cover of this Statement of Additional
Information.

CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business
on the previous day) of (a) all shares of the Fund held
by the investor and (b) all shares of any other Alliance
Mutual Fund held by the investor; and

(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder eligible to
combine his or her purchase with that of the investor
into a single "purchase" (see above).

For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the 2.25% rate applicable to a single $300,000
purchase of shares of the Fund, rather than the 3.25% rate.

<PAGE>

To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.

STATEMENT OF INTENTION. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
Class C and/or Advisor Class shares) of the Fund or any other
Alliance Mutual Fund. Each purchase of shares under a Statement
of Intention will be made at the public offering price or prices
applicable at the time of such purchase to a single transaction
of the dollar amount indicated in the Statement of Intention. At
the investor's option, a Statement of Intention may include
purchases of shares of the Fund or any other Alliance Mutual Fund
made not more than 90 days prior to the date that the investor
signs the Statement of Intention; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund, to qualify for the
3.25% sales charge on the total amount being invested (the sales
charge applicable to an investment of $100,000).

The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed shares will
be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention

<PAGE>

and qualifies for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
the rate of the sales charge applicable to the actual amount of
the aggregate purchases.

Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.

CERTAIN RETIREMENT PLANS. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase previously made during the 13-month period and
(ii) the current month's purchase multiplied by the number of
months (including the current month) remaining in the 13-month
period. Sales charges previously paid during such period will
not be retroactively adjusted on the basis of later purchases.

REINSTATEMENT PRIVILEGE. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that (i)
such reinvestment is made within 120 calendar days after the
redemption or repurchase date, and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. The
reinstatement privilege may be used by the shareholder only once,

<PAGE>

irrespective of the number of shares redeemed or repurchased,
except that the privilege may be used more than once in
connection with transactions whose sole purpose is to transfer a
shareholder's interest in the Fund to his or her individual
retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written
request sent to the Fund at the address shown on the cover of
this Statement of Additional Information.

SALES AT NET ASSET VALUE. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a contingent deferred sales charge to certain
categories of investors including: (i) investment management
clients of the Adviser or its affiliates; (ii) officers and
present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; officers and directors of ACMC, the
Principal Underwriter, Alliance Fund Services, Inc. and their
affiliates; officers, directors and present full-time employees
of selected dealers or agents; or the spouse, sibling, direct
ancestor or direct descendant (collectively "relatives") of any
such person; or any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) the Adviser, Principal
Underwriter, Alliance Fund Services, Inc. and their affiliates;
certain employee benefit plans for employees of the Adviser, the
Principal Underwriter, Alliance Fund Services, Inc. and their
affiliates; (iv) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer and
approved by the Principal Underwriter, pursuant to which such
persons pay an asset-based fee to such broker-dealer, or its
affiliate or agent, for services in the nature of investment
advisory or administrative services; (v) persons who establish to
the Principal Underwriter's satisfaction that they are investing,
within such time period as may be designated by the Principal
Underwriter, proceeds of redemption of shares of such other
registered investment companies as may be designated from time to
time by the Principal Underwriter; and (vi) employer-sponsored
qualified pension or profit-sharing plans (including Section
401(k) plans), custodial accounts maintained pursuant to Section
403(b)(7) retirement plans and individual retirement accounts
(including individual retirement accounts to which simplified
employee pension (SEP) contributions are made), if such plans or
accounts are established or administered under programs sponsored
by administrators or other persons that have been approved by the
Principal Underwriter.

<PAGE>

CLASS B SHARES

Investors may purchase Class B shares at the public
offering price equal to the net asset value per share of the
Class B shares on the date of purchase without the imposition of
a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will
receive the full amount of the investor's purchase payment.

Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.

CONTINGENT DEFERRED SALES CHARGE. Class B shares that
are redeemed within three years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.

To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12
and, during such time, the investor has acquired 10 additional
Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares
(proceeds of $600), 10 Class B shares will not be subject to the
charge because of dividend reinvestment. With respect to the
remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 2.0% (the
applicable rate in the second year after purchase, as set forth
below).

The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of

<PAGE>

payment for the purchase of Class B shares until the time of
redemption of such shares.

Contingent Deferred Sales Charge as a %
Year Since Purchase of Dollar Amount Subject to Charge

First 3%
Second 2%
Third 1%
Fourth None

In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions and, second,
of shares held longest during the time they are subject to the
sales charge. When shares acquired in an exchange are redeemed,
the applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of the
purchase of shares of the corresponding class of the Alliance
Mutual Fund originally purchased by the shareholder.

The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who
has attained the age of 70-1/2, (iii) that had been purchased by
present or former Directors of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services - Systematic Withdrawal Plan" below).

CONVERSION FEATURE. Six years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.

For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions

<PAGE>

paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.

The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending six years after the end of the calendar month in which the
shareholder's purchase order was accepted.

CLASS C SHARES

Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares and
Advisor Class shares, and will thus have a higher expense ratio
and pay correspondingly lower dividends than Class A shares and
Advisor Class shares.

Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares
derived from reinvestment of dividends or capital gains

<PAGE>

distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares."

In determining the contingent deferred sales charge
applicable to a redemption of Class C shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because the
shares have been held beyond the period during which the charge
applies or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge.

Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares and Advisor Class shares.

Conversion of Advisor Class Shares to Class A Shares

Advisor Class shares may be held solely through the fee-
based program accounts and employee benefit plans described above
under "Purchase of Shares--General," and by investment advisory
clients of, and by certain other persons associated with, the
Adviser and its affiliates or the Fund. If (i) a holder of
Advisor Class shares ceases to participate in a fee-based program
or plan that satisfies the requirements to purchase shares set
forth under "Purchase of Shares--General" or (ii) the holder is
otherwise no longer eligible to purchase Advisor Class shares as
described in the Advisor Class Prospectus and this Statement of
Additional Information (each, a "Conversion Event"), then all
Advisor Class shares held by the shareholder will convert
automatically and without notice to the shareholder, other than
the notice contained in the Advisor Class Prospectus and this
Statement of Additional Information, to Class A shares of the
Fund during the calendar month following the month in which the
Fund is informed of the occurrence of the Conversion Event. The
failure of a shareholder or a fee-based program to satisfy the
minimum investment requirements to purchase Advisor Class shares
will not constitute a Conversion Event. The conversion would
occur on the basis of the relative net asset values of the two
classes and without the imposition of any sales load, fee or

<PAGE>

other charge. Class A shares currently bear a .30% distribution
services fee and have a higher expense ratio than Advisor Class
shares. As a result, Class A shares may pay correspondingly
lower dividends and have a lower net asset value than Advisor
Class shares.

The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his Advisor Class shares, which would constitute a taxable
event under federal income tax law.

_________________________________________________________________

REDEMPTION AND REPURCHASE OF SHARES
_________________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus(es) under the heading "Purchase and Sale of
Shares--How to Sell Shares." If you are an Advisor Class
shareholder through an account established under a fee-based
program your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
of the Fund that are different from those described herein. A
transaction fee may be charged by your financial representative
with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative.

REDEMPTION

Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within
seven days after the Fund's receipt of such tender for
redemption. If a shareholder is in doubt about what documents
are required by his or her fee-based program or employee benefit
plan, the shareholder should contact his or her financial
representative.

The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days

<PAGE>

after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.

Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.

To redeem shares of the Fund for which no stock
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.

To redeem shares of the Fund represented by stock
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.

TELEPHONE REDEMPTION BY ELECTRONIC FUNDS TRANSFER. Each
Fund shareholder is entitled to request redemption by electronic

<PAGE>

funds transfer, once in any 30-day period (except for certain
omnibus accounts), of shares for which no stock certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from Alliance Fund Services, Inc.
A telephone redemption request may not exceed $100,000 (except
for certain omnibus accounts), and must be made by 4:00 p.m.
Eastern time on a Fund business day as defined above. Proceeds
of telephone redemptions will be sent by Electronic Funds
Transfer to a shareholder's designated bank account at a bank
selected by the shareholder that is a member of the NACHA.

TELEPHONE REDEMPTION BY CHECK. Except for certain
omnibus accounts or as noted below, each Fund shareholder is
eligible to request redemption by check, once in any 30-day
period, of Fund shares for which no stock certificates have been
issued by telephone at (800) 221-5672 before 4:00 p.m. Eastern
time on a Fund business day in an amount not exceeding $50,000.
Proceeds of such redemptions are remitted by check to the
shareholder's address of record. Telephone redemption by check is
not available with respect to shares (i) for which certificates
have been issued, (ii) held in nominee or "street name" accounts,
(iii) held by a shareholder who has changed his or her address of
record within the preceding 30 calendar days or (iv) held in any
retirement plan account. A shareholder otherwise eligible for
telephone redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.

TELEPHONE REDEMPTION -- GENERAL. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information. The
Fund reserves the right to suspend or terminate its telephone
redemption service at any time without notice. Neither the Fund
nor the Adviser, the Principal Underwriter or Alliance Fund
Services, Inc. will be responsible for the authenticity of
telephone requests for redemptions that the Fund reasonably
believes to be genuine. The Fund will employ reasonable
procedures in order to verify that telephone requests for
redemptions are genuine, including, among others, recording such
telephone instructions and causing written confirmations of the
resulting transactions to be sent to shareholders. If the Fund
did not employ such procedures, it could be liable for losses

<PAGE>

arising from unauthorized or fraudulent telephone instructions.
Selected dealers or agents may charge a commission for handling
telephone requests for redemptions.

REPURCHASE

The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.

GENERAL

The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.

<PAGE>

_________________________________________________________________

SHAREHOLDER SERVICES
_________________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus(es) under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.

AUTOMATIC INVESTMENT PROGRAM

Investors may purchase shares of the Fund through an
automatic investment program utilizing Electronic Funds Transfer
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least $25)
are used to purchase shares through the selected dealer or
selected agent designated by the investor at the public offering
price next determined after the Principal Underwriter receives
the proceeds from the investor's bank. In electronic form,
drafts can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact Alliance Fund Services, Inc. at the address or telephone
numbers shown on the cover of this Statement of Additional
Information to establish an automatic investment program.

EXCHANGE PRIVILEGE

You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by Alliance). In
addition, (i) present officers and full-time employees of the
Adviser, (ii) present Directors or Trustees of any Alliance
Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates may, on a tax-free
basis, exchange Class A shares of the Fund for Advisor Class
shares of the Fund. Exchanges of shares are made at the net
asset value next determined and without sales or service charges.
Exchanges may be made by telephone or written request. Telephone

<PAGE>

exchange requests must be received by Alliance Fund Services,
Inc. by 4:00 p.m. Eastern time on a Fund business day in order to
receive that day's net asset value.

Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.

Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call Alliance Fund Services, Inc. at 800-221-5672 to exchange
uncertificated shares. Except with respect to exchanges of Class
A shares of the Fund for Advisor Class shares of the Fund,
exchanges of shares as described above in this section are
taxable transactions for federal income tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days written notice.

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.

Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc., receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone

<PAGE>

request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange, at (800) 221-5672
before 4:00 p.m., Eastern time, on a Fund business day as defined
above. Telephone requests for exchange received before 4:00 p.m.
Eastern time on a Fund business day will be processed as of the
close of business on that day. During periods of drastic
economic or market developments, such as the market break of
October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto.

None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for exchanges are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers, agents or
financial representatives, as applicable, may charge a commission
for handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance Mutual Fund being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.

<PAGE>

RETIREMENT PLANS

The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "For Literature" telephone number on the cover of
this Statement of Additional Information, or write to:

Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520

INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.

EMPLOYER-SPONSORED QUALIFIED RETIREMENT PLANS. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.

If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan reaches $5 million
on or before December 15 in any year, all Class B or Class C
shares of the Fund held by the plan can be exchanged at the
plan's request without any sales charge, for Class A shares of
the Fund.

SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.

<PAGE>

403(B)(7) RETIREMENT PLAN. Certain tax-exempt
organizations and public educational institutions may sponsor
retirements plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to Alliance Fund Services, Inc. as compensation for its services
to the retirement plan accounts maintained with the Fund.

Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.

DIVIDEND DIRECTION PLAN

A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).
Further information can be obtained by contacting Alliance Fund
Services, Inc. at the address or the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Investors wishing to establish a dividend direction
plan in connection with their initial investment should complete
the appropriate section of the Subscription Application found in
the Prospectus. Current shareholders should contact Alliance
Fund Services, Inc. to establish a dividend direction plan.

SYSTEMATIC WITHDRAWAL PLAN

General. Any shareholder who owns or purchases shares of
the Fund having a current net asset value of at least $4,000 (for
quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.

<PAGE>

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such payments will be subject to any
taxes applicable to redemptions and, except as discussed below,
any applicable contingent deferred sales charge. Shares acquired
with reinvested dividends and distributions will be liquidated
first to provide such withdrawal payments and thereafter other
shares will be liquidated to the extent necessary, and depending
upon the amount withdrawn, the investor's principal may be
depleted. A systematic withdrawal plan may be terminated at any
time by the shareholder or the Fund.

Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level. Therefore,
redemptions of shares under the plan may reduce or even liquidate
a shareholder's account and may subject the shareholder to the
Fund's involuntary redemption provisions. See "Redemption and
Repurchase of Shares--General." Purchases of additional shares
concurrently with withdrawals are undesirable because of sales
charges when purchases are made. While an occasional lump-sum
investment may be made by a holder of Class A shares who is
maintaining a systematic withdrawal plan, such investment should
normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.

Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "For Literature" telephone number shown on the cover of this
Statement of Additional Information.

CDSC Waiver for Class B Shares and Class C Shares. Under
a systematic withdrawal plan, up to 1% monthly, 2% bi-monthly or
3% quarterly of the value at the time of redemption of the Class
B or Class C shares in a shareholders account may be redeemed
free of any contingent deferred sales charge.

With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held the
longest will be redeemed next. Redemptions of Class B shares in
excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.

<PAGE>

With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.

STATEMENTS AND REPORTS

Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a confirmation of each purchase and redemption. By
contacting his or her broker or Alliance Fund Services, Inc., a
shareholder can arrange for copies of his or her account
statements to be sent to another person.

Shareholder Services Applicable to
Class A and Class C Shareholders Only

CHECKWRITING

A new Class A or Class C investor may fill out the
Signature Card which is included in the Prospectus to authorize
the Fund to arrange for a checkwriting service through State
Street Bank and Trust Company (the "Bank") to draw against
Class A or Class C shares of the Fund redeemed from the
investor's account. Under this service, checks may be made
payable to any payee in any amount not less than $500 and not
more than 90% of the net asset value of the Class A or Class C
shares in the investor's account (excluding for this purpose the
current month's accumulated dividends and shares for which
certificates have been issued). A Class A or Class C shareholder
wishing to establish this checkwriting service subsequent to the
opening of his or her Fund account should contact the Fund by
telephone or mail. Corporations, fiduciaries and institutional
investors are required to furnish a certified resolution or other
evidence of authorization. This checkwriting service will be
subject to the Bank's customary rules and regulations governing
checking accounts, and the Fund and the Bank each reserve the
right to change or suspend the checkwriting service. There is no
charge to the shareholder for the initiation and maintenance of
this service or for the clearance of any checks.

When a check is presented to the Bank for payment, the
Bank, as the shareholder's agent, causes the Fund to redeem, at
the net asset value next determined, a sufficient number of full
and fractional shares of the Fund in the shareholder's account to
cover the check. Because the level of net assets in a
shareholder's account constantly change, due, among various

<PAGE>

factors, to market fluctuations, a shareholder should not attempt
to close his or her account by use of a check. In this regard,
the Bank has the right to return checks (marked "insufficient
funds") unpaid to the presenting bank if the amount of the check
exceeds 90% of the assets in the account. Canceled (paid) checks
are returned to the shareholder. The checkwriting service
enables the shareholder to receive the daily dividends declared
on the shares to be redeemed until the day that the check is
presented to the Bank for payment.

_________________________________________________________________

NET ASSET VALUE
_________________________________________________________________

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

For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in
foreign currencies will be converted into United States dollars
at the mean of the bid and asked prices of such currencies
against the United States dollar last quoted by a major bank
which is a regular participant in the institutional foreign

100

<PAGE>

exchange markets or on the basis of a pricing service which takes
into account the quotes provided by a number of such major banks.

The assets belonging to the Class A shares, Class B
shares, Class C shares and Advisor Class shares will be invested
together in a single portfolio. The net asset value of each
class will be determined separately by subtracting the accrued
expenses and liabilities allocated to that class from the assets
belonging to that class.

________________________________________________________________

DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________

United States Federal Income Taxation
of Dividends and Distributions

General

The Fund qualified for the fiscal period ended
November 30, 1995 and intends to qualify in the future for tax
treatment as a "regulated investment company" under the Code.
Qualification relieves the Fund of federal income tax liability
on the part of its net ordinary income and net realized capital
gains which it timely distributes to its shareholders. Such
qualification does not, of course, involve governmental
supervision of management or investment practices or policies.
Investors should consult their own counsel for a complete
understanding of the requirements the Fund must meet to qualify
to be taxed as a "regulated investment company."

In order to qualify as a regulated investment company
for any taxable year, the fund must, among other things,
(i) derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans and
gains from the sale or other disposition of stock or foreign
currency or securities or certain other income (including, but
not limited to, gains from options, futures and forward
contracts) derived with respect to its business of investing in
such stock, securities or currency, and (ii) derive less than 30%
of its gross income in such years from the sale or other
disposition within three months of their acquisition by the Fund
of stocks, securities, options, futures or forward contracts.
These requirements will limit the Fund's ability to write and
purchase options, to purchase and sell futures contracts, to
purchase or sell forward foreign currency contracts, to enter
into interest rate swaps and to purchase or sell interest rate
caps and floors. In addition, the Fund will qualify as a
regulated investment company for any taxable year only if it
satisfies the diversification requirements set forth in the

101

<PAGE>

Fund's Prospectus under the heading "Additional Investment
Considerations--Non-Diversified Status."

