ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRU INC, 485BPOS, 1997-10-31

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRU INC
485BPOS, 1997-10-31

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<PAGE>

As filed with the Securities and Exchange
Commission on October 31, 1997

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. 16 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 16 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)

Copies of communications to:
Thomas G. MacDonald
Seward & Kissel
One Battery Park Plaza
New York, New York 10004

<PAGE>

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.

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

<PAGE>

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

N-1A Item No. Location in Prospectus
- ------------ ----------------------
PART A
- ------

Item 1. Cover Page . . . . . . . . . . . . . . . . Cover Page

Item 2. Synopsis . . . . . . . . . . . . . . . . . The Funds at a Glance

Item 3. Condensed Financial Information. . . . . . Financial Highlights

Item 4. General Description of Registrant. . . . . Description of the
Funds

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

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

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

Item 8. Redemption or Repurchase . . . . . . . . . Purchase and Sale of
Shares

Item 9. Pending Legal Proceedings. . . . . . . . . General Information

<PAGE>

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 History. . . . . . Description of the
Fund; General
Information

<PAGE>

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

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

Item 13. Investment Objectives and Policies . . . . Description of the Fund;
Additional Information
About Canada, the
United Mexican
States and the
Republic of
Argentina

Item 14. Management of the Registrant . . . . . . . Management of
the Fund

Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . Management of the Fund;
General Information

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

Item 17. Brokerage Allocation and Other Practices . General Information

Item 18. Capital Stock and Other Securities . . . . General Information

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

Item 20. Tax Status . . . . . . . . . . . . . . . . Description
of the Fund;
Dividends,
Distributions and
Taxes

Item 21. Underwriters . . . . . . . . . . . . . . . General Information

Item 22. Calculation of Performance Data. . . . . . General Information

Item 23. Financial Statements . . . . . . . . . . . Financial Statements;
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 AND APPLICATION

OCTOBER 31, 1997

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 FUNDS
- -ALLIANCE MORTGAGE -CORPORATE BOND PORTFOLIO
SECURITIES INCOME FUND -ALLIANCE HIGH YIELD 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 24
Certain Fundamental Investment Policies 35
Risk Considerations 37
Purchase and Sale of Shares 41
Management of the Funds 44
Dividends, Distributions and Taxes 46
General Information. 48
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 Funds invest 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
through this Prospectus. These shares 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 (four years of purchase for Alliance Global Strategic Income
Trust and Alliance High Yield Fund) (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.SM

(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 $199
billion in assets under management as of June 30, 1997. Alliance provides
investment management services to 29 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 . . . A diversified portfolio of 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 FUNDS

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.

HIGH YIELD FUND
SEEKS . . . A high total return by maximizing current income and, to the extent
consistent with that objective, capital appreciation.

INVESTS PRIMARILY IN . . . A diversified mix of high yield, below investment
grade fixed-income securities involving greater volatility of price and risk of
principal and income than higher quality fixed-income securities.

A WORD ABOUT RISK . . .
The prices of the shares of the Alliance Bond Funds will fluctuate daily as the
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.SM

(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.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES(B) CLASS B SHARES(D) CLASS C SHARES
-------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Maximum sales charge imposed on purchases
(as a percentage of offering price) 4.25%(a) None None None

Sales charge imposed on dividend reinvestments None None None None
Deferred sales charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower) None 3.0% during 4.0% during 1.0% during
the first year, the first year, the first year,
decreasing 1.0% decreasing 1.0% 0% thereafter
annually to 0% annually to 0%
after the third after the fourth
year (c) year (e)

Exchange fee None 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% DEFERRED SALES
CHARGE ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASE AND SALE OF
SHARES-HOW TO BUY SHARES" -PAGE 41.

(B) FOR ALL FUNDS EXCEPT GLOBAL STRATEGIC INCOME AND HIGH YIELD.

(C) CLASS B SHARES OF EACH FUND, OTHER THAN GLOBAL STRATEGIC INCOME AND HIGH
YIELD, AUTOMATICALLY CONVERT TO CLASS A SHARES AFTER SIX YEARS. SEE "PURCHASE
AND SALE OF SHARES-HOW TO BUY SHARES" -PAGE 41.

(D) FOR GLOBAL STRATEGIC INCOME AND HIGH YIELD ONLY.

(E) SHARES OF GLOBAL STRATEGIC INCOME AND HIGH YIELD AUTOMATICALLY CONVERT TO
CLASS A SHARES AFTER EIGHT YEARS. SEE "PURCHASE AND SALE OF SHARES-HOW TO BUY
SHARES"-PAGE 41.

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES EXAMPLES
- ---------------------------------------------------------------- -----------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees(b)(after waiver) None None None After 1 year $ 56 $ 51 $ 21 $ 31 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 85 $ 76 $ 66 $ 66 $ 66
Other expenses After 5 years $116 $113 $113 $113 $113
Interest expense .01% .01% .01% After 10 years $204 $210 $210 $244 $244
Other operating expenses (a)(b)
(after reimbursement) 1.10% 1.10% 1.10%
Total other expenses 1.11% 1.11% 1.10%
Total fund operating expenses(b)(j)
(after waiver/reimbursement) 1.41% 2.11% 2.11%

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 $ 48 $ 18 $ 27 $ 17
12b-1 fees .30% 1.00% 1.00% After 3 years $ 74 $ 64 $ 54 $ 54 $ 54
Other expenses(a) .19% .20% .19% After 5 years $ 96 $ 94 $ 94 $ 93 $ 93
Total fund operating expenses 1.02% 1.73% 1.72% After 10 years $162 $168 $168 $203 $203

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 $ 64 $ 60 $ 30 $ 40 $ 30
12b-1 fees .30% 1.00% 1.00% After 3 years $109 $101 $ 91 $ 90 $ 90
Other expenses After 5 years $156 $155 $155 $154 $154
Interest expense .64% .64% .63% After 10 years $287 $294 $294 $324 $324
Other operating expenses(a) .63% .65% .64%
Total other expenses 1.27% 1.29% 1.27%
Total fund operating expenses(h) 2.22% 2.94% 2.92%
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 6.

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES EXAMPLES
- ---------------------------------------------------------------- -----------------------------------------------------------------
MORTGAGE SECURITIES INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .50% .50% .50% After 1 year $ 59 $ 54 $ 24 $ 34 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 84 $ 74 $ 74 $ 74
Other expenses After 5 years $130 $127 $127 $127 $127
Interest expense .65% .63% .65% After 10 years $233 $238 $238 $272 $272
Other operating expenses(a) .23% .24% .23%
Total other expenses .88% .87% .88%
Total fund operating expenses(g) 1.68% 2.37% 2.38%

WORLD INCOME
Management fees(c)(after waiver) .49% After 1 year $ 21
12b-1 fees(c)(after waiver) .68% After 3 years $ 66
Other expenses(a) .93% After 5 years $113
Total fund operating After 10 years $243
expenses(c)(after waiver) 2.10%

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 $ 55 $ 50 $ 20 $ 30 $ 20
12b-1 fees .30% 1.00% 1.00% After 3 years $ 82 $ 73 $ 63 $ 62 $ 62
Other expenses(a) .44% .45% .43% After 5 years $110 $108 $108 $107 $107
Total fund operating expenses 1.29% 2.00% 1.98% After 10 years $192 $198 $198 $231 $231

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 $ 54 $ 24 $ 34 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 92 $ 83 $ 73 $ 73 $ 73
Other expenses After 5 years $128 $126 $126 $125 $125
Interest expense .04% .04% .04% After 10 years $229 $235 $235 $268 $268
Other operating expenses(a) .70% .71% .70%
Total other expenses .74% .75% .74%
Total fund operating expenses(d) 1.64% 2.35% 2.34%

NORTH AMERICAN GOVERNMENT INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
Management fees(e) .74% .74% .74% After 1 year $ 65 $ 61 $ 31 $ 41 $ 31
12b-1 fees .30% 1.00% 1.00% After 3 years $112 $104 $ 94 $ 94 $ 94
Other expenses After 5 years $162 $160 $160 $160 $160
Interest expense .93% .93% .92% After 10 years $299 $305 $305 $336 $336
Other operating expenses(a) .37% .38% .38%
Total other expenses 1.30% 1.31% 1.30%
Total fund operating expenses(f) 2.34% 3.05% 3.04%

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 $ 58 $ 53 $ 23 $ 33 $ 23
12b-1 fees .30% 1.00% 1.00% After 3 years $ 89 $ 81 $ 71 $ 70 $ 70
Other expenses(a) .50% .51% .50% After 5 years $123 $121 $121 $120 $120
Total fund operating expenses 1.55% 2.26% 2.25% After 10 years $219 $225 $225 $258 $258

GLOBAL STRATEGIC INCOME CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
Management fees(i)(after waiver) 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) After 5 years $141 $138 $138 $138 $138
(after reimbursement) 1.60% 1.60% 1.60% After 10 years $255 $261 $261 $293 $293
Total fund operating
expenses(i)(after waiver/
reimbursement) 1.90% 2.60% 2.60%
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 6.

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES EXAMPLES
- ---------------------------------------------------------------- -----------------------------------------------------------------
CORPORATE BOND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .57% .57% .57% After 1 year $ 53 $ 48 $ 18 $ 29 $ 18
12b-1 fees .30% 1.00% 1.00% After 3 years $ 77 $ 67 $ 57 $ 57 $ 57
Other expenses(a) .25% .25% .25% After 5 years $102 $ 99 $ 99 $ 99 $ 99
Total fund operating expenses 1.12% 1.82% 1.82% After 10 years $173 $179 $179 $214 $214

HIGH YIELD CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
- ------------------------------------- ------- ------- ------- ------- -------- --------- -------- ---------
Management fees (k) (after waiver) None None None After 1 year $[ ] $[ ] $[ ] $[ ] $[ ]
12b-1 fees .30% 1.00% 1.00% After 3 years $[ ] $[ ] $[ ] $[ ] $[ ]
Other expenses(a) 1.40% 1.40% 1.40% After 5 years $[ ] $[ ] $[ ] $[ ] $[ ]
Total fund operating expenses 1.70% [ ]% [ ]% After 10 years $[ ] $[ ] $[ ] $[ ] $[ ]
</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 (EIGHT
YEARS IN THE CASE OF GLOBAL STRATEGIC INCOME AND HIGH YIELD).

++ 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. (EIGHT
YEARS IN THE CASE OF GLOBAL STRATEGIC INCOME AND HIGH YIELD)

(A) THESE EXPENSES INCLUDE A TRANSFER AGENCY FEE PAYABLE TO ALLIANCE FUND
SERVICES, INC., AN AFFILIATE OF ALLIANCE.

(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 1.57% FOR CLASS A, 1.55% FOR CLASS B AND 1.54% FOR
CLASS C AND TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN 2.42% FOR CLASS A,
3.10% FOR CLASS B AND 3.09% 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 2.48%.

(D) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.60%, FOR CLASS B, 2.31% AND FOR CLASS C, 2.30%.

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

(F) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.41%, FOR CLASS B, 2.12%, AND FOR CLASS C, 2.12%.

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

(H) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.58%, FOR CLASS B, 2.30%, AND FOR CLASS C, 2.29%.

(I) NET OF VOLUNTARY FEE WAIVERS AND EXPENSE REIMBURSEMENT. ABSENT SUCH WAIVERS
AND REIMBURSEMENTS, MANAGEMENT FEES WOULD HAVE BEEN .75%, OTHER EXPENSES WOULD
HAVE BEEN 18.15% FOR CLASS A, 17.82% FOR CLASS B, AND 17.74% FOR CLASS C AND
TOTAL OPERATING EXPENSES WOULD HAVE BEEN 19.20% FOR CLASS A, 19.57% FOR
CLASS B, AND 19.49% FOR CLASS C.

(J) EXCLUDING INTEREST EXPENSE, TOTAL FUND OPERATING EXPENSES WOULD HAVE BEEN
FOR CLASS A, 1.40% FOR CLASS B, 2.10% AND FOR CLASS C, 2.10%.

(K) NET OF VOLUNTARY FEE WAIVERS AND EXPENSE REIMBURSEMENTS. ABSENT SUCH
WAIVERS AND REIMBURSEMENTS, MANAGEMENT FEES WOULD HAVE BEEN .75, OTHER
EXPENSES WOULD HAVE BEEN 3.11% (ANNUALIZED) FOR CLASS A, 3.85% (ANNUALIZED)
FOR CLASS B, AND 3.84% (ANNUALIZED) FOR CLASS C; AND TOTAL OPERATING EXPENSES
WOULD HAVE BEEN 3.86% (ANNUALIZED) FOR CLASS A, 4.60% (ANNUALIZED) FOR
CLASS B, AND 4.59% (ANNUALIZED) 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 SHORT-TERM
U.S. GOVERNMENT, 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 SHORT-TERM U.S. GOVERNMENT, MULTI-MARKET
STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, MORTGAGE SECURITIES INCOME and
LIMITED MATURITY GOVERNMENT would be lower (see notes (b), (d), (f), (g),
(h) and (j) above) and the cumulative expenses shown in the Examples above
with respect to those Funds would be lower. 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. "Other Expenses"
are based on estimated amounts for High Yield's current fiscal year. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. ACTUAL RETURNS 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, CORPORATE BOND and HIGH YIELD has been
audited by Ernst & Young LLP, the independent auditors for these Funds. 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.

CLASS B
Year Ended 8/31/97 $ 9.77 $.41(h) $.02 $.43 $(.39) $0.00
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 8/31/97 $ 9.76 $.41(h) $.02 $.43 $(.39) $0.00
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 6/30/97 $ 7.52 $.57(h) $(.10) $.47 $(.57) $0.00
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

CLASS B
Year Ended 6/30/97 $ 7.52 $.52(h) $(.10) $.42 $(.52) $0.00
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 6/30/97 $ 7.52 $.52(h) $(.10) $.42 $(.52) $0.00
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
5/3/93++ to 6/30/93 8.56 .10 .08 .18 (.10) 0.00

LIMITED MATURITY GOVERNMENT
CLASS A
Six Months Ended 5/31/97
unaudited $ 9.45 $.26(h) $(.14) $.12 $(.27) $0.00
Year Ended 11/30/96 9.52 .51(h) (.04) .47 (.51) 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 5/31/97
unaudited $ 9.45 $.24(h) $(.15) $.09 $(.24) $0.00
Year Ended 11/30/96 9.52 .44(h) (.04) .40 (.44) 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 5/31/97
unaudited) $ 9.45 $.24(h) $(.15) $.09 $(.24) $0.00
Year Ended 11/30/96 9.52 .45(h) (.05) .40 (.45) 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
</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 $(0.07) $(.53) $9.63 5.29% $3,901 1.41%(d)(e) 4.90% 65%
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 $(0.07) $(.46) $9.74 4.45% $6,458 2.11%(d)(e) 4.13% 65%
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 $(0.07) $(.46) $9.73 4.45% $5,012 2.11%(d)(e) 4.15% 65%
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 $(0.01) $(.58) $7.41 6.49% $354,782 1.02% 7.66% 330%
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 $(0.01) $(.53) $7.41 5.69% $471,889 1.73% 6.95% 330%
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 0.00 (.62) 8.64 11.45 552,471 1.81 7.25 386
0.00 0.00 (.49) 8.34 6.95 32,227 1.80* 7.40* 418

$0.00 $(0.01) $(.53) $7.41 5.69% $115,607 1.72% 6.96% 330%
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 0.00 (.10) 8.64 2.12 67,757 1.80* 6.00* 386

$0.00 $0.00 $(.27) $9.30 1.30% $18,100 2.38%*(e) 5.38%* 67%
0.00 (.03) (.54) 9.45 5.11 16,248 2.22(e) 5.44 159
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) $9.30 .94% $40,862 3.12%*(e) 4.64%* 67%
0.00 (.03) (.47) 9.45 4.36 50,386 2.94(e) 4.73 159
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) $9.30 .94% $35,558 3.10%*(e) 4.66%* 67%
0.00 (.02) (.47) 9.45 4.38 43,457 2.92(e) 4.75 159
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 1.74*(e) 3.70* 499
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND INCREASE
VALUE UNREALIZED (DECREASE) IN DIVIDENDS FROM DISTRIBUTIONS
BEGINNING OF NET 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>
MORTGAGE SECURITIES INCOME
CLASS A
Six Months Ended 6/30/97
unaudited $8.51 $ .28(h) $ .02 $ .30 $ (.29) $0.00
Year Ended 12/31/96 8.75 .54(h) (.19) .35 (.51) 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)
CLASS B
Six Months Ended 6/30/97
unaudited $8.51 $ .24(h) $ .02 $ .26 $ (.25) $0.00
Year Ended 12/31/96 8.75 .48(h) (.19) .29 (.46) 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 6/30/97
unaudited $8.51 $ .25(h) $ .01 $ .26 $ (.25) $0.00
Year Ended 12/31/96 8.75 .48(h) (.19) .29 (.46) 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
WORLD INCOME
Six Months Ended 4/30/97
unaudited $1.67 $ .04(h) $ (.02) $ .02 $ (.05) $0.00
Year Ended 10/31/96 1.66 .09(h) .02 .11 (.10) 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 4/30/97
unaudited $7.73 $ .26(h) $ .01 $ .27 $ (.31) $0.00
Year Ended 10/31/96 7.47 .60(h) .35 .95 (.69) 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 4/30/97
unaudited $7.73 $ .23(h) $ .01 $ .24 $ (.28) $0.00
Year Ended 10/31/96 7.47 .54(h) .35 .89 (.63) 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 4/30/97
unaudited $7.73 $ .24(h) $ 0.00 $ .24 $ (.28) $0.00
Year Ended 10/31/96 7.47 .51(h) .38 .89 (.63) 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 4/30/97
unaudited $7.23 $ .24(h) $ .04 $ .28 $ (.33) $0.00
Year Ended 10/31/96 6.83 .59(h) .48 1.07 (.67) 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 4/30/97
unaudited $7.23 $ .22(h) $ .03 $ .25 $ (.30) $0.00
Year Ended 10/31/96 6.83 .53(h) .47 1.00 (.60) 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 4/30/97
unaudited $7.23 $ .21(h) $ .04 $ .25 $ (.30) $0.00
Year Ended 10/31/96 6.83 .54(h) .47 1.01 (.61) 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
</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 $(.29) $8.52 3.54% $380,439 1.56%*(e) 6.55%* 66%
0.00 (.08) (.59) 8.51 4.23 412,899 1.68(e) 6.38 208
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 $(.25) $8.52 3.16% $383,923 2.28%*(e) 5.83%* 66%
0.00 (.07) (.53) 8.51 3.46 477,196 2.37(e) 5.66 208
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 $(.25) $8.52 3.16% $31,079 2.26%*(e) 5.84%* 66%
0.00 (.07) (.53) 8.51 3.46 35,355 2.38(e) 5.67 208
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

$0.00 $0.00 $(.05) $1.64 1.73% $41,024 2.29%*(d) 4.43% N/A
0.00 0.00 (.10) 1.67 6.98 44,890 2.10(d) 5.37 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 $(.31) $7.69 3.51% $402,165 1.28%* 6.82%* 143%
0.00 0.00 (.69) 7.73 13.23 386,545 1.29 7.85 208
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 $(.28) $7.69 3.13% $185,161 1.99%* 6.05%* 143%
0.00 0.00 (.63) 7.73 12.34 273,109 2.00 7.14 208
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 $(.28) $7.69 3.13% $7,002 1.97%* 6.09%* 143%
0.00 0.00 (.63) 7.73 12.35 10,031 1.98 7.15 208
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) $7.18 3.94% $64,439 1.59%* 6.71%* 200%
0.00 0.00 (.67) 7.23 16.37 68,776 1.64(f) 8.40 215
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) $7.18 3.50% $77,031 2.30%* 6.00%* 200%
0.00 0.00 (.60) 7.23 15.35 88,427 2.35(f) 7.69 215
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) $7.18 3.51% $1,292 2.29%* 5.97%* 200%
0.00 0.00 (.61) 7.23 15.36 1,076 2.34(f) 7.62 215
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
</TABLE>

PLEASE REFER TO THE FOOTNOTES ON PAGE 14.

CLASS B
Six Months Ended 5/31/97
unaudited $ 8.01 $ .53(h) $ (.11) $ .42 $ (.45) $ 0.00
Year Ended 11/30/96 6.75 1.04(h) 1.12 2.16 (.69) 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 5/31/97
unaudited $ 8.01 $ .53(h) $ (.11) $ .42 $ (.45) $ 0.00
Year Ended 11/30/96 6.75 1.05(h) 1.11 2.76 (.69) 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 8/31/97 $10.01 $ .88(h) $ 1.85 $ 2.73 $ (.95) $(1.15)
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 8/31/97 $10.01 $ .81(h) $ 1.84 $ 2.65 $ (.87) $(1.15)
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 8/31/97 $10.01 $ .82(h) $ 1.84 $ 2.66 $ (.88) $(1.15)
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

GLOBAL STRATEGIC INCOME
CLASS A
Six Months Ended 4/30/97
unaudited $10.83 $ .35 $ .50 $ .85 $ (.51) $ (.10)
1/9/96+ to 10/31/96 10.00 .69 .95 1.64 (.81) 0.00

CLASS B
Six Months Ended 4/30/97
unaudited $10.83 $ .30 $ .52 $ .82 $ (.48) $ (.10)
3/25/96++ to 10/31/96 9.97 .41 1.01 1.42 (.56) 0.00

CLASS C
Six Months Ended 4/30/97
unaudited $10.83 $ .32 $ .50 $ .82 $ (.48) $ (.10)
3/25/96++ to 10/31/96 9.97 .39 1.03 1.42 (.56) 0.00

CORPORATE BOND
CLASS A
Year Ended 6/30/97 $13.29 $1.15(h) $ .97 $ 2.12 $(1.22) $ 0.00
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 6/30/97 $13.29 $1.05(h) $ .98 $ 2.03 $(1.13) $ 0.00
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 6/30/97 $13.29 $1.04(h) $ .99 $ 2.03 $(1.13) $ 0.00
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)
5/3/93++ to 6/30/93 13.63 .16 .53 .69 (.17) 0.00

HIGH YIELD
CLASS A
4/22/97+ to 8/31/97 $10.00 $ .37(h) $1.15 $ 1.52 $ (.35) $ 0.00

CLASS B
4/22/97+ to 8/31/97 $10.00 $ .31(h) $1.19 $ 1.50 $ (.33) $ 0.00

CLASS C
4/22/97+ to 8/31/97 $10.00 $ .32(h) $1.18 $ 1.50 $ (.33) $ 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) $ 7.98 5.91% $ 430,758 2.23%*(f) 14.06%* 142%
0.00 (.22) (.97) 8.01 35.22 385,784 2.34(f) 14.82 166
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) $ 7.98 5.44% $1,342,657 2.94%*(f) 13.36%* 142%
0.00 (.21) (.90) 8.01 33.96 1,329,719 3.05(f) 14.20 166
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) $ 7.98 5.44% $ 261,454 2.93%*(f) 13.37%* 142%
$0.00 (.21) (.90) 8.01 33.96 250,676 3.04(f) 14.22 166
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 $(2.10) $10.64 30.04% $ 37,416 1.55% 8.49% 314%
0.00 0.00 (.95) 10.01 38.47 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 $(2.02) $10.64 29.14% $ 93,377 2.26% 7.81% 314%
0.00 0.00 (.87) 10.01 37.36 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 $(2.03) $10.64 29.17% $ 25,130 2.25% 7.82% 314%
0.00 0.00 (.88) 10.01 37.40 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

$0.00 $0.00 $ (.61) $11.07 7.71% $ 5,649 1.90%*(d) 6.57%* 730%
0.00 0.00 (.81) 10.83 17.31 2,295 1.90*(d) 8.36* 282

$0.00 $0.00 $ (.58) $11.07 7.63 $ 10,212 2.60 5.79 730
0.00 0.00 (.56) 10.83 14.47 800 2.60*(d) 7.26* 282

$0.00 $0.00 $ (.58) $11.07 7.64 $ 2,470 2.60 5.86 730
0.00 0.00 (.56) 10.83 14.47 750 2.60*(d) 7.03* 282

$0.00 $0.00 $(1.22) $14.19 16.59% $ 370,845 1.12% 8.34% 307%
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 $(1.13) $14.19 15.80% $ 480,326 1.82% 7.62% 307%
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 $(1.13) $14.19 15.80% $ 174,762 1.82% 7.61% 307%
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

$0.00 $0.00 $ (.35) $11.17 15.33% $ 5,889 1.70%*(d) 8.04%* 73%

$0.00 $0.00 $ (.33) $11.17 15.07% $ 43,297 2.40*(d) 7.19* 73%

$0.00 $0.00 $ (.33) $11.17 15.07% $ 7,575 2.40*(d) 7.24* 73%
</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 TO 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, FOR THE YEAR ENDED APRIL 30,
1994, WITH RESPECT TO CLASS A SHARES 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 AND 2.42% FOR THE YEAR ENDED AUGUST 31, 1997; 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 AND 3.10% FOR
THE YEAR ENDED AUGUST 31, 1997; 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 (ANNUALIZED), 4.23% FOR THE YEAR ENDED AUGUST 31,
1995, 3.72% FOR THE YEAR ENDED AUGUST 31, 1996 AND 3.10% FOR THE YEAR ENDED
AUGUST 31, 1997. 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, 2.35% FOR 1995, 2.48% FOR
1996 AND 2.67% (ANNUALIZED) FOR THE SIX MONTHS ENDED APRIL 30, 1997. 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 OCTOBER 31, 1996, THE
EXPENSE RATIO WOULD HAVE BEEN WITH RESPECT TO CLASS A SHARES, 19.20%
(ANNUALIZED) AND 5.07% (ANNUALIZED) FOR THE SIX MONTHS ENDED APRIL 30, 1997;
WITH RESPECT TO CLASS B SHARES, FOR THE PERIOD MARCH 25, 1996 TO OCTOBER 31,
1996, 19.57% (ANNUALIZED); AND WITH RESPECT TO CLASS C SHARES, 19.49%
(ANNUALIZED). IF HIGH YIELD HAD BORNE ALL EXPENSES, THE EXPENSE RATIOS WOULD
HAVE BEEN WITH RESPECT TO CLASS A SHARES, 3.11% (ANNUALIZED); WITH RESPECT
TO CLASS B SHARES, 3.85% (ANNUALIZED); AND WITH RESPECT TO CLASS C SHARES,
3.84% (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 AND 1997; WITH RESPECT TO CLASS B SHARES, 2.10% FOR 1996 AND
1997; AND WITH RESPECT TO CLASS C SHARES 2.10% FOR 1996 AND 1997. 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, 1.58%
FOR 1996, AND 1.62% (ANNUALIZED) FOR THE SIX MONTHS ENDED MAY 31, 1997; WITH
RESPECT TO CLASS B SHARES, 2.10% (ANNUALIZED) FOR 1992, 2.07% FOR 1993, 1.91%
FOR 1994, 2.11% FOR 1995, 2.30% FOR 1996 AND 2.36% (ANNUALIZED) FOR THE SIX
MONTHS ENDED MAY 31, 1997; WITH RESPECT TO CLASS C SHARES, 1.58% (ANNUALIZED),
FOR 1993, 1.89% FOR 1994, 2.10% FOR 1995, 2.29% FOR 1996 AND 2.34% (ANNUALIZED)
FOR THE SIX MONTHS ENDED MAY 31, 1997. 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, 1.03%
FOR 1996 AND 1.07% (ANNUALIZED) FOR THE PERIOD ENDED JUNE 30, 1997; WITH
RESPECT TO CLASS B SHARES, 1.68% FOR 1994, 1.74% FOR 1995, 1.74% FOR 1996 AND
1.77% (ANNUALIZED) FOR THE PERIOD ENDED JUNE 30, 1997; WITH RESPECT TO CLASS C
SHARES 1.69% FOR 1994, 1.73% FOR 1995, 1.73% FOR 1996, AND 1.76% (ANNUALIZED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997.

(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 1.60% FOR 1996; 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 2.31% FOR 1996; WITH RESPECT TO
CLASS C SHARES, 2.11% (ANNUALIZED) FOR 1993, 1.99% FOR 1994, 2.24% FOR 1995,
AND 2.30% FOR 1996. 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, 1.41% FOR 1996 AND 1.41%
(ANNUALIZED) FOR THE PERIOD ENDED MAY 31, 1997; WITH RESPECT TO CLASS B SHARES,
2.35% (ANNUALIZED) FOR 1992, 2.04% FOR 1993, 2.07% FOR 1994, 2.22% FOR 1995,
2.12% FOR 1996 AND 2.12% (ANNUALIZED) FOR THE PERIOD ENDED MAY 31, 1997; AND
WITH RESPECT TO CLASS C SHARES, 2.04% (ANNUALIZED) FOR 1993, 2.06% FOR 1994,
2.21% FOR 1995, 2.12% FOR 1996, AND 2.12% (ANNUALIZED) FOR THE PERIOD ENDED MAY
31, 1997.

(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.

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.

NRSRO is a nationally recognized securities rating organization.

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, L.P.

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.

EXCHANGE is the New York Stock Exchange, Inc.

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. In periods of rising interest rates the
Fund may, to the extent it invests in mortgage-related securities, be subject
to the risk that its average dollar-weighted portfolio maturity may be extended
as a result of lower than anticipated prepayment rates. See "Additional
Investment Practices-Mortgage-Related 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
Arkansas, California, Colorado, Connecticut*, Delaware, Florida, Hawaii*,
Illinois, Indiana, Kansas, Louisiana, Maine, Mississippi, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma,
Pennsylvania, South Carolina, South Dakota*, Texas, Utah and Virginia, (iii)
credit unions chartered under the laws of California, Florida*, Georgia,
Illinois, Kentucky, Maine, Maryland*, Nevada*, New Hampshire, Ohio*, Oregon*,
Pennsylvania*, South Carolina, Utah, Washington and West Virginia, and (iv)
commercial banks chartered under the laws of Alabama, Alaska, Arizona,
California, Colorado, Connecticut*, Delaware, Florida, Georgia, Hawaii*, Idaho,
Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts,
Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, New
Mexico, New York, North Carolina*, North Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas,
Utah, Vermont, Virginia, 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 ten years or a duration not
exceeding that of a ten-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 high quality debt issues outstanding 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.
Although not all Argentine Government securities are rated investment grade
quality by S&P, Moody's, Duff & Phelps or Fitch, Alliance believes that there
are unrated 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" and "Risk Considerations-Sovereign Debt
Obligations." 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, 1997, 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
5% in A and above, 67% in Ba or BB, 9% in B, 2% in CCC and 5% 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, Russia 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, Russia 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 five 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 may borrow in order to purchase securities or
make other investments, although it 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 FUNDS

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, 1997, 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 29% in A and above, 41% in Baa or BBB, 14% in
Ba or BB, and 12% 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.

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.

ALLIANCE HIGH YIELD FUND

ALLIANCE HIGH YIELD FUND, INC. ("High Yield") is a diversified management
investment company that seeks primarily to achieve high total return by
maximizing current income and, to the extent consistent with that objective,
capital appreciation. The Fund will pursue this objective by investing
primarily in a diversified mix of high yield, below investment grade
fixed-income securities involving greater volatility of price and risk of
principal and income than higher quality fixed-income securities. The below
investment grade debt securities in which the Fund may invest are known as
"junk bonds."

The Fund attempts to achieve its objective by investing primarily in a
diversified mix of high yield, below investment grade fixed-income securities
involving greater volatility of price and risk of principal and income than
higher fixed-income securities. The Fund will be managed to maximize current
income by taking advantage of market developments, yield disparities and
variations in the creditworthiness of issuers. The Fund will use various
strategies in attempting to achieve its objective.

Under normal circumstances, at least 65% of the Fund's total assets will be
invested in high yield fixed-income securities rated below investment grade by
two or more NRSROs (i.e., rated lower than Baa by Moody's or lower than BBB or
lower by S&P) or unrated but deemed by Alliance to be equivalent to such
lower-rated securities. The Fund will not, however, invest more than 10% of its
total assets in (i) fixed-income securities which are rated lower than B3 or B-
or their equivalents by two or more NRSROs or if unrated are of equivalent
quality as determined by Alliance, and (ii) money market instruments of any
entity which has an outstanding issue of unsecured debt that is rated lower
than B3 or B- or their equivalents by two or more NRSROs or if unrated is of
equivalent quality as determined by Alliance.

As of August 31, 1997, 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
12% in A and above, 3% in Ba or BB, 53% in B 2% in CCC and 13% in unrated
securities. The Fund did not invest in securities rated below CCC 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.

Certain of the Fund's investments will be in fixed-income securities which are
providing high current yields because of risks other than credit. For example,
the Fund may invest in securities which have prepayment risks, and non-U.S.
dollar denominated foreign securities, which have currency risks.

See Appendix A, "Bond Ratings," for a description of each rating category. In
the event that any securities held by the Fund fall below those ratings, the
Fund will not be obligated to dispose of such securities and may continue to
hold such securities if, in the opinion of Alliance, such investment is
considered appropriate under the circumstances.

A portion of the Fund's assets are also expected to be invested in foreign
securities, and the Fund may buy and sell foreign currencies principally for
the purpose of preserving the value of foreign securities or in anticipation of
purchasing foreign securities. See "Risk Considerations-Foreign Investment" and
"-Currency Considerations."

In addition, and although not to be emphasized, in furtherance of its
investment objective, the Fund may (i) invest in mortgage-backed and
asset-backed securities, (ii) enter into repurchase agreements, (iii) invest in
loan participations and assignments of loans to corporate, governmental, or
other borrowers originally made by institutional lenders or lending syndicates,
(iv) enter into forward commitments for the purchase or sale of securities and
purchase and sell securities on a when-issued or delayed delivery basis, (v)
write covered put and call options on fixed-income securities, securities
indices and foreign currencies and purchase put or call options on fixed-income
securities, securities indices and foreign curencies, (vi) purchase and sell
futures contracts and related options on debt securities and on indices of debt
securities, (vii) enter into contracts for the purchase or sale of a specific
currency for hedging purposes only, and (viii) lend portfolio securities. For
additional information on the uses, risks and costs of these practices, see
"Additional Investment Practices."

In addition to the foregoing, the Fund may from time to time make investments
in (i) U.S. Government securities, (ii) certificates of deposit, bankers'
acceptances, bank notes, time deposits and interest bearing savings deposits
issued or guaranteed by certain domestic and foreign banks, (iii) commercial
paper (rated at least A-1 by S&P or Prime-1 by Moody's or, if not rated, issued
by domestic or foreign companies having high quality outstanding debt
securities) and participation interests in loans extended by banks to such
companies, (iv) corporate debt obligations with remaining maturities of less
than one year rated at least high quality as well as corporate debt obligations
rated at least high grade provided the corporation also has outstanding an
issue of commercial paper rated at least A-1 by S&P or Prime-1 Moody's, and
(v) floating rate or master demand notes.

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, HIGH YIELD 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, and 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
is 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 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, CORPORATE
BOND and HIGH YIELD generally purchase or write privately negotiated options on
securities. A Fund that does so 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. 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 securities held by a Fund 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 of futures
contracts upon exercise. 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 write or purchase an 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. MORTGAGE SECURITIES INCOME will
not write or purchase options on futures contracts. 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 enter into a futures contract or, if otherwise permitted, write or
purchase an option on a futures contract, 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 any
futures contract (i) other than one on fixed-income securities or based on
interest rates, or (ii) 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.

HIGH YIELD will not purchase or sell futures contracts or options on futures
contracts unless either (i) the futures contracts or options thereon are for
"bona fide hedging" purposes (as that term is defined under the Commodities
Futures Trading Commission regulations) or (ii) if for other purposes, the sum
of amounts of initial margin deposits and premiums required to establish
non-hedging positions would not exceed 5% of the Fund's liquidation value.

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 (a "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 (a "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 (a
"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 realize a gain
or incur a 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 NRSRO. 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 high quality debt
securities outstanding.

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 one or more tranches of the CMO to be retired
substantially earlier than the stated maturities or final distribution dates of
the collateral. 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 fixed-rate mortgages or adjustable-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
prepayments of underlying mortgages. Such prepayments generally occur during
periods of falling mortgage interest rates. 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 investments that provide as high a yield as the
mortgage-related securities. Early payments associated with mortgage-related
securities causes these securities to experience significantly greater price
and yield volatility than is 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. Conversely, during periods of rising interest
rates, a reduction in prepayments may increase the effective life of
mortgage-related securities, subjecting them to greater risk of decline in
market value in response to rising interest rates. 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.

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 an 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 payments of mortgage-related securities
generally tend to decline during a period of rising interest rates.

Although the values of ARMS may not be affected as much as the values of
fixed-rate mortgage securities by rising interest rates, ARMS may still decline
in value as a result of rising interest rates. Although, as described above,
the yields on ARMS vary 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 and HIGH YIELD, 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 may not be a liquid market for such investments,
they 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 investments and a Fund's ability to dispose of particular
participations and assignments 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
participations and assignments also may make it more difficult for the Fund to
assign a value to these investments 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."

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.

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. 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 secured 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 50%, with
respect to HIGH YIELD, 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 are different from
or 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, (b) borrow
for temporary or emergency purposes in an amount not exceeding 5% of the value
of the total assets of the Fund, and (c) enter into reverse repurchase
agreements and dollar rolls, (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, (b) borrow for temporary or emergency purposes in an amount not exceeding
5% of the value of the total assets of the Fund, and (c) enter into reverse
repurchase agreements and dollar rolls, 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.

HIGH YIELD may not (i) invest in any one industry if that investment would make
the Fund's holding in that industry exceed 25% of the Fund's total assets and
(ii) will not make an investment unless, when considering all its other
investments, 75% of the value of its assets would consist of cash, cash items,
U.S. Government Securities, securities of other investment companies and other
securities.

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 will generally rise, although
if falling interest rates are viewed as a precursor to a recession, the values
of a Fund's securities may fall along with interest rates. Conversely, during
periods of rising interest rates, the values of a Fund's securities will
generally decline. Changes in interest rates have a greater effect on
fixed-income 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 will be 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 and HIGH YIELD invest may include
securities issued in connection with corporate restructurings such as takeovers
or leveraged buyouts, which may pose particular risks. Securities issued to
finance corporate restructurings may have special credit risks due to the
highly leveraged conditions of the issuer. In addition, such issuers may lose
experienced management as a result of the restructuring. Furthermore, the
market price of such securities may be more volatile to the extent that
expected benefits from the restructuring do not materialize. The Funds 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 Funds' 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 registration,
custody and settlements may in some instances be subject to delays and legal
and 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 also 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 most 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 that country. In the event of nationalization,
expropriation or other confiscation, a Fund could lose its entire investment in
securities 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 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 and
such sales could cause the Fund to incur related transaction costs and to
realize gains on securities held for less than three months. Until the start
of a Fund's first tax year beginning after August 5, 1997, 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."

Each of MULTI-MARKET STRATEGY, NORTH AMERICAN GOVERNMENT INCOME, GLOBAL
STRATEGIC INCOME and GLOBAL DOLLAR GOVERNMENT may 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, LIMITED MATURITY 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, LIMITED MATURITY 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, CORPORATE BOND and HIGH YIELD 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 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
WORLD INCOME, SHORT-TERM MULTI-MARKET, MULTI-MARKET STRATEGY, NORTH AMERICAN
GOVERNMENT INCOME, GLOBAL DOLLAR GOVERNMENT and GLOBAL STRATEGIC 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 at a price based on the next
calculated net asset value after receipt of a proper purchase order either
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 and may not exceed $500,000.

Each Fund (except WORLD INCOME) offers three classes of shares through this
Prospectus, 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
(four years in the case of GLOBAL STRATEGIC INCOME and HIGH YIELD) 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.

GLOBAL STRATEGIC INCOME and HIGH YIELD:
Year Since Purchase CDSC
First 4.00%
Second 3.00%
Third 2.00%
Fourth 1.00%
Fifth and thereafter None

ALL OTHER FUNDS:
Year Since Purchase CDSC
First 3.0%
Second 2.0%
Third 1.0%
Fourth and thereafter None

Class B shares are subject to higher distribution fees than Class A shares for
a period of six years, eight years in the case of GLOBAL STRATEGIC INCOME and
HIGH YIELD, (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 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 or Trustees believe accurately reflect fair
market value.

EMPLOYEE BENEFIT PLANS
Certain employee benefit plans, including employer-sponsored tax-qualified
401(k) plans and other defined contribution retirement plans ("Employee Benefit
Plans"), may establish requirements as to the purchase, sale or exchange of
shares of the Funds, including maximum and minimum initial investment
requirements, that are different from those described in this Prospectus. Such
Employee Benefit Plans may also not offer all Classes of shares of the Funds.
In addition, the Class A, Class B and Class C CDSC may be waived for
investments made through such Employee Benefit Plans.

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 $1,000,000.

GLOBAL STRATEGIC INCOME and HIGH YIELD FUND offer a fourth class of shares,
Advisor Class shares, by means of separate prospectuses. Advisor Class shares
may be purchased and held solely by (i) accounts established under a fee-based
program sponsored and maintained by a registered broker-dealer or other
financial intermediary and approved by AFD, (ii) 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 and (iii) certain other categories
of investors described in the prospectuses for the Advisor Class, including
investment advisory clients of, and certain other persons associated with,
Alliance and its affiliates or the Funds. Advisor Class shares are offered
without any initial sales charge or CDSC and without an ongoing distribution
fee and are expected, therefore, to have different performance than Class A,
Class B or Class C shares. You may obtain more information about Advisor Class
shares by contacting AFS at (800) 221-5672 or by contacting your financial
representative.

A transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of Class A,
Class B or Class C shares made through such financial representative. Such
financial intermediaries may also impose requirements with respect to the
purchase, sale or exchange of shares that are different from, or in addition
to, those imposed by a Fund, including requirements as to the minimum initial
and subsequent investment amounts.

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 EQ Financial Consultants 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, Inc.
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 4:00 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 his or her 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 Subscription 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, 1997 totaling more than $199 billion (of
which more than $71 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 54 registered investment companies managed by Alliance comprising
116 separate investment portfolios currently have over two million
shareholders. As of June 30, 1997, Alliance was retained as an investment
manager for 29 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
Government -Senior Vice President Alliance.

Jeffrey S. Phlegar (see above)
since 1997-(see above)

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

Patricia J. Young since 1997 (see above)
-(see above)

Jeffrey S. Phlegar Associated with
since 1997-Vice President Alliance.

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

Jeffrey S. Phlegar (see above)
since 1997-(see above)

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

Jeffrey S. Phlegar (see above)
since 1997-(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 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)

High Yield Wayne C. Tappe Associated with
since 1991-Vice President* Alliance.

Nelson Jantzen Associated with
since 1991-Senior Alliance.
Vice President*

* ASSOCIATED WITH EQUITABLE CAPITAL MANAGEMENT CORPORATION ("EQUITABLE
CAPITAL") PRIOR TO JULY 22, 1993. ON THAT DATE ALLIANCE ACQUIRED THE BUSINESS
AND SUBSTANTIALLY ALL THE ASSETS OF EQUITABLE CAPITAL.

PERFORMANCE OF A SIMILARLY MANAGED PORTFOLIO
Alliance is the investment adviser of a portfolio (the "Historical Portfolio")
of a registered investment company, sold only to separate accounts of insurance
companies in connection with variable life insurance contracts and variable
annuities certificates and contracts (the "Contracts"), that has substantially
the same investment objective and policies and has been managed in accordance
with essentially the same

investment strategies and techniques as those contemplated for the HIGH YIELD
FUND. See "Description of the Funds." Alliance since July 22, 1993, and prior
thereto, Equitable Capital, whose advisory business Alliance acquired on that
date, have served as investment adviser to the Historical Portfolio since its
inception in 1987.

The following tables set forth performance results for the Historical Portfolio
since its inception (January 2, 1987), together with those of the Lipper High
Current Yield Mutual Funds Average as a comparative benchmark. As of February
28, 1997, the assets in the Historical Portfolio totalled approximately $234
million. The data below does not represent the performance of the Fund.

The performance data does not reflect account charges applicable to the
Contracts or imposed at the insurance company separate account level. In
addition, the performance data does not reflect the Fund's estimated higher
expenses, which, if reflected, would lower the performance of the Historical
Portfolio. The performance data have not been adjusted for taxes, if any,
payable with respect to the Historical Portfolio. The rates of return shown for
the Historical Portfolio are not an estimate or guarantee of future investment
performance of the Fund.

The Lipper High Current Yield Bond Funds Average is a survey of the performance
of a large number of mutual funds the investment objective of each of which is
similar to that of the Fund. This survey is published by Lipper Analytical
Services, Inc. ("Lipper"), a firm recognized for its reporting of performance
of actively managed funds. According to Lipper, performance data are presented
net of investment management fees, operating expenses and, for funds with Rule
12b-1 plans, asset-based sales charges.

The performance results presented below are based on percent changes in net
asset values of the Historical Portfolio with dividends and capital gains
reinvested. Cumulative rates of return reflect performance over a stated period
of time. Annualized rates of return represent the rate of growth that would
have produced the corresponding cumulative return had performance been constant
over the entire period.

ANNUALIZED RATES OF RETURN
PERIODS ENDED FEBRUARY 28, 1997
-------------------------------
PORTFOLIO/BENCHMARK 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
- -------------------------------------------------------------------------------
Historical Portfolio 21.06% 13.25% 14.85% 11.78% 11.62%
Lipper High Current Yield
Mutual Funds Average 13.38 8.47 11.42 9.27 9.57

CUMULATIVE RATES OF RETURN
PERIODS ENDING FEBRUARY 28, 1997
--------------------------------
PORTFOLIO/BENCHMARK 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
- -------------------------------------------------------------------------------
Historical Portfolio 21.06% 45.24% 99.87% 204.39% 205.67%
Lipper High Current Yield
Mutual Funds Average 13.38 27.72 71.98 144.71 153.00

* JANUARY 2, 1987

EXPENSES OF THE FUND

In addition to the payments to Alliance under the Advisory Agreement with HIGH
YIELD, HIGH YIELD pays certain other costs, including (i) custody, transfer and
dividend disbursing expenses, (ii) fees of the Directors who are not affiliated
with Alliance, (iii) legal and auditing expenses, (iv) clerical, accounting and
other office costs, (v) costs of printing the Fund's prospectuses and
shareholder reports, (vi) costs of maintaining the Fund's existence, (vii)
interest charges, taxes, brokerage fees and commissions, (viii) costs of
stationary and supplies, (ix) expenses and fees related to registration and
filing with the Commission and with state regulatory authorities, and (x) upon
the approval of the Board of Directors, costs of personnel of Alliance or its
affiliates rendering clerical, accounting and other office services and (xi)
such promotional, shareholder servicing and other expenses as may be
contemplated by the Distribution Services Agreement, described below.

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 class of 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 the 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
and Class C 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, in the case of Class B and Class C
shares, 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
- -----------------------------------------------------------------------------
U.S. Government $ 8,593,091 (1.56%) $3,589,130 (2.63%)
Limited Maturity Government $ 472,895 (.73%) $2,677,214 (4.92%)
Mortgage Securities Income $12,491,371 (2.79%) $2,688,747 (6.50%)
Short-Term Multi-Market $26,166,892 (6.40%) $1,343,129 (20.59%)
Multi-Market Strategy $ 9,610,982 (9.58%) $ 454,910 (57.38%)
North American
Government Income $35,196,166 (2.88%) $3,291,519 (1.40%)
Global Dollar Government $ 2,214,590 (2.54%) $ 460,747 (2.29%)
Corporate Bond $ 9,163,392 (2.23%) $2,093,526 (1.77%)
Global Strategic Income $ 131,691 (53.37%) $ 84,063 (37.53%)
High Yield* $ 1,679,237 (8.5%) $ 79,092 (2.36%)

* FOR THE FISCAL PERIOD APRIL 22, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH
AUGUST 31, 1997.

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 TAXES

Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Internal Revenue Code. So long as a Fund distributes at least 90% of
its income, qualification as a regulated investment company relieves that Fund
of Federal income 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 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 with respect to a dividend
unless the corporation holds shares in the Fund on the ex-dividend rate and for
at least 45 more days during the 90-day period surrounding the ex-dividend
rate. Furthermore, the dividends-received deduction will be disallowed to the
extent that a corporation's investment in shares of a Fund is financed with
indebtedness.

Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to
net capital gains-that is, the excess of net gains from capital assets held for
more than one year ("long-term capital assets") over net losses from capital
assets held for not more than one year ("short-term capital assets"). One rate
(generally 28%) applies to net gains on capital assets held for more than one
year but not more than 18 months ("mid-term gains") and a second, preferred
rate (generally 20%) applies to the balance of such net capital gains
("adjusted net capital gains"). Distributions of net capital gains will be
treated in the hands of shareholders as mid-term gains to the extent designated
by the Fund as deriving from net gains from assets held for more than one year
but not more than 18 months, and the balance will be treated as adjusted net
capital gains. Distributions of mid-term gains and adjusted net capital gains
will be taxable to shareholders as such, regardless of how long a shareholder
has held the shares in the Fund.

Under current federal tax law, the amount of 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. Any loss realized on the sale of shares held six months
or less will be a long-term capital loss to the extent of any capital gain
distributions received by the shareholder with respect to such shares.

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 Statements 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.

GENERAL INFORMATION
_______________________________________________________________________________

PORTFOLIO TRANSACTIONS

Consistent with the Conduct Rules 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), ALLIANCE GLOBAL STRATEGIC INCOME
TRUST, INC. (1995) and ALLIANCE HIGH YIELD FUND, INC. (1996). 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 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
of the same class of shares 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. LITIGATION was filed in the U.S. District Court for the Southern District
of New York against the Fund, Alliance, ACMC, AFD, The Equitable Companies
Incorporated ("ECI"), a parent of the Adviser, and certain current and former
officers and directors of the Fund and ACMC, alleging violations of the federal
securities laws, fraud and breach of fiduciary duty in connection with the
Fund's investments in Mexican and Argentine securities. The Complaint sought
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.
Plaintiffs alleged that during 1995 the Fund's losses exceeded $750,000,000 and
sought as relief unspecified damages, costs and attorney's fees. On September
26, 1996, the District Court granted defendants' motion to dismiss the
Complaint as to all claims.

On October 29, 1996, plaintiffs filed a motion for leave to file an amended
complaint. In the proposed amended complaint ("Amended Complaint"), plaintiffs
asserted claims against the Fund, Alliance, ACMC, AFD, ECI, and certain current
and former officers and directors of the Fund and ACMC alleging violations of
federal securities laws, fraud and breach of fiduciary duty. The principal
allegations of the Amended Complaint related to the Fund's hedging practices,
the Fund's investments in certain mortgage-backed securities, and the risks and
objectives of the Fund as described in the Fund's marketing materials. The
Amended Complaint made similar request for class certification and damages as
the Complaint. On July 15, 1997, the District Court denied plaintiffs' motion
to file the Amended Complaint and dismissed the case. On August 13, 1997,
plaintiffs filed a Notice of Appeal of the District Court's denial of their
motion to file the Amended Complaint to the U.S. Court of Appeals for the
Second Circuit.

The Fund and Alliance believe that the allegations in the Complaint and the
Amended Complaint are without merit and intend to defend vigorously against
those 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 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-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.

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, L.P.

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 generally has been
narrower than the range of fluctuation between the U.S. Dollar and most other
major currencies. Between 1991 and 1995, Canada 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 20% from October 1991. Since January 1996, however, the Canadian
Dollar has remained steady in value against the U.S. Dollar at a level
approximately 3% to 4% above that low. 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.

Over the past decade, the Mexican economy has experienced improvement in a
number of areas, including eight 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. In 1994, Mexico 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
accord among the government and the business and labor sectors of the economy
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.

B-1

In October 1995, and again in October 1996, the Mexican government
announced new accords designed to encourage economic growth and reduce
inflation. While it cannot be accurately predicted whether these accords will
achieve their objectives, the Mexican economy has stabilized since the
economic crisis of 1994, and the high inflation and high interest rates that
continued to be a factor after 1994 have subsided as well. After declining for
five consecutive quarters beginning with the first quarter of 1995, Mexico's
gross domestic product began to grow in the second quarter of 1996. That
growth was sustained in 1996, resulting in a 5.1% increase from 1995, and,
according to preliminary estimates, continued at the same rate during the
first quarter of 1997, compared with the first quarter of 1996. In addition,
inflation dropped from a 52% annual rate in 1995 to a 27.7% annual rate in
1996. In May 1997, the monthly inflation rate was 0.9%, the first time since
December 1994 that the monthly inflation rate was below 1%. The inflation rate
for the first half of 1997 was 8.7%, compared with 15.3% for the first half of
1996. 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 22, 1994, the Mexican
government announced that it would permit the Peso to float against other
currencies, resulting in a precipitous decline against the U.S. Dollar. By
December 31, 1996, the Peso-Dollar exchange rate had decreased approximately
40% from that on December 22, 1994. In 1996, the average annual Peso-Dollar
exchange rate decreased approximately 15% from that in 1995, which itself had
decreased approximately 47% from that in 1994. The Peso-Dollar exchange rate
has been relatively stable in 1997. On September 30, 1997, the Peso-Dollar
exchange rate was 7.77.

Mexico has in the past imposed strict foreign exchange controls. 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 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. During 1996, however, gross domestic product
increased 4.3% from 1995. During the first quarter of 1997, gross domestic
product increased 8.1% compared to the first quarter of 1996, and preliminary
data for the third quarter of 1997 indicate an 8.4% increase from the second
quarter of 1996. The rate of inflation is generally viewed to be under control.

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.

B-2

instrumental in stabilizing the economy, but has not reduced pressures from
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. In 1993, legislation was adopted abolishing previous requirements
of a three-year waiting period for capital repatriation. Under the legislation,
foreign investors are permitted to remit profits at any time.

B-3

<PAGE>

The Registrant's Advisor Class Prospectus is incorporated herein
by reference to Part A of the Amendment to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
February 28, 1997.

<PAGE>

[LOGO] ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.
_________________________________________________________________
Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
February 28, 1997
(as amended October 31, 1997)
_________________________________________________________________

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for Alliance North American Government Income Trust,
Inc. (the "Fund") 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
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 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."

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 &

<PAGE>

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
"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

<PAGE>

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
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

<PAGE>

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.

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.

<PAGE>

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
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

<PAGE>

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.

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

<PAGE>

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
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.

<PAGE>

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, there are
five Mexican Government Securities denominated in the Mexican
Peso that have been rated investment grade by either S&P or
Moody's. These five Mexican Government Securities are Cetes and
Tesobonos, each rated A-2 by S&P, and Ajustabonos, Bondes and
Udibonos, each rated BBB+/stable by S&P. The Adviser, however,
believes that there are other Peso-denominated Mexican Government
Securities that are of investment grade quality. Currently,
Floating Rate Notes, rated BB/stable by S&P, is the only Mexican
Government Security denominated in U.S. Dollars that is rated
investment grade by S&P. 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) Bondes, 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
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

<PAGE>

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 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.

<PAGE>

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

<PAGE>

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 suffers 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 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 by approximately 40% compared to the U.S.
Dollar.

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

<PAGE>

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 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 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 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,
the establishment of two trust funds, and the implementation of
limited deposit insurance.

<PAGE>

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 in the Prospectus.

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
on futures contracts to be written or purchased by the Fund will
be traded on U.S. or foreign exchanges or over-the-counter.

<PAGE>

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.

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

<PAGE>

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
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

<PAGE>

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 liquid assets 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 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.

<PAGE>

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
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

<PAGE>

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
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

<PAGE>

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 liquid assets 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.
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

<PAGE>

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.

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

<PAGE>

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
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

<PAGE>

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
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

<PAGE>

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
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

<PAGE>

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 1995 and 1996, the
portfolio turnover rates of the securities of the Fund were 180%
and 166%, respectively.

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
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.

<PAGE>

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
(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

<PAGE>

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,
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

<PAGE>

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.

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

<PAGE>

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.

CERTAIN 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,
or (ii) more than 50% of the outstanding shares, whichever is
less.

<PAGE>

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
might be deemed to be an underwriter for purposes of the
Securities Act.

<PAGE>

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 (the
"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 of any such maximum.

_______________________________________________________________

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
Canada, Mexico or Argentina, their economies, or the consequences
of investing in Mexican Government Securities, Canadian
Government Securities or Argentine Government Securities.

<PAGE>

_______________________________________________________________

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 30 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. The legislative branch consists of a
House of Commons (parliament) and the 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. The prime minister has the
privilege of appointing all judges except those of the provincial
courts.

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 the House
of Commons 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. The Liberal Party was re-elected for a
second term in the June 2, 1997 general election, but lost 20
seats in the House of Commons. It has been reported that
Mr. Chretien may step down in two years.

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. 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. 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. Because of the
closeness of the vote, it is possible that there will be
federally-sponsored legislation or the proposal of constitutional
amendments with regard to the relationship between the federal
government and the provinces, or that there will be another
referendum within the next few years. In the meantime, the
federal government and others have initiated legal actions to
determine the legality of Quebec's secession. In addition,
Canada's provincial leaders (other than Quebec's) met in
September 1997 to formulate a seven-point framework for
discussion on national unity. It is expected that Quebec's
position within Canada will continue to play an active part in
the political debate.

Monetary and Banking System

The central bank of Canada is the Bank of Canada. Its main
functions are conducting monetary policy, supervising commercial
banks, acting as a fiscal agent to the federal government and

<PAGE>

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.

Trade

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 1995 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. Initial talks with South American countries, such as Chile,
are also under way for bilateral trade agreements that are
expected eventually to fall under the umbrella of a new form of
NAFTA. 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 1980s. In the early 1990s, however, the economy experienced
a deep recession. This resulted from, among other things, high
government debt and high interest rates. The 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 recession in the early
1990s, 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. For the fiscal year
1994-95, the budget deficit was 4.2% of gross domestic product

<PAGE>

("GDP"). The 1996/97 budget deficit was approximately 2.2% of
GDP. While the Government's budget deficit objectives 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 undertook
plans to balance their respective budgets, and, with the
exception of Ontario and Quebec, the provinces have achieved, or
are close to achieving, their goals.

Canada's real GDP growth rate slipped to 2.3% in 1995 and
1.5% in 1996 from 4.1% in 1994. Canada is forecast to experience
real GDP growth of 3.5% in 1997 and 3.3% in 1998. The recent
growth of the economy has been broadly based, unlike earlier
periods of recovery, when it was attributable almost entirely to
a growth in exports. The trade sector continues to be an
important factor, however, in the growth of the Canadian economy.
The trade surplus reached a record in 1995, more than three times
higher than the average surplus between 1990 and 1994. In 1996,
the trade surplus was almost 25% higher than it was in 1995.
Exports grew by 16% in 1995 and by 6% in 1996. According to
preliminary data, however, in the first five months of 1997 the
trade surplus was reduced as the pace of import growth doubled
the pace of export growth.

During 1994, despite growing output and low inflation,
concern over the country's deficit and the uncertainty associated
with Quebec's status within Canada led to a weakening of its
currency and higher interest rates. On January 20, 1995, the
Canadian Dollar fell to .702, its lowest rate in almost nine
years and close to its record low of .692. The Bank of Canada
responded by increasing rates on Treasury bills and selling U.S.
Dollars. The Canadian Dollar has increased in value from .702
against the U.S. Dollar on January 20, 1995 to .724 on
September 30, 1997. The easing of monetary policy was also
facilitated by a renewed strength in the Canadian Dollar. In
June 1997, with a real growth of 4% annualized during the first
two quarters of 1997, the Bank of Canada decided to raise
interest rates for the first time since 1995, by 25 basis points.

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

<PAGE>

Government Securities. Historical statistical information is not
necessarily indicative of future developments.

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.

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 future fluctuations in that rate. Future rates of
exchange cannot be predicted, particularly over extended periods
of time.

<PAGE>

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
1996 0.73
1997
January 0.74
February 0.74
March 0.73
April 0.72
May 0.72
June 0.72
July 0.73

Source: Federal Reserve Bulletin

<PAGE>

INFLATION RATE OF THE CANADIAN CONSUMER PRICE INDEX.
Inflation has remained below 2% since 1991. 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 1996 and for the five
months January-May 1997 (1986 = 100).

National Consumer
Price Index
_________________

1981 . . . . . . . . . . . . . . . 12.4%
1982 . . . . . . . . . . . . . . . 10.9
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 . . . . . . . . . . . . . . . 2.1
1996 . . . . . . . . . . . . . . . 1.6
1997
January . . . . . . . . . . . . 2.2
February . . . . . . . . . . . . 2.2
March . . . . . . . . . . . . . 2.0
April . . . . . . . . . . . . . 1.7
May . . . . . . . . . . . . . . 1.5

Source: BANK OF CANADA REVIEW Winter 1996-1997; CANADIAN
ECONOMIC OBSERVER, Summer 1997.

<PAGE>

CANADIAN GROSS DOMESTIC PRODUCT. The following table
sets forth Canada's GDP for the years 1981 through the first
quarter of 1997 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 747,260 594,990 4.1
1995 776,299 608,835 2.3
1996 667,952 617,795 1.5
1997
1st Quarter 822,932 629,504 0.9

Source: BANK OF CANADA REVIEW Summer 1997.

<PAGE>

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 1995 through
September 1997.

Treasury Bills Benchmark Bonds
1995 3 Months 6 Months 5 Years 10 Years
____ ___________________ __________________

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
October 7.16 7.21 7.54 7.86
November 5.83 5.87 6.74 7.19
December 5.54 5.64 6.64 7.11

Treasury Bills Benchmark Bonds
1996 3 Months 6 Months 5 Years 10 Years
____ ___________________ __________________

January 5.12 5.20 6.33 7.01
February 5.21 5.38 6.87 7.53
March 5.02 5.25 7.02 7.64
April 4.78 4.97 7.09 7.76
May 4.68 4.88 7.01 7.72
June 4.70 4.94 7.05 7.77
July 4.39 4.75 6.96 7.62
August 4.02 4.32 6.60 7.34
September 3.86 4.13 6.28 7.16
October 3.17 3.33 5.59 6.47
November 2.73 2.89 5.10 6.05
December 2.85 3.24 5.44 6.37

<PAGE>

Treasury Bills Benchmark Bonds
1997 3 Months 6 Months 5 Years 10 Years
____ ___________________ __________________
January 2.87 3.21 5.67 6.65
February 2.91 3.17 5.44 6.38
March 3.14 3.45 5.75 6.59
April 3.14 3.55 5.92 6.68
May 2.99 3.39 5.86 6.65
June 2.86 3.19 5.32 6.14
July 3.29 3.62 5.18 5.80
August 3.11 3.68 5.36 6.06
September 2.86 3.49 5.17 5.70

Source: BANK OF CANADA REVIEW Summer 1997.

_________________________________________________________________

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 91.1 million, as reported by the National Institute
of Statistics, Geography and Informatics in 1995.

Mexico's three largest cities are Mexico City,
Guadalajara and Monterrey, with estimated populations in 1995 of
16.4 million, 3.3 million and 2.9 million, respectively. In the
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
the population growth rate to a projected 1.6% in 1997.

Government

The present form of government was established by the
Constitution, which took effect on May 1, 1917. The Constitution
establishes 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.

<PAGE>

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 Federal Attorney
General, the Federal District Department and the office of the
Attorney General of the Federal District.

Federal 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 elected 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.

Federal 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 approximately 176
countries. It is a charter member of the United Nations and a
founding member of the Organization of American States, the
International Monetary Fund (the "IMF"), the World Bank, the
International Finance Corporation, the Inter-American Development
Bank and the European Bank for Reconstruction and Development.
Mexico became a member of the Organization for Economic
Corporation and Development (the "OECD") 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")).

Politics

The Partido Revolucionario Institucional ("PRI") is the
dominant political party in Mexico. Since 1929 the PRI has won
all presidential elections and until the 1997 Congressional
elections held a majority in Congress. Until 1989 it had also
won all of the state governorships. The oldest opposition party
in Mexico is the Partido Accion Nacional ("PAN"). 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,

<PAGE>

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 had the
third largest representation with 10 seats in the Senate and 70
seats in the Chamber of Deputies. The PRI won two additional
seats pursuant to proportional representation and the PAN and the
PRD each won one seat in extraordinary elections held on
April 30, 1995. In the mid-term Congressional elections on
July 6, 1997, the PRI lost its majority in the Chamber of
Deputies and now holds 239 of its 500 seats. Elections will next
be held by 2000 (Presidential).

At the beginning of 1994 armed insurgents attacked (and
in some cases temporarily seized control of) several villages in
the southern state of Chiapas. While the Government responded by
providing support to the local authorities and publicly offering
to negotiate a peaceful resolution that would address the
underlying concerns of the local population, the conflict
remained a source of debate and uncertainty for the remainder of
the year. Negotiations with the insurgents continued through the
spring of 1994, but subsequently were broken off. In December of
1994, the Congress approved the creation of a Congressional peace
commission, to be formed by members of both chambers of Congress,
which would be responsible for mediating the negotiations between
the Government and the insurgents. By the end of 1994, however,
the insurgents had not agreed to resume negotiations and there
were additional incidents of civil unrest.

In the Spring of 1995, the Government renewed its
efforts to resolve its differences with the insurgents in the
Chiapas region by facilitating their participation in the
political process. On March 9, 1995, Congress approved a law
granting temporary amnesty to insurgents who participate in peace
talks with the Government, and on March 13, 1995, the law
establishing the framework for these peace talks took effect. On
September 11, 1995, the Government and the insurgents reached an
agreement pursuant to which both sides accepted a common
political agenda and procedural rules, and agreed to the creation
of a working committee regarding the rights of indigenous
peoples. This agreement was expected to represent a first step
toward a comprehensive peace agreement between the parties. The
working committee began negotiations on October 17, 1995 and
concluded a second round of meetings on November 19, 1995 having
made significant progress in laying out the framework for a

<PAGE>

plenary session that took place from January 10 through
January 19, 1996. The attendees at the plenary session drafted
an agreement on a series of measures aimed at enhancing and
guaranteeing the rights of the indigenous population. The
agreement was signed on February 16, 1996. Talks with the
insurgents have continued but are currently on hold.

On August 28, 1996, a newly formed group calling itself
the Popular Revolutionary Army attacked military and police
targets in small cities of some southern states of Mexico. It is
generally believed that this group does not enjoy popular
support, and its terrorists attacks have been condemned by both
Government and nongovernment representatives. The Government has
announced the apprehension of several alleged members of the
group.

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
include 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. There have
also been mushrooming revelations linking Mexico's drug cartels
with high Government and military officials. These revelations
could jeopardize Mexico's status as an ally of the U.S. in the
war against narcotics smuggling. While Mexico is currently
certified as an ally there is no assurance that the certification
will be maintained. A loss of certification could result in the
termination of U.S. economic assistance to Mexico.

On January 17, 1995, the major political parties of
Mexico entered into a new accord to further the opening of the
political process in Mexico. On July 25, 1996, the Mexican
Government announced certain proposed constitutional amendments
aimed at reforming the electoral law that were ratified on
August 22, 1996. The amendments, which had been agreed to by the
President and the leaders of the four major political parties
represented in Congress, among other things, exclude the
President from the Federal Electoral Institute, an autonomous
agency charged with organizing elections; eliminate the Electoral
Committee of the Chamber of Deputies, which had been responsible
for determining the validity of presidential elections; impose
limits on expenditures on political campaigns and controls on the
source of and uses of funds contributed to a political party;
grant voting rights to Mexican citizens residing abroad; reduce
from 315 to 300 the maximum number of congressional
representatives who may belong to a single party, and establish
an electoral procedure intended to result in a more proportional
representation in the Senate. The Mexican Supreme Court is
empowered to determine the constitutionality of electoral laws

<PAGE>

and the Mexican Federal Electoral Court, which has been part of
the executive branch, will become part of the judicial branch.

Money and Banking

Banco de Mexico, chartered in 1925, is the central bank
of Mexico. It is the Federal Government's primary authority 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
monetary 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
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 became a member of the GATT in 1986 and has been
a member of the WTO since January 1, 1995, the date on which the
WTO superseded the GATT. 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 as a step toward
establishing a free-trade area by the end of 1997, 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

<PAGE>

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 steep decline in oil prices
in 1981 and 1982, together with high international interest rates
and the credit markets' unwillingness to refinance maturing
external Mexican credits, led in 1982 to record inflation,
successive devaluations of the peso by almost 500% in total, a
pubic sector deficit of 16.9% of GDP and, in August 1982, a
liquidity crisis that precipitated subsequent restructurings of a
large portion of the country's external debt. 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."

The value of the 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), and 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.