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

The Fund intends to declare and distribute dividends in
the amounts and at the times necessary to avoid the application
of the 4% federal excise tax imposed on certain undistributed
income of regulated investment companies. The Fund will be
required to pay the 4% excise tax to the extent it does not
distribute to its shareholders during any calendar year an amount
equal to the sum of (i) 98% of its ordinary taxable income for
the calendar year, (ii) 98% of its capital gain net income and
foreign currency gains for the twelve months ended October 31 of
such year, (or November 30 if elected by the Fund), and (iii) any
ordinary income or capital gain net income from the preceding
calendar year that was not distributed during such year. For
this purpose, income or gain retained by the Fund that is subject
to corporate income tax will be considered to have been
distributed by the Fund by year-end. For federal income and
excise tax purposes, dividends declared and payable to
shareholders of record as of a date in October, November or
December but actually paid during the following January will be
taxable to these shareholders for the year declared, and not for
the subsequent calendar year in which the shareholders actually
receive the dividend.

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

The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders will be taxable to the shareholders as long-term
capital gains, irrespective of the length of time a shareholder
may have held his or her Fund shares. Any dividend or
distribution received by a shareholder on shares of the Fund will

102

<PAGE>

have the effect of reducing the net asset value of such shares by
the amount of such dividend or distribution. Furthermore, a
dividend or distribution made shortly after the purchase of such
shares by a shareholder, although in effect a return of capital
to that particular shareholder, would be taxable to him or her as
described above. If a shareholder has held shares in the Fund
for six months or less and during that period has received a
distribution taxable to the shareholder as a long-term capital
gain, any loss recognized by the shareholder on the sale of those
shares during the six-month period will be treated as a long-term
capital loss to the extent of the distribution.

Dividends are taxable in the manner discussed regardless
of whether they are paid to the shareholder in cash or are
reinvested in additional shares of the Fund's Common Stock.

The Fund generally will be required to withhold tax at
the rate of 31% with respect to dividends of net ordinary income
and net distributions of realized capital gains payable to a
noncorporate shareholder unless the shareholder certifies on his
or her subscription application that the social security or
taxpayer identification number provided is correct and that the
shareholder has not been notified by the Internal Revenue Service
that he or she is subject to backup withholding.

FOREIGN TAX CREDIT

Investment income received by the Fund from sources
within foreign countries may be subject to foreign income taxes,
including taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption
from taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of the
Fund's assets to be invested within various countries is not
known. If more than 50% of the value of the Fund's total assets
at the close of its taxable year consists of stocks or securities
of foreign corporations (which for this purpose should include
obligations issued by foreign governments), the Fund will be
eligible to file an election with the Internal Revenue Service to
pass through to its shareholders the amount of foreign taxes paid
by the Fund. If eligible, the Fund intends to file such an
election. However, there can be no assurance that the Fund will
be able to do so. Pursuant to this election a United States
shareholder will be required to (i) include in gross income(in
addition to taxable dividends actually received) his pro rata
share of any foreign income taxes paid by the Fund, (ii) treat
his pro rata share of such foreign taxes as having been paid by
him; and (iii) either deduct such pro rata share of foreign taxes
in computing his taxable income or treat such foreign taxes as a
credit against United States federal income taxes. Shareholders

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<PAGE>

who normally are not liable for Federal income taxes, such as
retirement plans qualified under section 401 of the Code, will
not be affected by any such pass-through of taxes by the Fund. No
deduction for foreign income taxes may be claimed by an
individual United States shareholder who does not itemize
deductions. In addition, certain individual United States
shareholders may be subject to rules which limit or reduce their
ability to fully deduct their pro rata share of the foreign
income taxes paid by the Fund. Each shareholder will be notified
within 60 days after the close of the Fund's taxable year whether
the foreign income taxes paid by the Fund will pass through for
that year and, if so, such notification will designate (i) such
shareholder's portion of the foreign income taxes paid to each
such country, and (ii) the portion of dividends that represents
income derived from sources within each such country.

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

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

UNITED STATES FEDERAL INCOME TAXATION OF THE FUND

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

104

<PAGE>

CURRENCY FLUCTUATIONS--"SECTION 988" GAINS OR LOSSES.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its shareholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as a non-taxable return of
capital to shareholders, rather than as an ordinary dividend,
reducing each shareholder's basis in his or her Fund shares. To
the extent that such distributions exceed such shareholder's
basis, each will be treated as a gain from the sale of shares.

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

105

<PAGE>

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

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

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

TAX STRADDLES. Any option, futures contract, or forward
foreign currency contract, interest rate swap, cap or floor or

106

<PAGE>

other position entered into or held by the Fund in conjunction
with any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. A straddle of which
at least one, but not all, the positions are section 1256
contracts may constitute a "mixed straddle". In general,
straddles are subject to certain rules that may affect the
character and timing of the Fund's gains and losses with respect
to straddle positions by requiring, among other things, that
(i) loss realized on disposition of one position of a straddle
not be recognized to the extent that the Fund has unrealized
gains with respect to the other position in such straddle;
(ii) the Fund's holding period in straddle positions be suspended
while the straddle exists (possibly resulting in gain being
treated as short-term capital gain rather than long-term capital
gain); (iii) losses recognized with respect to certain straddle
positions which are part of a mixed straddle and which are non-
section 1256 positions be treated as 60% long-term and 40% short-
term capital loss; (iv) losses recognized with respect to certain
straddle positions which would otherwise constitute short-term
capital losses be treated as long-term capital losses; and
(v) the deduction of interest and carrying charges attributable
to certain straddle positions may be deferred. The Treasury
Department is authorized to issue regulations providing for the
proper treatment of a mixed straddle where at least one position
consists of an ordinary asset and at least one position consists
of a capital asset. No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles. In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.

ZERO COUPON SECURITIES. Current federal tax law
requires that a holder (such as the Fund) of a zero coupon
security accrue a portion of the discount at which the security
was purchased as income each year even though the Fund receives
no interest payment in cash on the security during the year.
Accordingly, the Fund may be required to pay out as an income
distribution each year an amount which is greater than the total
amount of cash interest the Fund actually received. Such
distributions will be made from the cash assets of the Fund or by
liquidation of portfolio securities, if necessary. If a
distribution of cash necessitates the liquidation of portfolio
securities, the Adviser will select which securities to sell.
The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions,
its shareholders may receive a larger capital gain distribution,
if any, than they would have in the absence of such transactions.

107

<PAGE>

TAXATION OF FOREIGN STOCKHOLDERS

The foregoing discussion relates only to United States
federal income tax law as it affects shareholders who are United
States citizens or residents or United States corporations. The
effects of federal income tax law on shareholders who are non-
resident alien individuals or foreign corporations may be
substantially different. Foreign investors should therefore
consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.

_________________________________________________________________

PORTFOLIO TRANSACTIONS
_________________________________________________________________

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

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

108

<PAGE>

_________________________________________________________________

GENERAL INFORMATION
_________________________________________________________________

CAPITALIZATION

The Fund's shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares
voting for the election of Directors can elect 100% of the
Directors if they choose to do so, and in such event the holders
of the remaining less than 50% of the shares voting for such
election of Directors will not be able to elect any person or
persons to the Board of Directors.

The authorized capital stock of the Fund currently
consists of 3,000,000,000 shares of Class A Common Stock,$.001
par value, 3,000,000,000 shares of Class B Common Stock, .$001
par value, 3,000,000,000 shares of Class C Common Stock, $.001
par value, and 3,000,000,000 shares of Advisor Class Common
Stock,$.001 par value. All shares of the Fund, when issued, are
fully paid and non-assessable. The Board of Directors is
authorized to reclassify and issue any unissued shares to any
number of additional series and classes without shareholder
approval. Accordingly, the Board in the future, for reasons such
as the desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of another class or series would be governed by the 1940
Act and the law of the State of Maryland. If shares of another
series were issued in connection with the creation of a second
portfolio, each share of either portfolio would normally be
entitled to one vote for all purposes. Generally, shares of both
portfolios would vote as a single series on matters, such as the
election of Directors, that affected both portfolios in
substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Advisory Agreement
and changes in investment policy, shares of each portfolio would
vote as separate series.

The outstanding voting shares of the Fund as of October
11, 1996 consisted of 245,628,887 shares of common stock
outstanding, of which 46,983,107 were Class A shares, 166,898,610
were Class B shares and 31,747,170 were Class C shares. To the
knowledge of the Fund, the following persons owned of record, and
no person owned beneficially, 5% or more of the outstanding
shares of the Fund as of October 11, 1996:

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<PAGE>

No. of % of % of % of
Name and Address Shares Class A Class B Class C

Merrill Lynch 7,547,232 16.06%
Mutual Fund Operations
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, Florida
32246-6484

Merrill Lynch 44,363,018 26.58%
Mutual Fund Operations
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, Florida
32246-6484

Merrill Lynch 14,027,044 44.18%
Mutual Fund Operations
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, Florida
32246-6484

CUSTODIAN

Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109, acts as custodian for the securities and
cash of the Fund but plays no part in deciding the purchase or
sale of portfolio securities. Subject to the supervision of the
Fund's Directors, Brown Brothers Harriman & Co. may enter into
sub-custodial agreements for the holding of the Fund's foreign
securities.

PRINCIPAL UNDERWRITER

Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase shares of the Fund. Under the Distribution
Services Agreement the Fund has agreed to indemnify the Principal
Underwriter, in the absence of its willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations
thereunder, against certain civil liabilities, including
liabilities under the Securities Act.

COUNSEL

Legal matters in connection with the issuance of the
shares offered hereby are passed upon by Seward & Kissel, New
York, New York. Seward & Kissel has relied upon the opinion of

110

<PAGE>

Venable, Baetjer and Howard LLP, Baltimore, Maryland, for matters
relating to Maryland law.

INDEPENDENT AUDITORS

Ernst & Young LLP, New York, New York, have been
appointed as independent auditors for the Fund.

YIELD AND TOTAL RETURN QUOTATIONS

From time to time the Fund advertises its "yield",
"actual distribution rate" and "total return". Computed
separately for each class, the Fund's yield for any 30-day (or
one-month) period is computed by dividing the net investment
income per share earned during such period by the maximum public
offering price per share on the last day of the period, and then
annualizing such 30-day (or one-month) yield in accordance with a
formula prescribed by the Securities and Exchange Commission
which provides for compounding on a semi-annual basis. The
Fund's "actual distribution rate," which may be stated in sales
literature, is computed in the same manner as yield except that
actual income dividends declared per share during the period in
question are substituted for net investment income per share. The
actual distribution rate is computed separately for each class of
shares. Computed separately for each class, the Fund's total
return is its average annual compounded total return for its most
recently completed one-, five- and ten-year periods (or, if
shorter, the period since the Fund's inception). The Fund's total
return for each such period is computed by finding, through the
use of a formula prescribed by the Securities and Exchange
Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested in
the value of such investment at the end of the period. For
purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to
have been reinvested when received and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been
paid.

The Fund's yield for the month ended May 31, 1996 for
Class A shares was 11.45%, for Class B shares was 11.23% and for
Class C shares was 11.24%. The Fund's actual distribution rate
for such period for Class A shares was 12.71%, for Class B shares
was 12.31% and for Class C shares was 12.31%. The Fund's average
total returns from March 27, 1992 (commencement of operations for
Class A and Class B shares) through May 31, 1996 were 3.84% and
4.03% for Class A and Class B shares, respectively, and for the
period from May 3, 1993 (commencement of distribution for Class C
shares) through May 31, 1996 was 1.73% for Class C shares The
total return for the year ended May 31, 1996 was 15.05% for the
Class A shares, 15.98% for the Class B shares and 18.98% for the

111

<PAGE>

Class C shares. The Fund will compute yield and total return
figures separately for Class A shares, Class B shares and Class C
shares.

Yield and total return are not fixed and will fluctuate
in response to prevailing market conditions or as a function of
the type, and quality of the securities in the Fund's portfolio,
the Fund's average portfolio maturity and its expenses.
Quotations of yield and total return do not include any provision
for the effect of individual income taxes. An investor's
principal invested in the Fund is not fixed and will fluctuate in
response to prevailing market conditions. The Fund may advertise
the fluctuation of its net asset value over certain time periods
and compare its performance to that available from other
investments, including money market funds and certificates of
deposit, the later of which, unlike the Fund, are insured and
have fixed rates of return.

Advertisements quoting performance rankings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc., and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers,
magazines such as The Wall Street Journal, The New York Times,
Barrons, Investor's Daily, Money Magazine, Changing Times,
Business Week and Forbes or other media on behalf of the Fund.
It is expected that the Fund will be ranked by Lipper in the
category known as "World Income Funds."

ADDITIONAL INFORMATION

Any shareholder inquiries may be directed to the
shareholder's broker or to Alliance Fund Services, Inc. at the
address or telephone numbers shown on the front cover of this
Statement of Additional Information. This Statement of
Additional Information does not contain all the information set
forth in the Registration Statement filed by the Fund with the
Securities and Exchange Commission under the Securities Act of
1933. Copies of the Registration Statement may be obtained at a
reasonable charge from the Securities and Exchange Commission or
may be examined, without charge, at the offices of the Securities
and Exchange Commission in Washington, D.C.

112

<PAGE>

PORTFOLIO OF INVESTMENTS ALLIANCE NORTH AMERICAN
MAY 31, 1996 (UNAUDITED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- --------------------------------------------------------------------
ARGENTINA-30.7%
GOVERNMENT OBLIGATIONS-30.7%
Republic of Argentina
Pensioner-Bocon Series I
3.50%, 4/01/01 (FRN) ARS 18,787 $ 14,601,059
Pensioner-Bocon Series II
3.50%, 9/01/02 (FRN) 83,636 53,677,276
Supplier-Bocon
3.50%, 4/01/07 (FRN) 795,197 469,812,247
Total Argentinian Securities
(cost $549,784,541) 538,090,582

CANADA-31.5%
GOVERNMENT/AGENCY-31.5%
Government of Canada
8.00%, 6/01/23 (a) CA$ 113,070 81,698,573
8.00%, 6/01/27 (a) 159,500 115,071,890
Ontario Hydro
10.00%, 3/19/01 (a) 50,000 40,623,289
11.00%, 10/01/97 1,500 1,165,931
Province of British Columbia
7.875%, 11/30/23 36,000 24,330,183
8.00%, 9/08/23 24,600 17,288,136
9.00%, 8/23/24 25,000 19,663,905
Province of Manitoba
7.75%, 12/22/25 60,200 41,041,360
Province of Ontario
8.00%, 6/02/26 (a) 91,250 63,521,695
Province of Quebec
9.375%, 1/16/23 88,600 68,815,911
Province of Saskatchewan
9.50%, 8/16/04 48,000 38,549,940
9.60%, 2/04/22 24,600 20,133,165
Quebec Hydro
9.125%, 8/15/20 (c) 250,000 21,348,028
Total Canadian Securities
(cost $556,134,916) 553,252,006

MEXICO-8.7%
GOVERNMENT/AGENCY-8.7%
Bankers Acceptances
Nacional Financiera
S.N.C. (c)
15.00%, 8/13/98 MXP 80,180 5,049,372
16.50%, 12/26/03 414,125 10,837,493
16.95%, 12/24/03 81,401 2,131,434
17.50%, 12/11/03 55,253 1,452,280
Mexican Ajustabonos
6.83%, 11/28/96 (d) 31,500 7,804,888
Mexican Treasury Bills (c)
35.75%, 8/29/96 MXP 50,000 6,272,749
35.80%, 9/05/96 46,539 5,793,038
35.80%, 9/12/96 35,616 4,409,235
36.00%, 8/15/96 46,098 5,845,642
36.20%, 9/19/96 60,000 7,387,690
36.25%, 9/26/96 123,770 15,157,377
39.00%, 10/03/96 129,411 15,763,248
40.00%, 8/08/96 198,610 25,322,460
41.46%, 6/20/96 175,864 23,340,110
44.70%, 7/11/96 34,968 4,569,855
44.70%, 7/25/96 50,000 6,468,539
45.25%, 7/18/96 35,500 4,615,937
Total Mexican Securities
(cost $239,867,021) 152,221,347

UNITED STATES-51.2%
U.S. TREASURY SECURITIES-35.1%
U.S. Treasury Bonds
12.375%, 5/15/04 US 47,200 62,997,250
12.50%, 8/15/14 19,000 27,659,844
14.00%, 11/15/11 82,900 125,360,344
U.S. Treasury Notes
6.75%, 4/30/00 124,300 125,018,609
7.875% 11/15/04 101,200 107,698,938
U.S. Treasury Strips
Zero Coupon, 5/15/09 52,430 21,059,148
Zero Coupon, 5/15/10 384,970 142,758,040
Zero Coupon, 5/15/14 13,400 3,693,733
-------------
616,245,906

DEBT OBLIGATIONS-12.6%
United Mexican States
21.00%, 11/27/96 (b) (e) 225,500 220,863,495

FEDERAL AGENCY SECURITIES-2.5%
Federal National Mortgage
Association
Zero Coupon, 10/09/19 85,025 15,012,227
Student Loan Marketing
Association
15.00%, 9/17/96 27,450 28,224,090
-------------
43,236,317

MORTGAGE BACKED SECURITIES-1.0%
Government National
Mortgage Association
9.75%, 6/15/24 16,467 17,692,100

ALLIANCE NORTH AMERICAN
PORTFOLIO OF INVESTMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

CONTRACTS U.S. $VALUE
- --------------------------------------------------------------------
PUT OPTION PURCHASED-0.0%
Brazil Real
Expiring November 1996
@ 0.91 US$ 223,750 $ 290,875
Total United States Securities
(cost $931,844,539) 898,328,693

TOTAL INVESTMENTS-122.1%
(cost $2,277,631,017) $2,141,892,628
Other assets less liabilities-(22.1%) (387,104,991)

NET ASSETS-100% $1,754,787,637

(a) Security, or portion thereof, has been segregated to collateralize forward
exchange currency contracts. This collateral has a total market value of
$300,915,447 at May 31, 1996.

(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At May 31, 1996 this security
amounted to $220,863,495 or 12.6% of net assets.

(d) Interest payment adjusted quarterly based on Mexico's inflation rate on
the date of interest payment.

Glossary:
FRN - Floating Rate Note; stated interest rate in effect at May 31, 1996.