A fixed exchange rate was maintained from February to
December 1988. Thereafter, under a Government implemented
devaluation schedule, the intended annual rate of devaluation was
gradually lowered from 16.7% in 1989 to 11.4% in 1990, 4.5% in
1991 and 2.4% in 1992. From October 1992 through December 20,
1994, the peso/dollar exchange rate was allowed to fluctuate
within a band that widened daily. The ceiling of the band, which
was the maximum selling rate, depreciated at a daily rate of
0.0004 pesos (equal to approximately 4.5% per year), while the
floor of the band, i.e., the minimum buying rate, remained fixed.
Banco de Mexico agreed to intervene in the foreign exchange

<PAGE>

market to the extent that the peso/dollar exchange rate reached
either the floor or the ceiling of the band.

RECENT DEVELOPMENTS. Beginning on January 1, 1994,
volatility in the peso/dollar exchange rate began to increase,
with the value of the peso relative to the dollar declining at
one point to an exchange rate of 3.375 pesos to the U.S. Dollar,
a decline of approximately 8.69% from the high of 3.1050 pesos
reached in early February. This increased volatility was
attributed to a number of political and economic factors,
including a growing current account deficit, the relative
overvaluation of the peso, investor reactions to the increase in
U.S. interest rates, lower than expected economic growth in
Mexico in 1993, uncertainty concerning the Mexican Presidential
elections in August 1994 and certain related developments.

On December 20, 1994, increased pressure on the
peso/dollar exchange rate led Mexico to increase the ceiling of
the Banco de Mexico intervention band. That action proved
insufficient to address the concerns of foreign investors, and
the demand for foreign currency continued. On December 22, the
Government adopted a free exchange rate policy, eliminating the
intervention band and allowing the peso to float freely against
the dollar. The value of the peso continued to weaken relative
to the dollar in the following days. There was substantial
volatility in the peso/dollar exchange during the first quarter
of 1995, with the peso/dollar exchange rate falling to a low
point of 7.588 pesos to the U.S. Dollar on March 13, 1995. By
the end of April and through September 1995, the exchange rate
began to stabilize; however, the exchange rate began to show
signs of renewed volatility in October and November 1995. The
peso/dollar exchange rate fell to a low for the year of 8.14
pesos to the U.S. Dollar on November 13, 1995. The peso/dollar
exchange rate announced by Banco de Mexico on October 27, 1997
(to take effect on the second business day thereafter) for the
payment of obligations denominated in dollars and payable in
pesos was 8.39 pesos to the U.S. Dollar.

In order to address the adverse economic situation that
developed at the end of 1994, the Government announced in January
1995 a new economic program and a new accord among the Government
and the business and labor sectors of the economy, which,
together with a subsequent program announced in March 1995 and
the international support package described below, formed the
basis of Mexico's 1995 economic plan (the "1995 Economic Plan").
The objectives of the 1995 Economic Plan were to stabilize the
financial markets, lay the foundation for a return to lower
inflation rates over the medium-term, preserve Mexico's
international competitiveness, maintain the solvency of the
banking system and attempt to reassure long-term investors of the
strong underlying fundamentals of the Mexican economy.

<PAGE>

The central elements of the 1995 Economic Plan were
fiscal reform, aimed at increasing public revenues through price
and tax adjustments and reducing public sector expenditures;
restrictive monetary policy, characterized by limited credit
expansion; stabilization of the exchange rate while maintaining
the current floating exchange rate policy; reduction of the
current account deficit; introduction of certain financial
mechanisms to enhance the stability of the banking sector; and
maintenance and enhancement of certain social programs, to ease
the transition for the poorest segments of society.

In addition to the actions described above, in the
beginning of 1995, the Government engaged in a series of
discussions with the IMF, the World Bank, the Inter-American
Development Bank and the U.S. and Canadian Governments in order
to obtain the international financial support necessary to
relieve Mexico's liquidity crisis and aid in restoring financial
stability to Mexico's economy. The proceeds of the loans and
other financial support have been and will be used to refinance
public sector short-term debt, primarily Tesobonos, to restore
the country's international reserves and to support the banking
sector. The largest component of the international support
package is up to $20 billion in support from the United States
pursuant to four related agreements entered into on February 21,
1995. During 1995, the U.S. Government and the Canadian
Government disbursed $13.7 billion of proceeds to Mexico under
these agreements and the North American Framework Agreement
("NAFA"), the proceeds of which were used by Mexico to refinance
maturing short-term debt, including Tesobonos and $1 billion of
short-term swaps under the NAFA.

Using resources made available through the international
support package as well as operations by Banco de Mexico, in 1995
Mexico altered its debt profile significantly. The outstanding
Tesobono balance was reduced from $29.2 billion at December 31,
1994 to $16.2 billion at the end of the first quarter of 1995,
$10.0 billion at the end of the second quarter, $2.5 billion at
the end of the third quarter and $246 million at the end of the
fourth quarter. By February 16, 1996, Mexico had no Tesobonos
outstanding, and has not issued Tesobonos since that date. As of
December 31, 1996, 100% of Mexico's net internal debt was
denominated and payable in pesos, as compared with only 44.3% of
such debt at the end of 1994.

On May 31, 1995, the Government announced the Plan
Nacional de Desarrollo 1995-2000 (1995-2000 National Development
Plan, or the "Development Plan"). The Development Plan covers
five topics: sovereignty; the rule of law; democratic
development; social development; and economic growth. The
fundamental strategic objective of the Development Plan is to
promote vigorous and sustainable economic growth. Among other

<PAGE>

things, the Development Plan calls for steps to increase domestic
savings, preferences for channeling foreign investment into
direct productive investment, the elimination of unnecessary
regulatory obstacles to foreign participation in productive
activities and further deregulation of the economy.

On October 29, 1995, the Government announced the
establishment of a new accord among the Government and the
business, labor and agricultural sectors of the economy known as
the Alianza para la Recuperacion Economica (Alliance for Economic
Recovery or "ARE"). The chief objectives of the ARE, which was
replaced by the ACE (as defined below), were to stimulate
economic recovery and job creation, and to strengthen the basis
for gradual and sustainable economic growth.

On October 26, 1996, the Government announced the
establishment of another accord among the Government and the
business, labor and agricultural sectors of the economy known as
the Alianza para el Crecimiento Economico (Alliance for Economic
Growth or "ACE"). The chief objectives of the ACE are to foster
sustainable economic growth by emphasizing (i) the export sector,
particularly through domestic and foreign investment, (ii) public
investment, particularly in the hydrocarbon, electricity,
transportation and water sectors, private consumption and
(iii) fiscal and monetary discipline in order to encourage an
environment of greater price stability and lower interest rates.

On June 3, 1997, the Government announced the Programa
Nacional de Financiamiento del Desarrollo 1997-2000 (National
Development Financing Program 1997-2000, or "PRONAFIDE"). The
PRONAFIDE's goals are to: (i) achieve, on average, real GDP
growth of 5% per year, (ii) generate more than one million jobs
per year, (iii) increase real wages and salaries, (iv) strengthen
the capacity of the Government to respond to social needs and
(v) avoid an economic crisis of the type suffered by Mexico
during the past 20 years.

The effects of the devaluation of the peso, as well as
the Government's response to that and related events, were
apparent in the performance of the Mexican economy during 1995
and 1996. Recent trade figures show a reversal of Mexico's trade
deficit during 1995. The value of imports (including in-bond
industries) decreased by 8.7% between 1994 and 1995, to $72.5
billion in 1995. Although the value of imports (including in-
bond industries) in 1996 increased approximately 23.4% from 1995,
to $89.5 billion, exports increased by almost the same amount.
During 1995, Mexico registered a $7.089 billion trade surplus,
its first annual trade surplus since 1989. Mexico registered a
surplus in its trade balance of $6.531 billion during 1996, down
approximately 7.9% from 1995. During 1996, Mexico's current

<PAGE>

account balance registered a deficit of $1.922 billion, as
compared with a deficit of $1.577 billion in 1995.

Banco de Mexico is currently disclosing reserve figures
on a weekly basis. On December 31, 1996, Mexico's international
reserves amounted to $17,509 million, as compared to $15,741
million at December 31, 1995, $6,148 million at December 31, 1994
and $24,538 million at December 31, 1993.

During 1995 real GDP decreased by 6.9%, as compared with
a growth rate of 3.5% during 1994. This downward trend continued
into the first quarter of 1996, but turned around in the second
quarter of 1996. The real GDP continued to grow in the third and
fourth quarters of 1996, resulting in an overall GDP growth rate
of 5.1% for 1996. According to preliminary estimates, the GDP
continued to grow by 5.1% during the first quarter of 1997,
compared to the first quarter of 1996. The Government currently
projects a 4.5% increase in the GDP for 1997. 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,
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 1996 and for each of the six months ended June 1997.

<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* 3.007*
1992. . . . . . . 3.119 3.094 -- --
1993. . . . . . . 3.192 3.155 -- --
1994. . . . . . . 5.325 3.222 -- --
1995. . . . . . . 7.643 6.419 -- --
1996. . . . . . . 7.851 7.598 -- --
1997
January 7.839 7.831 -- --
February 7.784 7.793 -- --
March 7.891 7.963 -- --
April 7.927 7.904 -- --
May 7.909 7.906 -- --
June 7.958 7.947 -- --

* Through November 10, 1991.

Source: Banco de Mexico.

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 wages and prices (the "1987 accord"). The
1987 accord included the implementation of restrictive fiscal and
monetary policies, the elimination of trade barriers and the
reduction of import tariffs. After substantive increases in
public sector prices and utility rates, price controls were
introduced.

<PAGE>

The 1987 accord was succeeded by a series of additional
accords, each of which continued to stress the moderation of
inflation, fiscal discipline and a gradual devaluation of the
peso. There was a gradual reduction in the number of goods and
services whose prices were covered by such accords. The two most
recent of these accords also incorporated a reduction in the
income tax rate applicable to corporations and certain self-
employed individuals from 35% to 34% and a reduction in the
withholding tax applicable to interest payments on publicly
issued external debt and external debt payable to certain
financial institutions from 15% to 4.9%. Under the later of
these two accords, tax benefits were proposed for workers
receiving salaries not exceeding twice the minimum wage and asset
taxes to be reduced to 1.8%. 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.

Over the medium-term, the Government is committed to
reversing the decline in real wages experienced in the last
decade through control of inflation, a controlled gradual upward
adjustment of wages and a reduction in income taxes for the lower
income brackets. Nonetheless, the effect of the devaluation of
the peso and the Government's response to that event and related
developments caused a significant increase in inflation in 1995,
as well a decline in real wages for much of the population during
1995. Inflation during 1995 (as measured by the increase in the
National Consumer Price Index), was 52.0%, as compared with 7.1%
during 1994. Inflation during 1996 was 27.7%. In May 1997, the
monthly consumer inflation rate was 0.9%, the first time the
monthly inflation rate was below 1% since December 1994. The
inflation rate during the first six months of 1997 was 8.7%,
compared to 15.3% during the first six months of 1996.

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 1996 and for the six
months ended June 30, 1997.

<PAGE>

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................................... 9.7
1990................................... 29.9
1991................................... 18.8
1992................................... 11.9
1993................................... 8.0
1994................................... 7.1
1995................................... 52.0
1996................................... 27.7
1997(1)................................ 8.7

(1) For the six months ended June 30.

Source: Banco de Mexico.

<PAGE>

MEXICAN GROSS DOMESTIC PRODUCT. The following table
sets forth certain information concerning Mexico's GDP for the
years 1990 through 1996 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)

1991. . . . 865,166 5,463 3.6
1992. . . . 1,019,156 5,616 2.8
1993. . . . 1,145,382 5,659 0.7
1994. . 1,272,799 5,858 3.5
1995(2). 1,604,368 5,452 (6.9)
1996(2)(3) 2,285,266 1,270.4(4) 3.0

(1) Constant peso with purchasing power at December 31, 1980,
expressed in new pesos.
(2) Preliminary.
(3) Annualized.
(4) Constant peso with purchasing power at December 31, 1993.

Source: Ministry of Finance and Public Credit

<PAGE>

INTEREST RATES. The following table sets forth the
average interest rates per annum on 28-day and 91-day Cetes, the
average weighted cost of term deposits for commercial banks
("CPP"), the average interest rate ("TIIP") and the equilibrium
interest rate ("TIIE") for the periods listed below:

Average Cetes and Interest Rates
_________________________________

28-Day 91-Day
Cetes Cetes CPP TIIP TIIE
_____ _____ _____ _____ _____

1990:
Jan.-June 41.2 40.7 43.2% _____ _____
July-Dec. 28.3 29.4 31.0 _____ _____
1991:
Jan.-June 21.2 21.7 24.3 _____ _____
July-Dec. 17.3 18.0 20.8 _____ _____
1992:
Jan.-June 13.8 13.8 16.9 _____ _____
July-Dec. 17.4 18.0 20.7 _____ _____
1993:
Jan.-June 16.4 17.3 20.9 20.4(1) _____
July-Dec. 13.5 13.6 16.2 16.1 _____
1994:
Jan.-June 13.0 13.5 14.2 15.3 _____
July-Dec. 15.2 15.7 16.8 20.4 _____
1995:
Jan.-June 55.0 54.3 49.6 63.6 71.2(2)
July-Dec. 41.9 42.2 40.7 44.5 44.5
1996:
Jan.-June 35.4 37.2 34.5 37.3 37.2
July-Dec. 27.4 28.6 26.9 30.2 30.1
1997:
January 23.6 24.6 24.1 25.9 26.0
February 19.8 22.0 21.1 22.2 22.1
March 21.7 22.3 21.1 24.0 24.0
April 21.4 22.4 21.1 23.8 24.0
May 18.4 20.6 18.7 20.6 20.7
June 20.2 21.4 18.8 22.5 22.5

(1) February-June average
(2) Average for the last two weeks of March
Source: Banco de Mexico

<PAGE>

________________________________________________________________

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. In 1991, the
year of the last Census, it had a population of approximately
34.6 million.

The most densely inhabited areas and the traditional
agricultural wealth are on the wide temperate belt that stretches
across central Argentina. About one-third of the population lives
in the greater Buenos Aires area. Six other urban centers,
Cordoba, Rosario, Mendoza, San Miguel de Tucuman, Mar del Plata
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. In the 1990-1995 period, Argentina's
population grew at a 1.2% 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
Court of Justice (the "Supreme Court") is the highest body of
authority. The President is directly elected by the voters and
may serve for a maximum of two consecutive four-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 for
each province and the federal capital of Buenos Aires. Senators
are elected for six-year terms, and serve in staggered terms so

<PAGE>

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.
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,
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 in 1890. 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 took office, the PJ held 130 seats and the UCR held 70
seats in the Chamber of Deputies and 40 seats and 22 seats in the
Senate, respectively.

Since the 1930's, Argentina's political parties have had
difficulty in resolving the inter-group conflicts that arose 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 67 years. Poor economic
management by the military 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

<PAGE>

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 re-
established 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 first 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, but his
popularity has eroded recently as the government has faced
allegations of corruption and criticism from both the ruling and
opposition parties concerning its economic policies. The
October 26, 1997 Congressional elections are expected to test
President Menem's popularity.

Argentina has diplomatic relations with more than 135
countries. It is a charter member of the United Nations and is
currently a member of its security council, and is 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 WTO on January 1, 1995 (the date on which the WTO
superseded 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. Under the
Government's medium-term program with the IMF, the Government has
agreed to maintain the present fixed exchange rate of one peso
per dollar. Due to the ease of convertibility between the peso
and the dollar as a result of the Government's exchange rate
policies, changes in U.S. interest rates constitute a significant
factor in determining peso-dollar capital flows.

<PAGE>

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. Although the GDP declined by 4.4% in
1995, GDP increased 4.3% in 1996. During the first quarter of
1997, GDP increased 8.1% compared to the first quarter of 1996,
and preliminary data for the second quarter of 1997 indicate an
increase of 8.4% from the second quarter of 1996. The basis for
Argentina's recent economic growth has been an increase in
investment and exports.

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, steps were taken to remove various
regulations that restricted both international trade and domestic
commerce. 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, 11 in
1994 and 3 in 1995. On March 13, 1995 the Government announced a
new fiscal package, which included, among other measures, an
acceleration in the sale of assets and the privatization of
several additional companies. In July 1997, the postal service
was privatized and efforts to privatize the airports network, the
Yacireta hydroelectric dam and the national mortgage bank are
ongoing.

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 . . . . . . . . . . . . 1.0
1995 . . . . . . . . . . . . 1.0
1996 . . . . . . . . . . . . 1.0

Source: Banco Central de la Republica Argentina

WAGES AND PRICES. Prior to the adoption of a new
economic plan announced by former Economy Minister Domingo F.
Cavallo 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. High
inflation combined with the lag between the accrual and receipt
of taxes reduced real tax revenues and increased 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. Between December 1989 and
December 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 stability through reforms relating
to the tax system, privatizations and the opening of the economy
that are intended to address underlying structural problems that
had distorted fiscal and monetary policy.

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

<PAGE>

not to exceed the Central Bank's gross international assets as a
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 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 led 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. It has
been reported that the IMF is expected to enter into a new three-
year EFF agreement with Argentina in the near future, indicating
the IMF's continuing endorsement of the Convertibility Plan and
the economic performance that has resulted.

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%

<PAGE>

monthly rate in February 1991 to a 0.3% monthly rate in December
1992 and resulted in a 24.8% annual rate for 1992. Inflation
continued to decrease in 1993 (to 10.6%), in 1994 (to 4.3%), in
1995 (to 3.3%) and in 1996 (to 0.4%). At the end of July 1997,
the inflation rate was 0.4% on an annualized basis, according to
preliminary data.

The dismissal of Economy Minister Cavallo by President
Menem in July 1996 has had no effect on the economic priorities
of the government. There is 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, 1989-96, and the months
January through July, 1997.

INFLATION

Consumer Prices,
Increase Over
Previous Period
----------------

1989............................................ 4,923.6
1990............................................ 1,343.9
1991............................................ 84.1
1992............................................ 24.8
1993............................................ 10.6
1994............................................ 4.3
1995(1)......................................... 3.3
1996(1)......................................... 0.4
1997
January................................... 0.5
February.................................. 0.4
March..................................... (0.5)
April..................................... (0.3)
May....................................... (0.1)
June...................................... 0.2
July...................................... 0.2

(1) In 1996, a new index was introduced called the
Indice Precios Internos al por Mayor (IPIM). The IPIM is broadly
similar to the index formerly used to determine wholesale price
inflation, but varies slightly as to the weighted average of the
goods measured in the index. The 1995 figures were also
recalculated using the new IPIM index.
___________________

Source: Banco Central de la Republica Argentina

<PAGE>

ARGENTINE GROSS DOMESTIC PRODUCT. The following table
sets forth Argentina's GDP for the years 1989 through 1996 and
the first quarter of 1997 at historical and constant prices.

Gross Domestic Change from Prior
Gross Product at Year at
Domestic Product Constant 1986 Prices Constant Prices
________________ ___________________ _______________

(millions of Argentine Pesos) (percent)

1991 180,898 10,270 8.9
1992 226,847 11,159 8.7
1993 257,570 11,832 6.0
1994 281,600 12,710 7.4
1995 279,500 12,150 (4.6)
1996 294,100 12,672 4.3
1997
1st Qtr N/A N/A 8.1

_______________

Source: Banco Central de la Republica Argentina

1996 and 1997 data are preliminary.

_________________________________________________________________

MANAGEMENT OF THE FUND
_________________________________________________________________

Adviser

Alliance Capital Management L.P., a Delaware limited
partnership 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 of the Fund's Board of Directors (see "Management of
the Fund" in the Prospectus).

Alliance is a leading international investment manager
supervising client accounts with assets as of June 30, 1997 of
more than $199 billion (of which more than $71 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundation and endowment funds. As of June 30, 1997, the Adviser
was an investment manager of employee benefit fund assets for 29

<PAGE>

of the FORTUNE 100 companies. As of that date, the Adviser and
its subsidiaries employed approximately 1,500 employees who
operated out of domestic offices and the offices of subsidiaries
in Bahrain, Bangalore, Chennai, Istanbul, London, Madrid, Mumbai,
Paris, Singapore, Tokyo and Toronto and affiliate offices located
in Vienna, Warsaw, Hong Kong, Sao Paulo and Moscow. The 54
registered investment companies comprising more than 116 separate
investment portfolios managed by the Adviser 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"). ECI is a holding company
controlled by AXA-UAP, a French insurance holding company which
at September 30, 1997, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1997, 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.

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

Based on information provided by AXA-UAP, as of September
30, 1997 more than 25% of the voting power of AXA-UAP was
controlled directly and indirectly by FINAXA, a French holding
company. As of September 30, 1997 more than 25% of the voting
power of FINAXA was controlled directly and indirectly by four
French mutual insurance companies (the "Mutuelles AXA"), one of
which, AXA Assurances I.A.R.D. Mutuelle, itself controlled
directly and indirectly more than 25% of the voting power of
FINAXA. Acting as a group, the Mutuelles AXA control AXA-UAP and
FINAXA.

Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for

<PAGE>

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
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, 1998 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 9, 1997.

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 1994, 1995 and 1996 the
Adviser received from the Fund advisory fees of $16,529,719,
$11,774,101, and $13,118,739, respectively.

Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The Adviser

<PAGE>

may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund. If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is
the policy of the Adviser 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 Environment Fund, Inc., Alliance Global Small Cap
Fund, Inc., Alliance Global Strategic Income Trust, Inc.,
Alliance Government Reserves, Alliance Greater China '97 Fund,
Inc., Alliance Growth and Income Fund, Inc., Alliance High Yield
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 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.

<PAGE>

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
address of each such person is 1345 Avenue of the Americas, New
York, New York 10105.

DIRECTORS

JOHN D. CARIFA,* 52, Chairman and President of the Fund, is
the President, Chief Operating Officer and a Director of Alliance
Capital Management Corporation ("ACMC") with which he has been
associated since prior to 1992.

RUTH BLOCK, 66, 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). Her address is P.O. Box 4653, Stamford,
Connecticut 06903.

DAVID H. DIEVLER, 68, was formerly Chairman of the Board and
President of the Fund and a Senior Vice President of ACMC with
which he had been associated since prior to 1992. He is
currently an independent consultant. His address is P.O. Box 167,
Spring Lake, New Jersey 07762.

JOHN H. DOBKIN, 55, has been President of Historic Hudson
Valley (historic preservation) since prior to 1992. Previously
he was a Director of the National Academy of Design. His address
is Historic Hudson Valley, 150 White Plains Rd., Tarrytown, New
York 10591.

WILLIAM H. FOULK, JR., 65, 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 associated since prior to 1992. His address is
Suite 100, 2 Greenwich Plaza, Greenwich, Connecticut 06830.

DR. JAMES M. HESTER, 73, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide Corporation
with which he has been associated since prior to 1992. 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.

____________________

* An "interested person" as defined in the 1940 Act.

<PAGE>

CLIFFORD L. MICHEL, 58, is a partner of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1992. He is President, Chief Executive Officer and
Director of Wenonah Development Company (investment holding
company) and a Director of Placer Dome, Inc. (mining). His
address is St. Bernard's Road, Gladstone, New Jersey 07934.

DONALD J. ROBINSON, 63, was formerly a senior partner of the
law firm of Orrick, Herrington & Sutcliffe and is currently of
counsel to that firm. His address is 666 Fifth Avenue, 19th
Floor, New York, New York 10103.

OFFICERS

JOHN D. CARIFA, Chairman and President, see biography,
above.

KATHLEEN A. CORBET, 37, 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 1992.

WAYNE D. LYSKI, 56, Senior Vice President, is an Executive
Vice President of ACMC with which he has been associated since
prior to 1992.

EDMUND P. BERGAN, JR., 47, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1992.

ANDREW L. GANGOLF, 43, Assistant Secretary, has been a Vice
President and Assistant General Counsel of AFD 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 since prior to
1992.

DOMENICK PUGLIESE, 36, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since May 1995. Previously, he was Vice President
and Counsel of Concord Holding Corporation since 1994, Vice
President and Associate General Counsel of Prudential Securities
since prior to 1992.

EMILIE D. WRAPP, 41, Assistant Secretary, is a Vice
President and Special Counsel of AFD, with which she has been
associated since prior to 1992.

<PAGE>

MARK D. GERSTEN, 47, Treasurer and Chief Financial Officer,
is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") with which he has been associated since prior to 1992.

JUAN J. RODRIGUEZ, 40, Controller, is an Assistant Vice
President of AFS with which he has been associated since prior to
1992.

CARLA LAROSE, 34, Assistant Controller, is a Manager of AFS
with which she has been associated since 1992.

JOSEPH J. MANTINEO, 38, Assistant Controller, is a Vice
President of AFS with which he has been associated since prior to
1992.

VINCENT S. NOTO, 32, Assistant Controller, is an Assistant
Vice President of AFS with which he has been associated since
prior to 1992.

The aggregate compensation paid by the Fund to each of the
Directors during its fiscal year ended November 30, 1996, the
aggregate compensation paid to each of the Directors during
calendar year 1996 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 (and separate investment portfolios within
those 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.

<PAGE>

Total Number
of Funds in Total Number
the Alliance of Investment
Total Complex, Portfolios
Compensation Including within the
From the the Fund, Funds,
Alliance as to which Including the
Aggregate Fund the Direc- Fund, as to
Compensation Complex, tor is a which the
Name of Director from the Including Director Director is a
of the Fund Fund the Fund or Trustee Director or Trustee

John D. Carifa $-0- $-0- 52 114
Ruth Block $3,746 $157,500 38 76
David H. Dievler $3,226 $182,000 45 79
John H. Dobkin $3,893 $121,250 31 52
William H. Foulk, Jr. $3,920 $144,250 34 70
Dr. James M. Hester $3,753 $148,500 39 73
Clifford L. Michel $3,753 $146,068 39 88
Donald J. Robinson $ 367 $137,250 42 102

As of October 3, 1997, 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 services 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

<PAGE>

the combined contingent deferred sales charges and distribution
services fees on the Class B shares and 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 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
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 (the "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, 1996,
with respect to Class A shares, the Fund paid distribution
services fees for expenditures under the Agreement in the

<PAGE>

aggregate amount of $931,605 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 $812,816. Of the
$1,744,421 paid by the Fund and the Adviser under the Plan with
respect to the Class A shares, $132,502 was spent on advertising,
$24,967 on printing and mailing of prospectuses for persons other
than current shareholders, $993,486 for compensation to broker-
dealers and other financial intermediaries (including $224,804 to
the Fund's Principal Underwriter), $288,020 for compensation to
sales personnel and $305,446 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

During the Fund's fiscal year ended November 30, 1996,
with respect to Class B shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $12,231,411 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
own resources, as described above, aggregating $-0-. Of the
$11,058,603 paid by the Fund and the Adviser under the Plan,
$266,149 was spent on advertising, $50,657 on printing and mailing
of prospectuses for persons other than current shareholders,
$8,144,065 for compensation to broker-dealers and other financial
intermediaries (including $458,550 to the Fund's Principal
Underwriter), $285,912 for compensation to sales personnel and
$553,412 was spent on printing of sales literature, travel,
entertainment, due diligence and other promotional expenses, and
$1,758,408 in interest on Class B shares financing. The additional
$1,172,808 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, 1996,
with respect to Class C shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $2,345,916 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 $554,783. Of the
$2,900,699 paid by the Fund and the Adviser under the Plan, with
respect to Class C shares $60,356 was spent on advertising,
$11,452 on printing and mailing of prospectuses for persons other
than current shareholders, $2,602,363 for compensation to broker-
dealers and other financial intermediaries (including $101,425 to
the Fund's Principal Underwriter), $98,995 for compensation to
sales personnel and $127,533 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

<PAGE>

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, 1998 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 9, 1997.

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
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.

<PAGE>

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, 1996, the
Fund paid Alliance Fund Services, Inc. $2,816,268 for transfer
agency services.

________________________________________________________________

PURCHASE OF SHARES
________________________________________________________________

The following information supplements that set forth in
the Prospectus(es) under the heading "Purchase and Sale of Shares
- --How To Buy Shares."

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, (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, (iii) by the
categories of investors described in clauses (i) through (iv)
under "--Sales at Net Asset Value" (other than officers, directors

<PAGE>

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), or (iv) by
directors and present or retired full-time employees of Koll Real
Estate Services. Generally, a fee-based program must charge an
asset-based or other similar fee and must invest at least $250,000
in Advisor Class shares of each Fund in which the program invests
in order to be approved by AFD for investment in Advisor Class
shares.

Investors may purchase shares of the Fund either through
selected broker-dealers, agents, financial intermediaries or other
financial representatives or directly through the Principal
Underwriter. A transaction, service, administrative or other
similar fee may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to the
purchase, sale or exchange of Class A, Class B, Class C or Advisor
Class shares made through such financial representative. Such
financial representative may also impose requirements with respect
to the purchase, sale or exchange of shares that are different
from, or in addition to, those imposed by the Fund, including
requirements as to the minimum initial and subsequent investment
amounts. Sales personnel of selected dealers and agents
distributing the Funds shares may receive differing compensation
for selling Class A, Class B, Class C or Advisor Class shares.

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
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

<PAGE>

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 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

<PAGE>

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
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

<PAGE>

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, Class B and 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.

Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares.**

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

____________________

** Advisor Class shares are sold only to investors described
above in this section under "--General."

<PAGE>

than $1,000,000 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
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 1994, 1995, and 1996 the
aggregate amount of underwriting commission payable with respect
to shares of the Fund was $12,194,935, $4,384,448, and $6,878,583,
respectively. Of those amounts, the Principal Underwriter
received the amounts of $348,161, $167,547, and $237,477
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 years ended in

<PAGE>

1996, 1995 and 1994, the Principal Underwriter received contingent
deferred sales charges of $237,571, $-0- and $-0-, respectively,
on Class A shares, $1,914,263, $3,776,823 and $3,094,728,
respectively, on Class B shares and $32,226, $-0- and $-0-,
respectively, on Class C 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
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

<PAGE>

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
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, 1997.

<PAGE>

Net Asset Value per Class A
Share at May 31, 1997 $7.98

Per Share Sales Charge - 4.25%
of offering price (4.44% of
net asset value per share) $ .35

Class A Per Share Offering Price
to the Public $8.33

Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but may be subject in most such cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
charge. The circumstances under which such 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
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.

<PAGE>

-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield 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
-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

<PAGE>

-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.

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

<PAGE>

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 only be necessary to
invest 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
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

<PAGE>

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. 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

<PAGE>

shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) the Adviser, the 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) registered investment advisers or other
financial intermediaries who charge a management, consulting or
other fee for their service and who purchase shares through a
broker or agent approved by the Principal Underwriter and clients
of such registered investment advisers or financial
intermediaries whose accounts are linked to the master account of
such investment adviser or financial intermediary on the books of
such approved broker or agent; (v) persons participating in a
fee-based program, sponsored and maintained by a registered
broker-dealer or other financial intermediary and approved by the
Principal Underwriter, pursuant to which such persons pay an
asset-based fee to such broker-dealer or financial intermediary,
or its affiliate or agent, for services in the nature of
investment advisory or administrative services; (vi) 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
(vii) 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.

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

<PAGE>

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
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 and thereafter 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,

<PAGE>

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
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

<PAGE>

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
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

<PAGE>

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, employee benefit plans and registered
investment advisory or other financial intermediary relationships
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 the
fee-based program or plan, or to be associated with the
investment adviser or financial intermediary 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 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

<PAGE>

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
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

<PAGE>

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
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.

<PAGE>

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
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

<PAGE>

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.

________________________________________________________________

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

<PAGE>

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 the Adviser).
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
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.

<PAGE>

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
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

<PAGE>

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.

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.

100

<PAGE>

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 $1 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.

403(B)(7) RETIREMENT PLAN. Certain tax-exempt
organizations and public educational institutions may sponsor
retirement 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.

101

<PAGE>

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 the shareholder's 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.

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

102

<PAGE>

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 shareholder's 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.

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.

103

<PAGE>

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
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

104

<PAGE>

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
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

105

<PAGE>

of Dividends and Distributions

General

The Fund intends for each taxable year to be qualified
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, securities or
foreign currency, or certain other income (including, but not
limited to, gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock,
securities or currency, and (ii) for its taxable year ending
November 30, 1997, 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 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

106

<PAGE>

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.

Pursuant to the Taxpayer Relief Act of 1997, two
different tax rates apply to net capital gains---that is, the
excess of net gains from capital assets held for more than one
year over net losses from capital assets held for not more than
one year. One rate (generally 28%) applies to net gains on
capital assets held for more than one year but not more than 18
months ("mid-term gains"), and a second rate (generally 20%)
applies to the balance of such net capital gains ("adjusted net
capital gains"). Except as noted below, distributions of net
capital gains will be treated in the hands of shareholders as
mid-term gains to the extent designated by the Fund as deriving
from net gains from assets held for more than one year but not
more than 18 months, and the balance will be treated as adjusted
net capital gains. Gains derived from assets sold before May 7,
1997 and held for more than 18 months will be treated as mid-term
gains. Gains derived from assets sold after May 6, 1997 and
before July 29, 1997 and held for more than one year will be
treated as adjusted net capital gains. Distributions of mid-term
gains and adjusted net capital gains will be taxable to
shareholders as such, regardless of how long a shareholder has
held shares in the Fund. Any dividend or distribution received
by a shareholder on shares of the Fund will have the effect of
reducing the net asset value of such shares by the amount of such

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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 of net capital gains, 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 may be required to withhold federal income tax
at the rate of 31% of all taxable distributions payable to
shareholders who fail to provide the Fund with their correct
taxpayer identification numbers or to make required
certifications, or who have been notified by the Internal Revenue
Service that they are subject to backup withholding. Corporate
shareholders and certain other shareholders specified in the Code
are exempt from such backup withholding. Backup withholding is
not an additional tax; any amounts so withheld may be credited
against a shareholder's federal income tax liability or refunded.

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

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credit against United States federal income taxes. Shareholders
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 United States shareholders may
be subject to rules which limit or reduce their ability to fully
deduct, or claim a credit for, their pro rata share of the
foreign income taxes paid by the Fund. A shareholder's foreign
tax credit with respect to a dividend received from the Fund will
be disallowed unless the shareholder holds shares in the Fund on
the ex-dividend date and for at least 15 other days during the
30-day period beginning 15 days prior to the ex-dividend date.
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.

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.

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

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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.

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

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<PAGE>

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
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

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<PAGE>

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.

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.

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<PAGE>

_________________________________________________________________

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.

_________________________________________________________________

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

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<PAGE>

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 3, 1997 consisted of 268,752,187 shares of common stock
outstanding, of which 61,090,006 were Class A shares, 172,967,149
were Class B shares and 34,695,032 were Class C shares and no
Advisor Class 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 3, 1997:
No. of % of % of % of
Name and Address Shares Class A Class B Class C

Merrill Lynch 9,267,829 15.17%
Attn: Fund Administration 42,608,997 24.63%
4800 Deer Lake Dr. East 14,329,506 41.30%
3rd Floor
Jacksonville, Florida
32246-6484

CUSTODIAN

Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109, will act as custodian for the assets of the
Fund but plays no part in deciding the purchase or sale of
portfolio securities. Subject to the supervision of the Fund's

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<PAGE>

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
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

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<PAGE>

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, 1997 for
Class A shares was 9.99%, for Class B shares was 9.71% and for
Class C shares was 9.72%. The Fund's actual distribution rate
for such period for Class A shares was 11.72%, for Class B shares
was 11.28% and for Class C shares was 11.28%. The Fund's average
total returns from March 27, 1992 (commencement of operations for
Class A and Class B shares) through May 31, 1997 were 7.41% and
7.39% for Class A and Class B shares, respectively. The Fund's
average annual total return for the five-year period ended May
31, 1997 was 7.41% and 7.42% for Class A and Class B shares,
respectively. The average annual total return for the period
from May 3, 1993 (commencement of distribution for Class C
shares) through May 31, 1997 was 6.49% for Class C shares The
total return for the one-year period ended May 31, 1997 was
18.55% for the Class A shares, 19.64% for the Class B shares and
21.63% for the 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.,
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,

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<PAGE>

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
Commission under the Securities Act of 1933. Copies of the
Registration Statement 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.

_________________________________________________________________

REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
_________________________________________________________________

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ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST

SEMI-ANNUAL REPORT
MAY 31, 1997

ALLIANCE CAPITAL

PORTFOLIO OF INVESTMENTS ALLIANCE NORTH AMERICAN
MAY 31, 1997 (UNAUDITED) GOVERNMENT INCOME TRUST
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
ARGENTINA-29.0%
GOVERNMENT OBLIGATIONS-29.0%
Republic of Argentina
Pensioner-Bocon Pre III FRN
3.58%, 9/01/02 (a) 144,625 $ 119,777,957
Supplier-Bocon Pro I FRN
3.51%, 4/01/07 ARS 618,306 469,691,662

Total Argentinian Securities
(cost $479,390,464) 589,469,619

CANADA-19.0%
GOVERNMENT/AGENCY OBLIGATIONS-19.0%
Government of Canada
8.00%, 6/01/27 (b) CA$ 64,500 52,297,802
Province of British Columbia
7.88%, 11/30/23 (b) 36,000 27,346,392
8.00%, 9/08/23 (b) 24,600 19,434,882
9.00%, 8/23/24 (b) 25,000 21,914,262
Province of Manitoba
7.75%, 12/22/25 (b) 60,200 46,688,294
Province of Ontario
7.75%, 12/08/03 (b) 20,000 15,619,682
8.00%, 6/02/26 (b) 91,250 72,222,926
Province of Quebec
9.375%, 1/16/23 (b) 88,600 78,177,414
Province of Saskatchewan
9.60%, 2/04/22 (b) 24,600 22,685,905
Quebec Hydro
8.77%, 8/15/20 (c)(d) 250,000 29,870,741

Total Canadian Securities
(cost $353,863,887) 386,258,300

MEXICO-29.0%
GOVERNMENT/AGENCY OBLIGATIONS-29.0%
Bankers Acceptances
Nacional Financiera S.N.C. (d)
15.00%, 8/13/98 MXP 80,180 7,859,762
16.50%, 12/26/03 414,125 11,383,470
16.95%, 12/24/03 81,401 2,238,987
17.50%, 12/11/03 55,253 1,526,277
Mexican Treasury Bills (d)
21.42%, 11/13/97 MXP 75,081 $ 8,637,298
22.15%, 12/04/97 197,089 22,411,180
23.16%, 5/07/98 774,729 80,647,895
23.50%, 3/05/98 204,792 22,121,474
23.86%, 4/02/98 593,548 65,090,603
23.90%, 2/04/98 66,126 7,251,648
24.58%, 7/17/97 84,320 10,382,677
25.47%, 12/31/97 157,216 17,628,647
26.54%, 11/06/97 712,219 82,248,374
26.70%, 10/02/97 257,958 30,360,531
27.90%, 6/05/97 516,971 65,193,492
29.10%, 7/31/97 753,658 92,086,224
30.85%, 7/03/97 216,194 26,880,629
32.09%, 9/04/97 295,743 35,443,512

Total Mexican Securities
(cost $677,310,320) 589,392,680

UNITED STATES-44.9%
U.S. GOVERNMENT/AGENCY OBLIGATIONS-44.9%
Government National Mortgage Association
9.75%, 6/15/24 US$ 16,355 17,230,309
U.S. Treasury Bonds
6.625%, 2/15/27 78,000 75,148,086
6.75%, 8/15/26 55,000 53,539,035
12.00%, 8/15/13 66,200 92,493,779
12.375%, 5/15/04 41,200 54,216,604
12.50%, 8/15/14 19,000 27,710,303
14.00%, 11/15/11 31,900 47,810,125
U.S. Treasury Notes
6.125%, 8/31/98 18,500 18,534,688
6.25%, 10/31/01 60,000 59,437,500
6.25%, 2/15/07 89,000 86,496,875
6.625%, 3/31/02 88,900 89,316,674
6.625%, 4/30/02 34,000 34,159,358
6.75%, 4/30/00 46,100 46,575,383

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
U.S. Treasury Strips
Zero Coupon, 5/15/09 US$ 52,430 $ 23,226,543
Zero Coupon, 5/15/10 384,970 158,514,477
Zero Coupon, 2/15/11 70,000 27,264,930
Zero Coupon, 5/15/14 13,400 4,106,577

Total United States Securities
(cost $934,273,271) 915,781,246

TOTAL INVESTMENTS-121.9%
(cost $2,444,837,942) $2,480,901,845
Other assets less liabilities-(21.9)% (446,033,109)

NET ASSETS-100% $2,034,868,736

(a) Interest is compounded monthly and capitalized until October 1, 1998,
after which the security holder will receive monthly paydowns of principal and
interest until maturity.

(b) Securities, or portion thereof, with an aggregate market value of
$356,387,559 have been segregated to collateralize forward exchange currency
contracts.

(d) Interest rate represents annualized yield to maturity at purchase date.

Glossary:
FRN - Floating rate note

See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES ALLIANCE NORTH AMERICAN
MAY 31, 1997 (UNAUDITED) GOVERNMENT INCOME TRUST
_______________________________________________________________________________

ASSETS
Investments in securities, at value (cost $2,444,837,942) $2,480,901,845
Cash 62,293
Receivable for investment securities sold 24,488,203
Interest receivable 23,654,858
Receivable for capital stock sold 8,724,465
Unrealized appreciation of forward exchange
currency contracts 3,117,372
Other assets 115,702
Total assets 2,541,064,738

LIABILITIES
Loan payable 250,000,000
Payable for investment securities purchased 234,205,157
Dividend payable 10,174,932
Payable for capital stock redeemed 4,501,322
Loan interest payable 2,935,695
Advisory fee payable 1,292,360
Distribution fee payable 472,561
Accrued expenses 2,613,975
Total liabilities 506,196,002

NET ASSETS $2,034,868,736

COMPOSITION OF NET ASSETS
Capital stock, at par $ 255,059
Additional paid-in capital 2,269,877,106
Distribution in excess of net investment income (13,450,333)
Accumulated net realized loss on investments and
foreign currency transactions (261,157,400)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 39,344,304
$2,034,868,736

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($430,757,638 / 54,004,060 shares of capital stock
issued and outstanding) $7.98
Sales charge--4.25% of public offering price .35
Maximum offering price $8.33

CLASS B SHARES
Net asset value and offering price per share
($1,342,657,356 / 168,285,191 shares of capital stock
issued and outstanding) $7.98

CLASS C SHARES
Net asset value and offering price per share
($261,453,742 / 32,769,335 shares of capital stock
issued and outstanding) $7.98

See notes to financial statements.

STATEMENT OF OPERATIONS ALLIANCE NORTH AMERICAN
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED) GOVERNMENT INCOME TRUST
_______________________________________________________________________________

INVESTMENT INCOME
Interest (net of foreign taxes
withheld of $139,545) $ 159,846,662

EXPENSES
Advisory fee $ 7,225,442
Distribution fee - Class A 599,144
Distribution fee - Class B 6,594,818
Distribution fee - Class C 1,270,676
Custodian 1,698,666
Transfer agency 1,511,642
Printing 149,247
Audit and legal 95,927
Administrative 86,231
Taxes 53,459
Registration 48,760
Amortization of organization expenses 21,187
Directors' fees 13,212
Miscellaneous 48,036
Total expenses before interest 19,416,447
Interest expense 7,978,235
Total expenses 27,394,682
Net investment income 132,451,980

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment
transactions 8,287,846
Net realized gain on foreign
currency transactions 9,348,758
Net change in unrealized appreciation of:
Investments (40,000,874)
Foreign currency denominated assets
and liabilities (1,831,228)
Net loss on investments (24,195,498)

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 108,256,482

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SIX MONTHS ENDED YEAR ENDED
MAY 31, 1997 NOVEMBER 30,
(UNAUDITED) 1996
---------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 132,451,980 $ 253,011,440
Net realized gain (loss) on investments
and foreign currency transactions 17,636,604 (166,940,464)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency denominated assets and
liabilities (41,832,102) 435,674,111
Net increase in net assets from operations 108,256,482 521,745,087

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (24,664,019) (31,636,818)
Class B (75,476,918) (115,651,793)
Class C (14,548,983) (22,209,685)
Tax return of capital
Class A -0- (9,263,080)
Class B -0- (33,862,188)
Class C -0- (6,502,870)

CAPITAL STOCK TRANSACTIONS
Net increase 75,123,522 68,868,628
Total increase 68,690,084 371,487,281

NET ASSETS
Beginning of year 1,966,178,652 1,594,691,371
End of period $2,034,868,736 $1,966,178,652

See notes to financial statements.

STATEMENT OF CASH FLOWS ALLIANCE NORTH AMERICAN
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED) GOVERNMENT INCOME TRUST
_______________________________________________________________________________

INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received $ 52,650,220
Interest paid (7,990,805)
Operating expenses paid (18,051,766)
Net increase in cash from operating
activities $ 26,607,649

INVESTING ACTIVITIES:
Proceeds from disposition of short-term
portfolio investments, net 50,699,578
Purchases of long-term portfolio
investments (1,411,149,599)
Proceeds from disposition of long-term
portfolio investments 1,351,063,250
Net decrease in cash from investing
activities (9,386,771)

FINANCING ACTIVITIES*:
Subscriptions of capital stock, net 70,032,662
Cash dividends paid (110,745,358)
Net decrease in cash from financing
activities (40,712,696)
Effect of exchange rate on cash 16,355,934
Net decrease in cash (7,135,884)
Cash at beginning of year 7,198,177
Cash at end of period $ 62,293

RECONCILIATION OF NET INCREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net increase in net assets from operations $ 108,256,482

ADJUSTMENTS:
Decrease in interest receivable $ 984,655
Net realized gain on investment transactions (8,287,846)
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities 41,832,102
Accretion of bond discount (108,181,096)
Increase in accrued expenses and other
liabilities 1,352,110
Net realized gain on foreign currency
transactions (9,348,758)
(81,648,833)
Net increase in cash from operating activities $ 26,607,649

* 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, 1997 (UNAUDITED) GOVERNMENT INCOME TRUST
_______________________________________________________________________________

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 management investment company. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.25% for purchases not exceeding $1,000,000. With respect to purchases of
$1,000,000 or more, Class A shares redeemed within one year of purchase will be
subject to a contingent deferred sales charge of 1%. 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 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. However, readily marketable portfolio 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 value of such securities.
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
which mature in 60 days or less are valued at amortized cost, which
approximates market value, unless this method does not represent fair value.
Securities for which market quotations are not readily available and restricted
securities are valued in good faith at fair value using methods determined by
the Board of Directors. In determining fair value, consideration is given to
cost, operating and other financial data.

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 gains on foreign currency transactions represent foreign exchange
gains and losses from sales and maturities of foreign securities and foreign
exchange currency contracts, 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 appreciation of investments and
foreign currency denominated assets and liabilities.

3. ORGANIZATION EXPENSES
Organization expenses of approximately $331,965 have been deferred and were
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 INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund accretes discount as an
adjustment 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.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.

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.

Pursuant to the advisory agreement, the Fund paid the Adviser $86,231
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended May 31, 1997.

The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $765,752 for the six months ended May 31, 1997.

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 $125,629 from the sale of Class A shares and $138,
$733,762 and $34,273 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the six months ended May 31, 1997.

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. 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 both 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 $35,369,373 and $3,674,920 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 securities) aggregated $174,315,031 and $291,214,110,
respectively, for the six months ended May 31, 1997. There were purchases of
$1,197,484,037 and sales of $1,030,012,099 of U.S. government and government
agency obligations for the six months ended May 31, 1997.

At May 31, 1997, the cost of investments for federal income tax purposes was
$2,466,032,158. Accordingly, gross unrealized appreciation of investments was
$148,246,231 and gross unrealized depreciation of investments was $133,376,544
resulting in net unrealized appreciation of $14,869,687. At November 30, 1996,
the Fund had a capital loss carryforward totaling $244,497,492, of which
$70,618,925 expires in the year 2002, $134,381,470 expires in the year 2003,
and $39,497,097 expires in the year 2004.

FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward foreign exchange currency contracts for investment
purposes and to hedge its exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings and to hedge certain firm

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

purchase and sales 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 contracts and the closing of
such contracts is included in realized gains or losses from foreign currency
transactions.

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 the 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 the total exposure of
the Fund in that particular currency contract.

At May 31, 1997, 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
6/02/97-6/30/97 481,507,607 $352,163,665 $349,046,293 $3,117,372

NOTE E: BANK BORROWING
The Fund entered into a Revolving Credit Agreement with Deutsche Bank AG, New
York Branch on June 25, 1996. The maximum credit available under the credit
facility is $250,000,000 and requires no collateralization. The loan
outstanding, under the Credit Agreement for the six months ended May 31, 1997
was $250,000,000 with a related weighted average interest rate at period end of
6.08% and a weighted average annualized interest rate of 6.25%. The
$250,000,000 balance will mature on June 24, 1997. Interest payments on current
borrowings are based on the Eurodollar margin plus the applicable Eurodollar
rate. The Fund is also obligated to pay Deutsche Bank AG, New York Branch a
facility fee computed at the rate of .15% per annum on the daily amount of the
total commitment as in effect.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

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 shares.
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
stock were as follows:

SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31, 1997 NOV. 30, MAY 31, 1997 NOV. 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 7,559,094 18,944,431 $ 59,743,145 $ 140,393,513
Shares issued in
reinvestment of
dividends and
distributions 1,078,828 2,057,846 8,545,088 15,163,942
Shares converted
from Class B 3,260,835 2,279,998 25,803,742 16,873,171
Shares redeemed (6,079,686) (12,520,904) (48,022,034) (93,408,830)
Net increase 5,819,071 10,761,371 $ 46,069,941 $ 79,021,796

CLASS B
Shares sold 19,796,121 35,540,009 $ 156,743,536 $ 262,230,157
Shares issued in
reinvestment of
dividends and
distributions 2,739,951 6,054,943 21,711,684 44,586,197
Shares converted
to Class A (3,260,835) (2,279,998) (25,803,742) (16,873,171)
Shares redeemed (17,073,736) (39,607,584) (135,078,618) (291,766,451)
Net increase
(decrease) 2,201,501 (292,630) $ 17,572,860 $ (1,823,268)

CLASS C
Shares sold 5,255,370 8,095,161 $ 41,520,461 $ 59,728,484
Shares issued in
reinvestment of
dividends and
distributions 572,205 1,232,338 4,535,019 9,077,697
Shares redeemed (4,367,984) (10,461,384) (34,574,759) (77,136,081)
Net increase
(decrease) 1,459,591 (1,133,885) $ 11,480,721 $ (8,329,900)

NOTE G: LITIGATION
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint"), styled IN RE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.
SECURITIES LITIGATION, was filed in the U.S. District Court for the Southern
District of New York against the Fund, the Adviser, Alliance Capital Management
Corporation ("ACMC"), Alliance Fund Distributors, Inc. ("AFD"), The Equitable
Companies Incorporated ("The Equitable"), a parent of the Adviser, and certain
current and former officers and directors of the Fund and ACMC, alleging
violations of the federal securities laws, fraud and breach of fiduciary duty
in connection with the Fund's investments in Mexican and Argentine securities.
The Complaint sought 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. On September 26, 1996, the District Court granted
defendants' motion to dismiss the Complaint as to all claims.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

Fund's investments in certain mortgage-backed securities, and (iii) the risks
and objectives of the Fund as described in the Fund's marketing materials. The
Amended Complaint made similar requests for class certification as the
Complaint. On July 15, 1997, the District Court denied plaintiffs' motion for
leave to file the Amended Complaint and ordered that the case be dismissed.
Plaintiffs have 30 days from the time a final judgement is entered in the case
to file an appeal from the District Court's decision. The Fund and the Adviser
believe that the allegations in the Complaint and the Amended Complaint are
without merit and intend to defend vigorously against these claims.

NOTE H: CONCENTRATION OF RISK
Investing in securities of foreign governments involves special risks which
include revaluation of currencies and the possibility of future adverse
political and economic developments. Moreover, securities of many foreign
governments and their markets may be less liquid and their prices more volatile
than those of the United States government. The Fund may invest in the
sovereign debt obligations of countries that are considered emerging market
countries at the time of purchase. Therefore, the Fund is susceptible to
governmental factors and economic and debt restructuring developments adversely
affecting the economies of these emerging market countries. In addition, these
debt obligations may be less liquid and subject to greater volatility than debt
obligations of more developed countries.

FINANCIAL HIGHLIGHTS ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS MARCH 27,
ENDED 1992(A)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1997 -------------------------------------------------- NOV. 30,
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.01 $ 6.75 $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .55(b) 1.09(b) 1.18(b) 1.02 1.09 .69(c)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.09) 1.14 (1.59) (2.12) .66 (.31)
Net increase (decrease) in net asset
value from operations .46 2.23 (.41) (1.10) 1.75 .38

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.49) (.75) -0- (.91) (1.09) (.68)
Tax return of capital -0- (.22) (.97) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.49) (.97) (.97) (1.12) (1.10) (.68)
Net asset value, end of period $ 7.98 $ 8.01 $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net
asset value(d) 5.91% 35.22% (3.59)% (11.32)% 18.99% 3.49%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $430,758 $385,784 $252,608 $303,538 $268,233 $61,702
Ratio of expenses to average net assets 2.23%(e) 2.34% 2.62% 1.70% 1.61% 2.45%(e)(f)
Ratio of expenses to average net assets
excluding interest expense (g) 1.41%(e) 1.41% 1.51% 1.37% 1.33% 1.66%(e)
Ratio of net investment income to
average net assets 14.06%(e) 14.82% 18.09% 11.22% 10.77% 10.93%(e)
Portfolio turnover rate 142% 166% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 17.

FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS MARCH 27,
ENDED 1992(A)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1997 -------------------------------------------------- NOV. 30,
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.01 $ 6.75 $ 8.13 $10.35 $ 9.70 $10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .53(b) 1.04(b) 1.13(b) .96 1.01 .64(c)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.11) 1.12 (1.61) (2.13) .67 (.31)
Net increase (decrease) in net asset
value from operations .42 2.16 (.48) (1.17) 1.68 .33

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.69) -0- (.84) (1.02) (.63)
Tax return of capital -0- (.21) (.90) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (.45) (.90) (.90) (1.05) (1.03) (.63)
Net asset value, end of period $ 7.98 $ 8.01 $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net
asset value(d) 5.44% 33.96% (4.63)% (11.89)% 18.15% 3.30%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,342,657 $1,329,719 $1,123,074 $1,639,602 $1,313,591 $216,317
Ratio of expenses to average net assets 2.94%(e) 3.05% 3.33% 2.41% 2.31% 3.13%(e)(f)
Ratio of expenses to average net assets
excluding interest expense (g) 2.12%(e) 2.12% 2.22% 2.07% 2.04% 2.35%(e)
Ratio of net investment income to
average net assets 13.36%(e) 14.20% 17.31% 10.53% 10.01% 10.16%(e)
Portfolio turnover rate 142% 166% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 17.

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS MAY 3,
ENDED 1993(H)
MAY 31, YEAR ENDED NOVEMBER 30, TO
1997 ------------------------------------- NOV. 30,
(UNAUDITED) 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.01 $ 6.75 $ 8.13 $10.34 $10.04

INCOME FROM INVESTMENT OPERATIONS
Net investment income .53(b) 1.05(b) 1.13(b) .96 .58
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.11) 1.11 (1.61) (2.12) .30
Net increase (decrease) in net asset
value from operations .42 2.16 (.48) (1.16) .88

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.69) -0- (.84) (.58)
Tax return of capital -0- (.21) (.90) (.21) -0-
Total dividends and distributions (.45) (.90) (.90) (1.05) (.58)
Net asset value, end of period $ 7.98 $ 8.01 $ 6.75 $ 8.13 $10.34

TOTAL RETURN
Total investment return based on net
asset value(d) 5.44% 33.96% (4.63)% (11.89)% 9.00%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $261,454 $250,676 $219,009 $369,714 $310,230
Ratio of expenses to average net assets 2.93%(e) 3.04% 3.33% 2.39% 2.21%(e)
Ratio of expenses to average net assets
excluding interest expense (g) 2.12%(e) 2.12% 2.21% 2.06% 2.04%(e)
Ratio of net investment income to
average net assets. 13.37%(e) 14.22% 17.32% 10.46% 9.74%(e)
Portfolio turnover rate 142% 166% 180% 131% 254%
</TABLE>

(a) Commencement of operations.

(b) Based on average shares outstanding.

(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) Annualized.

(f) 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.

(g) Net of interest expense of .82%, .93%, 1.11%, .33%, .28% and .79%,
respectively, since inception on loan agreement (see Note E).

(h) Commencement of distribution.

<PAGE>

PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
ARGENTINA-28.7%
GOVERNMENT OBLIGATIONS-28.7%
Republic of Argentina
Pensioner-Bocon Pre I FRN
3.51%, 4/01/01 (a) ARS 19,114 $ 16,211,728
Pensioner-Bocon Pre III FRN
3.51%, 9/01/02 (b) 73,198 54,485,511
Supplier-Bocon Pro I FRN
3.51%, 4/01/07 (a) 719,610 493,021,600

Total Argentinean Securities
(cost $475,904,182) 563,718,839

CANADA-25.2%
GOVERNMENT/AGENCY OBLIGATIONS-25.2%
Government of Canada
8.00%, 6/01/27 (c) CA$ 134,500 116,025,136
Ontario Hydro
10.00%, 3/19/01 (c) 50,000 44,136,729
Province of British Columbia
7.88%, 11/30/23 (c) 36,000 29,015,682
8.00%, 9/08/23 (c) 24,600 20,557,002
9.00%, 8/23/24 (c) 25,000 23,217,662
Province of Manitoba
7.75%, 12/22/25 (c) 60,200 49,413,413
Province of Ontario
8.00%, 6/02/26 (c) 91,250 76,117,784
Province of Quebec
9.375%, 1/16/23 (c) 88,600 82,152,004
Province of Saskatchewan
9.60%, 2/04/22 (c) 24,600 23,904,126
Quebec Hydro
8.77%, 8/15/20 (d)(e) 250,000 31,327,624

Total Canadian Securities
(cost $423,483,240) 495,867,162

MEXICO-28.6%
GOVERNMENT/AGENCY OBLIGATIONS-28.6%
Bankers Acceptances
Nacional Financiera
S.N.C. (e)
15.00%, 8/13/98 MXP 80,180 6,818,528
16.50%, 12/26/03 414,125 10,770,514
16.95%, 12/24/03 81,401 2,118,404
17.50%, 12/11/03 55,253 1,443,672
Mexican Treasury Bills (e)
26.54%, 11/06/97 MXP 450,000 45,695,994
26.70%, 10/02/97 61,350 6,358,172
27.09%, 5/29/97 345,000 38,554,450
27.40%, 5/08/97 278,387 31,551,498
27.50%, 4/30/97 703,527 80,136,831
27.51%, 5/22/97 449,826 50,497,025
27.75%, 2/20/97 135,956 16,227,473
27.90%, 6/05/97 430,440 47,884,321
29.10%, 7/31/97 653,658 70,271,556
30.85%, 7/03/97 76,517 8,361,751
31.60%, 1/30/97 126,500 15,331,390
31.70%, 4/03/97 162,924 18,899,041
31.70%, 2/13/97 53,485 6,414,446
31.80%, 12/05/96 20,364 2,571,287
31.95%, 3/06/97 86,804 10,250,769
32.00%, 1/23/97 58,089 7,073,324
32.09%, 9/04/97 198,670 20,904,660
32.40%, 1/16/97 293,361 35,907,719
32.40%, 1/09/97 192,881 23,694,436
33.00%, 1/02/97 40,577 5,012,951

Total Mexican Securities
(cost $656,644,727) 562,750,212

UNITED STATES-40.2%
U.S. GOVERNMENT/AGENCY OBLIGATIONS-40.1%
U.S. Treasury Bonds
6.75%, 8/15/26 US$ 106,000 110,637,606
12.375%, 5/15/04 47,200 65,077,047
12.50%, 8/15/14 19,000 29,188,769
14.00%, 11/15/11 94,900 149,645,532
U.S. Treasury Notes
6.125%, 8/31/98 28,000 28,262,528
6.25%, 10/31/01 20,000 20,350,020
6.50%, 10/15/06 76,000 78,541,288
6.75%, 4/30/00 46,100 47,511,859
7.00%, 7/15/06 19,000 20,252,822
U.S. Treasury Strips
Zero Coupon, 5/15/09 52,430 23,983,736
Zero Coupon, 5/15/10 384,970 164,093,463
Zero Coupon, 2/15/11 70,000 28,294,770
Zero Coupon, 5/15/14 13,400 4,314,344
Government National
Mortgage Association
9.75%, 6/15/24 16,413 17,848,828
-------------
788,002,612

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
REPURCHASE AGREEMENT-0.1%
Chase Manhattan Bank
5.60%, dated 11/29/96,
due 12/02/96, (collateralized
by $1,497,000 U.S. Treasury Note
5.875%, 7/31/97) US$ 1,500 $ 1,500,000

Total United States Securities
(cost $779,741,899) 789,502,612

TOTAL INVESTMENTS-122.7%
(cost $2,335,774,048) $2,411,838,825
Other assets less liabilities-(22.7)% (445,660,173)

NET ASSETS-100% $1,966,178,652

(a) Interest is compounded monthly and capitalized until May 1, 1997, after
which the security holder will receive monthly paydowns of principal and
interest until maturity.

(b) Interest is compounded monthly and capitalized until October 1, 1998,
after which the security holder will receive monthly paydowns of principal and
interest until maturity.

(c) Securities, or portion thereof, with an aggregate market value of
$464,539,538 have been segregated to collateralize forward exchange currency
contracts.

(d) Private Placement, valued at fair value. (see Note A.)

(e) Interest rate represents annualized yield to maturity at purchase date.

Glossary:
FRN - Floating Rate Note; stated interest rate in effect at November 30,
1996.

See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

ASSETS
Investments in securities, at value (cost $2,335,774,048) $2,411,838,825
Cash, at value (cost $7,198,628) 7,198,177
Receivable for investment securities sold 54,325,244
Interest receivable 24,639,513
Receivable for capital stock sold 9,572,619
Unrealized appreciation of forward exchange currency contracts 4,733,394
Deferred organization expenses and other assets 102,128
Total assets 2,512,409,900

LIABILITIES
Loan payable 250,000,000
Payable for investment securities purchased 273,555,687
Payable for capital stock redeemed 10,440,337
Dividend payable 6,230,370
Loan interest payable 2,948,265
Advisory fee payable 1,164,500
Distribution fee payable 277,412
Accrued expenses 1,614,677
Total liabilities 546,231,248

NET ASSETS $1,966,178,652

COMPOSITION OF NET ASSETS
Capital stock, at par $ 245,578
Additional paid-in capital 2,194,763,065
Distribution in excess of net investment income (31,212,393)
Accumulated net realized loss on investments and foreign
currency transactions (278,794,004)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 81,176,406
$1,966,178,652

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($385,784,171/
48,184,989 shares of capital stock issued and outstanding) $8.01
Sales charge--4.25% of public offering price .36
Maximum offering price $8.37

CLASS B SHARES
Net asset value and offering price per share($1,329,718,387/
166,083,690 shares of capital stock issued and outstanding) $8.01

CLASS C SHARES
Net asset value and offering price per share($250,676,094/
31,309,744 shares of capital stock issued and outstanding) $8.01

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

INVESTMENT INCOME
Interest (net of foreign taxes withheld of $289,318) $ 304,694,299

EXPENSES
Advisory fee $13,118,739
Distribution fee - Class A 931,605
Distribution fee - Class B 12,231,411
Distribution fee - Class C 2,345,916
Custodian 2,985,301
Transfer agency 2,816,268
Audit and legal 250,696
Printing 247,025
Administrative 156,382
Registration 77,360
Amortization of organization expenses 67,373
Taxes 46,950
Directors' fees 27,482
Miscellaneous 22,097
Total expenses before interest 35,324,605
Interest expense 16,358,254
Total expenses 51,682,859
Net investment income 253,011,440

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (66,853,010)
Net realized loss on foreign currency transactions (100,087,454)
Net change in unrealized appreciation (depreciation) of:
Investments 434,683,270
Foreign currency denominated assets and liabilities 990,841
Net gain on investments 268,733,647

NET INCREASE IN NET ASSETS FROM OPERATIONS $ 521,745,087

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
-------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 253,011,440 $ 272,121,257
Net realized loss on investments and foreign
currency transactions (166,940,464) (507,701,318)
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 435,674,111 43,988,763
Net increase (decrease) in net assets
from operations 521,745,087 (191,591,298)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (31,636,818) -0-
Class B (115,651,793) -0-
Class C (22,209,685) -0-
Tax return of capital
Class A (9,263,080) (33,426,216)
Class B (33,862,188) (152,169,130)
Class C (6,502,870) (30,951,612)

CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 68,868,628 (310,024,369)
Total increase (decrease) 371,487,281 (718,162,625)

NET ASSETS
Beginning of year 1,594,691,371 2,312,853,996
End of year $1,966,178,652 $1,594,691,371

See notes to financial statements.

STATEMENT OF CASH FLOWS
YEAR ENDED NOVEMBER 30, 1996
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received $ 164,961,593
Interest paid (16,400,440)
Operating paid (35,075,134)
Net increase in cash from operating activities $113,486,019

INVESTING ACTIVITIES:
Purchases of short-term portfolio
investments, net (241,891,915)
Purchases of long-term portfolio investments (2,839,561,020)
Proceeds from disposition of long-term
portfolio investments 3,128,184,747
Net increase in cash from investing activities 46,731,812

FINANCING ACTIVITIES*:
Subscriptions of capital stock, net 70,836,530
Cash dividends paid (218,879,811)
Net decrease in cash from financing activities (148,043,281)
Effect of exchange rate on cash (5,076,860)
Net increase in cash 7,097,690
Cash at beginning of year 100,487
Cash at end of year $ 7,198,177

RECONCILIATION OF NET INCREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH FROM
OPERATING ACTIVITIES:
Net increase in net assets from operations $521,745,087

ADJUSTMENTS:
Decrease in interest receivable $ 476,451
Net realized loss on securities 66,853,010
Net change in unrealized appreciation (435,674,111)
Accretion of bond discount (140,217,166)
Increase in accrued expenses and other
liabilities 215,294
Net realized loss on foreign currency
transactions 100,087,454
(408,259,068)
Net increase in cash from operating activities $113,486,019

* Non-cash financing activities not included herein consist of reinvestment of
dividends.

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance North American Government Income Trust (the "Fund"), was incorporated
in the State of Maryland on February 3, 1992 as a non-diversified, open-end
management investment company. The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase will be subject to
a contingent deferred sales charge of 1%. 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 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 which mature in 60 days or less are valued at amortized
cost, which approximates market value, unless this method does not represent
fair value. Securities for which market quotations are not readily available
and restricted securities are valued in good faith at fair value using methods
determined by the Board of Directors. In determining fair value, consideration
is given to cost, operating and other financial data.

Net realized losses on foreign currency transactions represent foreign exchange
gains and losses from sales and maturities of foreign securities and foreign
exchange currency contracts, 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 appreciation 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. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
As of November 30, 1996, the Fund reclassified certain components of net
assets. The reclassification resulted in net increases to distributions in
excess of net investment

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

income of $50,892,211 and to accumulated net realized loss on investments and
foreign currency transactions of $100,087,466, and a net decrease to additional
paid in capital of $49,195,255. These reclassifications were the result of
permanent book and tax differences, primarily resulting from the Fund's tax
return of capital and foreign currency losses. Net assets were not affected by
the change.

Pursuant to the advisory agreement, the Fund paid the Adviser $156,382
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 $1,891,919 for the year
ended November 30, 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 $237,477 from the sale of Class A shares and
$237,571, $1,914,263 and $32,226 in contingent deferred sales charges imposed
upon redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended November 30, 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 $35,196,166 and $3,291,519 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 $708,551,808 and $1,108,404,014,
respectively, for the year ended November 30, 1996. There were purchases of
$2,195,939,691 and sales of $1,874,948,267 of U.S. Government and government
agency obligations for the year ended November 30, 1996.

FORWARD EXCHANGE CURRENCY CONTRACTS
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.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

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 liquid assets 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 November
30, 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 12/12/96-5/27/97 586,446 $441,648,594 $436,915,200 $4,733,394

At November 30, 1996, the cost of investments for federal income tax purposes
was $2,370,070,560. Accordingly, gross unrealized appreciation of investments
was $154,896,041 and gross unrealized depreciation of investments was
$113,127,776 resulting in net unrealized appreciation of $41,768,265. At
November 30, 1996 the Fund had a capital loss carryforward totaling
$244,497,492, of which $70,618,925 expires in the year 2002, $134,381,470
expires in the year 2003, and $39,497,097 expires in the year 2004.