See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES ALLIANCE NORTH AMERICAN
MAY 31, 1996 (UNAUDITED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

ASSETS
Investments in securities, at value (cost $2,277,631,017) $2,141,892,628
Interest receivable 62,034,283
Receivable for capital stock sold 5,659,589
Receivable for investment securities sold 1,012,171
Unrealized appreciation of forward exchange currency contracts 639,534
Deferred organization expenses 54,505
Other assets 38,662
Total assets 2,211,331,372

LIABILITIES
Due to custodian 541,228
Loan Payable 250,000,000
Payable for investment securities purchased 187,725,751
Dividend payable 7,640,686
Payable for capital stock redeemed 3,893,363
Loan interest payable 3,007,813
Advisory fee payable 1,175,818
Distribution fee payable 256,251
Accrued expenses 2,302,825
Total liabilities 456,543,735

NET ASSETS $1,754,787,637

COMPOSITION OF NET ASSETS
Capital stock, at par $ 240,041
Additional paid-in capital 2,203,723,399
Undistributed net investment income 10,748,109
Accumulated net realized loss on investments and foreign
currency transactions (325,012,851)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (134,911,061)
---------------
$1,754,787,637

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($303,683,755/
41,541,512 shares of capital stock issued and outstanding) $7.31
Sales Charge-4.25% of public offering price .32
Maximum offering price $7.63

CLASS B SHARES
Net asset value and offering price per share($1,216,641,535/
166,426,847 shares of capital stock issued and outstanding) $7.31

CLASS C SHARES
Net asset value, redemption and offering price per share($234,462,347
/32,072,577 shares of capital stock issued and outstanding) $7.31

See notes to financial statements.

STATEMENT OF OPERATIONS ALLIANCE NORTH AMERICAN
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

INVESTMENT INCOME
Interest(net of foreign taxes withheld of $147,035) $160,765,180

EXPENSES
Advisory fee $ 6,490,762
Distribution fee - Class A 429,179
Distribution fee - Class B 6,114,829
Distribution fee - Class C 1,176,703
Transfer agency 1,546,403
Custodian 1,499,206
Printing 140,123
Audit and legal 122,441
Administrative 80,793
Registration 42,767
Amortization of organization expenses 34,055
Taxes 18,685
Directors' fees 11,248
Miscellaneous 22,851
Total expenses before interest 17,730,045
Interest expense 8,446,378
Total expenses 26,176,423
Net investment income 134,588,757

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (26,206,789)
Net realized loss on foreign currency transactions (86,865,056)
Net change in unrealized depreciation of investments 222,880,104
Net change in unrealized appreciation of foreign
currency denominated assets and liabilities (3,293,460)
Net gain on investments 106,514,799

NET INCREASE IN NET ASSETS FROM OPERATIONS $241,103,556

See notes to financial statements.

ALLIANCE NORTH AMERICAN
STATEMENT OF CHANGES IN NET ASSETS GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SIX MONTHS ENDED YEAR ENDED
MAY 31,1996 NOVEMBER 30,
(UNAUDITED) 1995
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 134,588,757 $ 272,121,257
Net realized loss on investments and
foreign currency transactions (113,071,845) (507,701,318)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 219,586,644 43,988,763
Net increase (decrease) in net assets from
operations 241,103,556 (191,591,298)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (19,146,716) -0-
Class B (75,877,028) -0-
Class C (14,611,716) -0-
Tax return of capital
Class A -0- (33,426,216)
Class B -0- (152,169,130)
Class C -0- (30,951,612)

CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 28,628,170 (310,024,369)
Total increase (decrease) 160,096,266 (718,162,625)

NET ASSETS
Beginning of year 1,594,691,371 2,312,853,996
End of period (including undistributed
net investment income of $10,748,109
at May 31, 1996) $1,754,787,637 $1,594,691,371

See notes to financial statements.

STATEMENT OF CASH FLOWS ALLIANCE NORTH AMERICAN
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received $ 54,545,040
Interest expense paid (8,429,016)
Operating expenses paid (16,982,623)
Net increase in cash from operating activities $ 29,133,401

INVESTING ACTIVITIES:
Proceeds from disposition of short-term
portfolio investments, net 245,152,997
Purchases of long-term portfolio investments (1,805,628,372)
Proceeds from disposition of long-term
portfolio investments 1,605,780,814
Net increase in cash from investing activities 45,305,439

FINANCING ACTIVITIES*:
Subscriptions of capital stock, net 27,864,181
Cash dividends paid (107,880,573)
Net decrease in cash from financing activities (80,016,392)
Effect of exchange rate on cash 4,935,837
Net decrease in cash (641,715)
Cash at beginning of period 100,487
Cash at end of period $ (541,228)

_______________________________________________________________________________

RECONCILIATION OF NET INCREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net increase in net assets from operations $241,103,556

ADJUSTMENTS:
Increase in interest receivable $(36,918,319)
Net realized loss on securities 26,206,789
Net change in unrealized appreciation (219,586,644)
Accretion of bond discount (69,301,823)
Increase in accrued expenses and other
liabilities 764,786
Net realized loss on foreign currency
transactions 86,865,056
(211,970,155)
Net increase in cash from operating activities $ 29,133,401

* Non-cash financing activities not included herein consist of reinvestment of
dividends.

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS ALLIANCE NORTH AMERICAN
MAY 31, 1996 (UNAUDITED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance North American Government Income Trust, Inc. (the "Fund"), was
incorporated in the State of Maryland on February 3, 1992 as a non-diversified,
open-end investment company. The Fund currently offers three classes of shares,
Class A, Class B and Class C shares. Class A shares are sold with a front-end
sales charge of up to 4.25%. Class B shares are 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
currently sold without an initial or contingent deferred sales charge. Class C
shares purchased on or after July 1, 1996, 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 with respect to its distribution plan. The following is a summary
of significant accounting policies followed by the Fund.

1. SECURITY VALUATION
Investments are stated at value. 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 last bid price
quoted on such day. Securities traded on the over-the-counter market are valued
at the mean of the closing bid and asked price provided by the principal market
makers. Securities for which market quotations are not readily available are
valued in good faith at fair value using methods determined by the Board of
Directors. Securities which mature in 60 days or less are valued at amortized
cost, which approximates market value, unless this method does not represent
fair value.

2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.

Net realized losses on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities, holding of foreign
currencies, exchange gains or losses realized between the trade and settlement
dates on security transactions, and the difference between the amounts of
interest recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized currency gains and losses
from valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized depreciation of
investments and foreign currency denominated assets and liabilities.

3. ORGANIZATION EXPENSES
Organization expenses of approximately $331,965 have been deferred and are
being amortized on a straight-line basis through March, 1997.

4. 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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.

5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income.

6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.

7. CONCENTRATION OF RISK
The investments in Emerging Markets may involve greater risks than investments
in more developed markets and the prices of such investments may be volatile.
The consequences of political, social or economic changes in these markets may
have disruptive effects on the market prices of the Fund's investments and the
income they generate, as well as the Fund's ability to repatriate such amounts.

ALLIANCE NORTH AMERICAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

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
.65 of 1% of the average adjusted daily net assets of the Fund. Such fee is
accrued daily and paid monthly.

The Adviser has agreed under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fee, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
currently imposed by any state is 2 1/2% of the first $30 million of its
average daily net assets, 2% of the next $70 million of its average daily net
assets and 1 1/2% of its average daily net assets in excess of $100 million. No
such reimbursement was required for the six months ended May 31, 1996. Pursuant
to the advisory agreement, the Fund paid the Adviser $80,793 representing the
cost of certain legal and accounting services provided to the Fund by the
Adviser.

The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) for providing personnel and facilities to perform transfer agency
services for the Fund. Such compensation amounted to $981,449 for the six
months ended May 31, 1996.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $115,763 from the sale of Class A shares and
$1,100,462 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the six months ended May 31, 1996.

NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C shares. Under the Agreement, the Fund pays a distribution
fee to the Distributor at an annual rate of up to .30% of the Fund's average
daily net assets attributable to Class A shares and 1% of the average daily net
assets attributable to the Class B and Class C shares. Such fee is accrued
daily and paid monthly. The Agreement provides that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by the Fund in the amount of $35,394,907 and $2,935,028 for
Class B and Class C shares respectively; such costs may be recovered from the
Fund in future periods so long as the Agreement is in effect. In accordance
with the Agreement, there is no provision for recovery of unreimbursed
distribution costs, incurred by the Distributor, beyond the current year for
Class A shares. The Agreement also provides 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 obligations) aggregated $440,796,610 and $624,467,550,
respectively, for the six months ended May 31, 1996.

The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contract and the closing of such contract is included in realized gains or
losses from foreign currency transactions.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.

The Fund's custodian will place and maintain cash not available for investment
or other liquid high quality debt securities in a separate account of the Fund
having a value equal to the aggregate amount of the Fund's commitments under
forward exchange currency contracts entered into with respect to position
hedges.

Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects total exposure of the
Fund in that particular currency contract. At May 31, 1996, the Fund had
outstanding forward exchange currency contracts as follows:

CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
------- ------------ ------------ ------------
FOREIGN CURRENCY SALE CONTRACT
Canadian Dollars,
expiring 6/28/96-7/11/96 396,718 $290,352,238 $289,712,704 $639,534

At May 31, 1996, the cost of investments for federal income tax purposes was
$2,310,224,916. Accordingly, gross unrealized appreciation of investments was
$12,815,293 and gross unrealized depreciation of investments was $181,147,581
resulting in net unrealized depreciation of $168,332,288. At November 30, 1995,
the Fund had a capital loss carry-forward totaling $205,000,395, of which
$70,618,925, which expires in the year 2002 and $134,381,470 expires in the
year 2003.

NOTE E: BANK BORROWING
The Fund entered into a Revolving Credit Agreement with Credit Lyonnais of New
York on June 27, 1995. The maximum credit available under the renewed credit
facility is $250,000,000 and requires no collateralization. The loan
outstanding, under the renewed Credit Agreement at May 31, 1996 was
$250,000,000 with a related weighted average interest rate of 6.188%. The
$250,000,000 balance will mature on June 25, 1996. Interest payments on current
borrowings are based on the London Interbank Offered Rate. The Fund is also
obligated to pay Credit Lyonnaise of New York a commitment fee, computed at the
rate 1/4 of 1% per annum on the daily average unused portion of the revolving
credit. The maximum amount of such loan outstanding at any time during the year
was $250,000,000 with a weighted average annualized interest rate of 6.487%.

ALLIANCE NORTH AMERICAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

NOTE F: CAPITAL STOCK
There are 9,000,000,000 shares of $0.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C. Each class
consists of 3,000,000,000 authorized shares. Transactions in capital stock were
as follows:

SHARES AMOUNT
-------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
MAY 31,1996 NOVEMBER 30, MAY 31,1996 NOVEMBER 30,
------------ ------------ ------------- --------------
CLASS A
Shares sold 6,614,476 14,452,683 $ 61,348,174 $ 94,352,169
Shares issued in
reinvestment of
dividends 1,009,793 2,314,466 7,354,345 14,875,359
Shares converted from
Class B to Class A 1,743,758 12,647,418
Shares redeemed (5,250,133) (16,694,036) (38,620,867) (107,647,756)
Net increase 4,117,894 73,113 $ 42,729,070 $ 1,579,772

CLASS B
Shares sold 17,082,099 29,670,771 $124,685,994 $ 194,645,827
Shares issued in
reinvestment of
dividends 3,085,897 9,031,497 22,472,269 58,268,585
Shares converted from
Class B to Class A (1,743,758) (12,647,418)
Shares redeemed (18,373,711) (73,890,695) (146,135,439) (477,796,460)
Net increase(decrease) 50,527 (35,188,427) $(11,624,594) $(224,882,048)

CLASS C
Shares sold 3,820,359 6,692,492 $ 27,872,473 $ 43,465,432
Shares issued in
reinvestment of
dividends 622,725 2,381,481 4,637,687 15,394,839
Shares redeemed (4,814,136) (22,112,533) (34,986,466) (145,582,364)
Net decrease (371,052) (13,038,560) $ (2,476,306) $ (86,722,093)

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

NOTE G: LITIGATION
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") styled In RE ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST,
INC. SECURITIES LITIGATION was filed in the United States District Court for
the Southern District of New York against the Fund, the Adviser, Alliance
Capital Management Corporation ("ACMC"), Alliance Fund Distributors, Inc., The
Equitable Companies Incorporated, a parent of the Adviser, certain officers of
the Fund, certain current and former directors of the Fund, certain current and
former officers of ACMC and certain directors of ACMC, alleging violations of
federal securities laws, fraud and breach of fiduciary duty in connection with
the Fund's investments in Mexican and Argentine securities. The Complaint seeks
certification of a plaintiff class of all persons who purchased or owned Class
A, B or C shares of the Fund from March 27, 1992 through December 23, 1994. The
Complaint alleges that as of the date of the Complaint, the Fund's losses
exceeded $750,000,000. The Complaint seeks as relief unspecified damages, costs
and attorneys' fees.

The principal allegations of the Complaint are that upon the advice of the
Adviser the Fund purchased debt securities issued by the Mexican and Argentine
governments in amounts that were not permitted by the Fund's Investment
objective, and that there was no shareholder vote to change the investment
objective to permit purchases in such amounts. The Complaint further alleges
that the decline in the value of the Mexican and Argentine securities held by
the Fund caused the Fund's net asset value to decline to the detriment of the
Fund's shareholders.

On September 26, 1995, defendants jointly filed a motion to dismiss the
Complaint in its entirety. The Fund and the Adviser believe that the
allegations in the Complaint are without merit and intend to vigorously defend
against these claims.

ALLIANCE NORTH AMERICAN
FINANCIAL HIGHLIGHTS GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
SIX MONTHS MARCH 27,
ENDED 1992(F)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1996 ------------------------------------- NOVEMBER 30,
(UNAUDITED) 1995 1994 1993 1992
------------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 6.75 $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .58(e) 1.18(e) 1.02 1.09 .69(a)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .46 (1.59) (2.12) .66 (.31)
Net increase (decrease) in net asset
value from operations 1.04 (.41) (1.10) 1.75 .38

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income. (.48) -0- (.91) (1.09) (.68)
Tax return of capital -0- (.97) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.48) (.97) (1.12) (1.10) (.68)
Net asset value, end of period $ 7.31 $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net
asset value(d) 15.73% (3.59)% (11.32)% 18.99% 3.49%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $303,684 $252,608 $303,538 $268,233 $61,702
Ratio of expenses to average net assets 2.44%(b) 2.62% 1.70% 1.61% 2.45%(b)(c)
Ratio of expenses to average net assets
excluding interest expense(see Note E) 1.46%(b) 1.51% 1.37% 1.33% 1.66%(b)
Ratio of net investment income to
average net assets 16.19%(b) 18.09% 11.22% 10.77% 10.93%(b)
Portfolio turnover rate 162% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 18.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------------
SIX MONTHS MARCH 27,
ENDED 1992(F)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1996 ------------------------------------- NOVEMBER 30,
(UNAUDITED) 1995 1994 1993 1992
------------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 6.75 $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .56(e) 1.13(e) .96 1.01 .64(a)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .45 (1.61) (2.13) .67 (.31)
Net increase (decrease) in net asset
value from operations 1.01 (.48) (1.17) 1.68 .33

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) -0- (.84) (1.02) (.63)
Tax return of capital -0- (.90) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.45) (.90) (1.05) (1.03) (.63)
Net asset value, end of period $ 7.31 $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net
asset value(d) 15.17% (4.63)% (11.89)% 18.15% 3.30%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $1,216,642 $1,123,074 $1,639,602 $1,313,591 $216,317
Ratio of expenses to average net assets 3.15%(b) 3.33% 2.41% 2.31% 3.13%(b)(c)
Ratio of expenses to average net assets
excluding interest expense(see Note E) 2.17%(b) 2.22% 2.07% 2.04% 2.35%(b)
Ratio of net investment income to
average net assets 15.49%(b) 17.31% 10.53% 10.01% 10.16%(b)
Portfolio turnover rate 162% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 18.

ALLIANCE NORTH AMERICAN
FINANCIAL HIGHLIGHTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------
SIX MONTHS
ENDED MAY 3,1993(G)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1996 ------------------------ NOVEMBER 30,
(UNAUDITED) 1995 1994 1993
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 6.75 $ 8.13 $10.34 $10.04

INCOME FROM INVESTMENT OPERATIONS
Net investment income .56(e) 1.13(e) .96 .58
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .45 (1.61) (2.12) .30
Net increase (decrease) in net asset
value from operations 1.01 (.48) (1.16) .88

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) -0- (.84) (.58)
Tax return of capital -0- (.90) (.21) -0-
Total dividends and distributions (.45) (.90) (1.05) (.58)
Net asset value, end of period $ 7.31 $ 6.75 $ 8.13 $10.34

TOTAL RETURN
Total investment return based on net
asset value(d) 15.17% (4.63)% (11.89)% 9.00%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $234,462 $219,009 $369,714 $310,230
Ratio of expenses to average net assets 3.14%(b) 3.33% 2.39% 2.21%(b)
Ratio of expenses to average net assets
excluding interest expense(see Note E) 2.16%(b) 2.21% 2.06% 2.04%(b)
Ratio of net investment income to
average net assets 15.50%(b) 17.32% 10.46% 9.74%(b)
Portfolio turnover rate 162% 180% 131% 254%
</TABLE>

(a) Net of expenses waived by the Adviser.

(b) Annualized.

(c) If the Fund had borne all expenses, the ratios of expenses to average net
assets would have been 2.49% and 3.16% for Class A and Class B shares,
respectively.

(d) 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. Total investment return calculated for a period of less than one year
is not annualized.

(e) Based on average shares outstanding.

(f) Commencement of operations.

(g) Commencement of distribution.