NOTE E: BANK BORROWING
The Fund entered into a Revolving Credit Agreement with Deutsche Bank AG, New
York Branch on June 25, 1996. The maximum credit available under the credit
facility is $250,000,000 and requires no collateralization. The loan
outstanding, under the Credit Agreement for the year ended November 30, 1996
was $250,000,000 with a related weighted average interest rate at year end of
6.20% and a weighted average annualized interest rate of 6.33%. The
$250,000,000 balance will mature on June 24, 1997. Interest payments on current
borrowings are based on the Eurodollar margin plus the applicable Eurodollar
rate. The Fund is also obligated to pay Deutsche Bank AG, New York Branch a
facility fee computed at the rate of .15% per annum on the daily amount of the
total commitment as in effect.

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 18,944,431 14,452,683 $ 140,393,513 $ 94,352,169
Shares issued in
reinvestment of
dividends 2,057,846 2,314,466 15,163,942 14,875,359
Shares converted
from Class B 2,279,998 -0- 16,873,171 -0-
Shares redeemed (12,520,904) (16,694,036) (93,408,830) (107,647,756)
Net increase 10,761,371 73,113 $ 79,021,796 $ 1,579,772

CLASS B
Shares sold 35,540,009 29,670,771 $ 262,230,157 $ 194,645,827
Shares issued in
reinvestment of
dividends 6,054,943 9,031,497 44,586,197 58,268,585
Shares converted
to Class A (2,279,998) -0- (16,873,171) -0-
Shares redeemed (39,607,584) (73,890,695) (291,766,451) (477,796,460)
Net decrease (292,630) (35,188,427) $ (1,823,268) $(224,882,048)

CLASS C
Shares sold 8,095,161 6,692,492 $ 59,728,484 $ 43,465,432
Shares issued in
reinvestment of
dividends 1,232,338 2,381,481 9,077,697 15,394,839
Shares redeemed (10,461,384) (22,112,533) (77,136,081) (145,582,364)
Net decrease (1,133,885) (13,038,560) $ (8,329,900) $ (86,722,093)

NOTE G: LITIGATION
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint"), styled IN RE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.
SECURITIES LITIGATION, was filed in the U.S. District Court for the Southern
District of New York against the Fund, the Adviser, Alliance Capital Management
Corporation ("ACMC"), Alliance Fund Distributors, Inc. ("AFD"), The Equitable
Companies Incorporated ("The Equitable"), a parent of the Adviser, and certain
current and former officers and directors of the Fund and ACMC, alleging
violations of the 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. Plaintiffs allege that, as of the date of the
Complaint, the Fund's losses exceeded $750,000,000 and seek as relief
unspecified damages, costs and attorneys' fees. On September 26, 1996, the
District Court granted defendants' motion to dismiss the Complaint as to all
claims.
On October 29, 1996, plaintiffs filed a motion for leave to file an amended
complaint. In the proposed amended complaint ("Amended Complaint"), plaintiffs
have asserted claims against the Fund, the Adviser, ACMC,

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

AFD, The Equitable, and certain current and former officers and directors of
the Fund and ACMCalleging violations of federal securities laws, fraud and
breach of fiduciary duty. The principal allegations of the Amended Complaint
relate to (i) the Fund's hedging practices, (ii) the Fund's investments in
certain mortgage-backed securities, and (iii) the risks and objectives of the
Fund as described in the Fund's marketing materials. The Amended Complaint
makes similar requests for class certification and damages as the Complaint.
Defendants have filed papers in opposition to plaintiffs' motion for leave to
file the Amended Complaint, and the motion is currently pending with the Court.
The Fund and the Adviser believe that the allegations in the Complaint and the
Amended Complaint are without merit and intend to defend vigorously against
these claims.

FINANCIAL HIGHLIGHTS
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
MARCH 27,1992(A)
YEAR ENDED NOVEMBER 30, TO
-------------------------------------------------- NOVEMBER 30,
1996 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 1.09(b) 1.18(b) 1.02 1.09 .69(c)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.14 (1.59) (2.12) .66 (.31)
Net increase (decrease) in net asset
value from operations 2.23 (.41) (1.10) 1.75 .38

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.75) -0- (.91) (1.09) (.68)
Tax return of capital (.22) (.97) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.97) (.97) (1.12) (1.10) (.68)
Net asset value, end of period $ 8.01 $ 6.75 $ 8.13 $10.35 $ 9.70

TOTAL RETURN
Total investment return based on net
asset value (d) 35.22% (3.59)% (11.32)% 18.99% 3.49%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $385,784 $252,608 $303,538 $268,233 $61,702
Ratio of expenses to average net assets 2.34% 2.62% 1.70% 1.61% 2.45%(e)(f)
Ratio of expenses to average net assets
excluding interest expense (g) 1.41% 1.51% 1.37% 1.33% 1.66%(e)
Ratio of net investment income to
average net assets 14.82% 18.09% 11.22% 10.77% 10.93%(e)
Portfolio turnover rate 166% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 19.

FINANCIAL HIGHLIGHTS (CONTINUED)
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------
MARCH 27,1992(A)
YEAR ENDED NOVEMBER 30, TO
------------------------------------------------------- NOVEMBER 30,
1996 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 1.04(b) 1.13(b) .96 1.01 .64(c)
Net realized and unrealized gain (loss)
on investments
and foreign currency transactions 1.12 (1.61) (2.13) .67 (.31)
Net increase (decrease) in net asset
value from operations 2.16 (.48) (1.17) 1.68 .33

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.69) -0- (.84) (1.02) (.63)
Tax return of capital (.21) (.90) (.21) -0- -0-
Distributions from net realized gains -0- -0- -0- (.01) -0-
Total dividends and distributions (.90) (.90) (1.05) (1.03) (.63)
Net asset value, end of period $8.01 $6.75 $8.13 $10.35 $9.70

TOTAL RETURN
Total investment return based on net
asset value (d) 33.96% (4.63)% (11.89)% 18.15% 3.30%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $1,329,719 $1,123,074 $1,639,602 $1,313,591 $216,317
Ratio of expenses to average net assets 3.05% 3.33% 2.41% 2.31% 3.13%(e)(f)
Ratio of expenses to average net assets
excluding interest expense (g) 2.12% 2.22% 2.07% 2.04% 2.35%(e)
Ratio of net investment income to
average net assets 14.20% 17.31% 10.53% 10.01% 10.16%(e)
Portfolio turnover rate 166% 180% 131% 254% 86%
</TABLE>

See footnote summary on page 19.

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
MAY 3, 1993(H)
YEAR ENDED NOVEMBER 30, TO
------------------------------------- NOVEMBER 30,
1996 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 1.05(b) 1.13(b) .96 .58
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.11 (1.61) (2.12) .30
Net increase (decrease) in net asset
value from operations 2.16 (.48) (1.16) .88

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.69) -0- (.84) (.58)
Tax return of capital (.21) (.90) (.21) -0-
Total dividends and distributions (.90) (.90) (1.05) (.58)
Net asset value, end of period $8.01 $6.75 $ 8.13 $10.34

TOTAL RETURN
Total investment return based on net
asset value (d) 33.96% (4.63)% (11.89)% 9.00%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $250,676 $219,009 $369,714 $310,230
Ratio of expenses to average net assets 3.04% 3.33% 2.39% 2.21%(e)
Ratio of expenses to average net assets
excluding interest expense (g) 2.12% 2.21% 2.06% 2.04%(e)
Ratio of net investment income to
average net assets 14.22% 17.32% 10.46% 9.74%(e)
Portfolio turnover rate 166% 180% 131% 254%
</TABLE>

(a) Commencement of operations.

(b) Based on average shares outstanding.

(e) Annualized.

(f) 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.

(g) Net of interest expense of .93% on loan agreement (see Note E).

(h) Commencement of distribution.

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST
_______________________________________________________________________________

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, 1996, 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, 1996, 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, 1996, 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 8, 1997

<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 a 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
some speculative elements while Ca represents a high degree of

A-1

<PAGE>

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.

B-1

<PAGE>

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

C-1

<PAGE>

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
that Exchange that had been issued by the Options Clearing

C-2

<PAGE>

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 the 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 it 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
realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs.

C-3

<PAGE>

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.

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

C-4

<PAGE>

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
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.

C-5

<PAGE>

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
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

C-6

<PAGE>

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.
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

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<PAGE>

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
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

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<PAGE>

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
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.

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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
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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<PAGE>

PART C

OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

(a) Financial Statements
--------------------
Included in the Prospectus:

Financial Highlights.

Included in the Statement of Additional Information:

Portfolio of Investments - November 30, 1996.
Statement of Assets and Liabilities -
November 30, 1996.
Statement of Operations - year ended November 30, 1996.
Statement of Changes in Net Assets - years ended
November 30, 1995 and November 30, 1996.
Statement of Cash Flows - year ended November 30, 1996.
Notes to Financial Statements - November 30, 1996.
Financial Highlights - for Class A and Class B shares
for years ended November 30, 1996, 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, 1996, November 30,
1995, 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, 1997 (unaudited).
Statement of Assets and Liabilities - May 31, 1997
(unaudited).
Statement of Operations - for the six months ended
May 31, 1997 (unaudited).
Statement of Changes in Net Assets - for the year ended
November 30, 1996 and the six months ended May 31,
1997 (unaudited).
Statement of Cash Flows - for the six months ended
May 31, 1997 (unaudited).
Notes to Financial Statements - May 31, 1997
(unaudited).
Financial Highlights - for Class A and Class B shares
for the six months ended May 31, 1997 (unaudited)
and for the years ended November 30, 1996, 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

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<PAGE>

shares for the six months ended May 31, 1997
(unaudited) and the years ended November 30, 1996,
November 30, 1995, November 30, 1994 and the period
May 3, 1993 (commencement of distribution) through
November 30, 1993.

Included in Part C of the Registration Statement:

All other financial statements or schedules are not
required or the required information is shown in the
Statement of Assets and Liabilities or to the notes
thereto.

(b) Exhibits

(1)(a) Articles of Incorporation of the Registrant - filed
herewith.

(1)(b) Articles Supplementary - filed herewith.

(1)(c) Articles Supplementary - Incorporated by reference
from Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission
on October 31, 1996.

(2) By-Laws of the Registrant - filed herewith.

(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) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - filed herewith.

(6) (a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
filed herewith.

(b) Amendment to Distribution Services Agreement -
Incorporated by reference from Post-Effective

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<PAGE>

Amendment No. 14 to Registrant's Registration
Statement on Form N-1A, filed with the Securities
and Exchange Commission on October 31, 1996.

(c) Selected Dealer Agreement between Alliance Fund
Distributors, Inc. and selected dealers offering
shares of Registrant - filed herewith.

(d) Selected Agent Agreement between Alliance Fund
Distributors, Inc. and selected agents making
available shares of Registrant - filed herewith.

(7) Not applicable.

(8) Custodian Contract between the Registrant and Brown
Brothers Harriman & Co. - filed herewith.

(9) Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc. - filed herewith.

(10) (a) Opinion of Seward & Kissel - filed herewith.

(b) Opinion and Consent of Venable, Baetjer and Howard,
LLP - filed herewith.

(11) Consent of Independent Auditors - filed herewith.

(12) Not applicable.

(13) Investment Representation Letter of Alliance
Capital Management L.P. - filed herewith.

(14) Not applicable.

(15) Rule 12b-1 Plan - Incorporated by reference from
Post-Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A, filed with the
Securities and Exchange Commission on October 31,
1996. See Exhibit 6(a) hereto.

(16) Schedule for Computation of Performance Quotations
- filed herewith.

(17) Financial Data Schedule - Incorporated by reference
to the (i) Financial Data Schedule contained in the
Registrant's most recent Semi-Annual Report on Form
N-SAR with respect to a fiscal year ended and
(ii) Financial Data Schedule contained in any more
recent such report of the Registrant with respect
to a six-month period ended.

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<PAGE>

(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 - Incorporated by
reference from Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission
on October 31, 1996.

Other Exhibits: Powers of Attorney of Ms. Block
and Messrs. Carifa, Dievler, Dobkin, Foulk, Hester,
Michel and Robinson - Incorporated by reference
from Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A,
filed with the Securities and Exchange Commission
on October 31, 1996.

ITEM 25. Persons Controlled by or under Common Control with
Registrant.

None.

ITEM 26. Number of Holders of Securities.

As of October 3, 1997, the Registrant had 19,072 record
holders of Class A shares of common stock, 52,644 record
holders of Class B shares of common stock and 8,522
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:

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<PAGE>

"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS.--(a) In this section the
following words have the meaning indicated.

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

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

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

(4) "Official capacity" means the following:

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

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

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

(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:

C-5

<PAGE>

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

1. Was committed in bad faith; or

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

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

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

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

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

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

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

C-6

<PAGE>

expenses incurred by the director in connection
with the proceeding.

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

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

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

C-7

<PAGE>

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 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

C-8

<PAGE>

need not be secured and may be accepted without
reference to financial ability to make the
repayment.

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

(g) 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:

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<PAGE>

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

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

(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."

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<PAGE>

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
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

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<PAGE>

that protects or purports to protect directors and
officers of the Corporation against any liabilities to
the Corporation or its security holders to which any
such director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of his office.

ARTICLE 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

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<PAGE>

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
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.

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<PAGE>

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
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

C-14

<PAGE>

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
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

C-15

<PAGE>

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
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
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves

C-16

<PAGE>

Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield 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, Inc. II
Alliance Municipal Trust
Alliance New Europe Fund, 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 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

C-17

<PAGE>

James S. Comforti Senior Vice President

James L. Cronin Senior Vice President

Daniel J. Dart Senior Vice President

Richard A. Davies Senior Vice President,
Managing Director

Byron M. Davis Senior Vice President

Anne S. Drennan Senior Vice President
and Treasurer

Mark J. Dunbar Senior Vice President

Bradley F. Hanson Senior Vice President

Geoffrey L. Hyde Senior Vice President

Robert H. Joseph, Jr. Senior Vice President
and Chief Financial
Officer

Richard E. Khaleel Senior Vice President

Stephen R. Laut Senior Vice President

Daniel D. McGinley Senior Vice President

Ryne A. Nishimi Senior Vice President

Antonios G. Poleondakis Senior Vice President

Robert E. Powers Senior Vice President

Richard Saccullo 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

Benji A. Baer Vice President

C-18

<PAGE>

Kenneth F. Barkoff Vice President

Casimir F. Bolanowski Vice President

Timothy W. Call Vice President

Kevin T. Cannon Vice President

John R. Carl Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Richard W. Dabney Vice President

John F. Dolan Vice President

Sohaila S. Farsheed Vice President

William C. Fisher Vice President

Gerard J. Friscia Vice President
and Controller

Andrew L. Gangolf Vice President Assistant Secretary

Mark D. Gersten Vice President Treasurer and Chief
Financial Officer

Joseph W. Gibson Vice President

Charles M. Greenberg Vice President

Alan Halfenger Vice President

William B. Hanigan Vice President

Daniel M. Hazard Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Scott Hutton Vice President

Thomas K. Intoccia Vice President

Larry P. Johns Vice President

Richard D. Keppler Vice President

C-19

<PAGE>

Gwenn M. Kessler Vice President

Donna M. Lamback Vice President

James M. Liptrot Vice President

James P. Luisi Vice President

Christopher J. MacDonald Vice President

Michael F. Mahoney Vice President

Lori E. Master Vice President

Shawn P. McClain Vice President

Maura A. McGrath Vice President

Thomas F. Monnerat Vice President

Joanna D. Murray Vice President

Jeanette M. Nardella Vice President

Nicole Nolan-Koester Vice President

John C. O'Connell Vice President

John J. O'Connor Vice President

Robert T. Pigozzi Vice President

James J. Posch Vice President

Domenick Pugliese Vice President and Assistant Secretary
Assistant General
Counsel

Bruce W. Reitz Vice President

Dennis A. Sanford Vice President

Karen C. Satterberg Vice President

Robert C. Schultz Vice President

Raymond S. Sclafani Vice President

Richard J. Sidell Vice President

Andrew D. Strauss Vice President

C-20

<PAGE>

Michael J. Tobin Vice President

Joseph T. Tocyloski Vice President

Martha D. Volcker Vice President

Patrick E. Walsh Vice President

William C. White Vice President

Emilie D. Wrapp Vice President & Assistant Secretary
Special Counsel

Charles M. Barrett Assistant Vice President

Robert F. Brendli Assistant Vice President

Maria L. Carreras Assistant Vice President

John P. Chase Assistant vice President

Russell R. Corby Assistant Vice President

John W. Cronin Assistant Vice President

Ralph A. DiMeglio Assistant Vice President

Faith C. Dunn Assistant Vice President

John C. Endahl Assistant Vice President

John E. English Assistant Vice President

Duff C. Ferguson Assistant Vice President

John Grambone Assistant Vice President

Brian S. Hanigan Assistant Vice President

James J. Hill Assistant Vice President

Edward W. Kelly Assistant Vice President

Michael Laino Assistant Vice President

Nicholas J. Lapi Assistant Vice President

Patrick Look Assistant Vice President
& Assistant Treasurer

Richard F. Meier Assistant Vice President

C-21

<PAGE>

Catherine N. Peterson Assistant Vice President

Carol H. Rappa Assistant Vice President

Clara Sierra Assistant Vice President

Vicent T. Strangio Assistant Vice President

Wesley S. Williams Assistant Vice President

Christopher J. Zingaro 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, 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 27th day of October, 1997.

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 Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.

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

1. Principal
Executive Officer

/s/ John D. Carifa Chairman and October 27, 1997
__________________ President
John D. Carifa

2. Principal Financial
and Accounting Officer

/s/ Mark D. Gersten Treasurer and October 27, 1997
___________________ Chief Financial
Mark D. Gersten 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

By: /s/ Edmund P. Bergan, Jr. October 27, 1997
_________________________
Edmund P. Bergan, Jr.
(Attorney-in-Fact)

C-24

<PAGE>

INDEX TO EXHIBITS

(1)(a) Articles of Incorporation

(1)(b) Articles Supplementary

(2) By-Laws

(5) Advisory Agreement

(6)(a) Distribution Services Agreement

(6)(c) Selected Dealer Agreement

(6)(d) Selected Agent Agreement

(8) Custodian Contract

(9) Transfer Agency Agreement

(10)(a) Opinion and Consent of Seward & Kissel

(10)(b) Opinion and Consent of Venable, Baetjer and Howard

(11) Consent of Independent Auditors

(13) Investment Representation Letter

(16) Schedule for Computation of Performance Quotations

C-25

00250117.AS9

<PAGE>

ARTICLES OF INCORPORATION

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

FIRST: (1) The name of the incorporator is Edward J.
Burke.

(2) The incorporator's post office address is
One Battery Park Plaza, New York, New York 10004.

(3) The incorporator is over eighteen years
of age.

(4) The incorporator is forming the
corporation named in these Articles of Incorporation under the
general laws of the State of Maryland.

SECOND: The name of the corporation (hereinafter
called the Corporation) is Alliance North American Government
Income Trust, Inc.

THIRD: (1) The purposes for which the Corporation is
formed is to conduct, operate and carry on the business of an
investment company.

(2) The Corporation may engage in any other
business and shall have all powers conferred upon or permitted to
corporations by the Maryland General Corporation Law.

FOURTH: The post office address of the principal
office of the Corporation within the State of Maryland is 32
South Street, Baltimore, Maryland 21202 in care of The
Corporation Trust, Incorporated. The resident agent of the
Corporation in the State of Maryland is The Corporation Trust,
Incorporated, 32 South Street, Baltimore, Maryland 21202.

FIFTH: (1) The total number of shares of capital
stock which the Corporation shall have authority to issue is six
billion (6,000,000,000), all of which shall be Common Stock
having a par value of one-tenth of one cent ($.001) per share and
an aggregate par value of six million dollars ($6,000,000).
Until such time as the Board of Directors shall provide otherwise
in accordance with paragraph (a)(iv) of Article SEVENTH hereof,
three billion (3,000,000,000) of the authorized shares of Common
Stock of the Corporation are designated as Class A Common Stock
and three billion (3,000,000,000) of such shares are designated
as Class B Common Stock.

<PAGE>

(2) As more fully set forth hereafter, the
assets and liabilities and the income and expenses of each class
of the Corporation's stock may be determined separately and,
accordingly, the net asset value, the dividends payable to
holders, and the amounts distributable in the event of
dissolution of the Corporation to holders of shares of the
Corporation's stock may vary from class to class. Except for
these differences and certain other differences hereafter set
forth, each class of the Corporation's stock shall have the same
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of and rights to require redemption.

(3) All consideration received by the
Corporation for the issue or sale of shares of a class of the
Corporation's stock, together with all funds derived from any
investment and reinvestment thereof and, in the case of Class A
Common Stock, all assets attributable to shares of Class A Common
Stock into which shares of Class B Common Stock have been
converted, shall irrevocably belong to that class for all
purposes, subject only to the automatic conversion of Class B
Common Stock into Class A Common Stock and the rights of
creditors, and shall be so recorded upon the books of account of
the Corporation. Such consideration and assets attributable to
shares that have been converted as well as any funds derived from
any investment and reinvestment are herein referred to as "assets
belonging to" that class. The assets belonging to the Class A
Common Stock and the assets belonging to the Class B Common Stock
shall be invested in the same investment portfolio of the
Corporation.

(4) The allocation of the assets and
liabilities, investment income or capital gains and expenses of
the Corporation between the Class A Common Stock and Class B
Common Stock shall be determined by the Board of Directors in a
manner that is consistent with the order dated January 8, 1990
(Investment Company Act of 1940 Release No. 17295) issued by the
Securities and Exchange Commission in connection with the
application for exemption filed by Alliance Capital Management
L.P., et al., and any amendment to such order or any rule or
interpretation under the Investment Company Act of 1940 that
modifies or supersedes such order. The determination of the
Board of Directors shall be conclusive as to the allocation of
investment income or capital gains, expenses and liabilities
(including accrued expenses and reserves) and assets to a
particular class or classes.

(5) Shares of each class of stock shall be
entitled to such dividends or distributions, in stock or in cash
or both, as may be declared from time to time by the Board of
Directors with respect to such class. Dividends or distributions

<PAGE>

shall be paid on shares of a class of stock only out of the
assets belonging to that class. Specifically, and without
limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect
to the Class A Common Stock may vary from dividends and
distributions of investment income and capital gains with respect
to the Class B Common Stock to reflect differing allocations of
expenses of the Corporation between the holders of the Class A
Common Stock and the holders of the Class B Common Stock and any
resultant differences between the net asset value of the Class A
Common Stock and the net asset value of the Class B Common Stock,
to such extent and for such purposes as the Board of Directors
may deem appropriate. The Board of Directors may provide that
dividends shall be payable only with respect to those shares of
stock that have been held of record continuously by the
stockholder for a specified period, not to exceed 72 hours, prior
to the record date of the dividend.

(6) On each matter submitted to a vote of the
stockholders, each holder of stock shall be entitled to one vote
for each share standing in his name on the books of the
Corporation. Subject to any applicable requirements of the
Investment Company Act of 1940, as from time to time in effect,
or rules or orders of the Securities and Exchange Commission or
any successor thereto, all holders of shares of stock shall vote
as a single class except with respect to any matter which affects
only one or more classes of stock, in which case only the holders
of shares of the classes affected shall be entitled to vote. The
holders of the Class A Common Stock shall have (i) exclusive
voting rights with respect to provisions of any distribution plan
adopted by the Corporation pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (a "Plan") applicable to the
Class A Common stock and (ii) no voting rights with respect to
provisions of any Plan applicable to the Class B Common Stock.
The holders of the Class B Common Stock shall have (i) exclusive
voting rights with respect to provisions of any Plan applicable
to the Class B Common Stock and (ii) no voting rights with
respect to provisions of any Plan applicable to the Class A
Common Stock.

(7) In the event of the liquidation or
dissolution of the Corporation, the stockholders of a class of
the Corporation's stock shall be entitled to receive, as a class,
out of the assets of the Corporation available for distribution
to stockholders, the assets belonging to that class less the
liabilities allocated to that class. The assets so distributable
to the stockholders of a class shall be distributed among such
stockholders in proportion to the number of shares of that class
held by them and recorded on the books of the Corporation. In
the event that there are any assets available for distribution
that are not attributable to any particular class of stock, such

<PAGE>

assets shall be allocated to all classes in proportion to the net
asset value of the respective classes.

(8)(a) Each holder of stock may require the
Corporation to redeem all or any part of the stock owned by that
holder, upon request to the Corporation or its designated agent,
at the net asset value of the shares of stock next determined
following receipt of the request in a form approved by the
Corporation and accompanied by surrender of the certificate or
certificates for the shares, if any, less the amount of any
applicable redemption charge or deferred sales charge imposed by
the Board of Directors (to the extent consistent with applicable
law). The Board of Directors may establish procedures for
redemption of stock.

(b) The proceeds of the redemption of a
share of the Class B Common Stock (including a fractional share)
shall be reduced by the amount of any contingent deferred sales
charge payable on such redemption pursuant to the terms of
issuance of such share.

(c)(i) The term "Minimum Amount" when used
herein shall mean two hundred dollars ($200) unless otherwise
fixed by the Board of Directors from time to time, provided that
the Minimum Amount may not in any event exceed twenty-five
thousand dollars ($25,000). The Board of Directors may establish
differing Minimum Amounts for categories of holders of stock
based on such criteria as the Board of Directors may deem
appropriate.

(ii) If the net asset value of the
shares of a class of stock held by a stockholder shall be less
than the Minimum Amount then in effect with respect to the
category of holders in which the stockholder is included, the
Corporation may redeem all of those shares, upon notice given to
the holder in accordance with paragraph (iii) of this
subsection (c), to the extent that the Corporation may lawfully
effect such redemption under the laws of the State of Maryland.

(iii) The notice referred to in
paragraph (ii) of this subsection (c) shall be in writing
personally delivered or deposited in the mail, at least thirty
days (or such other number of days as may be specified from time
to time by the Board of Directors) prior to such redemption. If
mailed, the notice shall be addressed to the stockholder at his
post office address as shown on the books of the Corporation, and
sent by first class mail, postage prepaid. The price for shares
acquired by the Corporation pursuant to this subsection (c) shall
be an amount equal to the net asset value of such shares.

<PAGE>

(d) Payment by the Corporation for shares
of stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven days of such
surrender out of the funds legally available therefor, provided
that the Corporation may suspend the right of the stockholders to
redeem shares of stock and may postpone the right of those
holders to receive payment for any shares when permitted or
required to do so by applicable statutes or regulations. Payment
of the aggregate price of shares surrendered for redemption may
be made in cash or, at the option of the Corporation, wholly or
partly in such portfolio securities of the Corporation as the
Corporation shall select.

(9)(a) Each share of the Class B Common
Stock, other than a share purchased through the automatic
reinvestment of a dividend or a distribution with respect to the
Class B Common Stock, shall be converted automatically, and
without any action or choice on the part of the holder thereof,
into shares of the Class A Common Stock on the date that is the
first Corporation business day in the month following the month
in which the eighth anniversary date of the date of issuance of
the share falls (the "Conversion Date").

(b) Each share of Class B Common Stock
purchased through the automatic reinvestment of a dividend or a
distribution with respect to the Class B Common Stock shall be
segregated in a separate sub-account on the stock records of the
Corporation for each of the holders of record thereof. On any
Conversion Date, a number of the shares held in the sub-account
of the holder of record of the share or shares being converted,
calculated in accordance with the next following sentence, shall
be converted automatically, and without any action or choice on
the part of the holder, into shares of the Class A Common Stock.
The number of shares in the holder's sub-account so converted
shall bear the same relation to the total number of shares
maintained in the sub-account on the Conversion Date (immediately
prior to conversion) as the number of shares of the holder
converted on the Conversion Date pursuant to paragraph (9)(a)
hereof bears to the total number of shares of the Class B Common
Stock of the holder on the Conversion Date (immediately prior to
conversion) not purchased through the automatic reinvestment of
dividends or distributions with respect to the Class B Common
Stock.

(c) The number of shares of the Class A
Common Stock into which a share of the Class B Common Stock is
converted pursuant to paragraph (9)(a) and (9)(b) hereof shall
equal the number (including for this purpose fractions of a
share) obtained by dividing the net asset value per share of the
Class B Common Stock for purposes of sales and redemptions
thereof on the Conversion Date by the net asset value per share

<PAGE>

of the Class A Common Stock for purposes of sales and redemptions
thereof on the Conversion Date.

(d) On the Conversion Date, the shares of
the Class B Common Stock converted into shares of the Class A
Common Stock will cease to accrue dividends and will no longer be
deemed outstanding and the rights of the holders thereof (except
the right to receive the number of shares of Class A Common Stock
into which the shares of Class B Common Stock have been converted
and declared but unpaid dividends to the Conversion Date) will
cease. Certificates resulting from the conversion need not be
issued until certificates representing shares of the Class A
Common Stock converted, if issued, have been received by the
Corporation or its agent duly endorsed for transfer.

(10) For the purpose of allowing the net
asset value per share of a class of the Corporation's stock to
remain constant, the Corporation shall be entitled to declare and
pay and/or credit as dividends daily the net income (which may
include or give effect to realized and unrealized gains and
losses, as determined in accordance with the Corporation's
accounting and portfolio valuation policies) of the Corporation
attributable to the assets belonging to that class. If the
amount so determined for any day is negative, the Corporation
shall be entitled, without the payment of monetary compensation
but in consideration of the interest of the Corporation and its
stockholders in maintaining a constant net asset value per share
of that class, to redeem pro rata from all the holders of record
of shares of that class at the time of such redemption (in
proportion to their respective holdings thereof) sufficient
outstanding shares of that class, or fractions thereof, as shall
permit the net asset value per share of that class to remain
constant.

(11) The Corporation may issue shares of
stock in fractional denominations to the same extent as its whole
shares, and shares in fractional denominations shall be shares of
stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including,
without limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right to
receive a stock certificate representing fractional shares.

(12) No stockholder shall be entitled to any
preemptive right other than as the Board of Directors may
establish.

SIXTH: The number of directors of the Corporation
shall be one. The number of directors of the Corporation may be
changed pursuant to the By-Laws of the Corporation. The name of

<PAGE>

the person who shall act as director of the Corporation until the
first annual meeting or until his successor is chosen and
qualified is Edmund P. Bergan, Jr.

SEVENTH: The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders.

(a) In addition to its other powers explicitly or
implicitly granted under these Articles of Incorporation, by law
or otherwise, the Board of Directors of the Corporation:

(i) is expressly authorized to make, alter,
amend or repeal the By-Laws of the Corporation;

(ii) may from time to time determine whether,
to what extent, at what times and places, and under what
conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of
the stockholders, and no stockholder shall have any right to
inspect any account, book or document of the Corporation except
as conferred by statute or as authorized by the Board of
Directors of the Corporation;

(iii) is empowered to authorize, without
stockholder approval, the issuance and sale from time to time of
shares of stock of the Corporation whether now or hereafter
authorized;

(iv) is authorized to classify or to
reclassify, from time to time, any unissued shares of stock of
the Corporation, whether now or hereafter authorized, by setting,
changing or eliminating the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms and conditions of or rights to require
redemption of the stock. The provisions of these Articles of
Incorporation (including those in Article FIFTH hereof) shall
apply to each class of stock unless otherwise provided by the
Board of Directors prior to issuance of any shares of that class;
and

(v) is authorized to adopt procedures for
determination of and to maintain constant the net asset value of
shares of any class of the Corporation's stock.

(b) Notwithstanding any provision of the Maryland
General Corporation Law requiring a greater proportion than a
majority of the votes of all classes or of any class of the
Corporation's stock entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized
upon the concurrence of a majority of the aggregate number of

<PAGE>

votes entitled to be cast thereon subject to any applicable
requirements of the Investment Company Act of 1940, as from time
to time in effect, or rules or orders of the Securities and
Exchange Commission or any successor thereto.

(c) The presence in person or by proxy of the
holders of shares entitled to cast one-third of the votes
entitled to be cast (without regard to class) shall constitute a
quorum at any meeting of the stockholders, except with respect to
any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more
classes of stock, in which case the presence in person or by
proxy of the holders of shares entitled to cast one-third of the
votes entitled to be cast by each class entitled to vote as a
class on the matter shall constitute a quorum.

(d) Any determination made in good faith by or
pursuant to the direction of the Board of Directors, as to the
amount of the assets, debts, obligations, or liabilities of the
Corporation as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for
creating such reserves or charges, as to the use, alteration or
cancellation of any reserves or charges (whether or not any debt,
obligation, or liability for which such reserves or charges shall
have been created shall be then or thereafter required to be paid
or discharged), as to the value of or the method of valuing any
investment owned or held by the Corporation, as to market value
or fair value of any investment or fair value of any other asset
of the Corporation, as to the allocation of any asset of the
Corporation to a particular class or classes of the Corporation's
stock, as to the charging of any liability of the Corporation to
a particular class or classes of the Corporation's stock, as to
the number of shares of the Corporation outstanding, as to the
estimated expense to the Corporation in connection with purchases
of its shares, as to the ability to liquidate investments in
orderly fashion, or as to any other matters relating to the
issue, sale, redemption or other acquisition or disposition of
investments or shares of the Corporation, shall be final and
conclusive and shall be binding upon the Corporation and all
holders of its shares, past, present and future, and shares of
the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be
binding as aforesaid.

EIGHTH: (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 Corporation whether or not that person is a

<PAGE>

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 may do so to such further extent as is
consistent with law. The Board of Directors may by By-Law,
resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to
the full extent permitted by the Maryland 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.

NINTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in these Articles
of Incorporation or in any amendment hereto in the manner now or
hereafter prescribed by the laws of the State of Maryland,
including any amendment which alters the contract rights, as
expressly set forth in these Articles of Incorporation, of any
outstanding stock, and all rights conferred upon stockholders
herein are granted subject to this reservation.

IN WITNESS WHEREOF, the undersigned, being the
incorporator of the Corporation, has adopted and signed these
Articles of Incorporation and does hereby acknowledge that the
adoption and signing are his act.

/s/ Edward J. Burke
__________________________
Edward J. Burke

Dated: February 3, 1992

9
00250117.AT9

<PAGE>

Exhibit 1(b)
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
Class C Common Stock.

SECOND: The shares of the Class C 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 Amendment and Restatement (other
than those provisions of Article FIFTH which by their terms are
applicable solely to the Class A Common Stock or the Class B
Common Stock of the Corporation) and shall be subject to all
provisions of the Articles of Amendment and Restatement relating
to stock of the Corporation generally, and those set forth as
follows:

(1) The assets belonging to the Class C Common Stock
shall be invested in the same investment portfolio of the
Corporation as the assets belonging to the Class A Common
Stock and the Class B Common Stock.

(2) The dividends and distributions of investment
income and capital gains with respect to the Class C 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 and Class B Common Stock to reflect differing
allocations of the expenses of the Corporation among the
holders of the three classes and any resultant differences
among the net asset values per share of the three 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
among the Class A Common Stock, the Class B Common Stock, and
the Class C Common Stock shall be determined by the Board of
Directors in a manner that is consistent with the order dated
January 8, 1990 (Investment Company Act of 1940 Release No.
17295) issued by the Securities and Exchange Commission in

<PAGE>

connection with the application for exemption filed by
Alliance Capital Management L.P., et al., and any existing or
future amendment to such order or any rule or interpretation
under the Investment Company Act of 1940 that modifies or
supersedes such order.

(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 Class C 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 Class C Common
Stock, including without limitation, the provisions of any
distribution plan adopted by the Corporation pursuant to Rule
12b-1 under the Investment Company Act of 1940 (a "Plan")
applicable to the Class C Common Stock and (ii) no voting
rights with respect to the provisions of any Plan applicable
to the Class A Common Stock or Class B Common Stock or with
regard to any other matter submitted to a vote of
stockholders which does not affect holders of the Class C
Common Stock.

(4) The proceeds of the redemption of a share
(including a fractional share) of Class C Common Stock shall
be reduced by the amount of any contingent deferred sales
charge payable on such redemption pursuant to the terms of
issuance of such share.

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 6,000,000,000 shares, the par value of each class of stock
being $.001 per share, with an aggregate par value of $6,000,000,
of which 3,000,000,000 shares were classified as shares of Class
A Common Stock and 3,000,000,000 shares were classified as shares
of Class B 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 9,000,000,000 shares, the par value of each class of stock
being $.001 per share, with an aggregate par value of $9,000,000,
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, and 3,000,000,000 shares are classified as
shares of Class C Common Stock.

FOURTH: The Corporation is registered as an open-end company
under the Investment Company Act of 1940.

<PAGE>

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.

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 29th day
of April, 1997. 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/David H. Dievler
____________________
David H. Dievler,
Chairman of the Board

Attested:/s/Edmund P. Bergan, Jr.
________________________
Edmund P. Bergan, Jr.,
Secretary

3
00250117.AT7

<PAGE>

BY-LAWS

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.
________________

ARTICLE I

Offices

Section 1. Principal Office in Maryland. The

Corporation shall have a principal office in the City of

Baltimore, State of Maryland.

Section 2. Other Offices. The Corporation may have

offices also at such other places within and without the State of

Maryland as the Board of Directors may from time to time

determine or as the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

Section 1. Place of Meeting. Meetings of stockholders

shall be held at such place, either within the State of Maryland

or at such other place within the United States, as shall be

fixed from time to time by the Board of Directors.

Section 2. Annual Meetings. Annual meetings of

stockholders shall be held on a date fixed from time to time by

the Board of Directors not less than ninety nor more than one

hundred twenty days following the end of each fiscal year of the

Corporation, for the election of directors and the transaction of

any other business within the powers of the Corporation;

provided, however, that the Corporation shall not be required to

<PAGE>

hold an annual meeting in any year in which the election of

directors is not required to be acted on by stockholders under

the Investment Company Act of 1940.

Section 3. Notice of Annual Meeting. Written or

printed notice of the annual meeting, stating the place, date and

hour thereof, shall be given to each stockholder entitled to vote

thereat and each other stockholder entitled to notice thereof not

less than ten nor more than ninety days before the date of the

meeting.

Section 4. Special Meetings. Special meetings of

stockholders may be called by the chairman, the president or by

the Board of Directors and shall be called by the secretary upon

the written request of holders of shares entitled to cast not

less than twenty-five percent of all the votes entitled to be

cast at such meeting. Such request shall state the purpose or

purposes of such meeting and the matters proposed to be acted on

thereat. In the case of such request for a special meeting, upon

payment by such stockholders to the Corporation of the estimated

reasonable cost of preparing and mailing a notice of such

meeting, the secretary shall give the notice of such meeting.

The secretary shall not be required to call a special meeting to

consider any matter which is substantially the same as a matter

acted upon at any special meeting of stockholders held within the

preceding twelve months unless requested to do so by holders of

shares entitled to cast not less than a majority of all votes

<PAGE>

entitled to be cast at such meeting. Notwithstanding the

foregoing, to the extent required by the Investment Company Act

of 1940, special meetings of stockholders for the purpose of

voting upon the question of removal of any director or directors

of the Corporation shall be called by the secretary upon the

written request of holders of shares entitled to cast not less

than ten percent of all the votes entitled to be cast at such

meeting.

Section 5. Notice of Special Meeting. Written or

printed notice of a special meeting of stockholders, stating the

place, date, hour and purpose thereof, shall be given by the

secretary to each stockholder entitled to vote thereat and each

other stockholder entitled to notice thereof not less than ten

nor more than ninety days before the date fixed for the meeting.

Section 6. Business of Special Meetings. Business

transacted at any special meeting of stockholders shall be

limited to the purposes stated in the notice thereof.

Section 7. Quorum. The holders of shares entitled to

cast one-third of the votes entitled to be cast thereat, present

in person or represented by proxy, shall constitute a quorum at

all meetings of the stockholders for the transaction of business,

except with respect to any matter which, under applicable

statutes or regulatory requirements, requires approval by a

separate vote of one or more classes of stock, in which case the

presence in person or by proxy of the holders of one-third of the

<PAGE>

shares of stock of each class required to vote as a class on the

matter shall constitute a quorum.

Section 8. Voting. When a quorum is present at any

meeting, the affirmative vote of a majority of the votes cast,

or, with respect to any matter requiring a class vote, the

affirmative vote of a majority of the votes cast of each class

entitled to vote as a class on the matter, shall decide any

question brought before such meeting (except that directors may

be elected by the affirmative vote of a plurality of the votes

cast), unless the question is one upon which by express provision

of the Investment Company Act of 1940, as from time to time in

effect, or other statutes or rules or orders of the Securities

and Exchange Commission or any successor thereto or of the

Articles of Incorporation a different vote is required, in which

case such express provision shall govern and control the decision

of such question.

Section 9. Proxies. Each stockholder shall at every

meeting of stockholders be entitled to one vote in person or by

proxy for each share of the stock having voting power held by

such stockholder, but no proxy shall be voted after eleven months

from its date, unless otherwise provided in the proxy.

Section 10. Record Date. In order that the Corporation

may determine the stockholders entitled to notice of or to vote

at any meeting of stockholders or any adjournment thereof, to

express consent to corporate action in writing without a meeting,

<PAGE>

or to receive payment of any dividend or other distribution or

allotment of any rights, or entitled to exercise any rights in

respect of any change, conversion or exchange of stock or for the

purpose of any other lawful action, the Board of Directors may

fix, in advance, a record date which shall be not more than

ninety days and, in the case of a meeting of stockholders, not

less than ten days prior to the date on which the particular

action requiring such determination of stockholders is to be

taken. In lieu of fixing a record date, the Board of Directors

may provide that the stock transfer books shall be closed for a

stated period, but not to exceed, in any case, twenty days. If

the stock transfer books are closed for the purpose of

determining stockholders entitled to notice of or to vote at a

meeting of stockholders, such books shall be closed for at least

ten days immediately preceding such meeting. If no record date

is fixed and the stock transfer books are not closed for the

determination of stockholders: (1) The record date for the

determination of stockholders entitled to notice of, or to vote

at, a meeting of stockholders shall be at the close of business

on the day on which notice of the meeting of stockholders is

mailed or the day thirty days before the meeting, whichever is

the closer date to the meeting; and (2) The record date for the

determination of stockholders entitled to receive payment of a

dividend or an allotment of any rights shall be at the close of

business on the day on which the resolution of the Board of

<PAGE>

Directors, declaring the dividend or allotment of rights, is

adopted, provided that the payment or allotment date shall not be

more than sixty days after the date of the adoption of such

resolution.

Section 11. Inspectors of Election. The directors, in

advance of any meeting, may, but need not, appoint one or more

inspectors to act at the meeting or any adjournment thereof. If

an inspector or inspectors are not appointed, the person

presiding at the meeting may, but need not, appoint one or more

inspectors. In case any person who may be appointed as an

inspector fails to appear or act, the vacancy may be filled by

appointment made by the directors in advance of the meeting or at

the meeting by the person presiding thereat. Each inspector, if

any, before entering upon the discharge of his duties, shall take

and sign an oath faithfully to execute the duties of inspector at

such meeting with strict impartiality and according to the best

of his ability. The inspectors, if any, shall determine the

number of shares outstanding and the voting power of each, the

shares represented at the meeting, the existence of a quorum, the

validity and effect of proxies, and shall receive votes, ballots

or consents, hear and determine all challenges and questions

arising in connection with the right to vote, count and tabulate

all votes, ballots or consents, determine the result, and do such

acts as are proper to conduct the election or vote with fairness

to all stockholders. On request of the person presiding at the

<PAGE>

meeting or any stockholder, the inspector or inspectors, if any,

shall make a report in writing of any challenge, question or

matter determined by him or them and execute a certificate of any

fact found by him or them.

Section 12. Informal Action by Stockholders. Except to

the extent prohibited by the Investment Company Act of 1940, as

from time to time in effect, or rules or orders of the Securities

and Exchange Commission or any successor thereto, any action

required or permitted to be taken at any meeting of stockholders

may be taken without a meeting if a consent in writing, setting

forth such action, is signed by all the stockholders entitled to

vote on the subject matter thereof and any other stockholders

entitled to notice of a meeting of stockholders (but not to vote

thereat) have waived in writing any rights which they may have to

dissent from such action, and such consent and waiver are filed

with the records of the Corporation.

ARTICLE III

Board of Directors

Section 1. Number of Directors. The number of

directors constituting the entire Board of Directors (which

initially was fixed at one in the Corporation's Articles of

Incorporation) may be increased or decreased from time to time by

the vote of a majority of the entire Board of Directors within

the limits permitted by law but at no time may be more than

twenty, but the tenure of office of a director in office at the

<PAGE>

time of any decrease in the number of directors shall not be

affected as a result thereof. The directors shall be elected to

hold offices at the annual meeting of stockholders, except as

provided in Section 2 of this Article, and each director shall

hold office until the next annual meeting of stockholders or

until his successor is elected and qualified. Any director may

resign at any time upon written notice to the Corporation. Any

director may be removed, either with or without cause, at any

meeting of stockholders duly called and at which a quorum is

present by the affirmative vote of the majority of the votes

entitled to be cast thereon, and the vacancy in the Board of

Directors caused by such removal may be filled by the

stockholders at the time of such removal. Directors need not be

stockholders.

Section 2. Vacancies and Newly-Created Directorships.

Any vacancy occurring in the Board of Directors for any cause

other than by reason of an increase in the number of directors

may be filled by a majority of the remaining members of the Board

of Directors although such majority is less than a quorum. Any

vacancy occurring by reason of an increase in the number of

directors may be filled by a majority of the entire Board of

Directors. A director elected by the Board of Directors to fill

a vacancy shall be elected to hold office until the next annual

meeting of stockholders or until his successor is elected and

qualifies.

<PAGE>

Section 3. Powers. The business and affairs of the

Corporation shall be managed by or under the direction of the

Board of Directors which may exercise all such powers of the

Corporation and do all such lawful acts and things as are not by

statute or by the Articles of Incorporation or by these By-Laws

conferred upon or reserved to the stockholders.

Section 4. Meetings. The Board of Directors of the

Corporation or any committee thereof may hold meetings, both

regular and special, either within or without the State of

Maryland. Regular meetings of the Board of Directors may be held

without notice at such time and at such place as shall from time

to time be determined by the Board of Directors. Special

meetings of the Board of Directors may be called by the chairman,

the president or by two or more directors. Notice of special

meetings of the Board of Directors shall be given by the

secretary to each director at least three days before the meeting

if by mail or at least 24 hours before the meeting if given in

person or by telephone or by telegraph. The notice need not

specify the business to be transacted.

Section 5. Quorum and Voting. During such times when

the Board of Directors shall consist of more than one director, a

quorum for the transaction of business at meetings of the Board

of Directors shall consist of two of the directors in office at

the time but in no event shall a quorum consist of less than one-

third of the entire Board of Directors. The action of a majority

<PAGE>

of the directors present at a meeting at which a quorum is

present shall be the action of the Board of Directors. If a

quorum shall not be present at any meeting of the Board of

Directors, the directors present thereat may adjourn the meeting

from time to time, without notice other than announcement at the

meeting, until a quorum shall be present.

Section 6. Committees. The Board of Directors may

appoint from among its members an executive committee and other

committees of the Board of Directors, each committee to be

composed of two or more of the directors of the Corporation. The

Board of Directors may delegate to such committees any of the

powers of the Board of Directors except those which may not by

law be delegated to a committee. Such committee or committees

shall have the name or names as may be determined from time to

time by resolution adopted by the Board of Directors. Unless the

Board of Directors designates one or more directors as alternate

members of any committee, who may replace an absent or

disqualified member at any meeting of the committee, the members

of any such committee present at any meeting and not disqualified

from voting may, whether or not they constitute a quorum, appoint

another member of the Board of Directors to act at the meeting in

the place of any absent or disqualified member of such committee.

At meetings of any such committee, a majority of the members or

alternate members of such committee shall constitute a quorum for

the transaction of business and the act of a majority of the

<PAGE>

members or alternate members present at any meeting at which a

quorum is present shall be the act of the committee.

Section 7. Minutes of Committee Meetings. The

committees shall keep regular minutes of their proceedings.

Section 8. Informal Action by Board of Directors and

Committees. Any action required or permitted to be taken at any

meeting of the Board of Directors or of any committee thereof may

be taken without a meeting if a written consent thereto is signed

by all members of the Board of Directors or of such committee, as

the case may be, and such written consent is filed with the

minutes of proceedings of the Board of Directors or committee,

provided, however, that such written consent shall not constitute

approval of any matter which pursuant to the Investment Company

Act of 1940 and the rules thereunder requires the approval of

directors by vote cast in person at a meeting.

Section 9. Meetings by Conference Telephone. The

members of the Board of Directors or any committee thereof may

participate in a meeting of the Board of Directors or committee

by means of a conference telephone or similar communications

equipment by means of which all persons participating in the

meeting can hear each other at the same time and such

participation shall constitute presence in person at such

meeting, provided, however, that such participation shall not

constitute presence in person with respect to matters which

pursuant to the Investment Company Act of 1940 and the rules

<PAGE>

thereunder require the approval of directors by vote cast in

person at a meeting.

Section 10. Fees and Expenses. The directors may be

paid their expenses of attendance at each meeting of the Board of

Directors and may be paid a fixed sum for attendance at each

meeting of the Board of Directors, a stated salary as director or

such other compensation as the Board of Directors may approve.

No such payment shall preclude any director from serving the

Corporation in any other capacity and receiving compensation

therefor. Members of special or standing committees may be

allowed like reimbursement and compensation for attending

committee meetings.

ARTICLE IV

Notices

Section 1. General. Notices to directors and

stockholders mailed to them at their post office addresses

appearing on the books of the Corporation shall be deemed to be

given at the time when deposited in the United States mail.

Section 2. Waiver of Notice. Whenever any notice is

required to be given under the provisions of the statutes, of the

Articles of Incorporation or of these By-Laws, a waiver thereof

in writing, signed by the person or persons entitled to said

notice, whether before or after the time stated therein, shall be

deemed the equivalent of notice and such waiver shall be filed

with the records of the meeting. Attendance of a person at a

<PAGE>

meeting shall constitute a waiver of notice of such meeting

except when the person attends a meeting for the express purpose

of objecting, at the beginning of the meeting, to the transaction

of any business because the meeting is not lawfully called or

convened.

ARTICLE V

Officers

Section 1. General. The officers of the Corporation

shall be chosen by the Board of Directors at its first meeting

after each annual meeting of stockholders and shall be a chairman

of the Board of Directors, a president, a secretary and a

treasurer. The Board of Directors may choose also such vice

presidents and additional officers or assistant officers as it

may deem advisable. Any number of offices, except the offices of

president and vice president and chairman and vice president, may

be held by the same person. No officer shall execute,

acknowledge or verify any instrument in more than one capacity if

such instrument is required by law to be executed, acknowledged

or verified by two or more officers.

Section 2. Other Officers and Agents. The Board of

Directors may appoint such other officers and agents as it

desires who shall hold their offices for such terms and shall

exercise such powers and perform such duties as shall be

determined from time to time by the Board of Directors.

<PAGE>

Section 3. Tenure of Officers. The officers of the

Corporation shall hold office at the pleasure of the Board of

Directors. Each officer shall hold his office until his

successor is elected and qualifies or until his earlier

resignation or removal. Any officer may resign at any time upon

written notice to the Corporation. Any officer elected or

appointed by the Board of Directors may be removed at any time by

the Board of Directors when, in its judgment, the best interests

of the Corporation will be served thereby. Any vacancy occurring

in any office of the Corporation by death, resignation, removal

or otherwise shall be filled by the Board of Directors.

Section 4. Chairman of the Board of Directors. The

chairman of the Board of Directors shall preside at all meetings

of the stockholders and of the Board of Directors. He shall be

the chief executive officer and shall have general and active

management of the business of the Corporation and shall see that

all orders and resolutions of the Board of Directors are carried

into effect. He shall be ex officio a member of all committees

designated by the Board of Directors except as otherwise

determined by the Board of Directors. He shall execute bonds,

mortgages and other contracts requiring a seal, under the seal of

the Corporation, except where required or permitted by law to be

otherwise signed and executed and except where the signing and

execution thereof shall be expressly delegated by the Board of

Directors to some other officer or agent of the Corporation.

<PAGE>

Section 5. President. The president shall act under

the direction of the chairman and in the absence or disability of

the chairman shall perform the duties and exercise the powers of

the chairman. He shall perform such other duties and have such

other powers as the chairman or the Board of Directors may from

time to time prescribe. He shall execute on behalf of the

Corporation, and may affix the seal or cause the seal to be

affixed to, all instruments requiring such execution except to

the extent that signing and execution thereof shall be expressly

delegated by the Board of Directors to some other officer or

agent of the Corporation.

Section 6. Vice Presidents. The vice presidents shall

act under the direction of the chairman and in the absence or

disability of the president shall perform the duties and exercise

the powers of the president. They shall perform such other

duties and have such other powers as the chairman or the Board of

Directors may from time to time prescribe. The Board of

Directors may designate one or more executive vice presidents or

may otherwise specify the order of seniority of the vice

presidents and, in that event, the duties and powers of the

president shall descend to the vice presidents in the specified

order of seniority.

Section 7. Secretary. The secretary shall act under

the direction of the chairman. Subject to the direction of the

chairman he shall attend all meetings of the Board of Directors

<PAGE>

and all meetings of stockholders and record the proceedings in a

book to be kept for that purpose and shall perform like duties

for the committees designated by the Board of Directors when

required. He shall give, or cause to be given, notice of all

meetings of stockholders and special meetings of the Board of

Directors, and shall perform such other duties as may be

prescribed by the chairman or the Board of Directors. He shall

keep in safe custody the seal of the Corporation and shall affix

the seal or cause it to be affixed to any instrument requiring

it.

Section 8. Assistant Secretaries. The assistant

secretaries in the order of their seniority, unless otherwise

determined by the chairman or the Board of Directors, shall, in

the absence or disability of the secretary, perform the duties

and exercise the powers of the secretary. They shall perform

such other duties and have such other powers as the chairman or

the Board of Directors may from time to time prescribe.

Section 9. Treasurer. The treasurer shall act under

the direction of the chairman. Subject to the direction of the

chairman he shall have the custody of the corporate funds and

securities and shall keep full and accurate accounts of receipts

and disbursements in books belonging to the Corporation and shall

deposit all moneys and other valuable effects in the name and to

the credit of the Corporation in such depositories as may be

designated by the Board of Directors. He shall disburse the

<PAGE>

funds of the Corporation as may be ordered by the chairman or the

Board of Directors, taking proper vouchers for such

disbursements, and shall render to the chairman and the Board of

Directors, at its regular meetings, or when the Board of

Directors so requires, an account of all his transactions as

treasurer and of the financial condition of the Corporation.

Section 10. Assistant Treasurers. The assistant

treasurers in the order of their seniority, unless otherwise

determined by the chairman or the Board of Directors, shall, in

the absence or disability of the treasurer, perform the duties

and exercise the powers of the treasurer. They shall perform

such other duties and have such other powers as the chairman or

the Board of Directors may from time to time prescribe.

ARTICLE VI

Certificates of Stock

Section 1. General. Every holder of stock of the

Corporation who has made full payment of the consideration for

such stock shall be entitled upon request to have a certificate,

signed by, or in the name of the Corporation by, the chairman,

the president or a vice president and countersigned by the

treasurer or an assistant treasurer or the secretary or an

assistant secretary of the Corporation, certifying the number

and, if additional shares of stock should be authorized, the

class of whole shares of stock owned by him in the Corporation.

<PAGE>

Section 2. Fractional Share Interests. The Corporation

may issue fractions of a share of stock. Fractional shares of

stock shall have proportionately to the respective fractions

represented thereby all the rights of whole shares, including the

right to vote, the right to receive dividends and distributions

and the right to participate upon liquidation of the Corporation,

excluding, however, the right to receive a stock certificate

representing such fractional shares.

Section 3. Signatures on Certificates. Any of or all

the signatures on a certificate may be a facsimile. In case any

officer who has signed or whose facsimile signature has been

placed upon a certificate shall cease to be such officer before

such certificate is issued, it may be issued with the same effect

as if he were such officer at the date of issue. The seal of the

Corporation or a facsimile thereof may, but need not, be affixed

to certificates of stock.

Section 4. Lost, Stolen or Destroyed Certificates. The

Board of Directors may direct a new certificate or certificates

to be issued in place of any certificate or certificates

theretofore issued by the Corporation alleged to have been lost,

stolen or destroyed, upon the making of any affidavit of that

fact by the person claiming the certificate or certificates to be

lost, stolen or destroyed. When authorizing such issue of a new

certificate or certificates, the Board of Directors may, in its

discretion and as a condition precedent to the issuance thereof,

<PAGE>

require the owner of such lost, stolen or destroyed certificate

or certificates, or his legal representative, to give the

Corporation a bond in such sum as it may direct as indemnity

against any claim that may be made against the Corporation with

respect to the certificate or certificates alleged to have been

lost, stolen or destroyed.

Section 5. Transfer of Shares. Upon request by the

registered owner of shares, and if a certificate has been issued

to represent such shares upon surrender to the Corporation or a

transfer agent of the Corporation of a certificate for shares of

stock duly endorsed or accompanied by proper evidence of

succession, assignment or authority to transfer, it shall be the

duty of the Corporation, if it is satisfied that all provisions

of the Articles of Incorporation, of the By-Laws and of the law

regarding the transfer of shares have been duly complied with, to

record the transaction upon its books, issue a new certificate to

the person entitled thereto upon request for such certificate,

and cancel the old certificate, if any.

Section 6. Registered Owners. The Corporation shall be

entitled to recognize the person registered on its books as the

owner of shares to be the exclusive owner for all purposes

including voting and dividends, and the Corporation shall not be

bound to recognize any equitable or other claim to or interest in

such share or shares on the part of any other person, whether or

<PAGE>

not it shall have express or other notice thereof, except as

otherwise provided by the laws of Maryland.

ARTICLE VII

Miscellaneous

Section 1. Reserves. There may be set aside out of any

funds of the Corporation available for dividends such sum or sums

as the Board of Directors from time to time, in their absolute

discretion, think proper as a reserve or reserves to meet

contingencies, or for such other purpose as the Board of

Directors shall think conducive to the interest of the

Corporation, and the Board of Directors may modify or abolish any

such reserve.

Section 2. Dividends. Dividends upon the stock of the

Corporation may, subject to the provisions of the Articles of

Incorporation and of applicable law, be declared by the Board of

Directors at any time. Dividends may be paid in cash, in

property or in shares of the Corporation's stock, subject to the

provisions of the Articles of Incorporation and of applicable

law.

Section 3. Capital Gains Distributions. The amount and

number of capital gains distributions paid to the stockholders

during each fiscal year shall be determined by the Board of

Directors. Each such payment shall be accompanied by a statement

as to the source of such payment, to the extent required by law.

<PAGE>

Section 4. Checks. All checks or demands for money and

notes of the Corporation shall be signed by such officer or

officers or such other person or persons as the Board of

Directors may from time to time designate.

Section 5. Fiscal Year. The fiscal year of the

Corporation shall be fixed by resolution of the Board of

Directors.

Section 6. Seal. The corporate seal shall have

inscribed thereon the name of the Corporation, the year of its

organization and the words "Corporate Seal, Maryland." The seal

may be used by causing it or a facsimile thereof to be impressed

or affixed or in another manner reproduced.

Section 7. Insurance Against Certain Liabilities. The

Corporation shall not bear the cost of insurance that protects or

purports to protect directors and officers of the Corporation

against any liabilities to the Corporation or its security

holders to which any such director or officer would otherwise be

subject by reason of willful misfeasance, bad faith, gross

negligence or reckless disregard of the duties involved in the

conduct of his office.

ARTICLE VIII

Indemnification

Section 1. Indemnification of Directors and Officers.

The Corporation shall indemnify its directors to the full extent

that indemnification of directors is permitted by the Maryland

<PAGE>

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 2. 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

<PAGE>

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 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 3. 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.

<PAGE>

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 4. 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 5. 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 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

<PAGE>

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 6. 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.

ARTICLE IX

Amendments

The Board of Directors shall have the power to make,

alter and repeal by-laws of the Corporation.

00250117.AU0

<PAGE>

Exhibit 5
ADVISORY AGREEMENT

Alliance North American Government Income Trust, Inc.
1345 Avenue of the Americas
New York, New York 10105

July 22, 1992

Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

We, the undersigned Alliance North American Government

Income Trust, Inc. herewith confirm our agreement with you as

follows:

1. We are an, open-end, non-diversified management

investment company registered under the Investment Company Act of

1940 (the "Act"). We are currently authorized to issue separate

classes of shares and our Directors are authorized to reclassify

and issue any unissued shares to any number of additional classes

or series (portfolios) each having its own investment objective,

policies and restrictions, all as more fully described in the

prospectus and the statement of additional information

constituting parts of the Registration Statement filed on our

behalf under the Securities Act of 1933 and the Act. We propose

to engage in the business of investing and reinvesting the assets

of each of our portfolios in securities ("the portfolio assets")

of the type and in accordance with the limitations specified in

our Articles of Incorporation, By-Laws, Registration Statement

<PAGE>

filed with the Securities and Exchange Commission under the

Securities Act of 1933 and the Act, and any representations made

in our prospectus and statement of additional information, all in

such manner and to such extent as may from time to time be

authorized by our Board of Directors. We enclose copies of the

documents listed above and will from time to time furnish you

with any amendments thereof.

2. (a) We hereby employ you to manage the investment

and reinvestment of the portfolio assets as above specified and,

without limiting the generality of the foregoing, to provide

management and other services specified below.

(b) You will make decisions with respect to all

purchases and sales of the portfolio assets. To carry out such

decisions, you are hereby authorized, as our agent and attorney-

in-fact, for our account and at our risk and in our name, to

place orders for the investment and reinvestment of the portfolio

assets. In all purchases, sales and other transactions in the

portfolio assets you are authorized to exercise full discretion

and act for us in the same manner and with the same force and

effect as we might or could do with respect to such purchases,

sales or other transactions, as well as with respect to all other

things necessary or incidental to the furtherance or conduct of

such purchases, sales or other transactions.

each meeting thereof all changes in the portfolio assets since

<PAGE>

the prior report, and will also keep us in touch with important

developments affecting the portfolio assets and on your own

initiative will furnish us from time to time with such

information as you may believe appropriate for this purpose,

whether concerning the individual issuers whose securities are

included in the portfolio assets, the industries in which they

engage, or the conditions prevailing in the economy generally.

You will also furnish us with such statistical and analytical

information with respect to the portfolio assets as you may

believe appropriate or as we reasonably may request. In making

such purchases and sales of the portfolio assets, you will bear

in mind the policies set from time to time by our Board of

Directors as well as the limitations imposed by our Articles of

Incorporation and in our Registration Statement under the Act and

the Securities Act of 1933, the limitations in the Act and of the

Internal Revenue Code of 1986, as amended, in respect of

regulated investment companies and the investment objective,

policies and restrictions applicable to each of our portfolios.

(d) It is understood that you will from time to

time employ or associate with yourselves such persons as you

believe to be particularly fitted to assist you in the execution

of your duties hereunder, the cost of performance of such duties

to be borne and paid by you. No obligation may be incurred on

our behalf in any such respect. During the continuance of this

agreement at our request you will provide us persons satisfactory

<PAGE>

to our Board of Directors to serve as our officers. You or your

affiliates will also provide persons, who may be our officers, to

render such clerical, accounting and other services to us as we

may from time to time request of you. Such personnel may be

employees of you or your affiliates. We will pay to you or your

affiliates the cost of such personnel for rendering such services

to us, provided that all time devoted to the investment or

reinvestment of the portfolio assets shall be for your account.

Nothing contained herein shall be construed to restrict our right

to hire our own employees or to contract for services to be

performed by third parties. Furthermore, you or your affiliates

shall furnish us without charge with such management supervision

and assistance and such office facilities as you may believe

appropriate or as we may reasonably request subject to the

requirements of any regulatory authority to which you may be

subject. You or your affiliates shall also be responsible for

the payment of any expenses incurred in promoting the sale of our

shares (other than the portion of the promotional expenses to be

borne by us in accordance with an effective plan pursuant to Rule

12b-1 under the Act and the costs of printing our prospectuses

and other reports to stockholders and fees related to

registration with the Securities and Exchange Commission and with

state regulatory authorities).

3. It is further agreed that you shall be responsible

for the portion of the net expenses of each of our portfolios

<PAGE>

(except interest, taxes, brokerage, fees paid in accordance with

an effective plan pursuant to Rule 12b-1 under the Act,

expenditures which are capitalized in accordance with generally

accepted accounting principles and extraordinary expenses, all to

the extent permitted by applicable state law and regulation)

incurred by us during each of our fiscal years or portion thereof

that this agreement is in effect between us which, as to a

portfolio, in any such year exceeds the limits applicable to such

portfolio under the laws or regulations of any state in which our

shares are qualified for sale (reduced pro rata for any portion

of less than a year). We hereby confirm that, subject to the

foregoing, we shall be responsible and hereby assume the

obligation for payment of all our other expenses, including:

(a) payment of the fee payable to you under paragraph 5 hereof;

(b) custody, transfer, and dividend disbursing expenses; (c) fees

of directors who are not your affiliated persons; (d) legal and

auditing expenses; (e) clerical, accounting and other office

costs; (f) the cost of personnel providing services to us, as

provided in subparagraph (d) of paragraph 2 above; (g) costs of

printing our prospectuses and stockholder reports; (h) cost of

maintenance of corporate existence; (i) interest charges, taxes,

brokerage fees and commissions; (j) costs of stationery and

supplies; (k) expenses and fees related to registration and

filing with the Securities and Exchange Commission and with state

regulatory authorities; and (l) such promotional expenses as may

<PAGE>

be contemplated by an effective plan pursuant to Rule 12b-1 under

the Act provided, however, that our payment of such promotional

expenses shall be in the amounts, and in accordance with the

procedures, set forth in such plan.

4. We shall expect of you, and you will give us the

benefit of, your best judgment and efforts in rendering these

services to us, and we agree as an inducement to your undertaking

these services that you shall not be liable hereunder for any

mistake of judgment or in any event whatsoever, except for lack

of good faith, provided that nothing herein shall be deemed to

protect, or purport to protect, you against any liability to us

or to our security holders to which you would otherwise be

subject by reason of willful misfeasance, bad faith or gross

negligence in the performance of your duties hereunder, or by

reason of your reckless disregard of your obligations and duties

hereunder.

5. In consideration of the foregoing we will pay you a

monthly fee at an annualized rate of .65 of 1% of our average

daily adjusted total assets (i.e., the average daily value of our

total assets, minus the sum of our accrued liabilities (other

then the principal amount of money borrowed)). Such fee shall be

payable in arrears on the last day of each calendar month for

services performed hereunder during such month. If our initial

Registration Statement is declared effective by the Securities

and Exchange Commission after the beginning of a month or this

<PAGE>

agreement terminates prior to the end of a month, such fee shall

be prorated according to the proportion which such portion of the

month bears to the full month.

6. This agreement shall become effective on the date

hereof, and shall remain in effect until the first meeting of our

shareholders and, if approved by the vote of a majority of the

outstanding voting securities, as defined in the Act, at such

meeting, continue in effect until October 31, 1993 and may be

continued for successive twelve-month periods (computed from each

November 1) with respect to each portfolio provided that such

continuance is specifically approved at least annually by the

Board of Directors or by majority vote of the holders of the

outstanding voting securities of such portfolio (as defined in

the Act), and, in either case, by a majority of the Board of

Directors who are not interested persons, as defined in the Act,

of any party to this agreement (other than as Directors of our

corporation), provided further, however, that if the continuation

of this agreement is not approved as to a portfolio, you may

continue to render to such portfolio the services described

herein in the manner and to the extent permitted by the Act and

the rules and regulations thereunder. Upon the effectiveness of

this agreement, it shall supersede all previous agreements

between us covering the subject matter hereof. This agreement

may be terminated with respect to any portfolio at any time,

without the payment of any penalty, by vote of a majority of the

<PAGE>

outstanding voting securities (as so defined) of such portfolio,

or by a vote of the Board of Directors on 60 days' written notice

to you, or by you with respect to any portfolio on 60 days'

written notice to us.

7. This agreement may not be transferred, assigned,

sold or in any manner hypothecated or pledged by you and this

agreement shall terminate automatically in the event of any such

transfer, assignment, sale, hypothecation or pledge by you. The

term "transfer", "assignment" and "sale" as used in this

paragraph shall have the meanings ascribed hereto by governing

law and any interpretation thereof contained in rules or

regulations promulgated by the Securities and Exchange Commission

thereunder.

8. (a) Except to the extent necessary to perform your

obligations hereunder, nothing herein shall be deemed to limit or

restrict your right, or the right of any of your employees, or

any of the officers or directors of Alliance Capital Management

Corporation, your general partner, who may also be a Director,

officer or employee of ours, or persons otherwise affiliated with

us (within the meaning of the Act) to engage in any other

business or to devote time and attention to the management or

other aspects of any other business, whether of a similar or

dissimilar nature, or to render services of any kind to any other

trust, corporation, firm, individual or association.

<PAGE>

(b) You will notify us of any change in the general

partners of your partnership within a reasonable time after such

change.