<PAGE>

PORTFOLIO OF INVESTMENTS ALLIANCE NORTH AMERICAN
NOVEMBER 30, 1995 GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
ARGENTINA30.2%
GOVERNMENT OBLIGATIONS30.2%
Republic of Argentina
Pensioner-Bocon Series I
3.50%, 4/01/01 (FRN) ARS 284,755 $160,983,808
Pensioner-Bocon Series II
3.50%, 9/01/02 (FRN) 87,861 38,265,806
Supplier-Bocon
3.50%, 4/01/07 (FRN) 749,578 282,985,749
Total Argentinian Securities
(cost $692,442,990) 482,235,363

CANADA35.8%
GOVERNMENT/AGENCY35.8%
Government of Alberta Telephone Co.
9.60%, 7/07/98 CA$ 4,500 3,561,969
Government of Canada
8.00%, 6/01/23 (a) 121,070 93,230,184
9.00%, 6/01/25
Series A (c) 177,000 151,544,889
Ontario Hydro
10.00%, 3/19/01 (a) 50,000 41,473,111
11.00%, 10/01/97 1,500 1,194,832
Province of Alberta
7.75%, 2/04/98 20,000 15,143,372
Province of British Columbia
9.00%, 8/23/24 25,000 20,773,365
Province of Manitoba
9.375%, 11/15/04(a) 30,000 24,958,958
11.00%, 8/15/00 20,000 17,126,661
Province of Ontario
8.25%, 12/01/05 85,000 66,174,035
8.75%, 4/16/97 4,500 3,426,473
Province of Quebec
9.375%, 1/16/23 115,000 94,080,134
Province of Saskatchewan
8.125%, 2/04/97 10,000 7,527,515
9.00%, 12/11/96 8,000 6,057,349
9.50%, 8/16/04 20,000 16,646,667
11.00%, 1/09/01 10,000 8,602,347
Total Canadian Securities
(cost $536,370,076) 571,521,861

MEXICO22.4%
GOVERNMENT/AGENCY22.4%
Bankers Acceptances
Nacional Financiera
S.N.C.(b)
15.00%, 8/13/98 MXP 80,180 4,108,479
16.50%, 12/26/03 414,125 9,559,233
16.95%, 12/24/03 81,401 1,879,944
17.50%, 12/11/03 55,253 1,280,760
Mexican Ajustabonos
6.83%, 11/28/96(c) 31,500 6,479,761
Mexican Treasury Bills(b)
34.39%, 3/20/96 159,016 18,260,349
35.80%, 9/05/96 46,539 4,422,202
35.80%, 9/12/96 35,616 3,360,444
42.50%, 1/25/96 361,636 44,466,489
14.56%, 12/07/95 149,129 19,597,110
14.97%, 12/14/95 69,082 8,977,352
34.65%, 1/04/96 173,225 21,903,329
34.65%, 12/21/95 192,562 24,817,370
35.25%, 2/15/96 305,051 36,502,675
35.91%, 2/08/96 225,675 27,248,133
36.20%, 9/19/96 60,000 5,621,486
36.25%, 9/26/96 30,000 2,791,202
36.49%, 3/07/96 262,832 30,665,826
36.99%, 8/15/96 46,098 4,475,624
38.48%, 1/18/96 149,300 18,528,041
41.52%, 1/11/96 188,741 23,641,883
42.05%, 3/28/96 138,096 15,705,483
45.25%, 7/18/96 35,500 3,549,708
53.00%, 2/01/96 56,000 6,823,030
54.00%, 2/29/96 100,000 11,755,807
Total Mexican Securities
(cost $546,676,634) 356,421,720

UNITED STATES35.7%
U.S. TREASURY SECURITIES29.7%
U.S. Treasury Bonds
12.375%, 5/15/04 US$ 50,000 71,757,813
12.50%, 8/15/14 31,000 49,178,594
14.00%, 11/15/11 38,900 63,716,984

ALLIANCE NORTH AMERICAN
PORTFOLIO OF INVESTMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
U.S. Treasury Notes
5.875%, 8/15/98 US$ 2,000 $ 2,022,500
6.75%, 4/30/00 11,300 11,824,391
7.875% 11/15/04 99,700 113,969,563
9.375%, 4/15/96 26,500 26,864,375
U.S. Treasury Strips
Zero Coupon, 5/15/10 250,400 102,286,647
Zero Coupon, 8/15/20 130,700 28,624,084
Zero Coupon, 11/15/21 15,500 3,143,555
473,388,506

FEDERAL AGENCY SECURITIES4.9%
Federal National Mortgage Association
Zero Coupon, 10/09/19 235,025 48,363,738
Student Loan Marketing Association
15.00%, 9/17/96 US$ 27,450 29,464,830
77,828,568

MORTGAGE BACKED SECURITIES1.1%
Government National Mortgage Association
9.75%, 6/15/24 16,519 17,708,704
Total United States Securities
(cost $562,233,515) 568,925,778

TOTAL INVESTMENTS-124.1%
(cost $2,337,723,215) 1,979,104,722
Other assets less liabilities-(24.1)% (384,413,351)

NET ASSETS100% $1,594,691,371

(a) Security, or portion thereof, has been segregated to collateralize forward
exchange currency contracts. This collateral has a total market value of
$52,458,884 at November 30, 1995.

(b) Interest rate represents annualized yield to maturity at purchase date.

Glossary:
FRN - Floating Rate Note; stated interest rate in effect at November 30,
1995.

See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES ALLIANCE NORTH AMERICAN
NOVEMBER 30, 1995 GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

ASSETS
Investments in securities, at value (cost $2,337,723,215) $1,979,104,722
Cash 100,487
Receivable for investment securities sold 55,647,469
Interest receivable 25,115,964
Receivable for capital stock sold 4,984,007
Unrealized appreciation of forward exchange currency contracts 3,917,322
Deferred organization expenses 88,560
Other assets 90,560
Total assets 2,069,049,091

LIABILITIES
Loan payable 250,000,000
Payable for investment securities purchased 208,625,208
Dividend payable 5,983,746
Payable for capital stock redeemed 3,883,823
Loan interest payable 2,990,451
Advisory fee payable 942,190
Distribution fee payable 114,838
Accrued expenses 1,817,464
Total liabilities 474,357,720

NET ASSETS $1,594,691,371

COMPOSITION OF NET ASSETS
Capital stock, at par $ 236,244
Additional paid-in capital 2,175,099,026
Distributions in excess of net investment income (14,205,188)
Accumulated net realized loss on investments and
foreign currency transactions (211,941,006)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (354,497,705)
---------------
$1,594,691,371

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($252,608,360/
37,423,618 shares of capital stock issued and outstanding) $6.75
Sales charge-4.25% of public offering price .30
Maximum offering price $7.05

CLASS B SHARES
Net asset value and offering price per share($1,123,074,263/
166,376,320 shares of capital stock issued and outstanding) $6.75

CLASS C SHARES
Net asset value, redemption and offering price per share($219,008,748
/32,443,629 shares of capital stock issued and outstanding) $6.75

See notes to financial statements.

STATEMENT OF OPERATIONS ALLIANCE NORTH AMERICAN
YEAR ENDED NOVEMBER 30, 1995 GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

INVESTMENT INCOME
Interest(net of foreign taxes withheld of $1,227,390) $ 322,539,943

EXPENSES
Advisory fee $11,774,101
Distribution fee - Class A 679,389
Distribution fee - Class B 11,098,575
Distribution fee - Class C 2,250,854
Transfer agency 3,261,011
Custodian 2,683,022
Printing 440,846
Audit and legal 213,842
Taxes 181,500
Administrative 162,064
Registration 115,183
Amortization of organization expenses 67,189
Directors' fees 32,366
Miscellaneous 44,509
Total expenses before interest 33,004,451
Interest expense 17,414,235
Total expenses 50,418,686
Net investment income 272,121,257

REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (104,982,523)
Net realized loss on foreign currency transactions (402,718,795)
Net change in unrealized depreciation of investments 39,801,217
Net change in unrealized depreciation of foreign
currency denominated assets and liabilities 4,187,546
Net loss on investments (463,712,555)

NET DECREASE IN NET ASSETS FROM OPERATIONS $(191,591,298)

See notes to financial statements.

ALLIANCE NORTH AMERICAN
STATEMENT OF CHANGES IN NET ASSETS GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $272,121,257 $ 255,422,163
Net realized loss on investments and foreign
currency transactions (507,701,318) (172,464,342)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 43,988,763 (418,790,066)
Net decrease in net assets from operations (191,591,298) (335,832,245)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -0- (31,066,379)
Class B -0- (153,207,280)
Class C -0- (38,260,122)
Tax return of capital
Class A (33,426,216) (6,559,363)
Class B (152,169,130) (32,407,917)
Class C (30,951,612) (7,957,809)

CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (310,024,369) 1,026,091,221
Total increase (decrease) (718,162,625) 420,800,106

NET ASSETS
Beginning of year 2,312,853,996 1,892,053,890
End of year $1,594,691,371 $2,312,853,996

See notes to financial statements.

STATEMENT OF CASH FLOWS ALLIANCE NORTH AMERICAN
YEAR ENDED NOVEMBER 30, 1995 GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received $ 141,413,766
Interest expense paid (17,048,020)
Operating expenses paid (34,044,485)
Net increase in cash from operating activities $ 90,321,261

INVESTING ACTIVITIES:
Purchases of short-term portfolio investments,
net (85,655,086)
Purchases of long-term portfolio investments (2,640,643,093)
Proceeds from disposition of long-term
portfolio investments 3,210,520,528
Net increase in cash from investing activities 484,222,349

FINANCING ACTIVITIES*:
Redemptions of capital stock, net (314,392,569)
Cash dividends paid (221,728,702)
Net decrease in cash from financing activities (536,121,271)
Effect of exchange rate on cash (38,321,852)
Net increase in cash 100,487
Cash at beginning of year -0-
Cash at end of year $ 100,487

_______________________________________________________________________________

RECONCILIATION OF NET DECREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net decrease in net assets from operations $(191,591,298)
ADJUSTMENTS:
Decrease in interest receivable $ 866,288
Net realized loss on securities 104,982,523
Net change in unrealized appreciation (43,988,763)
Accretion of bond discount (182,217,630)
Decrease in accrued expenses and other
liabilities (448,654)
Net realized loss on foreign currency
transactions 402,718,795
281,912,559
-------------
Net increase in cash from operating activities $ 90,321,261

* Non-cash financing activities not included herein consist of reinvestment of
dividends.

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS ALLIANCE NORTH AMERICAN
NOVEMBER 30, 1995 GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance North American Government Income Trust, Inc. (the 'Fund'), was
incorporated in the State of Maryland on February 3, 1992 as a non-diversified,
open-end investment company. The Fund currently offers three classes of shares,
Class A, Class B and Class C shares. Class A shares are sold with a front-end
sales charge of up to 4.25%. Class B shares are 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
sold without an initial or contingent deferred sales charge. All three classes
of shares have identical voting, dividend, liquidation and other rights with
respect to its distribution plan. The following is a summary of significant
accounting policies followed by the Fund.

Net realized losses on foreign currency transactions of $402,718,795 represent
foreign exchange gains and losses from sales and maturities of securities,
holding of foreign currencies, exchange gains and losses realized between the
trade and settlement dates on security transactions, and the difference between
the amounts of interest recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized depreciation of investments and foreign currency denominated assets
and liabilities.

3. ORGANIZATION EXPENSES
Organization expenses of approximately $331,965 have been deferred and are
being amortized on a straight-line basis through March, 1997.

6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.

7. CONCENTRATION OF RISK
The investments in emerging markets may involve greater risks than investments
in more developed markets and the prices of such investments may be volatile.
The consequences of political, social or economic changes in these markets may
have disruptive effects on the market prices of the Fund's investments and the
income they generate, as well as the Fund's ability to repatriate such amounts.

ALLIANCE NORTH AMERICAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

8. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
Due to permanent differences between the accounting and tax classifications of
foreign currency transactions a $402,718,795 foreign currency loss was
reclassified from accumulated net realized loss on investments and foreign
currency transactions to distributions in excess of net investment income. In
addition, the permanent accounting and tax difference occurring as a result of
the return of capital of $221,630,755 was reclassified from distributions in
excess of net investment income to additional paid-in capital. Net investment
income, net realized gains, and net assets were not affected by these
reclassifications.

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
.65 of 1% of the average adjusted daily net assets of the Fund. Such fee is
accrued daily and paid monthly.

The Adviser has agreed under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fees, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
currently imposed by any state is 2 1/2% of the first $30 million of its
average daily net assets, 2% of the next $70 million of its average daily net
assets and 1 1/2% of its average daily net assets in excess of $100 million. No
such reimbursement was required for the year ended November 30, 1995. Pursuant
to the advisory agreement, the Fund paid the Adviser $162,064 representing the
cost of certain legal and accounting services provided to the Fund by the
Adviser.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $167,547 from the sale of Class A shares and
$3,776,823 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B shares for the year ended November 30, 1995.

NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C shares. Under the Agreement, the Fund pays a distribution
fee to the Distributor at an annual rate of up to .30% of the Fund's average
daily net assets attributable to Class A shares and 1% of the average daily net
assets attributable to the Class B and Class C shares. Such fee is accrued
daily and paid monthly. The Agreement provides that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities. The Distributor has incurred expenses in excess of the distribution
costs reimbursed by the Fund in the amount of $36,368,974 and $2,736,736 for
Class B and Class C shares, respectively; such costs may be recovered from the
Fund in future periods so long as the Agreement is in effect. In accordance
with the Agreement, there is no provision for recovery of unreimbursed
distribution costs, incurred by the Distributor, beyond the current year for
Class A shares. The Agreement also provides that the Adviser may use its own
resources to finance the distribution of the Fund's shares.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $2,756,624,158 and $2,913,661,548, respectively, for the year ended
November 30, 1995.

Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund. The
Fund's custodian will place and maintain cash not available for investment or
securities in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.

CONTRACT VALUE ON U.S.$
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
------- ------------ ------------ ------------
FOREIGN CURRENCY SALE CONTRACTS
Canadian Dollars,
expiring 12/18/95-2/28/96 722,989 $536,021,197 $532,103,875 $3,917,322

At November 30, 1995, the cost of investments for federal income tax purposes
was $2,344,663,826. Accordingly, gross unrealized appreciation of investments
was $45,171,851 and gross unrealized depreciation of investments was
$410,730,955 resulting in net unrealized depreciation of $365,559,104. At
November 30, 1995, the Fund had a capital loss carry-forward totaling
$205,000,395, of which $70,618,925 expires in the year 2002 and $134,381,470
expires in the year 2003.

NOTE E: BANK BORROWING
The Fund entered into a Revolving Credit Agreement with Credit Lyonnais of New
York on June 27, 1995. The maximum credit available under the renewed credit
facility is $250,000,000 and requires no collateralization. The loan
outstanding, under the renewed Credit Agreement at November 30, 1995 was
$250,000,000 with a related weighted average interest rate of 6.095%. The
$250,000,000 balance will mature on March 25, 1996. Interest payments on
current borrowings are based on the London Interbank Offered Rate. The Fund is
also obligated to pay Credit Lyonnaise of New York a commitment fee, computed
at the rate 1/4 of 1% per annum on the daily average unused portion of the
revolving credit. The average monthly amount of the loan outstanding during the
year ended November 30, 1995 was approximately $250,000,000 with a weighted
average annualized interest rate of 6.8%. The maximum amount of such loan
outstanding at any time during the year was $250,000,000.

ALLIANCE NORTH AMERICAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 1995 1994
------------ ------------ -------------- --------------
CLASS A
Shares sold 14,452,683 21,946,095 $ 94,352,169 $ 209,028,752
Shares issued in
reinvestment of
dividends and
distributions 2,314,466 2,295,482 14,875,359 21,111,814
Shares redeemed (16,694,036) (12,811,114) (107,647,756) (116,080,684)
Net increase 73,113 11,430,463 $ 1,579,772 $ 114,059,882

CLASS B
Shares sold 29,670,771 102,755,123 $ 194,645,827 $ 992,033,470
Shares issued in
reinvestment of
dividends and
distributions 9,031,497 9,573,189 58,268,585 87,838,691
Shares redeemed (73,890,695) (37,684,580) (477,796,460) (335,913,399)
Net increase
(decrease) (35,188,427) 74,643,732 $(224,882,048) $ 743,958,762

CLASS C
Shares sold 6,692,492 48,593,915 $ 43,465,432 $ 476,032,862
Shares issued in
reinvestment of
dividends and
distributions 2,381,481 3,227,731 15,394,839 29,684,779
Shares redeemed (22,112,533) (36,333,163) (145,582,364) (337,645,064)
Net increase
(decrease) (13,038,560) 15,488,483 $ (86,722,093) $ 168,072,577

NOTE G: LITIGATION
In the first three months of 1995, thirteen purported class actions were filed
in federal district court against the Fund, the Adviser and others. In May
1995, these cases were consolidated into a single proceeding in United States
District Court. This action alleges violations of federal securities laws,
fraud, and breach of fiduciary duty in connection with the Fund's investments
in Mexican and Argentine securities and seeks unspecified damages and costs.
The ultimate effect on the Fund, if any, of these actions is not determinable
at this time.

ALLIANCE NORTH AMERICAN
FINANCIAL HIGHLIGHTS GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------
YEAR ENDED NOVEMBER 30, MARCH 27, 1992*
---------------------------------- TO
1995 1994 1993 NOV. 30,1992
----------- ---------- --------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.18(e) 1.02 1.09 .69(a)
Net realized and unrealized gain (loss) on
investment and foreign currency transactions (1.59) (2.12) .66 (.31)
Net increase (decrease) in net asset value
from operations (.41) (1.10) 1.75 .38

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.91) (1.09) (.68)
Tax return of capital (.97) (.21) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.97) (1.12) (1.10) (.68)
Net asset value, end of period $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net asset
value(d) (3.59)% (11.32)% 18.99% 3.49%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $252,608 $303,538 $268,233 $61,702
Ratio of expenses to average net assets 2.62% 1.70% 1.61% 2.45%(b)(c)
Ratio of expenses to average net assets
excluding interest expense (see Note E) 1.51% 1.37% 1.33% 1.66%(b)
Ratio of net investment income to average
net assets 18.09% 11.22% 10.77% 10.93%(b)
Portfolio turnover rate 180% 131% 254% 86%
</TABLE>

See footnote summary on page 17.

ALLIANCE NORTH AMERICAN
FINANCIAL HIGHLIGHTS (CONTINUED) GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
YEAR ENDED NOVEMBER 30, MARCH 27, 1992*
-------------------------------------- TO
1995 1994 1993 NOV. 30,1992
----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.13(e) .96 1.01 .64(a)
Net realized and unrealized gain (loss) on
investment and foreign currency transactions (1.61) (2.13) .67 (.31)
Net increase (decrease) in net asset value
from operations (.48) (1.17) 1.68 .33

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.84) (1.02) (.63)
Tax return of capital (.90) (.21) -0- -0-
Distributions from net realized gains -0- -0- (.01) -0-
Total dividends and distributions (.90) (1.05) (1.03) (.63)
Net asset value, end of period $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net asset
value(d) (4.63)% (11.89)% 18.15% 3.30%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,123,074 $1,639,602 $1,313,591 $216,317
Ratio of expenses to average net assets 3.33% 2.41% 2.31% 3.13%(b)(c)
Ratio of expenses to average net assets
excluding interest expense (see Note E) 2.22% 2.07% 2.04% 2.35%(b)
Ratio of net investment income to average
net assets 17.31% 10.53% 10.01% 10.16%(b)
Portfolio turnover rate 180% 131% 254% 86%
</TABLE>

See footnote summary on page 17.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

CLASS C
-------------------------------------
YEAR ENDED NOVEMBER 30, MAY 3,1993**
----------------------- TO
1995 1994 NOV. 30,1993
----------- ---------- ------------
Net asset value, beginning of period $ 8.13 $10.34 $10.04

INCOME FROM INVESTMENT OPERATIONS
Net investment income 1.13(e) .96 .58
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (1.61) (2.12) .30
Net increase (decrease) in net asset
value from operations (.48) (1.16) .88

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.84) (.58)
Tax return of capital (.90) (.21) -0-
Total dividends and distributions (.90) (1.05) (.58)
Net asset value, end of period $ 6.75 $ 8.13 $10.34

TOTAL RETURN
Total investment return based on net
asset value(d) (4.63)% (11.89)% 9.00%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $219,009 $369,714 $310,230
Ratio of expenses to average net assets 3.33% 2.39% 2.21%(b)
Ratio of expenses to average net assets
excluding interest expense(see Note E) 2.21% 2.06% 2.04%(b)
Ratio of net investment income to
average net assets 17.32% 10.46% 9.74%(b)
Portfolio turnover rate 180% 131% 254%

* Commencement of operations.
** Commencement of distribution.

(a) Net of expense waived by the Adviser.

(b) Annualized.

(c) If the Fund had borne all expenses, the ratios of expenses to average net
assets would have been 2.49% and 3.16% for Class A and Class B shares,
respectively.

(e) Based on average shares outstanding.

REPORT OF ERNST & YOUNG LLP ALLIANCE NORTH AMERICAN
INDEPENDENT AUDITORS GOVERNMENT INCOME TRUST, INC.
_______________________________________________________________________________

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

We have audited the accompanying statement of assets and liabilities of
Alliance North American Government Income Trust, Inc. (the 'Fund'), including
the portfolio of investments, as of November 30, 1995, and the related
statements of operations and cash flows for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance North American Government Income Trust, Inc. at November 30, 1995, the
results of its operations and its cash flows 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 indicated periods, in conformity
with generally accepted accounting principles.

New York, New York
January 10, 1996

<PAGE>

APPENDIX A

BOND RATINGS

STANDARD & POOR'S BOND RATINGS

A Standard & Poor's Ratings Services ("S&P") corporate
debt rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. Debt rated "AAA"
has the highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong. Debt rated "AA" has a
very strong capacity to pay interest and to repay principal and
differs from the highest rated issues only in small degree. Debt
rated "A" has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than a debt of a higher rated category. Debt rated
"BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions, or changing
circumstances are more likely to lead to a weakened capacity to
pay interest and to repay principal for debt in this category
than for higher rated categories.

Debt rated "BB", "B", "CCC" or "CC" is regarded, on
balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation. "BB" indicates the lowest degree of speculation
and "CC" the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to
adverse conditions. The rating "C" is reserved for income bonds
on which no interest is being paid. Debt rated "D" is in default
and payments of interest and/or repayment of principal is in
arrears.

The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within
the major rating categories.

MOODY'S BOND RATINGS

Excerpts from Moody's description of its corporate bond
ratings: Aaa - judged to be the best quality, carry the smallest
degree of investment risk; Aa - judged to be of high quality by
all standards; A - possess many favorable investment attributes
and are to be considered as higher medium grade obligations;
Baa - considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured and have speculative
characteristics as well; Ba, B, Caa, Ca, C - protection of
interest and principal payments is questionable; Ba indicates

A-1

<PAGE>

some speculative elements while Ca represents a high degree of
speculation and C represents the lowest rated class of bonds;
Caa, Ca and C bonds may be in default. Moody's applies numerical
modifiers 1, 2 and 3 in each generic rating classification from
Aa to B in it corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks at the
lower end of its generic rating category.

A-2

<PAGE>

APPENDIX B

DESCRIPTION OF OBLIGATIONS ISSUED
OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES

FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds
issued by a cooperatively owned nationwide system of banks and
associations supervised by the Farm Credit Administration, an
independent agency of the U.S. Government. These bonds are not
guaranteed by the U.S. Government.

MARITIME ADMINISTRATION BONDS--are bonds issued and
provided by the Department of Transportation of the U.S.
Government and are guaranteed by the U.S. Government.

FHA DEBENTURES--are debentures issued by the Federal
Housing Administration of the U.S. Government and are guaranteed
by the U.S. Government.

GNMA CERTIFICATES--are mortgage-backed securities which
represent a partial ownership interest in a pool of mortgage
loans issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations. Each mortgage loan
included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration.

FHLMC BONDS--are bonds issued and guaranteed by the
Federal Home Loan Mortgage Corporation.

FNMA BONDS--are bonds issued and guaranteed by the
Federal National Mortgage Association.

FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and
bonds issued by the Federal Home Loan Bank System and are not
guaranteed by the U.S. Government.

STUDENT LOAN MARKETING ASSOCIATION ("SALLIE MAE") NOTES
AND BONDS--are notes and bonds issued by the Student Loan
Marketing Association.

Although this list includes a description of the primary
types of U.S. Government agency or instrumentality obligations in
which the Fund intends to invest, the Fund may invest in
obligations of U.S. Government agencies or instrumentalities
other than those listed above.

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APPENDIX C

FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS AND FOREIGN CURRENCIES

OPTIONS ON U.S. AND FOREIGN GOVERNMENT SECURITIES

The Fund intends to write covered put and call options
and purchase put and call options on U.S. Government Securities
and foreign government securities that are traded on United
States and foreign securities exchanges and over-the-counter.
The Fund also intends to write call options that are not covered
for cross-hedging purposes.

The Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the
premium to be received from the cross-hedge transaction would
exceed that which would be received from writing a covered call
option, while at the same time achieving the desired hedge.

The writer of an option may have no control when the
underlying securities must be sold, in the case of a call option,
or purchased, in the case of a put option, since with regard to
certain options, the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or
not an option expires unexercised, the writer retains the amount
of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value
of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.

The writer of an option that wishes to terminate its
obligation may effect a "closing purchase transaction". This is
accomplished by buying an option of the same series as the option
previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation.
However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an
investor who is the holder of an option may liquidate its
position by effecting a "closing sale transaction". This is
accomplished by selling an option of the same series as the
option previously purchased. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected.

Effecting a closing transaction in the case of a written
call option will permit the Fund to write another call option on
the underlying security with either a different exercise price or

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expiration date or both, or in the case of a written put option
will permit the Fund to write another put option to the extent
that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction
will permit the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other Fund
investments. If the Fund desires to sell a particular security
from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale
of the security.

The Fund will realize a profit from a closing
transaction if the price of the purchase transaction is less than
the premium received from writing the option or the price
received from a sale transaction is more than the premium paid
to purchase the option; the Fund will realize a loss from a
closing transaction if the price of the purchase transaction is
more than the premium received from writing the option or the
price received from a sale transaction is less than the premium
paid to purchase the option. Because increases in the market of
a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in
part by appreciation of the underlying security owned by the
Fund.

An option position may be closed out only where there
exists a secondary market for an option of the same series. If a
secondary market does not exist, it might not be possible to
effect closing transactions in particular options with the result
that the Fund would have to exercise the options in order to
realize any profit. If the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. Reasons for the
absence of a liquid secondary market include the following:
(i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national
securities exchange ("Exchange") on opening transactions or
closing transactions or both, (iii) trading halts, suspensions or
other restrictions may be imposed with respect to particular
classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange, (v) the facilities of an Exchange or
the Options Clearing Corporation may not at all times be adequate
to handle current trading volume, or (vi) one or more Exchanges
could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a
particular class or series of options), in which event the
secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on

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that Exchange that had been issued by the Options Clearing
Corporation as a result of trades on that Exchange would continue
to be exercisable in accordance with their terms.

The Fund may write options in connection with buy-and-
write transactions; that is, the Fund may purchase a security and
then write a call option against that security. The exercise
price of the call Fund determines to write will depend upon the
expected price movement of the underlying security. The exercise
price of a call option may be below ("in-the-money"), equal to
("at-the- money") or above ("out-of-the-money") the current value
of the underlying security at the time the option is written.
Buy-and- write transactions using in-the-money call options may
be used when is expected that the price of the underlying
security will remain flat or decline moderately during the option
period. Buy- and-write transactions using at-the-money call
options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately
during the option period. Buy-and-write transactions using out-
of-the-money call options may be used when it is expected that
the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to
the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are
exercised in such transactions, the Fund's maximum gain will be
the premium received by it for writing the option, adjusted
upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the
options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.

The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the
position or take delivery of the security at the exercise price
and the Fund's return will be the premium received from the put
options minus the amount by which the market price of the
security is below the exercise price. Out-of-the-money, at-the-
money, and in-the-money put options may be used by the Fund in
the same market environments that call options are used in
equivalent buy-and-write transactions.

The Fund may purchase put options to hedge against a
decline in the value of its portfolio. By using put options in
this way, the Fund will reduce any profit it might otherwise have

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<PAGE>

realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.

The Fund may purchase call options to hedge against an
increase in the price of securities that the Fund anticipates
purchasing in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise of the option, and, unless the
price of the underlying security rises sufficiently, the option
may expire worthless to the Fund.

FUTURES CONTRACTS

The Fund may enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign
currencies, or contracts based on financial indices including any
index of U.S. Government Securities or foreign government
securities. U.S. futures contracts have been designed by
exchanges which have been designated "contracts markets" by the
Commodity Futures Trading Commission ("CFTC"), and must be
executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through
their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
The Fund will enter into futures contracts which are based on
debt securities that are backed by the full faith and credit of
the U.S. Government, such as long-term U.S. Treasury Bonds,
Treasury Notes, Government National Mortgage Association modified
pass-through mortgage-backed securities and three-month U.S.
Treasury Bills. The Fund may also enter into futures contracts
which are based on bonds issued by entities other than the U.S.
government.

At the same time a futures contract is purchased or
sold, the Fund must allocate cash or securities as a deposit
payment ("initial deposit"). It is expected that the initial
deposit would be approximately 1 1/2%-5% of a contract's face
value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the
Fund would provide or receive cash that reflects any decline or
increase in the contract's value.

At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different interest
rate from that specified in the contract. In some (but not many)
cases, securities called for by a futures contract may not have
been issued when the contract was written.

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<PAGE>

Although futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.

The purpose of the acquisition or sale of a futures
contract, in the case of a portfolio, such as the portfolio of
the Fund, which holds or intends to acquire fixed-income
securities, is to attempt to protect the Fund from fluctuations
in interest or foreign exchange rates without actually buying or
selling fixed-income securities or foreign currency. For
example, if interest rates were expected to increase, the Fund
might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as
selling an equivalent value of the debt securities owned by the
Fund. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the
futures contracts to the Fund would increase at approximately the
same rate, thereby keeping the net asset value of the Fund from
declining as much as it otherwise would have. The Fund could
accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures market is more
liquid than the cash market, the use of futures contracts as an
investment technique allows the Fund to maintain a defensive
position without having to sell its portfolio securities.

Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to attempt to hedge
against anticipated purchases of debt securities at higher
prices. Since the fluctuations in the value of futures contracts
should be similar to those of debt securities, the Fund could
take advantage of the anticipated rise in the value of debt
securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be
liquidated and the Fund could then buy debt securities on the
cash market. To the extent the Fund enters into futures
contracts for this purpose, the assets in the segregated asset
account maintained to cover the Fund's obligations with respect
to such futures contracts will consist of cash, cash equivalents
or high quality liquid debt securities from its portfolio in an

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amount equal to the difference between the fluctuating market
value of such futures contracts and the aggregate value of the
initial and variation margin payments made by the Fund with
respect to such futures contracts.

The ordinary spreads between prices in the cash and
futures markets, due to differences in the nature of those
markets, are subject to distortions. First, all participants in
the futures market are subject to initial deposit and variation
margin requirements. Rather than meeting additional variation
margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

In addition, futures contracts entail risks. Although
the Fund believes that use of such contracts will benefit the
Fund, if the Adviser's investment judgment about the general
direction of interest rates is incorrect, the Fund's overall
performance would be poorer than if it had not entered into any
such contract. For example, if the Fund has hedged against the
possibility of an increase in interest rates which would
adversely affect the price of debt securities held in its
portfolio and interest rates decrease instead, the Fund will lose
part or all of the benefit of the increased value of its debt
securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell debt securities from its portfolio to meet daily variation
margin requirements. Such sales of bonds may be, but will not
necessarily be, at increased prices which reflect the rising
market. The Fund may have to sell securities at a time when it
may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS

The Fund intends to purchase and write options on
futures contracts for hedging purposes. The purchase of a call
option on a futures contract is similar in some respects to the
purchase of a call option on an individual security. Depending

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<PAGE>

on the pricing of the option compared to either the price of the
futures contract upon which it is based or the price of the
underlying debt securities, it may or may not be less risky than
ownership of the futures contract or underlying debt securities.
As with the purchase of futures contracts, when the Fund is not
fully invested it may purchase a call option on a futures
contract to hedge against a market advance due to declining
interest rates.

The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency which is deliverable upon exercise
of the futures contract. If the futures price at expiration of
the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of
the security or foreign currency which is deliverable upon
exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which
provides as partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call
option the Fund has written is exercised, the Fund will incur a
loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes
in the value of its portfolio securities and changes in the value
of its futures positions, the Fund's losses from existing options
on futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective put
options on portfolio securities. For example, the Fund may
purchase a put option on a futures contract to hedge the Fund's
portfolio against the risk of rising interest rates.

The amount of risk the Fund assumes when it purchases an
option on a futures contract is the premium paid for the option
plus related transaction costs. In addition to the correlation
risks discussed above, the purchase of an option also entails the
risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the option purchased.

OPTIONS ON FOREIGN CURRENCIES

The Fund may purchase and write options on foreign
currencies for hedging purposes in a manner similar to that in
which futures contracts on foreign currencies, or forward
contracts, will be utilized. For example, a decline in the U.S.

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Dollar value of a foreign currency in which portfolio securities
are denominated will reduce the U.S. Dollar value of such
securities, even if their value in the foreign currency remains
constant. In order to protect against such diminutions in the
value of portfolio securities, the Fund may purchase put options
on the foreign currency. If the value of the currency does
decline, the Fund will have the right to sell such currency for a
fixed amount in U.S. Dollars and will thereby offset, in whole or
in part, the adverse effect on its portfolio which otherwise
would have resulted.

Conversely, where a rise in the U.S. Dollar value of a
currency in which securities to be acquired are denominated is
projected, thereby increasing the cost of such securities, the
Fund may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to the Fund deriving from
purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain
losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of
advantageous changes in such rates.

The Fund may write options on foreign currencies for the
same types of hedging purposes. For example, where the Fund
anticipates a decline in the U.S. Dollar value of foreign
currency denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected
decline occurs, the option will most likely not be exercised, and
the diminution in value of portfolio securities will be offset by
the amount of the premium received.

Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the U.S. Dollar cost of
securities to be acquired, the Fund could write a put option on
the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge
such increased cost up to the amount of the premium. As in the
case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the
amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised
and the Fund would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies,
the Fund also may be required to lose all or a portion of the

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benefits which might otherwise have been obtained from favorable
movements in exchange rates.

The Fund intends to write covered call options on
foreign currencies. A call option written on a foreign currency
by the Fund is "covered" if the Fund owns the underlying foreign
currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a
segregated account by its Custodian) upon conversion or exchange
of other foreign currency held in its portfolio. A call option
is also covered if the Fund has a call on the same foreign
currency and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less
than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is
maintained by the Fund in cash or liquid high-grade Government
Securities in a segregated account with its Custodian.

The Fund also intends to write call options on foreign
currencies that are not covered for cross-hedging purposes. A
call option on a foreign currency is for cross-hedging purposes
if it is not covered, but is designed to provide a hedge against
a decline in the U.S. Dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the
exchange rate. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
Custodian, cash or liquid high-grade Government Securities in an
amount not less than the value of the underlying foreign currency
in U.S. Dollars marked to market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS
FORWARD CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES

Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts
are not traded on contract markets regulated by the CFTC or (with
the exception of certain foreign currency options) by the SEC.
To the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. Similarly, options
on currencies may be traded over-the-counter. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose
more than the amount of the premium plus related transaction

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costs, this entire amount could be lost. Moreover, the option
writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the
margin and collateral requirements associated with such
positions.

Options on foreign currencies traded on national
securities exchanges are within the jurisdiction of the SEC, as
are other securities traded on such exchanges. As a result, many
of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on
a national securities exchange are cleared and guaranteed by the
Options Clearing Corporation ("OCC"), thereby reducing the risk
of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting the Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.