9. If you cease to act as our investment adviser, or,

in any event, if you so request in writing, we agree to take all

necessary action to change our name to a name not including the

term "Alliance". You may from time to time make available

without charge to us for our use such marks or symbols owned by

you, including marks or symbols containing the term "Alliance" or

any variation thereof, as you may consider appropriate. Any such

marks or symbols so made available will remain your property and

you shall have the right, upon notice in writing, to require us

to cease the use of such mark or symbol at any time.

10. This Agreement shall be construed in accordance

with the laws of the State of New York, provided, however, that

nothing herein shall be construed as being inconsistent with the

Act.

<PAGE>

If the foregoing is in accordance with your

understanding, will you kindly so indicate by signing and

returning to us the enclosed copy hereof.

Very truly yours,

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.

By /s/David H. Dievler
___________________
Name: David H. Dievler
Title: Chairman

Agreed to and accepted
as of the date first set forth above

ALLIANCE CAPITAL MANAGEMENT L.P.

By ALLIANCE CAPITAL MANAGEMENT CORPORATION,
its general partner

By /s/John D. Carifa
___________________
Name: John D. Carifa
Title: Executive Vice President

10
00250117.AT6

<PAGE>

Exhibit 6(a)
DISTRIBUTION SERVICES AGREEMENT

AGREEMENT made as of July 22, 1992, as amended as of April
30, 1993, 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 is registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), as a
diversified, open-end management investment company and it is in
the interest of the Fund to offer its shares for sale
continuously;

WHEREAS, the Underwriter is a securities firm engaged in the
business of selling shares of investment companies either
directly to purchasers or through other securities dealers;

WHEREAS, the Fund and the Underwriter wish to enter into an
amended agreement with each other with respect to the continuous
offering of the Fund's shares in order to promote the growth of
the Fund and facilitate the distribution of its shares;

NOW, THEREFORE, the parties agree as follows:

SECTION 1. Appointment of the Underwriter. The Fund hereby
appoints the Underwriter as the principal underwriter and
distributor of the Fund to sell to the public shares of its
Class A Common Stock (the "Class A shares"), Class B Common Stock
(the "Class B shares") and Class C Common Stock (the "Class C
shares") (the Class A shares, Class B shares and Class C shares
being 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 herein set forth.

SECTION 2. Exclusive Nature of Duties. The Underwriter
shall be the exclusive representative of the Fund to act as
principal underwriter and distributor except that the rights
given under this Agreement to the Underwriter shall not apply to
shares issued in connection with (a) the merger or consolidation
of any other investment company with the Fund, (b) the Fund's
acquisition by purchase or otherwise of all or substantially all
of the assets or stock of any other investment company or (c) the
reinvestment in shares by the Fund's shareholders of dividends or
other distributions.

<PAGE>

SECTION 3. Purchase of Shares from the Fund.

(a) The Underwriter shall have the right to buy from the
Fund the shares needed to fill unconditional orders for shares of
the Fund placed with the Underwriter by investors or securities
dealers, depository institutions or other financial
intermediaries acting as agent for their customers. The price
which the Underwriter shall pay for the shares so purchased from
the Fund shall be the net asset value, determined as set forth in
Section 3(d) hereof, used in determining the public offering
price on which such orders are based.

(b) The shares are to be resold by the Underwriter to
investors at a public offering price, as set forth in
Section 3(c) hereof, or to securities dealers, depository
institutions or other financial intermediaries acting as agent
for their customers having agreements with the Underwriter upon
the terms and conditions set forth in Section 8 hereof.

(c) The public offering price of the shares, i.e., the price
per share at which the Underwriter or selected dealers or
selected agents (each as defined in Section 8(a) below) may sell
shares to the public, shall be the public offering price
determined in accordance with the then current Prospectus and
Statement of Additional Information of the Fund (the "Prospectus"
and "Statement of Additional Information," respectively) under
the Securities Act of 1933, as amended (the "Securities Act"),
relating to such shares, but not to exceed the net asset value at
which the Underwriter is to purchase such shares, plus, in the
case of Class A shares, a front-end sales charge equal to a
specified percentage or percentages of the public offering price
of the Class A shares as set forth in the Prospectus. Class A
shares may be sold without such a sales charge to certain classes
of persons as from time to time set forth in the Prospectus and
Statement of Additional Information. All payments to the Fund
hereunder shall be made in the manner set forth in Section 3(f)
hereof.

(d) The net asset value of shares of the Fund shall be
determined by the Fund, or any agent of the Fund, as of the close
of regular trading on the New York Stock Exchange on each Fund
business day in accordance with the method set forth in the
Prospectus and Statement of Additional Information and guidelines
established by the Directors of the Fund.

(e) The Fund reserves the right to suspend the offering of
its shares at any time in the absolute discretion of its
Directors.

(f) The Fund, or any agent of the Fund designated in writing
to the Underwriter by the Fund, shall be promptly advised by the

<PAGE>

Underwriter of all purchase orders for shares received by the
Underwriter. Any order may be rejected by the Fund; provided,
however, that the Fund will not arbitrarily or without reasonable
cause refuse to accept or confirm orders for the purchase of
shares. The Fund (or its agent) will confirm orders upon their
receipt, will make appropriate book entries and upon receipt by
the Fund (or its agent) of payment thereof, will deliver deposit
receipts or certificates for such shares pursuant to the
instructions of the Underwriter. Payment shall be made to the
Fund in New York Clearing House funds. The Underwriter agrees to
cause such payment and such instructions to be delivered promptly
to the Fund (or its agent).

SECTION 4. Repurchase or Redemption of
Shares by the Fund.

(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 (8)(d) 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, in the case of Class B shares, a deferred sales
charge equal to a specified percentage or percentages of the net
asset value of the Class B shares or their cost, whichever is
less. Class B shares that have been outstanding for a specified
period of time may be redeemed without payment of a deferred
sales charge as from time to time set forth in the Prospectus.
All payments by the Fund hereunder shall be made in the 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 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 purchase by
an investor and his tendering for redemption or repurchase.

The Fund (or its agent) shall pay the total amount of the
redemption price and, except as may be otherwise required by the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc. (the "NASD") and any interpretations thereof ("NASD
rules and interpretations"), the deferred sales charges, if any,
as defined in the above paragraph, pursuant to the instructions
of the Underwriter in New York Clearing House funds on or before
the seventh business day subsequent to its having received the
notice of redemption in proper form.

<PAGE>

(b) Redemption of shares or payment may be suspended at
times when the New York Stock Exchange is closed, when trading
thereon is closed, when trading thereon is restricted, when an
emergency exists as a result of which disposal by the Fund or
securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or during any other period when the Securities
and Exchange Commission, by order, so permits.

SECTION 5. Plan of Distribution.

(a) It is understood that Sections 5, 12, and 16 hereof
together constitute a plan of distribution (the "Plan") within
the meaning of Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act ("Rule 12b-1").

(b) Except as may be required by NASD rules and
interpretations, the Fund will pay to the Underwriter each month
a distribution services fee with respect to each portfolio of the
Fund ("Portfolio") that will not exceed, on an annualized basis,
.30% of the aggregate average daily net assets of the Fund
attributable to the Class A shares, 1.00% of the aggregate
average daily net assets of the Fund attributable to the Class B
shares and 1.00% of the aggregate average daily net assets of the
Fund attributable to the Class C shares. With respect to each
Portfolio, the distribution services fee will be used in its
entirety by the Underwriter to make payments (i) to compensate
broker-dealers or other persons for providing distribution
assistance, (ii) to otherwise promote the sale of shares of each
Portfolio, including payment for the preparation, printing and
distribution of prospectuses and sales literature or other
promotional activities, and (iii) to compensate broker-dealers,
depository institutions and other financial intermediaries for
providing administrative, accounting and other services with
respect to each Portfolio's shareholders. A portion of the
distribution services fee that will not exceed, on an annualized
basis, .25% of the aggregate average daily net assets of the Fund
attributable to each of the Class A shares, Class B shares and
Class C shares will constitute a service fee that will be used by
the Underwriter for personal service and/or the maintenance of
shareholder accounts within the meaning of NASD rules and
interpretations.

(c) Alliance Capital Management L.P., the Fund's investment
adviser (the "Adviser"), may make payments from time to time from
its own resources for the purposes described in Section 5(b)
hereof.

(d) Payments to broker-dealers, depository institutions and
other financial intermediaries for the purposes set forth in
Section 5(b) are subject to the terms and conditions of the

<PAGE>

written agreements between the Underwriter and each broker-
dealer, depository institution or other financial intermediary.
Such agreements will be in a form satisfactory to the Directors
of the Fund.

(e) The Treasurer of the Fund will prepare and furnish to
the Fund's Directors, and the Directors will review, at least
quarterly, a written report complying with the requirements of
Rule 12b-1 setting forth all amounts expended hereunder and the
purposes for which such expenditures were made.

(f) The Fund is not obligated to pay any distribution
expense in excess of the distribution services fee described
above in Section 5(b) hereof. Any expenses of distribution of
the Fund's Class A shares accrued by the Underwriter in one
fiscal year of the Fund may not be paid from distribution
services fees received from the Fund in respect of Class A shares
in another fiscal year. Any expenses of distribution of the
Fund's Class B shares or Class C shares accrued by the
Underwriter in one fiscal year of the Fund may be carried forward
and paid from distribution services fees received from the Fund
in respect of such class of shares in another fiscal year. No
portion of the distribution services fees received from the Fund
in respect of Class A shares may be used to pay any interest
expense, carrying charges or other financing costs or allocation
of overhead of the Underwriter. The distribution services fees
received from the Fund in respect of Class B shares and Class C
shares may be used to pay interest expenses, carrying charges and
other financing costs or allocation of overhead of the
Underwriter to the extent permitted by Securities and Exchange
Commission rules, regulations or Securities and Exchange
Commission staff no-action or interpretative positions in effect
from time to time. In the event this Agreement is terminated by
either party or is not continued with respect to a class as
provided in Section 12 below: (i) no distribution services fees
(other than current amounts accrued but not yet paid) will be
owed by the Fund to the Underwriter with respect to that class,
and (ii) the Fund will not be obligated to pay the Underwriter
for any amounts expended hereunder not previously reimbursed by
the Fund from distribution services fees in respect of shares of
such class or recovered through deferred sales charges described
in Section 4(a) above. The distribution services fee of a
particular class may not be used to subsidize the sale of shares
of any other class.

SECTION 6. Duties of the Fund.

(a) The Fund shall furnish to the Underwriter copies of all
information, financial statements and other papers that the
Underwriter may reasonably request for use in connection with the
distribution of shares of the Fund, and this shall include one

<PAGE>

certified copy, upon request by the Underwriter, of all financial
statements prepared for the Fund by independent public
accountants. The Fund shall make available to the Underwriter
such number of copies of the Prospectus as the Underwriter shall
reasonably request.

(b) The Fund shall take, from time to time, but subject to
the necessary approval of its shareholders, all necessary action
to fix the number of authorized shares and such steps as may be
necessary to register the same under the Securities Act, to the
end that there will be available for sale such number of shares
as the Underwriter reasonably may be expected to sell.

(c) The Fund shall use its best efforts to qualify and
maintain the qualification of an appropriate number of its shares
under the securities laws of such states as the Underwriter and
the Fund may approve. Any such qualification may be withheld,
terminated or withdrawn by the Fund at any time in its
discretion. As provided in Section 9(b) hereof, the expense of
qualification and maintenance of qualification shall be borne by
the Fund. The Underwriter shall furnish such information and
other material relating to its affairs and activities as may be
required by the Fund in connection with such qualification.

(d) The Fund will furnish, in reasonable quantities upon
request by the Underwriter, copies of annual and interim reports
of the Fund.

SECTION 7. Duties of the Underwriter.

(a) The Underwriter shall devote reasonable time and effort
to effect sales of shares of the Fund, but shall not be obligated
to sell any specific number of shares. The services of the
Underwriter to the Fund hereunder are not to be deemed exclusive
and nothing in this Agreement shall prevent the Underwriter from
entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not
impaired thereby.

(b) In selling shares of the Fund, the Underwriter shall use
its best efforts in all material respects duly to conform with
the requirements of all federal and state laws relating to the
sale of such securities. Neither the Underwriter, any selected
dealer, any selected agent nor any other person is authorized by
the Fund to give any information or to make any representations,
other than those contained in the Fund's Registration Statement
(the "Registration Statement"), as amended from time to time,
under the Securities Act and the Investment Company Act or the
Prospectus and Statement of Additional Information or any sales
literature specifically approved in writing by the Fund.

<PAGE>

(c) The Underwriter shall adopt and follow procedures, as
approved by the officers of the Fund, for the confirmation of
sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales,
and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD, as such
requirements may from time to time exist.

SECTION 8. Selected Dealer and Agent Agreements.

(a) The Underwriter shall have the right to enter into
selected dealer agreements with securities dealers of its choice
("selected dealers") and selected agent agreements with
depository institutions and other financial intermediaries of its
choice ("selected agents") for the sale of shares and fix therein
the portion of the sales charge that may be allocated to the
selected dealers and selected agents; provided, that the Fund
shall approve the forms of agreements with selected dealers and
selected agents and the selected dealer and selected agent
compensation set forth therein and shall evidence such approval
by filing said forms and amendments thereto as exhibits to its
then currently effective Registration Statement. Shares sold to
selected dealers or through selected agents shall be for resale
by such selected dealers and selected agents only at the public
offering price set forth in the Prospectus and Statement of
Additional Information.

(b) Within the United States, the Underwriter shall offer
and sell shares only to such selected dealers as are members in
good standing of the NASD.

SECTION 9. Payment of Expenses.

(a) The Fund shall bear all costs and expenses of the Fund,
including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of its Registration
Statement and Prospectus and Statement of Additional Information,
and all amendments and supplements thereto, and preparing and
mailing annual and interim reports and proxy materials to
shareholders (including but not limited to the expense of setting
in type any such registration statements, prospectuses, annual or
interim reports or proxy materials).

(b) The Fund shall bear the cost of expenses of
qualification of shares for sale, and, if necessary or advisable
in connection therewith, of qualifying the Fund as an issuer or
as a broker or dealer, in such states of the United States or
other jurisdiction as shall be selected by the Fund and the
Underwriter pursuant to Section 6(c) hereof and the cost and
expenses payable to each such state for continuing qualification

<PAGE>

therein until the Fund decides to discontinue such qualification
pursuant to Section 6(c) hereof.

SECTION 10. Indemnification.

(a) The Fund agrees to indemnify, defend and hold the
Underwriter, and any person who controls the Underwriter within
the meaning of Section 15 of the Securities Act, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Underwriter or
any such controlling person may incur, under the Securities Act,
or under common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the
Fund's Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the
Securities Act or arising out of or based upon any alleged
omission to state a material fact required to be stated in any
one thereof or necessary to make the statements in any one
thereof not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect the
Underwriter against any liability to the Fund or its security
holders to which the Underwriter would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of the Underwriter's
reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify the Underwriter and
any such controlling person as aforesaid is expressly conditioned
upon the Fund's being notified of the commencement of any action
brought against the Underwriter or any such controlling person,
such notification to be given by letter or by telegram addressed
to the Fund at its principal office in New York, New York, and
sent to the Fund by the person against whom such action is
brought within ten days after the summons or other first legal
process shall have been served. The failure to so notify the
Fund of the commencement of any such action shall not relieve the
Fund from any liability which it may have to the person against
whom such action is brought by reason of any such alleged untrue
statement or omission otherwise than on account of the indemnity
agreement contained in this Section 10. The Fund will be
entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by the
Fund and approved by the Underwriter. In the event the Fund does
not elect to assume the defense of any such suit and retain
counsel of good standing approved by the Underwriter, the
defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but
in case the Fund does not elect to assume the defense of any such
suit, or in case the Underwriter does not approve of counsel
chosen by the Fund, the Fund will reimburse the Underwriter or

<PAGE>

the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel
retained by the Underwriter or such persons. The indemnification
agreement contained in this Section 10 shall remain operative and
in full force and effect regardless of any investigation made by
or on behalf of the Underwriter or any controlling person and
shall survive the sale of any of the Fund's shares made pursuant
to subscriptions obtained by the Underwriter. This agreement of
indemnity will inure exclusively to the benefit of the
Underwriter, to the benefit of its successors and assigns, and to
the benefit of any controlling persons and their successors and
assigns. The Fund agrees promptly to notify the Underwriter of
the commencement of any litigation or proceeding against the Fund
in connection with the issue and sale of any of its shares.

(b) The Underwriter agrees to indemnify, defend and hold the
Fund, its several officers and directors, and any person who
controls the Fund within the meaning of Section 15 of the
Securities Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of
investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the
Fund, its officers or directors, or any such controlling person
may incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability, or expense
incurred by the Fund, its officers, directors or such controlling
person resulting from such claims or demands shall arise out of
or be based upon any alleged untrue statement of a material fact
contained in information furnished in writing by the Underwriter
to the Fund for use in its Registration Statement, Prospectus or
Statement of Additional Information in effect from time to time
under the Securities Act, or shall arise out of or be based upon
any alleged omission to state a material fact in connection with
such information required to be stated in the Registration
Statement, Prospectus or Statement of Additional Information or
necessary to make such information not misleading. The
Underwriter's agreement to indemnify the Fund, its officers and
directors, and any such controlling person as aforesaid is
expressly conditioned upon the Underwriter being notified of the
commencement of any action brought against the Fund, its officers
or directors or any such controlling person, such notification to
be given by letter or telegram addressed to the Underwriter at
its principal office in New York, and sent to the Underwriter by
the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been
served. The Underwriter shall have a right to control the
defense of such action, with counsel of its own choosing,
satisfactory to the Fund, if such action is based solely upon
such alleged misstatement or omission on its part, and in any
other event the Underwriter and the Fund, and their officers and
directors or such controlling person, shall each have the right

<PAGE>

to participate in the defense or preparation of the defense of
any such action. The failure so to notify the Underwriter of the
commencement of any such action shall not relieve the Underwriter
from any liability which it may have to the Fund, to its officers
and trustees, or to such controlling person by reason of any such
untrue statement or omission on the part of the Underwriter
otherwise than on account of the indemnity agreement contained in
this Section 10.

SECTION 11. Notification by the Fund.

The Fund agrees to advise the Underwriter immediately:

(a) of any request by the Securities and Exchange
Commission for amendments to the Fund's Registration Statement,
Prospectus or Statement of Additional Information or for
additional information,

(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
effectiveness of the Fund's Registration Statement, Prospectus or
Statement of Additional Information or the initiation of any
proceeding for that purpose,

(c) of the happening of any material event which makes
untrue any statement made in the Fund's Registration Statement,
Prospectus or Statement of Additional Information or which
requires the making of a change in any one thereof in order to
make the statements therein not misleading, and

(d) of all actions of the Securities and Exchange
Commission with respect to any amendments to the Fund's
Registration Statement, Prospectus or Statement of Additional
Information which may from time to time be filed with the
Securities and Exchange Commission under the Securities Act.

SECTION 12. Term of Agreement.

(a) This Agreement shall become effective on the date hereof
and shall continue in effect until October 31, 1993, and
thereafter for successive twelve-month periods (computed from
each November 1) with respect to each class; 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
Investment Company Act) of that class, and, in either case, by a
majority of the Directors of the Fund who are not parties to this
Agreement or interested persons, as defined in the Investment
Company 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 Plan or any agreement related thereto;

<PAGE>

provided further, however, that if the continuation of this
Agreement is not approved as to a class or a Portfolio, the
Underwriter may continue to render to such class or Portfolio the
services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder.
Upon effectiveness of this Agreement, it shall supersede all
previous agreements between the parties hereto covering the
subject matter hereof. This Agreement may be terminated (i) by
the Fund with respect to any class or Portfolio at any time,
without the payment of any penalty, by the vote of a majority of
the outstanding voting securities (as so defined) of such class
or Portfolio, or by a vote of a majority of the Directors of the
Fund who are not interested persons, as defined in the Investment
Company Act, of the Fund (other than as directors of the Fund)
and have no direct and indirect financial interest in the
operation of the Plan or any agreement related thereto, in any
such event on sixty days' written notice to the Underwriter;
provided, however, that no such notice shall be required if such
termination is stated by the Fund to relate only to Sections 5
and 16 hereof (in which event Sections 5 and 16 shall be deemed
to have been severed herefrom and all other provisions of this
Agreement shall continue in full force and effect), or (ii) by
the Underwriter with respect to any Portfolio on sixty days'
written notice to the Fund.

(b) This Agreement may be amended at any time with the
approval of the Directors of the Fund, provided that (i) any
material amendments of the terms hereof will become effective
only upon approval as provided in the first proviso of the first
sentence of Section 12(a) hereof, and (ii) any amendment to
increase materially the amount to be expended for distribution
services fees pursuant to Section 5(b) hereof will be effective
only upon the additional approval by a vote of a majority of the
outstanding voting securities as defined in the Investment
Company Act of the class or Portfolio affected.

SECTION 13. No Assignment. This Agreement may not be
transferred, assigned, sold or in any manner hypothecated or
pledged by either party hereto and this Agreement shall terminate
automatically in the event of any such transfer, assignment,
sale, hypothecation or pledge. The terms "transfer",
"assignment", and "sale" as used in this paragraph shall have the
meanings ascribed thereto by governing law and any interpretation
thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.

SECTION 14. Notices. Any notice required or permitted to be
given hereunder by either party to the other shall be deemed
sufficiently given if sent by registered mail, postage prepaid,
addressed by the party giving such notice to the other party at
the last address furnished by such other party to the party given

<PAGE>

notice, and unless and until changed pursuant to the foregoing
provisions hereof addressed to the Fund or the Underwriter.

SECTION 15. Governing Law. The provisions of this Agreement
shall be, to the extent applicable, construed and interpreted in
accordance with the laws of the State of New York.

SECTION 16. Disinterested Directors of the Fund. While the
Agreement is in effect, the selection and nomination of the
Directors who are not "interested persons" of the Fund (as
defined in the Investment Company Act) will be committed to the
discretion of such disinterested Directors.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.

ALLIANCE NORTH AMERICAN GOVERNMENT

By /s/David H. Dievler
David H. Dievler
Chairman and President

ALLIANCE FUND DISTRIBUTORS, INC.

By /s/Robert L. Errico
___________________
Robert L. Errico
President

Accepted as to
Sections 5, 12 and 16:

ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
General Partner

By /s/John D. Carifa
_________________
John D. Carifa
Executive Vice President

12
00250117.AT5

<PAGE>

EXHIBIT 6(C)
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)

___________, 199

Selected Dealer Agreement
For Broker/Dealers
(other than Bank Subsidiaries)

Dear Sirs:

As the principal underwriter of shares of certain registered
investment companies presently or hereafter managed by Alliance
Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services
Agreements with such companies (the "Funds"), we invite you to
participate as principal in the distribution of shares of any and
all of the Funds upon the following terms and conditions:

1. You are to offer and sell such shares only at the public
offering prices which shall be currently in effect, in accordance
with the terms of the then current prospectuses and statements of
additional information of the Funds. You agree to act only as
principal in such transactions and shall not have authority to
act as agent for the Funds, for us, or for any other dealer in
any respect. All orders are subject to acceptance by us and
become effective only upon confirmation by us.

2. On each purchase of shares by you from us, the total
sales charges and discount to selected dealer, if any, shall be
as stated in each Fund's then current prospectus.

Such sales charges and discount to selected dealers are
subject to reductions under a variety of circumstances as
described in each Fund's then current prospectus and statement of
additional information. To obtain these reductions, we must be
notified when the sale takes place which would qualify for the
reduced charge.

There is no sales charge or discount to selected dealers on
the reinvestment of dividends.

<PAGE>

3. As a selected dealer, you are hereby authorized (i) to
place orders directly with the Funds for their shares to be
resold by us to you subject to the applicable terms and
conditions governing the placement of orders by us set forth in
the Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information and (ii) to tender shares directly to the Funds or
their agent for redemption subject to the applicable terms and
conditions set forth in the Distribution Services Agreement.

4. Repurchases of shares will be made at the net asset
value of such shares in accordance with the then current
prospectuses and statements of additional information of the
Funds.

5. You represent that you are a member of the National
Association of Securities Dealers, Inc. and that you agree to
abide by the Rules of Fair Practice of such Association.

6. This Agreement is in all respects subject to Rule 26 of
the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. which shall control any provisions to
the contrary in this Agreement.

7. You agree:

(a) To purchase shares only from us or only from your
customers.

(b) To purchase shares from us only for the purpose of
covering purchase orders already received or for your own bona
fide investment.

(c) That you will not purchase any shares from your
customers at prices lower than the redemption or repurchase
prices then quoted by the Fund. You shall, however, be permitted
to sell shares for the account of their record owners to the
Funds at the repurchase prices currently established for such
shares and may charge the owner a fair commission for handing the
transaction.

(d) That you will not withhold placing customers' orders for
shares so as to profit yourself as a result of such withholding.

(e) That if any shares confirmed to you hereunder are
redeemed or repurchased by any of the Funds within seven business
days after such confirmation of your original order, you shall
forthwith refund to us the full discount allowed to you on such
sales. We shall notify you of such redemption or repurchase
within ten days from the date of delivery of the request therefor

<PAGE>

or certificates to us or such Fund. Termination or cancellation
of this Agreement shall not relieve you or us from the
requirements of this subparagraph.

8. We shall not accept from you any conditional orders for
shares. Delivery of certificates for shares purchased shall be
made by the Funds only against receipt of the purchase price,
subject to deduction for the discount reallowed to you and our
portion of the sales charge on such sales. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid), or, at our option, we
may sell the shares ordered back to the Funds (in which case we
may hold you responsible for any loss, including loss of profit
suffered by us resulting from your failure to make payment as
aforesaid).

9. You will not offer or sell any of the shares except
under circumstances that will result in compliance with the
applicable Federal and State securities laws and in connection
with sales and offers to sell shares you will furnish to each
person to whom any such sale or offer is made a copy of the
applicable then current prospectus. We shall be under no
liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing herein
contained, however, shall be deemed to be a condition,
stipulation or provision binding any persons acquiring any
security to waive compliance with any provision of the Securities
Act of 1933, or of the Rules and Regulations of the Securities
and Exchange Commission, or to relieve the parties hereto from
any liability arising under the Securities Act of 1933.

10. From time to time during the term of this Agreement we
may make payments to you pursuant to one or more of the
distribution plans adopted by certain of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act")
in consideration, with respect to each such Fund, of your
furnishing distribution services hereunder and providing
administrative, accounting and other services, including personal
service and/or the maintenance of shareholder accounts. We have
no obligation to make any such payments and you waive any such
payment until we receive monies therefor from the Fund. Any such
payments made pursuant to this Section 10 shall be subject to the
following terms and conditions:

(a) Any such payments shall be in such amounts as we may
from time to time advise you in writing but in any event not in
excess of the amounts permitted by the plan in effect with

<PAGE>

respect to each particular Fund. Any such payments shall be in
addition to the selling concession, if any, allowed to you
pursuant to this Agreement. Such payments shall include a
service fee in the amount of .25 of 1% per annum of the average
daily net assets of certain Funds attributable to your clients.
Any such service fee shall be paid to you solely for personal
service and/or the maintenance of shareholder accounts.

(b) The provisions of this Section 10 relate to the plan
adopted by a particular Fund pursuant to Rule 12b-1. In
accordance with Rule 12b-1, any person authorized to direct the
disposition of monies paid or payable by a Fund pursuant to this
Section 10 shall provide the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such
expenditures were made.

(c) The provisions of this Section 10 applicable to each
Fund shall remain in effect for not more than a year and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually in
conformity with Rule 12b-1 and the Act. The provisions of this
Section 10 shall automatically terminate with respect to a
particular Plan in the event of the assignment (as defined by the
Act) of this Agreement, in the event such Plan terminates or is
not continued or in the event this Agreement terminates or ceases
to remain in effect. In addition, the provisions of this Section
10 may be terminated at any time, without penalty, by either
party with respect to any particular Plan on not more than 60
days' nor less than 30 days' written notice delivered or mailed
by registered mail, postage prepaid, to the other party.

11. No person is authorized to make any representations
concerning shares of the Funds except those contained in the
current prospectus, statement of additional information, and
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses
and statements of additional information, reasonable quantities
of reports to shareholders, supplemental sales literature, sales
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with the applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds, unless approved in writing by us in
advance of such use. Any printed information furnished by us
other than the then current prospectus and statement of
additional information for each Fund, periodic reports and proxy
solicitation materials are our sole responsibility and not the
responsibility of the Funds, and you agree that the Funds shall

<PAGE>

have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.

12. In connection with your distribution of shares of a
Fund, you shall conform to such written compliance standards as
we have provided you in the past or may from time to time provide
to you in the future.

13. We, our affiliates and the Funds shall not be liable for
any loss, expense, damages, costs or other claim arising out of
any redemption or exchange pursuant to telephone instructions
from any person or our refusal to execute such instructions for
any reason.

14. Either party to this Agreement may cancel this Agreement
by giving written notice to the other. Such notice shall be
deemed to have been given on the date on which it was either
delivered personally to the other party or any officer or member
thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other party at his or its address
as shown below. This Agreement may be amended by us at any time
and your placing of an order after the effective date of any such
amendment shall constitute your acceptance thereof.

15. This Agreement shall be construed in accordance with the
laws of the State of New York and shall be binding upon both
parties thereto when signed by us and accepted by you in the
space provided below.

Very truly yours,

ALLIANCE FUND DISTRIBUTORS, INC.

By:_____________________________
(Authorized Signature)

Bank or Firm Name _______________________________________________

Address _________________________________________________________

City _____________________ State ____________ Zip Code __________

ACCEPTED BY (signature) _____________________ Title _____________

Name (print) ________________________________ Title _____________

Date _____________________ 199__ Phone # ________________________

<PAGE>

Please return two signed copies of this Agreement (one of
which will be signed above by us and thereafter returned to you)
in the accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105

6
00250117.AT4

<PAGE>

EXHIBIT 6(D)
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)

___________, 199

Selected Agent Agreement
For Depository Institutions and Their Subsidiaries

Dear Sirs:

As the principal underwriter of shares of certain registered
investment companies presently or hereafter managed by Alliance
Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services
Agreements with such companies (the "Funds"), we invite you,
acting as agent for your customers, to make available to your
customers shares of any or all of the Funds upon the following
terms and conditions:

1. The customers in question will be for all purposes your
customers. We shall execute transactions in shares of the Funds
for each of your customers only upon your authorization, it being
understood in all cases that (a) you are acting as the agent for
the customer; (b) each transaction is initiated solely upon the
order of the customer; (c) each transaction is for the account of
the customer and not for your account; (d) the transactions are
without recourse against you by the customer; (e) except as we
otherwise agree, each transaction is effected on a fully
disclosed basis; (f) as between you and the customer, the
customer will have full beneficial ownership of the shares; (g)
you shall provide no investment advice and exercise no investment
discretion regarding the purchase, sale, or redemption of the
shares; and (h) you shall make appropriate disclosure to your
customers that any Fund's shares are not endorsed by you, do not
constitute your obligation and are not entitled to federal
deposit insurance.

2. You are to sell shares of the Funds only at the public
offering prices which shall be currently in effect, in accordance
with the terms of the then current prospectuses and statements of
additional information of the Funds. You agree to act only as
agent for your customers in such transactions and shall not have
authority to act as agent for the Funds or for us in any respect.

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All orders are subject to acceptance by us and become effective
only upon confirmation by us.

3. On each purchase of shares of a Fund authorized by you,
the total sales charge and commission, if any, shall be as stated
in the Fund's then current prospectus. Such sales charges and
commissions are subject to reductions under a variety of
circumstances as described in each Fund's then current prospectus
and statement of additional information. To obtain such a
reduction, you must provide us with such information as we may
request to establish that a particular transaction qualifies for
the reduction. There is no sales charge or commission to
selected agents on the reinvestment of dividends.

4. As a selected agent, you are hereby authorized (i) to
place orders directly with the Funds for their shares to be
resold by us through you subject to the applicable terms and
conditions governing the placement of orders by us set forth in
the Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information, and (ii) to tender shares directly to the Funds or
their agent for redemption or repurchase subject to the
applicable terms and conditions set forth in the Distribution
Services Agreement.

5. Redemptions and repurchases of shares will be made at
the net asset value of such shares in accordance with the then
current prospectuses and statements of additional information of
the Funds.

6. You represent that you are either:

(a) a bank as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), duly
authorized to engage in the transactions to be performed
hereunder and not required to register as a broker-dealer
pursuant to the 1934 Act; or

(b) a bank (as so defined) or an affiliate of a bank, in
either case registered as a broker-dealer pursuant to the 1934
Act and a member of the National Association of Securities
Dealers, Inc., and that you agree to abide by the rules and
regulations of the National Association of Securities Dealers,
Inc.

7. You agree:

(a) to order shares of the Funds only from us and to act as
agent only for your customers;

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(b) to order shares from us only for the purpose of covering
purchase orders already received;

(c) that you will not purchase any shares from your
customers at prices lower than the redemption or repurchase
prices then quoted by the Funds, provided, however, that you
shall be permitted to sell shares for the accounts of their
record owners to the Funds at the repurchase prices currently
established for such shares and may charge the owner a fair
commission for handling the transaction;

(d) that you will not withhold placing customers' orders for
shares so as to profit yourself as a result of such withholding;
and

(e) that if any shares confirmed through you hereunder are
redeemed or repurchased by any of the Funds within seven business
days after such confirmation of your original order, you shall
forthwith refund to us the full commission reallowed to you on
such sales. We shall notify you of such redemption or repurchase
within ten days from the date of delivery of the request therefor
or certificates to us or such Fund. Termination or cancellation
of this Agreement shall not relieve you or us from the
requirements of this subparagraph.

8. We shall not accept from you any conditional orders for
shares. Delivery of certificates for shares purchased shall be
made by the Funds only against receipt of the purchase price,
subject to deduction for the commission reallowed to you and our
portion of the sales charge on such sale. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid).

9. You will not accept orders for shares of any of the
Funds except under circumstances that will result in compliance
with the applicable Federal and State securities laws and banking
laws, and in connection with sales of shares to your customers
you will furnish, unless we agree otherwise, to each customer who
has ordered shares a copy of the applicable then current
prospectus. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us
herein. Nothing herein contained, however, shall be deemed to be
a condition, stipulation or provision binding any persons
acquiring any security to waive compliance with any provision of
the Securities Act of 1933 or of the rules and regulations of the
Securities and Exchange Commission, or to relieve the parties

<PAGE>

hereto from any liability arising under the Securities Act of
1933.