The purchase and sale of exchange-traded foreign
currency options, however, is subject to the risks of the
availability of a liquid secondary market described above, as
well as the risks regarding adverse market movements, margining
of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects
of other political and economic events. In addition, exchange-
traded options on foreign currencies involve certain risks not
presented by the over-the-counter market. For example, exercise
and settlement of such options must be made exclusively through
the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions
or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or
its clearing member, impose special procedures on exercise and
settlement, such as technical changes in the mechanics of
delivery of currency, the fixing of dollar settlement prices or
prohibitions, on exercise.

In addition, options on U.S. Government Securities,
futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on
foreign exchanges. Such transactions are subject to the risk of
governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of such positions
also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in
the United States of data on which to make trading decisions,
(iii) delays in the Fund's ability to act upon economic events

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occurring in foreign markets during nonbusiness hours in the
United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.

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00250117.AP2

<PAGE>

PART C

OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

(a) Financial Statements
--------------------
Included in the Prospectus:

Financial Highlights

Included in the Registrant's Statement of Additional
Information filed herewith:

Portfolio of Investments, November 30, 1995.
Statement of Assets and Liabilities,
November 30, 1995.
Statement of Operations, year ended November 30, 1995.
Statement of Changes in Net Assets, years ended
November 30, 1994 and November 30, 1995
Statement of Cash Flows, year ended November 30, 1995.
Notes to Financial Statements, November 30, 1995.
Financial Highlights for Class A and Class B shares for
years ended November 30, 1995, November 30, 1994,
November 30, 1993 and the period March 27, 1992
(commencement of operations) through November 30,
1992; for Class C shares for the years ended November
30, 1995 and November 30, 1994 and the period May 3,
1993 (commencement of distribution) through November
30, 1993.
Report of Independent Auditors.

Portfolio of Investments, May 31, 1996 (unaudited)
Statement of Assets and Liabilities, May 31, 1996
(unaudited)
Statement of Operations for the six months ended
May 31, 1996 (unaudited)
Statement of Changes in Net Assets for year ended
November 30, 1995 and the six months ended May 31, 1996
(unaudited)
Statement of Cash Flows for the six months ended May 31,
1996 (unaudited)
Notes to Financial Statements - May 31, 1996 (unaudited)
Financial Highlights for Class A and Class B shares for
the six months ended May 31, 1996 (unaudited) and
for years ended November 30, 1995, November 30,
1994, November 30, 1993 and the period March 27, 1992
(commencement of operations) through November 30,
1992; for Class C shares for the six months ended May
31, 1996 (unaudited) for the years ended November 30,

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1995, November 30, 1994 and the period May 3, 1993
(commencement of distribution) through November 30,
1993.

(b) Exhibits

(1) Copy of Articles of Incorporation of the Registrant as
now in effect - Incorporated by reference from
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on February
3, 1992.

(1) (a) Articles Supplementary - filed herewith.

(2) Copy of existing By-Laws of the Registrant -
Incorporated by reference from Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on February 3, 1992.

(3) Not applicable.

(4) (a) Form of Stock Certificate for Class A Shares -
Incorporated by reference from Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on February 3, 1992.

(b) Form of Stock Certificate for Class B Shares -
Incorporated by reference from Registrant's Registration
Statement on Form N-1A, filed with the Securities and
Exchange Commission on February 3, 1992.

(5) Copy of Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Incorporated by
reference from Registrant's Registration Statement on
Form N-1A, filed with the Securities and Exchange
Commission on February 1, 1993.

(6) (a) Distribution Services Agreement between the Registrant
and Alliance Fund Distributors, Inc. - Incorporated by
reference from Post-Effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on January
31, 1994; Amendment to Distribution Services Agreement -
filed herewith.

(b) Selected Dealer Agreement between Alliance Fund
Distributors, Inc. and selected dealers offering shares
of Registrant - Incorporated by reference from
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on March 2,
1993.

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(c) Form of Selected Agent Agreement between Alliance Fund
Distributors, Inc. and selected agents making available
shares of Registrant - Incorporated by reference from
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on March 2,
1993.

(7) Not applicable.

(8) Copy of Custodian Contract between the Registrant and
Brown Brothers Harriman & Co. - Incorporated by
reference from Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on
August 11, 1992.

(9) Copy of Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc -Incorporated by
reference from Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August
11, 1992.

(10) (a) Opinion of Seward & Kissel - Incorporated by
reference from Registrant's Registration Statement
on Form N-1A, filed with the Securities and
Exchange Commission on February 21, 1992.

(b) Opinion and Consent of Venable, Baetjer and Howard,
LLP - Incorporated by reference from Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on February 21,
1992.

(11) Consent of Independent Auditors - Filed herewith.

(12) Not applicable.

(13) Not applicable.

(14) Not applicable.

(15) Rule 12b-1 Plan - See Exhibit 6(a) hereto.

(16) Schedule for computation of performance quotations -
Incorporated by reference from Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on February 21,
1992.

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(18) Rule 18f-3 Plan - Incorporated by reference from Post-
Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on February 29,
1996; Amended Rule 18f-3 Plan - filed herewith.

(27) Financial Data Schedule - filed herewith.

Other Exhibits: Powers of Attorney of Ms. Block and
Messrs. Carifa, Dievler, Dobkin, Foulk, Hester, Michel,
Robinson and White - filed herewith.

ITEM 25. Persons Controlled by or under Common Control with
Registrant.

None.

ITEM 26. Number of Holders of Securities.

As of October 11, 1996, the Registrant had 15,504 record
holders of Class A shares of common stock, 53,783 record
holders of Class B shares of common stock and 7,905
record holders of Class C shares of common stock.

ITEM 27. Indemnification

It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum
extent permitted by Section 2-418 of the General
Corporation Law of the State of Maryland and as set
forth in Article EIGHTH of Registrant's Articles of
Incorporation, filed as Exhibit 1, Article VII and
Article VIII of the Registrant's By-Laws filed as
Exhibit 2 and Section 10 of the Distribution Services
Agreement filed as Exhibit 6(a), all as set forth below.
The liability of the Registrant's directors and officers
is dealt with in Article EIGHTH of Registrant's Articles
of Incorporation, and Article VII, Section 7 and
Article VIII, Section 1 through Section 6 of the
Registrant's By-Laws, as set forth below. The Adviser's
liability for any loss suffered by the Registrant or its
shareholders is set forth in Section 4 of the Advisory
Agreement filed as Exhibit 5 to this Registration
Statement, as set forth below.

SECTION 2-418 OF THE MARYLAND GENERAL CORPORATION LAW
READS AS FOLLOWS:

"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS.--(a) In this section the
following words have the meaning indicated.

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

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

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

(4) "Official capacity" means the following:

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

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

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

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

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

(b)(1) A corporation may indemnify any director
made a party to any proceeding by reason of service
in that capacity unless it is established that:
(i) The act or omission of the director was
material to the matter giving rise to the proceeding;
and

1. Was committed in bad faith; or

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

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

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

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

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

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

(ii) The termination of any proceeding by conviction,
or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment,
creates a rebuttable presumption that the director did
not meet that standard of conduct.

(c) A director may not be indemnified under
subsection (b) of this section in respect of any
proceeding charging improper personal benefit to the
director, whether or not involving action in the
director's official capacity, in which the director
was adjudged to be liable on the basis that personal
benefit was improperly received.

(d) Unless limited by the charter:

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

(2) A court of appropriate jurisdiction upon
application of a director and such notice as the court

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shall require, may order indemnification in the
following circumstances:

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

(ii) If it determines that the director is fairly
and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not the
director has met the standards of conduct set forth in
subsection (b) of this section or has been adjudged
liable under the circumstances described in subsection
(c) of this section, the court may order such
indemnification as the court shall deem proper.
However, indemnification with respect to any
proceeding by or in the right of the corporation or in
which liability shall have been adjudged in the
circumstances described in subsection (c) shall be
limited to expenses.

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

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

(2) Such determination shall be made:

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

(ii) By special legal counsel selected by the
board or a committee of the board by vote as set forth

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<PAGE>

in subparagraph (i) of this paragraph, or, if the
requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a
majority vote of the full board in which directors who
are parties may participate; or

(iii) By the stockholders.

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

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

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

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

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

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

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

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<PAGE>

(g) The indemnification and advancement of
expenses provided or authorized by this section may
not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director
may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an
agreement or otherwise, both as to action in an
official capacity and as to action in another
capacity while holding such office.

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

(i) For purposes of this section:

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

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

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

(j) Unless limited by the charter:

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

(2) A corporation may indemnify and advance
expenses to an officer, employee, or agent of the

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corporation to the same extent that it may
indemnify directors under this section; and

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

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

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

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

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

ARTICLE EIGHTH OF THE REGISTRANT'S ARTICLES OF INCORPORATION
READS AS FOLLOWS:
"(1) To the full extent that limitations on the
liability of directors and officers are permitted
by the Maryland General Corporation Law, no
director or officer of the Corporation shall have
any liability to the Corporation or its
stockholders for damages. This limitation on
liability applies to events occurring at the time a
person serves as a director or officer of the

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Corporation whether or not such person is a
director or officer at the time of any proceeding
in which liability is asserted.

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

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

"(4) References to the Maryland General Corporation
Law in this Article are to that law as from time to
time amended. No amendment to the Charter of the
Corporation shall affect any right of any person
under this Article based on any event, omission or
proceeding prior to the amendment."

ARTICLE VII, SECTION 7 OF THE REGISTRANT'S BY-LAWS READS AS
FOLLOWS:

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

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<PAGE>

ARTICLE VIII OF THE REGISTRANT'S BY-LAWS READS AS FOLLOWS:

Section B. INDEMNIFICATION OF DIRECTORS AND
OFFICERS. The Corporation shall indemnify its
directors to the full extent that indemnification
of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify
its officers to the same extent as its directors
and to such further extent as is consistent with
law. The Corporation shall indemnify its directors
and officers who while serving as directors or
officers also serve at the request of the
Corporation as a director, officer, partner,
trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan to the
full extent consistent with law. The
indemnification and other rights provided by this
Article shall continue as to a person who has
ceased to be a director or officer and shall inure
to the benefit of the heirs, executors and
administrators of such a person. This Article
shall not protect any such person against any
liability to the Corporation 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 conduct of his office
("disabling conduct").

Section B. ADVANCES. Any current or former
director or officer of the Corporation seeking
indemnification within the scope of this Article
shall be entitled to advances from the Corporation
for payment of the reasonable expenses incurred by
him in connection with the matter as to which he is
seeking indemnification in the manner and to the
full extent permissible under the Maryland General
Corporation Law. The person seeking
indemnification shall provide to the Corporation a
written affirmation of his good faith belief that
the standard of conduct necessary for
indemnification by the Corporation has been met and
a written undertaking to repay any such advance if
it should ultimately be determined that the
standard of conduct has not been met. In addition,
at least one of the following additional conditions
shall be met: (a) the person seeking
indemnification shall provide a security in form
and amount acceptable to the Corporation for his
undertaking; (b) the Corporation is insured against

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losses arising by reason of the advance; or (c) a
majority of a quorum of directors of the
Corporation who are neither "interested persons" as
defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended, nor parties to the
proceeding ("disinterested non-party directors"),
or independent legal counsel, in a written opinion,
shall have determined, based on a review of facts
readily available to the Corporation at the time
the advance is proposed to be made, that there is
reason to believe that the person seeking
indemnification will ultimately be found to be
entitled to indemnification.

Section B. PROCEDURE. At the request of any
person claiming indemnification under this Article,
the Board of Directors shall determine, or cause to
be determined, in a manner consistent with the
Maryland General Corporation Law, whether the
standards required by this Article have been met.
Indemnification shall be made only following:
(a) a final decision on the merits by a court or
other body before whom the proceeding was brought
that the person to be indemnified was not liable by
reason of disabling conduct or (b) in the absence
of such a decision, a reasonable determination,
based upon a review of the facts, that the person
to be indemnified was not liable by reason of
disabling conduct by (i) the vote of a majority of
a quorum of disinterested non-party directors or
(ii) an independent legal counsel in a written
opinion.

Section B. INDEMNIFICATION OF EMPLOYEES AND
AGENTS. Employees and agents who are not officers
or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such
employees or agents, as may be provided by action
of the Board of Directors or by contract, subject
to any limitations imposed by the Investment
Company Act of 1940.

Section B. OTHER RIGHTS. The Board of Directors
may make further provision consistent with law for
indemnification and advance of expenses to
directors, officers, employees and agents by
resolution, agreement or otherwise. The
indemnification provided by this Article shall not
be deemed exclusive of any other right, with
respect to indemnification or otherwise, to which
those seeking indemnification may be entitled under

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<PAGE>

any insurance or other agreement or resolution of
stockholders or disinterested directors or
otherwise. The rights provided to any person by
this Article shall be enforceable against the
Corporation by such person who shall be presumed to
have relied upon it in serving or continuing to
serve as a director, officer, employee, or agent as
provided above.

Section B. AMENDMENTS. References in this Article
are to the Maryland General Corporation Law and to
the Investment Company Act of 1940 as from time to
time amended. No amendment of these By-laws shall
affect any right of any person under this Article
based on any event, omission or proceeding prior to
the amendment.

The Advisory Agreement between Registrant and Alliance
Capital Management L.P. provides that Alliance Capital
Management L.P. will not be liable under such agreements
for any mistake of judgment or in any event whatsoever
except for lack of good faith and that nothing therein
shall be deemed to protect Alliance Capital Management
L.P. against any liability to Registrant or its security
holders to which it would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in
the performance of its duties thereunder, or by reason
of reckless disregard of its duties and obligations
thereunder.

The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. provides
that the Registrant will indemnify, defend and hold
Alliance Fund Distributors, Inc., and any person who
controls it within the meaning of Section 15 of the
Securities Act of 1933 (the "Securities Act"), free and
harmless from and against any and all claims, demands,
liabilities and expenses which Alliance Fund
Distributors, Inc. or any controlling person may incur
arising out of or based upon any alleged untrue
statement of a material fact contained in Registrant's
Registration Statement, Prospectus or Statement of
Additional Information or arising out of, or based upon
any alleged omission to state a material fact required
to be stated in any one of the foregoing or necessary to
make the statements in any one of the foregoing not
misleading.

The foregoing summaries are qualified by the entire text
of Registrant's Articles of Incorporation and By-Laws,
the Advisory Agreement between Registrant and Alliance

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<PAGE>

Capital Management L.P. and the Distribution Services
Agreement between Registrant and Alliance Fund
Distributors, Inc. which are filed herewith as Exhibits
1, 2, 5 and 6(a), respectively, in response to Item 24
and each of which are incorporated by reference herein.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors,
officer and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a director, officer or the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such
indemnification by it is against public policy as
expressed in the Securities Act and will be governed by
the final adjudication of such issue.

In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its directors,
officers, investment manager and principal underwriters
only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was
brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts,
that the indemnitee was not liable by reason of
disabling conduct, by (a) the vote of a majority of a
quorum of the directors who are neither "interested
persons" of the Registrant as defined in section
2(a)(19) of the Investment Company Act of 1940 nor
parties to the proceeding ("disinterested, non-party
directors"), or (b) an independent legal counsel in a
written opinion. The Registrant will advance attorneys
fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters
in defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless it
is ultimately determined that he is entitled to

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indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured against
losses arising by reason of any lawful advances, or
(3) a majority of a quorum of disinterested, non-party
directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.

ITEM 28. Business and Other Connections of Investment Adviser.

The descriptions of Alliance Capital Management L.P. under
the captions "Management of the Fund" in the Prospectus and in
the Statement of Additional Information constituting Parts A and
B, respectively, of this Registration Statement are incorporated
by reference herein.

The information as to the directors and executive officers of
Alliance Capital Management Corporation, the general partner of
Alliance Capital Management L.P., set forth in Alliance Capital
Management L.P.'s Form ADV filed with the Securities and Exchange
Commission on April 21, 1988 (File No. 801-32361) and amended
through the date hereof, is incorporated by reference herein.

ITEM 29. Principal Underwriters

(a) Alliance Fund Distributors, Inc. is the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following investment
companies:

ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.

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Alliance Money Market Fund
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios

(b) The following are the Directors and officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York 10105.

Positions and Offices Positions and Offices
Name With Underwriter With Registrant
- ---- ----------------------- ---------------------

Michael J. Laughlin Chairman

Robert L. Errico President

Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary

Daniel J. Dart Senior Vice President

Richard A. Davies Senior Vice President,
Managing Director

Byron M. Davis Senior Vice President

Kimberly A. Gardner Senior Vice President

Geoffrey L. Hyde Senior Vice President

Richard E. Khaleel Senior Vice President

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Barbara J. Krumseik Senior Vice President

Stephen R. Laut Senior Vice President

Daniel D. McGinley Senior Vice President

Dusty W. Paschall Senior Vice President

Antonios G. Poleonadkis Senior Vice President

Gregory K. Shannahan Senior Vice President

Joseph F. Sumanski Senior Vice President

Peter J. Szabo Senior Vice President

Nicholas K. Willett Senior Vice President

Richard A. Winge Senior Vice President

Jamie A. Atkinson Vice President

Warren W. Babcock, III Vice President

Benji A. Baer Vice President

Kenneth F. Barkoff Vice President

William P. Beanblossum Vice President

Jack C. Bixler Vice President

Casimir F. Bolanowski Vice President

Kevin T. Cannon Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Richard W. Dabney Vice President

John F. Dolan Vice President

Mark J. Dunbar Vice President

Sohaila S. Farsheed Vice President

Linda A. Finnerty Vice President

William C. Fisher Vice President

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Robert M. Frank Vice President

Gerard J. Friscia Vice President
and Controller

Andrew L. Gangolf Vice President & Assistant
Assistant General Secretary
Counsel

Mark D. Gersten Vice President Treasurer and
Financial
Officer

Joseph W. Gibson Vice President

Troy L. Glawe Vice President

Herbert H. Goldman Vice President

James E. Gunter Vice President

Alan Halfenger Vice President

Daniel M. Hazard Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Thomas K. Intoccia Vice President

Robert H. Joseph, Jr. Vice President &
Treasurer

Richard D. Keppler Vice President

Sheila F. Lamb Vice President

Donna M. Lamback Vice President

Thomas Leavitt, III Vice President

James M. Liptrot Vice President

James P. Luisi Vice President

Shawn P. McClain Vice President

Christopher J. MacDonald Vice President

Michael F. Mahoney Vice President

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Maura A. McGrath Vice President

Matthew P. Mintzer Vice President

Joanna D. Murray Vice President

Nicole Nolan-Koester Vice President

Daniel J. Phillips Vice President

Robert T. Pigozzi Vice President

James J. Posch Vice President

Robert E. Powers Vice President

Domenick Pugliese Vice President & Assistant
Associate General Secretary
Counsel

Bruce W. Reitz Vice President

Dennis A. Sanford Vice President

Karen C. Satterberg Vice President

Raymond S. Sclafani Vice President

Richard J. Sidell Vice President

J. William Strott, Jr. Vice President

Richard E. Tambourine Vice President

Joseph T. Tocyloski Vice President

Neil S. Wood Vice President

Emilie D. Wrapp Vice President & Assistant
Special Counsel Secretary

Maria L. Carreras Assistant Vice
President

John W. Cronin Assistant Vice
President

Leon M. Fern Assistant Vice
President

C-20

<PAGE>

William B. Hanigan Assistant Vice
President

John C. Hershock Assistant Vice
President

James J. Hill Assistant Vice
President

Kalen H. Holliday Assistant Vice
President

Edward W. Kelly Assistant Vice
President

Nicholas J. Lapi Assistant Vice
President

Patrock Look Assistant Vice
President
& Assistant
Treasurer

Thomas F. Monnerat Assistant Vice
President

Jeanette M. Nardella Assistant Vice
President

Carol H. Rappa Assistant Vice
President

Lisa Robinson-Cronin Assistant Vice
President

Robert M. Smith Assistant Vice
President

Wesley S. Williams Assistant Vice
President

Mark R. Manley Assistant Secretary

ITEM 30. Location of Accounts and Records.

The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules thereunder
are maintained as follows: journals, ledgers,

C-21

<PAGE>

securities records and other original records are
maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey,
07094 and at the offices of Brown Brothers Harriman &
Co., the Registrant's Custodian, 40 Water Street,
Boston, MA, 02109. All other records so required to be
maintained are maintained at the offices of Alliance
Capital Management L.P., 1345 Avenue of the Americas,
New York, New York, 10105.

ITEM 31. Management Services.

Not applicable.

ITEM 32. Undertakings

The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
any Director of the Fund in accordance with Section 16
of the Investment Company Act of 1940.

(c) The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders upon
request and without charge.

C-22

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York, on
the 30th day of October, 1996.

ALLIANCE NORTH AMERICAN
GOVERNMENT
INCOME TRUST, INC.

By: /s/ John D. Carifa
John D. Carifa
Chairman and President

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

Signature Title Date
--------- ----- ----
1. Principal
Executive Officer:
Chairman and
/s/ John D. Carifa President October 30, 1996
John D. Carifa

2. Principal Financial
and Accounting Officer:

/s/ Mark D. Gersten Treasurer and October 30, 1996
Mark D. Gersten Chief
Financial
Officer

C-23

<PAGE>

3. All of the 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
Robert C. White

By: /s/ Edmund P. Bergan, Jr. October 30, 1996
Edmund P. Bergan, Jr.
(Attorney-in-Fact)

C-24

<PAGE>

Index To Exhibits
-------------------

(1)(a) Articles Supplementary

(6)(a) Amendment to Distribution
Services Agreement

(11) Consent of Independent Auditors

(18) Amended Rule 18f-3 Plan

(27) Financial Data Schedule

Other Exhibits: Powers of Attorney for John D. Carifa,
Ruth Block, David H. Dievler, John H. Dobkin, William H.
Foulk, Jr., Dr. James M. Hester, Clifford L. Michel,
Donald J. Robinson and Robert C. White.

C-25
00250117.AP2

<PAGE>

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

ARTICLES SUPPLEMENTARY

Alliance North American Government Income Trust, Inc., a
Maryland corporation having its principal office in the City of
Baltimore (hereinafter called the "Corporation"), certifies that:

FIRST: The Board of Directors of the Corporation hereby
increases the aggregate number of shares of capital stock that
the Corporation has authority to issue by 3,000,000,000 shares
and hereby classifies such shares as 3,000,000,000 shares of
Advisor Class Common Stock.

SECOND: The shares of the Advisor Class Common Stock as
so classified by the Corporation's Board of Directors shall have
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption set forth in Article FIFTH of
the Corporation's Articles of Incorporation (other than those
provisions of Article FIFTH which by their terms are applicable
solely to other classes of the Corporation's Common Stock) and
shall be subject to all provisions of the Articles of
Incorporation relating to stock of the Corporation generally, and
those set forth as follows:

(1) The assets attributable to the Advisor Class
Common Stock shall be invested in the same investment
portfolio of the Corporation as the assets attributable
to the Class A Common Stock, Class B Common Stock and
Class C Common Stock.

(2) The dividends and distributions of investment
income and capital gains with respect to the Advisor
Class Common Stock shall be in such amount as may be
declared from time to time by the Board of Directors,
and such dividends and distributions may vary from
dividends and distributions of investment income and
capital gains with respect to the Class A Common Stock,
Class B Common Stock and Class C Common Stock to reflect
differing allocations of the expenses of the Corporation
among the holders of the four classes and any resultant
differences among the net asset values per share of the
four classes, to such extent and for such purposes as
the Board of Directors may deem appropriate. The
allocation of investment income or capital gains and
expenses and liabilities of the Corporation and of
amounts distributable in the event of liquidation or
dissolution of the Corporation among the Class A Common
Stock, the Class B Common Stock, the Class C Common

<PAGE>

Stock and the Advisor Class Common Stock shall be
determined by the Board of Directors in a manner that is
consistent with the Investment Company Act of 1940, the
rules and regulations thereunder, and the
interpretations thereof, in each case as from time to
time amended, modified or superseded.

(3) Except as may otherwise be required by law
pursuant to any applicable order, rule or interpretation
issued by the Securities and Exchange Commission, or
otherwise, the holders of the Advisor Class Common Stock
shall have (i) exclusive voting rights with respect to
any matter submitted to a vote of stockholders that
affects only holders of the Advisor Class Common Stock
and (ii) no voting rights with respect to the provisions
of any distribution plan adopted by the Corporation
pursuant to Rule 12b-1 under the Investment Company Act
of 1940 applicable solely to one or more classes of the
Corporation's Common Stock other than Advisor Class
Common Stock or with respect to any other matter
submitted to a vote of stockholders which does not
affect holders of the Advisor Class Common Stock.

(4) At such times (which may vary among holders of
Advisor Class Common Stock) as may be determined by the
Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation)
in accordance with the Investment Company Act of 1940,
applicable rules and regulations thereunder and
applicable rules and regulations of the National
Association of Securities Dealers, Inc., as memorialized
in resolutions duly adopted by the Board of Directors
and from time to time reflected in the registration
statement of the Corporation (the "Corporation's
Registration Statement"), certain of the shares of
Advisor Class Common Stock of the Corporation may be
automatically converted into shares of another class of
stock of the Corporation based on the relative net asset
values of such classes at the time of conversion,
subject, however, to any terms or conditions of
conversion that may be imposed by the Board of Directors
(or with the authorization of the Board of Directors, by
the officers of the Corporation) as are memorialized in
resolutions duly adopted by the Board of Directors and
reflected in the Corporation's Registration Statement.

THIRD: A. Immediately before the increase in
authorized capital stock provided for herein, the total number of
shares of stock of all classes which the Corporation had
authority to issue was 9,000,000,000 shares, the par value of
each class of stock being $.001 per share, with an aggregate par

<PAGE>

value of $9,000,000, of which 3,000,000,000 shares were
classified as shares of Class A Common Stock, 3,000,000,000
shares were classified as shares of Class B Common Stock and
3,000,000,000 shares were classified as shares of Class C Common
Stock.

B. Immediately after the increase in
authorized capital stock provided for herein, the total number of
shares of stock of all classes which the Corporation has
authority to issue is 12,000,000,000 shares, the par value of
each class of stock being $.001 per share, with an aggregate par
value of $12,000,000, of which 3,000,000,000 shares are
classified as shares of Class A Common Stock, 3,000,000,000
shares are classified as shares of Class B Common Stock,
3,000,000,000 shares are classified as shares of Class C Common
Stock and 3,000,000,000 shares are classified as shares of
Advisor Class Common Stock.

FOURTH: The Corporation is registered as an open-end
company under the Investment Company Act of 1940.

FIFTH: The total number of shares that the Corporation
has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland
General Corporation Law.

SIXTH: The shares aforesaid have been duly classified
by the Corporation's Board of Directors pursuant to authority and
power contained in the Corporation's Articles of Incorporation.

<PAGE>

IN WITNESS WHEREOF, Alliance North American Government
Income Trust, Inc. has caused these Articles Supplementary to be
executed by its Chairman of the Board and attested by its
Secretary and its corporate seal to be affixed on this 30th day
of September, 1996. The Chairman of the Board of the Corporation
who signed these Articles Supplementary acknowledges them to be
the act of the Corporation and states under the penalties of
perjury that, to the best of his knowledge, information and
belief, the matters and facts set forth herein relating to
authorization and approval hereof are true in all material
respects.

ALLIANCE NORTH AMERICAN GOVERNMENT
INCOME TRUST, INC.

[CORPORATE SEAL] By: /s/ John D. Carifa
______________________________
John D. Carifa
Chairman

Attested: /s/ Edmund P. Bergan, Jr.
_________________________
Edmund P. Bergan, Jr.
Secretary

4
00250117.AO3

<PAGE>

AMENDMENT TO
DISTRIBUTION SERVICES AGREEMENT

AMENDMENT made this 4th day of June, 1996 between
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC., a Maryland
corporation (the "Fund"), and ALLIANCE FUND DISTRIBUTORS INC., a
Delaware corporation (the "Underwriter").

WITNESSETH:

WHEREAS, the Fund and the Underwriter wish to amend the
Distribution Services Agreement dated as of July 22, 1992, as
amended as of April 30, 1993 (the "Agreement") in the manner set
forth herein;

NOW, THEREFORE, the parties agree as follows:

1. Amendment of Agreement. Section 1 and the first full
paragraph of Section 4(a) of the Agreement are hereby amended and
restated to read as follows:

Section 1. Appointment of Underwriter. "The
Fund hereby appoints the Underwriter as the principal
underwriter and distributor of the Fund to sell the
public shares of its Class A Common Stock (the "Class A
shares"), Class B Common Stock (the "Class B shares"),
Class C Common Stock (the "Class C shares"), Advisor
Class Common Stock (the "Advisor Class shares"), and
shares of such other class or classes as the Fund and
the Underwriter shall from time to time mutually agree
shall become subject to the Agreement ("New shares"),
(the Class A shares, Class B shares, Class C shares,
Advisor Class shares, and New shares shall be
collectively referred to herein as the "shares") and
hereby agrees during the term of this Agreement to sell
shares to the Underwriter upon the terms and conditions
set forth herein."

Section 4(a). "Any of the outstanding shares may
be tendered for redemption at any time, and the Fund
agrees to redeem or repurchase the shares so tendered in
accordance with its obligations as set forth in
Section 3 of Article Fifth of its Articles of
Incorporation and in accordance with the applicable
provisions set forth in the Prospectus and Statement of
Additional Information. The price to be paid to redeem
or repurchase the shares shall be equal to the net asset
value calculated in accordance with the provisions of
Section 3[d] hereof, less any applicable sales charge.
All payments by the Fund hereunder shall be made in the

<PAGE>

manner set forth below. The redemption or repurchase by
the Fund of any of the Class A shares purchased by or
through the Underwriter will not affect the initial
sales charge secured by the Underwriter or any selected
dealer or compensation paid to any selected agent
(unless such selected dealer or selected agent has
otherwise agreed with the Underwriter), in the course of
the original sale, regardless of the length of the time
period between the purchase by an investor and his
tendering for redemption or repurchase."

2. Class References. Any and all references in the
Agreement to "Class Y shares" are hereby amended to read "Advisor
Class shares."

3. No Other Changes. Except as provided herein, the
Agreement shall be unaffected hereby.

IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement.

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

By:/s/ Edmund P. Bergan, Jr.
Edmund P. Bergan, Jr.

ALLIANCE FUND DISTRIBUTORS, INC.

By:/s/ Andrew L. Gangolf
Andrew L. Gangolf

Accepted as of the date first written above:

ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
General Partner

By: /s/ John D. Carifa
John D. Carifa

2
00250117.AP3

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions
"Financial Highlights," "Shareholder Services - Statements and
Reports" and "General Information - Independent Auditors" and to
the use of our report dated January 10, 1996 included in this
Registration Statement (Form N-1A No. 33-45328) of Alliance North
American Government Income Trust, Inc.

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

New York, New York
October 29, 1996

00250117.AP6

<PAGE>

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

Amended and Restated Plan pursuant to Rule 18f-3
under the Investment Company Act of 1940

Effective as amended and restated September 30, 1996

The Plan (the "Plan") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "Act") of Alliance North
American Government Income Trust, Inc. (the "Fund"), which sets
forth the general characteristics of, and the general conditions
under which the Fund may offer, multiple classes of shares of its
now existing and hereafter created portfolios,1 is hereby
amended and restated in its entirety. This Plan may be revised
or amended from time to time as provided below.

Class Designations

The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares,
Class C shares and Advisor Class shares. Each of the four
classes of shares will represent interests in the same portfolio
of investments of the Fund and, except as described herein, shall
have the same rights and obligations as each other class. Each
class shall be subject to such investment minimums and other
conditions of eligibility as are set forth in the prospectus or
statement of additional information through which such shares are
issued, as from time to time in effect (the "Prospectus").

Class Characteristics

Class A shares are offered at a public offering price that is
equal to their net asset value ("NAV") plus an initial sales
charge, as set forth in the Prospectus. Class A shares may also
be subject to a Rule 12b-1 fee, which may include a service fee
and, under certain circumstances, a contingent deferred sales
charge ("CDSC"), as described in the Prospectus.

____________________

1. This Plan is intended to allow the Fund to offer multiple
classes of shares to the full extent and in the manner
permitted by Rule 18f-3 under the Act (the "Rule"), subject
to the requirements and conditions imposed by the Rule.

2. For purposes of this Plan, if the Fund has existing more than
one portfolio pursuant to which multiple classes of shares
are issued, then references in this Plan to the "Fund" shall
be deemed to refer instead to each portfolio.

<PAGE>

Class B shares are offered at their NAV, without an initial
sales charge, and may be subject to a CDSC and a Rule 12b-1 fee,
which may include a service fee, as described in the Prospectus.

Class C shares are offered at their NAV, without an initial
sales charge, and may be subject to a CDSC and a Rule 12b-1 fee,
which may include a service fee, as described in the Prospectus.

Advisor Class shares are offered at their NAV, without any
initial sales charge, CDSC or Rule 12b-1 fee.

The initial sales charge on Class A shares and CDSC on
Class A, B and C shares are each subject to reduction or waiver
as permitted by the Act, and as described in the Prospectus.

Allocations to Each Class

Expense Allocations

The following expenses shall be allocated, to the extent
practicable, on a class-by-class basis: (i) Rule 12b-1 fees
payable by the Fund to the distributor or principal underwriter
of the Fund's shares (the "Distributor"), and (ii) transfer
agency costs attributable to each class. Subject to the approval
of the Fund's Board of Directors, including a majority of the
independent Directors, the following "Class Expenses" may be
allocated on a class-by-class basis: (a) printing and postage
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxy statements to current
shareholders of a specific class,3 (b) SEC registration fees
incurred with respect to a specific class, (c) blue sky and
foreign registration fees and expenses incurred with respect to a
specific class, (d) the expenses of administrative personnel and
services required to support shareholders of a specific class
(including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or
about the Fund), (e) litigation and other legal expenses relating
to a specific class of shares, (f) Directors' fees or expenses
incurred as a result of issues relating to a specific class of
shares, (g) accounting and consulting expenses relating to a
specific class of shares, (h) any fees imposed pursuant to a non-
Rule 12b-1 shareholder services plan that relate to a specific
class of shares, and (i) any additional expenses, not including
advisory or custodial fees or other expenses related to the
____________________

3. For Advisor Class shares, the expenses of preparation,
printing and distribution of prospectuses and shareholder
reports, as well as other distribution-related expenses, will
be borne by the investment adviser of the Fund (the
"Adviser") or the Distributor from their own resources.

<PAGE>

management of the Fund's assets, if these expenses are actually
incurred in a different amount with respect to a class, or if
services are provided with respect to a class that are of a
different kind or to a different degree than with respect to one
or more other classes.

All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.

However, notwithstanding the above, the Fund may allocate all
expenses other than Class Expenses on the basis of relative net
assets (settled shares), as permitted by Rule 18f-3(c)(2) under
the Act.

Waivers and Reimbursements

The Adviser or Distributor may choose to waive or reimburse
Rule 12b-1 fees, transfer agency fees or any Class Expenses on a
voluntary, temporary basis. Such waiver or reimbursement may be
applicable to some or all of the classes and may be in different
amounts for one or more classes.

Income, Gains and Losses

Income, and realized and unrealized capital gains and losses
shall be allocated to each class on the basis of the net asset
value of that class in relation to the net asset value of the
Fund.

The Fund may allocate income, and realized and unrealized
capital gains and losses to each share based on relative net
assets (i.e. settled shares), as permitted by Rule 18f-3(c)(2)
under the Act.

Conversion and Exchange Features

Conversion Features

Class B shares of the Fund automatically convert to Class A
shares of the Fund after a certain number of months or years
after the end of the calendar month in which the shareholder's
purchase order was accepted as described in the Prospectus.
Class B shares purchased through reinvestment of dividends and
distributions will be treated as Class B shares for all purposes
except that such Class B shares will be considered held in a
separate sub-account. Each time any Class B shares in the
shareholder's account convert to Class A shares, an equal pro-
rata portion of the Class B shares in the sub-account will also
convert to Class A shares.

<PAGE>

Advisor Class shares of the Fund automatically convert to
Class A shares of the Fund during the calendar month following
the month in which the Fund is informed that the beneficial owner
of the Advisor Class shares has ceased to participate in a fee-
based program or employee benefit plan that satisfies the
requirements to purchase Advisor Class shares as described in the
Prospectus or is otherwise no longer eligible to purchase Advisor
Class shares as provided in the Prospectus.

The conversion of Class B and Advisor Class shares to Class A
shares may be suspended if the opinion of counsel obtained by the
Fund that the conversion does not constitute a taxable event
under current federal income tax law is no longer available.
Class B and Advisor Class shares will convert into Class A shares
on the basis of the relative net asset value of the two classes,
without the imposition of any sales load, fee or other charge.

In the event of any material increase in payments authorized
under the Rule 12b-1 Plan (or, if presented to shareholders, any
material increase in payments authorized by a non-Rule 12b-1
shareholder services plan) applicable to Class A shares, existing
Class B and Advisor Class shares will stop converting into
Class A shares unless the Class B and Advisor Class shareholders,
voting separately as a class, approve the increase in such
payments. Pending approval of such increase, or if such increase
is not approved, the Directors shall take such action as is
necessary to ensure that existing Class B and Advisor Class
shares are exchanged or converted into a new class of shares
("New Class A") identical in all material respects to Class A
shares as existed prior to the implementation of the increase in
payments, no later than such shares were previously scheduled to
convert to Class A shares. If deemed advisable by the Directors
to implement the foregoing, such action may include the exchange
of all existing Class B and Advisor Class shares for new classes
of shares ("New Class B" and "New Advisor Class," respectively)
identical to existing Class B and Advisor Class shares, except
that New Class B and New Advisor Class shares shall convert to
New Class A shares. Exchanges or conversions described in this
paragraph shall be effected in a manner that the Directors
reasonably believe will not be subject to federal income
taxation. Any additional cost associated with the creation,
exchange or conversion of New Class A, New Class B and New
Advisor Class shares shall be borne by the Adviser and the
Distributor. Class B and Advisor Class shares sold after the
implementation of the fee increase may convert into Class A
shares subject to the higher maximum payment, provided that the
material features of the Class A plan and the relationship of
such plan to the Class B and Advisor Class shares are disclosed
in an effective registration statement.

<PAGE>

Exchange Features

Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another Alliance Mutual Fund and shares of certain Alliance
money market funds, except that certain holders of Class A shares
of the Fund eligible to purchase and hold Advisor Class shares of
the Fund may also exchange their Class A shares for Advisor Class
shares. If the aggregate net asset value of shares of all
Alliance Mutual Funds held by an investor in the Fund reaches the
minimum amount at which an investor may purchase Class A shares
at net asset value without a front-end sales load on or before
December 15 in any year, then all Class B and Class C shares of
the Fund held by that investor may thereafter be exchanged, at
the investor's request, at net asset value and without any front-
end sales load or CDSC for Class A shares of the Fund. All
exchange features applicable to each class will be described in
the Prospectus.

Dividends

Dividends paid by the Fund with respect to its Class A,
Class B, Class C and Advisor Class shares, to the extent any
dividends are paid, will be calculated in the same manner, at the
same time and will be in the same amount, except that any Rule
12b-1 fee payments relating to a class of shares will be borne
exclusively by that class and any incremental transfer agency
costs or, if applicable, Class Expenses relating to a class shall
be borne exclusively by that class.

Voting Rights

Each share of a Fund entitles the shareholder of record to
one vote. Each class of shares of the Fund will vote separately
as a class with respect to the Rule 12b-1 plan applicable to that
class and on other matters for which class voting is required
under applicable law. Class A, Class B and Advisor Class
shareholders will vote as three separate classes to approve any
material increase in payments authorized under the Rule 12b-1
plan applicable to Class A shares.

Responsibilities of the Directors

On an ongoing basis, the Directors will monitor the Fund for
the existence of any material conflicts among the interests of
the four classes of shares. The Directors shall further monitor
on an ongoing basis the use of waivers or reimbursement by the
Adviser and the Distributor of expenses to guard against cross-
subsidization between classes. The Directors, including a
majority of the independent Directors, shall take such action as
is reasonably necessary to eliminate any such conflict that may

<PAGE>

develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.

Reports to the Directors

The Adviser and Distributor will be responsible for reporting
any potential or existing conflicts among the four classes of
shares to the Directors. In addition, the Directors will receive
quarterly and annual statements concerning distributions and
shareholder servicing expenditures complying with paragraph
(b)(3)(ii) of Rule 12b-1. In the statements, only expenditures
properly attributable to the sale or servicing of a particular
class of shares shall be used to justify any distribution or
service fee charged to that class. The statements, including the
allocations upon which they are based, will be subject to the
review of the independent Directors in the exercise of their
fiduciary duties. At least annually, the Directors shall receive
a report from an expert, acceptable to the Directors, (the
"Expert"), with respect to the methodology and procedures for
calculating the net asset value, dividends and distributions for
the classes, and the proper allocation of income and expenses
among the classes. The report of the Expert shall also address
whether the Fund has adequate facilities in place to ensure the
implementation of the methodology and procedures for calculating
the net asset value, dividends and distributions for the classes,
and the proper allocation of income and expenses among the
classes. The Fund and the Adviser will take immediate corrective
measures in the event of any irregularities reported by the
Expert.

Amendments

The Plan may be amended from time to time in accordance with
the provisions and requirements of Rule 18f-3 under the Act.

Amended and restated by action of the Board of Directors
this 30th day of September, 1996.

By: /s/Edmund P. Bergan, Jr.
Edmund P. Bergan, Jr.
Secretary

6
00250117.AP4

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ Donald J. Robinson
Donald J. Robinson

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ John D. Carifa
John D. Carifa

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ David H. Dievler
David H. Dievler

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ Ruth Block
Ruth Block

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ John H. Dobkin
John H. Dobkin

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ William H. Foulk, Jr.
William H. Foulk, Jr.

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ James M. Hester
James M. Hester

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ Clifford L. Michel
Clifford L. Michel

Dated: September 30, 1996

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the person whose

signature appears below hereby revokes all prior powers

granted by the undersigned to the extent inconsistent

herewith and constitutes and appoints John D. Carifa, Edmund

P. Bergan, Jr. and Andrew L. Gangolf, and each of them, to

act severally as attorneys-in-fact and agents, with power of

substitution and resubstitution, for the undersigned in any

and all capacities, solely for the purpose of signing the

Registration Statement, and any amendments thereto, on Form

N-1A of Alliance North American Government Income Trust,

Inc. and filing the same, with exhibits thereto, and other

documents in connection therewith, with the Securities and

Exchange Commission, hereby ratifying and confirming all

that said attorneys-in-fact, or their substitute or

substitutes, may do or cause to be done by virtue hereof.

/s/ Robert C. White
Robert C. White
Dated: September 30, 1996

9
00250117.AP5

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class A
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Dec-01-1995
[PERIOD-END] May-31-1996
[INVESTMENTS-AT-COST] 2277631017
[INVESTMENTS-AT-VALUE] 2141892628
[RECEIVABLES] 68706043
[ASSETS-OTHER] 732701
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2211331372
[PAYABLE-FOR-SECURITIES] 187725751
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 268817984
[TOTAL-LIABILITIES] 456543735
[SENIOR-EQUITY] 240041
[PAID-IN-CAPITAL-COMMON] 2203723399
[SHARES-COMMON-STOCK] 41541512
[SHARES-COMMON-PRIOR] 37423618
[ACCUMULATED-NII-CURRENT] 10748109
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (325012851)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (134911061)
[NET-ASSETS] 1754787637
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 160765180
[OTHER-INCOME] 0
[EXPENSES-NET] 26176423
[NET-INVESTMENT-INCOME] 134588757
[REALIZED-GAINS-CURRENT] (113071845)
[APPREC-INCREASE-CURRENT] 219586644
[NET-CHANGE-FROM-OPS] 241103556
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (19146716)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 8364234
[NUMBER-OF-SHARES-REDEEMED] (5250133)
[SHARES-REINVESTED] 1009793
[NET-CHANGE-IN-ASSETS] 160096266
[ACCUMULATED-NII-PRIOR] (14205188)
[ACCUMULATED-GAINS-PRIOR] (211941006)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

[GROSS-ADVISORY-FEES] 6490762
[INTEREST-EXPENSE] 8446378
[GROSS-EXPENSE] 26176423
[AVERAGE-NET-ASSETS] 1725069157
[PER-SHARE-NAV-BEGIN] 6.75
[PER-SHARE-NII] .58
[PER-SHARE-GAIN-APPREC] .46
[PER-SHARE-DIVIDEND] (.48)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 7.31
[EXPENSE-RATIO] 2.44
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

00250117.AO9

</TABLE>

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class B
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Dec-01-1995
[PERIOD-END] May-31-1996
[INVESTMENTS-AT-COST] 2277631017
[INVESTMENTS-AT-VALUE] 2141892628
[RECEIVABLES] 68706043
[ASSETS-OTHER] 732701
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2211331372
[PAYABLE-FOR-SECURITIES] 187725751
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 268817984
[TOTAL-LIABILITIES] 456543735
[SENIOR-EQUITY] 240041
[PAID-IN-CAPITAL-COMMON] 2203723399
[SHARES-COMMON-STOCK] 166426847
[SHARES-COMMON-PRIOR] 166376320
[ACCUMULATED-NII-CURRENT] 10748109
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (325012851)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (134911061)
[NET-ASSETS] 1754787637
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 160765180
[OTHER-INCOME] 0
[EXPENSES-NET] 26176423
[NET-INVESTMENT-INCOME] 134588757
[REALIZED-GAINS-CURRENT] (113071845)
[APPREC-INCREASE-CURRENT] 219586644
[NET-CHANGE-FROM-OPS] 241103556
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (75877028)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 18825857
[NUMBER-OF-SHARES-REDEEMED] (18373171)
[SHARES-REINVESTED] 3085897
[NET-CHANGE-IN-ASSETS] 160096266
[ACCUMULATED-NII-PRIOR] (14205188)
[ACCUMULATED-GAINS-PRIOR] (211941006)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

[GROSS-ADVISORY-FEES] 6490762
[INTEREST-EXPENSE] 8446378
[GROSS-EXPENSE] 26176423
[AVERAGE-NET-ASSETS] 1725069157
[PER-SHARE-NAV-BEGIN] 6.75
[PER-SHARE-NII] .56
[PER-SHARE-GAIN-APPREC] .45
[PER-SHARE-DIVIDEND] (.45)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 7.31
[EXPENSE-RATIO] 3.15
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

00250117.AP0

</TABLE>

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class C
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Dec-01-1995
[PERIOD-END] May-31-1996
[INVESTMENTS-AT-COST] 2277631017
[INVESTMENTS-AT-VALUE] 2141892628
[RECEIVABLES] 68706043
[ASSETS-OTHER] 732701
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2211331372
[PAYABLE-FOR-SECURITIES] 187725751
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 268817984
[TOTAL-LIABILITIES] 456543735
[SENIOR-EQUITY] 240041
[PAID-IN-CAPITAL-COMMON] 2203723399
[SHARES-COMMON-STOCK] 32072577
[SHARES-COMMON-PRIOR] 32443629
[ACCUMULATED-NII-CURRENT] 10748109
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (325012851)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (134911061)
[NET-ASSETS] 1754787637
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 160765180
[OTHER-INCOME] 0
[EXPENSES-NET] 26176423
[NET-INVESTMENT-INCOME] 134588757
[REALIZED-GAINS-CURRENT] (113071845)
[APPREC-INCREASE-CURRENT] 219586644
[NET-CHANGE-FROM-OPS] 241103556
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (14611716)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3820359
[NUMBER-OF-SHARES-REDEEMED] (4814136)
[SHARES-REINVESTED] 622725
[NET-CHANGE-IN-ASSETS] 160096266
[ACCUMULATED-NII-PRIOR] (14205188)
[ACCUMULATED-GAINS-PRIOR] (211941006)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

00250117.AP1

</TABLE>

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class A
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] Year
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Oct-01-1994
[PERIOD-END] Nov-30-1995
[INVESTMENTS-AT-COST] 2,337,723,215
[INVESTMENTS-AT-VALUE] 1,979,104,722
[RECEIVABLES] 85,747,927
[ASSETS-OTHER] 4,196,929
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,069,049,091
[PAYABLE-FOR-SECURITIES] 208,625,208
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 265,732,512
[TOTAL-LIABILITIES] 474,357,720
[SENIOR-EQUITY] 236,244
[PAID-IN-CAPITAL-COMMON] 2,175,099,026
[SHARES-COMMON-STOCK] 37,423,618
[SHARES-COMMON-PRIOR] 37,350,505
[ACCUMULATED-NII-CURRENT] (14,205,188)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (211,941,006)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (354,497,705)
[NET-ASSETS] 1,594,691,371
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 322,539,943
[OTHER-INCOME] 0
[EXPENSES-NET] 50,418,686
[NET-INVESTMENT-INCOME] 272,121,257
[REALIZED-GAINS-CURRENT] (507,701,318)
[APPREC-INCREASE-CURRENT] 43,988,763
[NET-CHANGE-FROM-OPS] (191,591,298)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (33,426,246)
[NUMBER-OF-SHARES-SOLD] 94,352,169
[NUMBER-OF-SHARES-REDEEMED] 107,647,756
[SHARES-REINVESTED] 14,875,359
[NET-CHANGE-IN-ASSETS] (718,162,625)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (106,760,154)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

[GROSS-ADVISORY-FEES] 11,774,101
[INTEREST-EXPENSE] 17,414,235
[GROSS-EXPENSE] 50,418,686
[AVERAGE-NET-ASSETS] 1,561,406
[PER-SHARE-NAV-BEGIN] 8.13
[PER-SHARE-NII] 1.18
[PER-SHARE-GAIN-APPREC] (1.59)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] (0.97)
[PER-SHARE-NAV-END] 6.75
[EXPENSE-RATIO] 2.62
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

00250117.AO6

</TABLE>

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class B
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] Year
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Oct-01-1994
[PERIOD-END] Nov-30-1995
[INVESTMENTS-AT-COST] 2,337,723,215
[INVESTMENTS-AT-VALUE] 1,979,104,722
[RECEIVABLES] 85,747,927
[ASSETS-OTHER] 4,196,929
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,069,049,091
[PAYABLE-FOR-SECURITIES] 208,625,208
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 265,732,512
[TOTAL-LIABILITIES] 474,357,720
[SENIOR-EQUITY] 236,244
[PAID-IN-CAPITAL-COMMON] 2,175,099,026
[SHARES-COMMON-STOCK] 166,376,320
[SHARES-COMMON-PRIOR] 201,564,747
[ACCUMULATED-NII-CURRENT] (14,205,188)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (211,941,006)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (354,497,705)
[NET-ASSETS] 1,594,691,371
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 322,539,943
[OTHER-INCOME] 0
[EXPENSES-NET] 50,418,686
[NET-INVESTMENT-INCOME] 272,121,257
[REALIZED-GAINS-CURRENT] (507,701,318)
[APPREC-INCREASE-CURRENT] 43,988,763
[NET-CHANGE-FROM-OPS] (191,591,298)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (152,169,130)
[NUMBER-OF-SHARES-SOLD] 194,645,827
[NUMBER-OF-SHARES-REDEEMED] 477,796,460
[SHARES-REINVESTED] 58,268,585
[NET-CHANGE-IN-ASSETS] (718,162,625)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (106,760,154)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

[GROSS-ADVISORY-FEES] 11,774,101
[INTEREST-EXPENSE] 17,414,235
[GROSS-EXPENSE] 50,418,686
[AVERAGE-NET-ASSETS] 1,561,406
[PER-SHARE-NAV-BEGIN] 8.13
[PER-SHARE-NII] 1.13
[PER-SHARE-GAIN-APPREC] (1.61)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] (.90)
[PER-SHARE-NAV-END] 6.75
[EXPENSE-RATIO] 3.33
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

00250117.AO7

</TABLE>

<PAGE>

[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] Class C
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] Year
[FISCAL-YEAR-END] Nov-30-1995
[PERIOD-START] Oct-01-1994
[PERIOD-END] Nov-30-1995
[INVESTMENTS-AT-COST] 2,337,723,215
[INVESTMENTS-AT-VALUE] 1,979,104,722
[RECEIVABLES] 85,747,927
[ASSETS-OTHER] 4,196,929
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,069,049,091
[PAYABLE-FOR-SECURITIES] 208,625,208
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 265,732,512
[TOTAL-LIABILITIES] 474,357,720
[SENIOR-EQUITY] 236,244
[PAID-IN-CAPITAL-COMMON] 2,175,099,026
[SHARES-COMMON-STOCK] 32,443,629
[SHARES-COMMON-PRIOR] 45,482,189
[ACCUMULATED-NII-CURRENT] (14,205,188)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (211,941,006)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (354,497,705)
[NET-ASSETS] 1,594,691,371
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 322,539,943
[OTHER-INCOME] 0
[EXPENSES-NET] 50,418,686
[NET-INVESTMENT-INCOME] 272,121,257
[REALIZED-GAINS-CURRENT] (507,701,318)
[APPREC-INCREASE-CURRENT] 43,988,763
[NET-CHANGE-FROM-OPS] (191,591,298)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (30,951,612)
[NUMBER-OF-SHARES-SOLD] 43,465,432
[NUMBER-OF-SHARES-REDEEMED] 145,582,364
[SHARES-REINVESTED] 15,394,839
[NET-CHANGE-IN-ASSETS] (718,162,625)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (106,760,154)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0

<PAGE>

[GROSS-ADVISORY-FEES] 11,774,101
[INTEREST-EXPENSE] 17,414,235
[GROSS-EXPENSE] 50,418,686
[AVERAGE-NET-ASSETS] 1,561,406
[PER-SHARE-NAV-BEGIN] 8.13
[PER-SHARE-NII] 1.13
[PER-SHARE-GAIN-APPREC] (1.61)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] (0.90)
[PER-SHARE-NAV-END] 6.75
[EXPENSE-RATIO] 3.33
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

00250117.AO8

</TABLE>