10. From time to time during the term of this Agreement we
may make payments to you pursuant to one or more of the
distribution plans adopted by certain of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act"),
to compensate you with respect to the shareholder accounts of
your customers in such Funds for providing administrative,
accounting and other services, including personal service and/or
the maintenance of such accounts. We have no obligation to make
any such payments and you waive any such payment until we receive
monies therefor from the fund. Any such payments made pursuant
to this Section 10 shall be subject to the following terms and
conditions:

(a) Any such payments shall be in such amounts as we may
from time to time advise you in writing but in any event not in
excess of the amounts permitted by the plan in effect with
respect to each particular Fund. Such payments shall include a
service fee in the amount of .25 of 1% per annum of the average
daily net assets of certain Funds attributable to your clients.
Any such service fee shall be paid to you solely for personal
service and/or the maintenance of shareholder accounts.

(b) The provisions of this Section 10 relate to the plan
adopted by a particular Fund pursuant to Rule 12b-1. In
accordance with Rule 12b-1, any person authorized to direct the
disposition of monies paid or payable by a Fund pursuant to this
Section 10 shall provide the Fund's Board of Directors, and the
Directors shall review, at lest quarterly, a written report of
the amounts so expended and the purposes for which such
expenditures were made.

(c) The provisions of this Section 10 applicable to each
Fund remain in effect for not more than a year and thereafter for
successive annual periods only so long as such continuance is
specifically approved at least annually in conformity with Rule
12b-1 and the Act. The provisions of this Section 10 shall
automatically terminate with respect to a particular Plan in the
event of the assignment (as defined by the Act) of this
Agreement, in the event such Plan terminates or is not continued
or in the event this Agreement terminates or ceases to remain in
effect. In addition, the provisions of this Section 10 may be
terminated at any time, without penalty, by either party with
respect to any particular Plan on not more than 60 days' nor less
than 30 days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.

11. No person is authorized to make any representation
concerning shares of the Funds except those contained in the

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current prospectus, statement of additional information, and
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses
and statements of additional information, reasonable quantities
of reports to shareholders, supplemental sales literature, sales
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds except in compliance with all laws and
regulations applicable to you and unless approved in writing by
us in advance of such use. Any printed information furnished by
us other than the then current prospectus and statement of
additional information for each Fund, periodic reports and proxy
solicitation materials are our sole responsibility and not the
responsibility of the Funds, and you agree that the Funds shall
have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.

12. In connection with your making shares of a Fund
available to your customers, you shall conform to such written
compliance standards as we have provided you in the past or may
from time to time provide to you in the future.

14. Either party to this Agreement may cancel this Agreement
by giving written notice to the other. Such notice shall be
deemed to have been given as of the date on which it was either
delivered personally to the other party or any officer or member
thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other party at his or its address
as shown below. This Agreement may be amended by us at any time
and your placing of an order after the effective date of any such
amendment shall constitute your acceptance thereof. If you are a
bank or an affiliate of a bank, this Agreement will automatically
terminate if you cease to be, or the bank of which you are an
affiliate ceases to be, a bank as defined in the 1934 Act.

<PAGE>

15. This Agreement shall be construed in accordance with the
laws of the State of New York and shall be binding upon both
parties hereto when signed by us and accepted by you in the space
provided below.

Very truly yours,

ALLIANCE FUND DISTRIBUTORS, INC.

By:_____________________________
(Authorized Signature)

Bank or Firm Name _______________________________________________

Address _________________________________________________________

City _____________________ State ____________ Zip Code __________

ACCEPTED BY (signature) _____________________ Title _____________

Name (print) ________________________________ Title _____________

Date _____________________ 199__ Phone # ________________________

Please return two signed copies of this Agreement (one of
which will be signed by us and thereafter returned to you) in the
accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105

6
00250117.AT3

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EXHIBIT 8
AGREEMENT BETWEEN
BROWN BROTHERS HARRIMAN & CO.
AND
ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.

<PAGE>

CUSTODIAN AGREEMENT

AGREEMENT made this 21st of February, 1992 between

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC. (the

"Fund") and Brown Brothers Harriman & Co. (the "Custodian").

WITNESSETH: That in consideration of the mutual

covenants and agreements herein contained, the parties hereto

agree as follows:

1. The Fund hereby employs and appoints the Custodian

as a custodian for the term and subject to the provisions of this

Agreement. The Custodian shall not be under any duty or

obligation to require the Fund to deliver to it any securities or

funds owned by the Fund and shall have no responsibility or

liability for or on account of securities or funds not so

delivered. The Fund will deposit with the Custodian copies of

the Articles of Incorporation and By-Laws (or comparable

documents) of the Fund and all amendments thereto, and copies of

such votes and other proceedings of the Fund as may be necessary

for or convenient to the Custodian in the performance of its

duties.

2. Except for securities and funds held by

subcustodians appointed pursuant to the provisions of Section 3

hereof, the Custodian shall have and perform the following powers

and duties:

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A. Safekeeping - To keep safely the securities of the

Fund that have been delivered to the Custodian and from time to

time to receive delivery of securities for safekeeping.

B. Manner of Holding Securities - To hold securities

of the Fund (1) by physical possession of the share certificates

or other instruments representing such securities in registered

or bearer form, or (2) in book-entry form by a Securities System

(as said term is defined in Section 2U).

C. Registered Name; Nominee - To hold registered

securities of the Fund (1) in the name or any nominee name of the

Custodian or the Fund, or in the name or any nominee name of any

agent appointed pursuant to Section 6E, or (2) in street

certificate form, so-called, and in any case with or without any

indication of fiduciary capacity.

D. Purchases - Upon receipt of Proper Instructions, as

defined in Section X on Page 16, insofar as funds are available

for the purpose, to pay for and receive securities purchased for

the account of the Fund, payment being made only upon receipt of

the securities (1) by the Custodian, or (2) by a clearing

corporation of a national securities exchange of which the

Custodian is a member, or (3) by a Securities System. However,

(i) in the case of repurchase agreements entered into by the

Fund, the Custodian (as well as an Agent) may release funds to a

Securities System or to a Subcustodian prior to the receipt of

advice from the Securities System or Subcustodian that the

<PAGE>

securities underlying such repurchase agreement have been

transferred by book entry into the Account (as defined in Section

2U) of the Custodian (or such Agent) maintained with such

Securities System or Subcustodian, so long as such payment

instructions to the Securities System or Subcustodian include a

requirement that delivery is only against payment for securities,

(ii) in the case of foreign exchange contracts, options, time

deposits, call account deposits, currency deposits and other

deposits, contracts or options pursuant to Sections 2J, 2L, 2M

and 2N, the Custodian may make payment therefor without receiving

an instrument evidencing said deposit, contract or option so long

as such payment instructions detail specific securities to be

acquired, and (iii) in the case of securities in which payment

for the security and receipt of the instrument evidencing the

security are under generally accepted trade practice or the terms

of the instrument representing the security expected to take

place in different locations or through separate parties, such as

commercial paper which is indexed to foreign currency exchange

rates, derivatives and similar securities, the Custodian may make

payment for such securities prior to delivery thereof in

accordance with such generally accepted trade practice or the

terms of the instrument representing such security.

E. Exchanges - Upon receipt of proper instructions to

exchange securities held by it for the account of the Fund for

other securities in connection with any reorganization,

<PAGE>

recapitalization, split-up of shares, change of par value,

conversion or other event, and to deposit any such securities in

accordance with the terms of any reorganization or protective

plan. Without such instructions, the Custodian may surrender

securities in temporary form for definitive securities, may

surrender securities for transfer into a name or nominee name as

permitted in Section 2C, and may surrender securities for a

different number of certificates or instruments representing the

same number of shares or same principal amount of indebtedness,

provided the securities to be issued are to be delivered to the

Custodian and further provided custodian shall at the time of .

surrendering securities or instruments receive a receipt or other

evidence of ownership thereof.

F. Sales of Securities - Upon receipt of proper

instructions, to make delivery of securities which have been sold

for the account of the Fund, but only against payment therefor

(1) in cash, by a certified check, bank cashier's check, bank

credit, or bank wire transfer, or (2) by credit to the account of

the Custodian with a clearing corporation of a national

securities exchange of which the Custodian is a member, or (3) by

credit to the account of the Custodian or an Agent of the

Custodian with a Securities System; provided, however, that (i)

in the case of delivery of physical certificates or instruments

representing securities, the Custodian may make delivery to the

broker buying the securities, against receipt therefor, for

<PAGE>

examination in accordance with "street delivery" custom, provided

that the payment therefor is to be made to the Custodian (which

payment may be made by a broker's check) or that such securities

are to be returned to the Custodian, and (ii) in the case of

securities referred to in clause (iii) of the last sentence of

Section 2D, the Custodian may make settlement, including with

respect to the form of payment, in accordance with generally

accepted trade practice relating to such securities or the terms

of the instrument representing said security.

G. Depositary Receipts - Upon receipt of proper

instructions, to instruct a subcustodian appointed pursuant-to

Section 3 hereof (a "Subcustodian") or an agent of the Custodian

appointed pursuant to Section 6E hereof (an "Agent") to surrender

securities to the depositary used by an issuer of American

Depositary Receipts or International Depositary Receipts

(hereinafter collectively referred to as "ADRs") for such

securities against a written receipt therefor adequately

describing such securities and written evidence satisfactory to

the Subcustodian or Agent that the depositary has acknowledged

receipt of instructions to issue with respect to such securities

ADRs in the name of the Custodian, or a nominee of the Custodian,

for delivery to the Custodian in Boston, Massachusetts, or at

such other place as the Custodian may from time to time

designate.

<PAGE>

Upon receipt of proper instructions, to surrender ADRs

to the issuer thereof against a written receipt therefor

adequately describing the ADRs surrendered and written evidence

satisfactory to the Custodian that the issuer of the ADRs has

acknowledged receipt of instructions to cause its depositary to

deliver the securities underlying such ADRs to a Subcustodian or

an Agent.

H. Exercise of Rights; Tender Offers - Upon timely

receipt of proper instructions, to deliver to the issuer or

trustee thereof, or to the agent of either, warrants, puts,

calls, rights or similar securities for the purpose of being

exercised or sold, provided that the new securities and cash, if

any, acquired by such action are to be delivered to the

Custodian, and, upon receipt of proper instructions, to deposit

securities upon invitations for tenders of securities, provided

that the consideration is to be paid or delivered or the tendered

securities are to be returned to the Custodian.

I. Stock Dividends, Rights, Etc. - To receive and

collect all stock dividends, rights and other items of like

nature; and to deal with the same pursuant to proper instructions

relative thereto.

J. Options - Upon receipt of proper instructions, to

receive and retain confirmations or other documents evidencing

the purchase of writing of an option on a security or securities

index by the Fund; to deposit and maintain in a segregated

<PAGE>

account, either physically or by book-entry in a Securities

System, securities subject to a covered call option written by

the Fund; and to release and/or transfer such securities or other

assets only in accordance with a notice or other communication

evidencing the expiration, termination or exercise of such

covered option furnished by The Options Clearing Corporation, the

securities or options exchange on which such covered option is

traded or such other organization as may be responsible for

handling such options transactions.

K. Borrowings - Upon receipt of proper instructions to

deliver securities of the Fund to lenders or their agents as

collateral for borrowings effected by the Fund, provided that

such borrowed money is payable to or upon the Custodian's order

as Custodian for the Fund.

L. Demand Deposit Bank Accounts - To open and operate

an account or accounts in the name of the Fund on the Custodian's

books subject only to draft or order by the Custodian. All funds

received by the Custodian from or for the account of the Fund

shall be deposited in said account(s). The responsibilities of

the Custodian to the Fund for deposits accepted on the

Custodian's books shall be that of a U.S. bank for a similar

deposit.

If and when authorized by proper instructions, the

Custodian may open and operate an additional account(s) in such

other banks or trust companies as may be designated by the Fund

<PAGE>

in such instructions (any such bank or trust company so

designated by the Fund being referred to hereafter as a "Banking

Institution"), provided that such account(s) shall be in the name

of the Custodian for account of the Fund and subject only to the

Custodian's draft or order. Such accounts may be opened with

Banking Institutions in the United States and in other countries

and may be denominated in either U.S. Dollars or other currencies

as the Fund may determine. All such deposits shall be deemed to

be portfolio securities of the Fund and accordingly the

responsibility of the Custodian therefore shall be the same as

and no greater than the Custodian's responsibility in respect of

other portfolio securities of the Fund.

M. Interest Bearing Call or Time Deposits - To place

interest bearing fixed term and call deposits with such banks and

in such amounts as the Fund may authorize pursuant to proper

instructions. Such deposits may be placed with the Custodian or

with Subcustodians or other Banking Institutions as the Fund may

determine. Deposits may be denominated in U.S. Dollars or other

currencies and need not be evidenced by the issuance or delivery

of a certificate to the Custodian, provided that the Custodian

shall include in its records with respect to the assets of the

Fund, appropriate notation as to the amount and currency of each

such deposit, the accepting Banking Institution, and other

appropriate details. Such deposits, other than those placed with

the Custodian, shall be deemed portfolio securities of the Fund

<PAGE>

and the responsibilities of the Custodian therefor shall be the

same as those for demand deposit bank accounts placed with other

banks, as described in Section L of this agreement. The

responsibility of the Custodian for such deposits accepted on the

Custodian's books shall be that of a U.S. bank for a similar

deposit.

N. Foreign Exchange Transactions and Futures

Contracts. Pursuant to proper instructions, to enter into

foreign exchange contracts or options to purchase and sell

foreign currencies for spot and future delivery on behalf and for

the account of the Fund. Such transactions may be undertaken by

the Custodian with such Banking Institutions, including the

Custodian and Subcustodian(s) as principals, as approved and

authorized by the Fund. Foreign exchange contracts and options

other than those executed with the Custodian, shall be deemed to

be portfolio securities of the Fund and the responsibilities of

the Custodian therefor shall be the same as those for demand

deposit bank accounts placed with other banks as described in

Section 2-L of this agreement. Upon receipt of proper

instructions, to receive and retain confirmations evidencing the

purchase or sale of a futures contract or an option on a futures

contract by the Fund; to deposit and maintain in a segregated

account, for the benefit of any futures commission merchant or to

pay to such futures commission merchant, assets designated by the

fund as initial, maintenance or variation "margin" deposits

<PAGE>

intended to secure the Fund's performance of its obligations

under any futures contracts purchased or sold or any options on

futures contracts written by the Fund, in accordance with the

provisions of any agreement or agreements among any of the Fund,

the Custodian and such futures commission merchant, designated to

comply with the rules of the Commodity Futures Trading Commission

and/or any contract market, or any similar organization or

organizations, regarding such margin deposits; and to release

and/or transfer assets in such margin accounts only in accordance

with any such agreements or rules.

O. Stock Loans. Upon receipt of proper instructions,

to deliver securities of the Fund, in connection with loans of

securities by the Fund, to the borrower thereof upon the receipt

of the cash collateral, if any, for such borrowing. In the event

U. S. Government securities are to be used as collateral, the

Custodian will not release the securities to be loaned until it

has received confirmation that such collateral has been delivered

to the Custodian. The Custodian and Fund understand that the

timing of receipt of such confirmation will normally require that

the delivery of securities to be loaned will be made one day

after receipt of the U.S. Government collateral.

P. Collections. To collect, receive and deposit in

said account or accounts all income, payments of principal and

other payments with respect to the securities held hereunder, and

in connection therewith to deliver the certificates or other

<PAGE>

instruments representing the securities to the issuer thereof or

its agent when securities are called, redeemed, retired or

otherwise become payable; provided, that the payment is to be

made in such form and manner and at such time, which may be after

delivery by the Custodian of the instrument representing the

security, as is in accordance with the terms of the instrument

representing the security, or such proper instructions as the

Custodian may receive, or governmental regulations, the rules of

Securities Systems or other U.S. securities depositories and

clearing agencies or, with respect to securities referred to in

clause (iii) of the last sentence of Section 2D, in accordance

with generally accepted trade practice; (ii) to execute ownership

and other certificates and affidavits for all federal and state

tax purposes in connection with receipt of income or other

payments with respect to securities of the Fund or in connection

with transfer of securities, and (iii) pursuant to proper

instructions to take such other actions with respect to

collection or receipt of funds or transfer of securities which

involve an investment decision.

Q. Dividends, Distributions and Redemptions. Upon

receipt of proper instructions from the Fund, or upon receipt of

instructions from the Fund's shareholder servicing agent or agent

with comparable duties (the "Shareholder Servicing Agent") (given

by such person or persons and in such manner on behalf of the

Shareholder Servicing Agent as the Fund shall have authorized),

<PAGE>

the Custodian shall release funds or securities to the

Shareholder Servicing Agent or otherwise apply funds or

securities, insofar as available, for the payment of dividends or

other distributions to Fund shareholders. Upon receipt of proper

instructions from the Fund, or upon receipt of instructions from

the Shareholder Servicing Agent (given by such person or persons

and in such manner on behalf of the Shareholder Servicing Agent

as the Fund shall have authorized), the Custodian shall release

funds or securities, insofar as available, to the Shareholder

Servicing Agent or as such Agent shall otherwise instruct for

payment to Fund shareholders who have delivered to such Agent a

request for repurchase or redemption of their shares of capital

stock of the Fund.

R. Proxies, Notices, Etc. - Promptly to deliver or

mail to the Fund all forms of proxies and all notices of meetings

and any other notices or announcements affecting or relating to

securities owned by the Fund that are received by the Custodian,

and upon receipt of proper instructions, to execute and deliver

or cause its nominee to execute and deliver such proxies or other

authorizations as may be required. Neither the Custodian nor its

nominee shall vote upon any of such securities or execute any

proxy to vote thereon or give any consent or take any other

action with respect thereto (except as otherwise herein provided)

unless ordered to do so by proper instructions.

<PAGE>

S. Nondiscretionary Details - Without the necessity of

express authorization from the Fund, (1) to attend to all

nondiscretionary details in connection with the sale, exchange,

substitution, purchase, transfer or other dealings with

securities, funds or other-property of the Portfolio held by the

Custodian except as otherwise directed from time to time by the

Directors of the Fund, and (2) to make payments to itself or

others for minor expenses of handling securities or other similar

items relating to the Custodian's duties under this Agreement,

provided that all such payments shall be accounted for to the

Fund.

T. Bills - Upon receipt of proper instructions to pay

or cause to be paid, insofar as funds are available for the

purpose, bills, statements, or other obligations of the Fund.

U. Deposit of Fund Assets in Securities Systems - The

Custodian may deposit and/or maintain securities owned by the

Fund in (i) The Depository Trust Company, (ii) any book-entry

system as provided in Subpart O of Treasury Circular No. 300, 31

CFR 306, Subpart B of 31 CFR Part 350, or the book-entry

regulations of federal agencies substantially in the form of

Subpart O, or (iii) any other domestic clearing agency registered

with the Securities and Exchange Commission under Section 17A of

the Securities Exchange Act of 1934 which acts as a securities

depository and whose use the Fund has previously approved in

writing (each of the foregoing being referred to in this

<PAGE>

Agreement as a "Securities System"). Utilization of a Securities

System shall be in accordance with applicable Federal Reserve

Board and Securities and Exchange Commission rules and

regulations, if any, and subject to the following provisions:

1) The Custodian may deposit and/or maintain Fund

securities, either directly or through one or more Agents

appointed by the Custodian (provided that any such agent shall be

qualified to act as a custodian of the Fund pursuant to the

Investment Company Act of 1940 and the rules and regulations

thereunder), in a Securities System provided that such securities

are represented in an account ("Account") of the Custodian or

such Agent in the Securities System which shall not include any

assets of the Custodian or Agent other than assets held as a

fiduciary, custodian, or otherwise for customers;

2) The records of the Custodian with respect to

securities of the Fund which are maintained in a Securities

System shall identify by book-entry those securities belonging to

the Fund;

3) The Custodian shall pay for securities

purchased for the account of the Fund upon (i) receipt of advice

from the Securities System that such securities have been

transferred to the Account, and (ii) the making of an entry on

the records of the Custodian to reflect such payment and transfer

for the account of the Fund. The Custodian shall Transfer

securities sold for the account of the Fund upon (i) receipt of

<PAGE>

advice from the Securities System that payment for such

securities has been transferred to the Account, and (ii) the

making of an entry on the records of the Custodian to reflect

such transfer and payment for the account of the Fund. Copies of

all advices from the Securities System of transfers of securities

for the account of the Fund shall identify the Fund, be

maintained for the Fund by the Custodian or an Agent as referred

to above, and be provided to the Fund at its request. The

Custodian shall furnish the Fund confirmation of each transfer to

or from the account of the Fund in the form of a written advice

or notice and shall furnish to the Fund copies of daily

transaction sheets reflecting each day's transactions in the

Securities System for the account of the Fund on the next

business day;

4) The Custodian shall provide the Fund with any

report obtained by the Custodian or any Agent as referred to

above on the Securities System's accounting system, internal

accounting control and procedures for safeguarding securities

deposited in the Securities System; and the Custodian and such

Agents shall send to the Fund such reports on their own systems

of internal accounting control as the Fund may reasonably request

from time to time.

5) At the written request of the Fund, the

Custodian will terminate the use of any such Securities System on

behalf of the Fund as promptly as practicable.

<PAGE>

V. Other Transfers - Upon receipt of Proper

Instructions, to deliver securities, funds and other property of

the Fund to a Subcustodian or another custodian of the Fund; and,

upon receipt of proper instructions, to make such other

disposition of securities, funds or other property of the Fund in

a manner other than or for purposes other than as enumerated

elsewhere in this Agreement, provided that the instructions

relating to such disposition shall include a statement of the

purpose for which the delivery is to be made, the amount of

securities to be delivered and the name of the person or persons

to whom delivery is to be made.

W. Investment Limitations - In performing its duties

generally, and more particularly in connection with the purchase,

sale and exchange of securities made by or for the Fund, the

Custodian may assume unless and until notified in writing to the

contrary that proper instructions received by it are not in

conflict with or in any way contrary to any provisions of the

Fund's Articles of Incorporation or By-Laws (or comparable

documents) or votes or proceedings of the shareholders or

Directors of the Fund. The Custodian shall in no event be liable

to the Fund and shall be indemnified by the Fund for any

violation which occurs in the course of carrying out instructions

given by the Fund of any investment limitations to which the Fund

is subject or other limitations with respect to the Fund's powers

<PAGE>

to make expenditures, encumber securities, borrow or take similar

actions affecting its portfolio.

X. Proper Instructions - Proper instructions shall

mean a tested telex from the Fund or a written request,

direction, instruction or certification signed or initialed on

behalf of the Fund by one or more person or persons as the Board

of Directors of the Fund shall have from time to time authorized,

provided, however, that no such instructions directing the

delivery of securities or the payment of funds to an authorized

signatory of the Fund shall be signed by such person. Those

persons authorized to give proper instructions may be identified

by the Board of Directors by name, title or position and will

include at least one officer empowered by the Board to name other

individuals who are authorized to give proper instructions on

behalf of the Fund. Telephonic or other oral instructions given

by any one of the above persons will be considered proper

instructions if the Custodian reasonably believes them to have

been given by a person authorized to give such instructions with

respect to the transaction involved. Oral instructions will be

confirmed by tested telex or in writing in the manner set forth

above but the lack of such confirmation shall in no way affect

any action taken by the Custodian in reliance upon such oral

instructions. The Fund authorizes the Custodian to tape record

any and all telephonic or other oral instructions given to the

Custodian by or on behalf of the Fund (including any of its

<PAGE>

officers, Directors, employees or agents) and will deliver to the

Custodian a similar authorization from any investment manager or

adviser or person or entity with similar responsibilities which

is authorized to give proper instructions on behalf of the Fund

to the Custodian. Proper instructions may relate to specific

transactions or to types or classes of transactions, and may be

in the form of standing instructions.

Proper instructions may include communications effected

directly between electro-mechanical or electronic devices or

systems, in addition to tested telex, provided that the Fund and

the Custodian agree to the use of such device or system.

3. Securities, funds and other property of the Fund

may be held by subcustodians appointed pursuant to the provisions

of this Section 3 (a "Subcustodian"). The Custodian may, at any

time and from time to time, appoint any bank or trust company

(meeting the requirements of a custodian or a foreign custodian

under the Investment Company Act of 1940 and the rules and

regulations thereunder) to act as a Subcustodian for the Fund,

provided that the Fund shall have approved in writing (l) any

such bank or trust company and the subcustodian agreement to be

entered into between such bank or trust company and the

Custodian, and (2) if the subcustodian is a bank organized under

the laws of a country other than the United States, the holding

of securities, cash and other property of the Fund in the country

in which it is proposed to utilize the services of such

<PAGE>

subcustodian. Upon such approval by the Fund, the Custodian is

authorized on behalf of the Fund to notify each Subcustodian of

its appointment as such. The Custodian may, at any time in its

discretion, remove any bank or trust company that has been

appointed as a Subcustodian but will promptly notify the Fund of

any such action.

Those Subcustodians, their offices or branches which the

Fund has approved to date are set forth on Appendix A hereto.

Such Appendix shall be amended from time to time as

Subcustodians, branches or offices are changed, added or deleted.

The Fund shall be responsible for informing the Custodian

sufficiently in advance of a proposed investment which is to be

held at a location not listed on Appendix A, in order that there

shall be sufficient time for the Fund to give the approval

required by the preceding paragraph and for the Custodian to put

the appropriate arrangements in place with such Subcustodian

pursuant to such subcustodian agreement.

Although the Fund does not intend to invest in a country

before the foregoing procedures have been completed, in the event

that an investment is made prior to approval, if practical, such

security shall be removed to an approved location or if not

practical such security shall be held by such agent as the

Custodian may appoint. In such event, the Custodian shall be

liable to the Fund for the actions of such agent if and only to

the extent the Custodian shall have recovered from such agent for

<PAGE>

any damages caused the Fund by such agent and provided that the

Custodian shall pursue its rights against such agent.

With respect to the securities and funds held by a

Subcustodian, either directly or indirectly, including demand and

interest bearing deposits, currencies or other deposits and

foreign exchange contracts as referred to in Sections 2K, 2L or

2M, the Custodian shall be liable to the Fund if and only to the

extent that such Subcustodian is liable to the Custodian;

provided, however, that the Custodian shall be liable to the Fund

for losses resulting from the bankruptcy or insolvency of a

Subcustodian if and only to the extent that such Subcustodian is

liable to the Custodian and the Custodian recovers from such

Subcustodian under the applicable subcustodian agreement. The

Custodian shall nevertheless be liable to the Fund for its own

negligence in transmitting any instructions received by it from

the Fund and for its own negligence in connection with the

delivery of any securities or funds held by it to any such

Subcustodian.

In the event that any Subcustodian appointed pursuant to

the provisions of this Section 3 fails to perform any of its

obligations under the terms and conditions of the applicable

subcustodian agreement, the Custodian shall use its best efforts

to cause such Subcustodians to perform such obligations. In the

event that the Custodian is unable to cause such Subcustodian to

perform fully its obligations thereunder, the Custodian shall

<PAGE>

forthwith upon the Fund's request terminate such Subcustodian

and, if necessary or desirable, appoint another subcustodian in

accordance with the provisions of this Section 3. At the election

of the Fund, it shall have the right to enforce, to the extent

permitted by the subcustodian agreement and applicable law, the

Custodian's rights against any such Subcustodian for loss or

damage caused the Fund by such Subcustodian.

At the written request of the Fund, the Custodian will

terminate any subcustodian appointed pursuant to the provisions

of this Section 3 in accordance with the termination provisions

under the applicable subcustodian agreement. The Custodian will

not amend any subcustodian agreement or agree to change or permit

any changes thereunder except upon the prior written approval of

the Fund.

In the event the Custodian receives a claim from a

Subcustodian under the indemnification provisions of any

subcustodian agreement, the Custodian shall promptly give written

notice to the Fund of such claim. No more than thirty days after

written notice to the Fund of the Custodian's intention to make

such payment, the Fund will reimburse the Custodian the amount of

such payment except in respect of any negligence or misconduct of

the Custodian.

4. The Custodian may assist generally in the

preparation of reports to Fund shareholders and others, audits of

accounts, and other ministerial matters of like nature.

<PAGE>

5. The Fund hereby also appoints the Custodian as its

financial agent. With respect to the appointment as financial

agent, the Custodian shall have and perform the following powers

and duties:

A. Records - To create, maintain and retain such

records relating to its activities and obligations under this

Agreement as are required under the Investment Company Act of

1940 and the rules and regulations thereunder (including Section

31 thereof and Rules 31a-1 and 31a-2 thereunder) and under

applicable Federal and State tax laws. All such records will be

the property of the Fund and in the event of termination of this

Agreement shall be delivered to the successor custodian, and the

Custodian agrees to cooperate with the Fund in execution of

documents and other action necessary or desirable in order to

substitute the successor custodian for the custodian under their

agreement.

B. Accounts - To keep books of account and render

statements, including interim monthly and complete quarterly

financial statements, or copies thereof, from time to time as

reasonably requested by proper instructions.

C. Access to Records - Subject to security

requirements of the Custodian applicable to its own

employees having access to similar records within the Custodian

and such regulations as may be reasonably imposed by the

Custodian, the books and records maintained by the Custodian

<PAGE>

pursuant to Sections 5A and 5B shall be open to inspection and

audit at reasonable times by officers of attorneys for and

auditors employed by, the Fund.

D. Calculation of Net Asset Value - To compute and

determine the net asset value per share of capital stock of the

Fund as of the close of business on the New York Stock Exchange

on each day on which such Exchange is open, unless otherwise

directed by proper instructions. Such computation and

determination shall be made in accordance with (1) the provisions

of the Fund's Articles of Incorporation or By Laws of the Fund,

as they may from time to time be amended and delivered to the

Custodian, (2) the votes of the Board of Directors of the Fund at

the time in force and applicable, as they may from time to time

be delivered to the Custodian, and (3) proper instructions from

such officers of the Fund or other persons as are from time to

time authorized by the Board of Directors of the Fund to give

instructions with respect to computation and determination of the

net asset value. On each day that the Custodian shall compute the

net asset value per share of the Fund, the Custodian shall

provide the Fund with written reports which permit the Fund to

verify that portfolio transactions have been recorded in

accordance with the Fund's instructions.

In computing the net asset value, the Custodian may rely

upon any information furnished by proper instructions, including

without limitation any information (1) as to accrual of

<PAGE>

liabilities of the Fund and as to liabilities of the Fund not

appearing on the books of account kept by the custodian, (2) as

to the existence, status and proper treatment of reserves, if

any, authorized by the fund, (3) as to the sources of quotations

to be used in computing the net asset value, including those

listed in Appendix B, (4) as to the fair value to be assigned to

any securities or other property for which price quotations are

not readily available, and (5) as to the sources of information

with respect to "corporate actions" affecting portfolio

securities of the fund, including those listed in Appendix B.

(Information as to "corporate actions" shall include information

as to dividends, distributions, stock splits, stock dividends,

rights offerings, conversions, exchanges, recapitalizations,

mergers, redemptions, calls, maturity dates and similar

transactions, including the ex and record dates and the amounts

or other terms thereof.)

In like manner, the Custodian shall compute and

determine the net asset value as of such other times as the Board

of Directors of the Fund from time to time may reasonably

request.

Notwithstanding any other provisions of this Agreement,

including Section 6C, the following provisions shall apply with

respect to the Custodian's foregoing responsibilities in this

Section 5D: The Custodian shall be held to the exercise of

reasonable care in computing and determining net asset value as

<PAGE>

provided in this Section 5D, but shall not be held accountable or

liable for any losses, damages or expenses the Fund or any

shareholder or former shareholder of the Fund may suffer or incur

arising from or based upon errors or delays in the determination

of such net asset value unless such error or delay was due to the

Custodian's negligence, gross negligence or reckless or willful

misconduct in determination of such net asset value. (The parties

hereto acknowledge, however, that the Custodian's causing an

error or delay in the determination of net asset value may, but

does not in and of itself, constitute negligence, gross

negligence or reckless or willful misconduct.) In no event shall

the Custodian be liable or responsible to the Fund, any present

or former shareholder of the fund or any other party for any

error or delay which continued or was undetected after the date

of an audit performed by the certified public accountants

employed by the Fund if, in the exercise of reasonable care in

accordance with generally accepted accounting standards, such

accountants should have become aware of such error or delay in

the course of performing such audit. The Custodian's liability

for any such negligence, gross negligence or reckless or willful

misconduct which results in an error in determination of such net

asset value shall be limited to the direct, out of pocket loss

the Fund, shareholder or former shareholder shall actually incur,

measured by the difference between the actual and the erroneously

computed net asset value, and any expenses the fund shall incur

<PAGE>

in connection with correcting the records of the Fund affected by

such error (including charges made by the Fund's registrar and

transfer agent for making such corrections) or communicating with

shareholders or former shareholders of the Fund affected by such

error.

Without limiting the foregoing, the Custodian shall not

be held accountable or liable to the Fund, any shareholder or

former shareholder thereof or any other person for any delays or

losses, damages or expenses any of them may suffer or incur

resulting from (1) the Custodian's failure to receive timely and

suitable notification concerning quotations or corporate actions

relating to or affecting portfolio securities of the fund or (2)

any errors in the computation of the net asset value based upon

or arising out of quotations or information as to corporate

actions if received by the Custodian either (i) from a source

which the Custodian was authorized pursuant to the second

paragraph of this Section 5D to rely upon, or (ii) from a source

which in the Custodian's reasonable judgment was as reliable a

source for such quotations or information as the sources

authorized pursuant to that paragraph. Nevertheless, the

Custodian will use its best judgment in determining whether to

verify through other sources any information it has received as

to quotations or corporate actions if the Custodian has reason to

believe that any such information might be incorrect. In the

event of any error or delay in the determination of such net

<PAGE>

asset value for which the Custodian may be liable, the Fund and

the Custodian will consult and make good faith efforts to reach

agreement on what actions should be taken in order to mitigate

any loss suffered by the Fund or its present or former

shareholders, in order that the custodian's exposure to liability

shall be reduced to the extent possible after taking into account

all relevant factors and alternatives. Such actions might include

the Fund or the custodian taking reasonable steps to collect from

any shareholder or former shareholder who has received any

overpayment upon redemption of shares such overpaid amount or to

collect from any shareholder who has underpaid upon a purchase of

shares the amount of such underpayment or to reduce the number of

shares issued to such shareholder. It is understood that in

attempting to reach agreement on the actions to be taken or the

amount of the loss which should appropriately be borne by the

Custodian, the Fund and the Custodian will consider such relevant

factors as the amount of the loss involved, the Fund's desire to

avoid loss of shareholder good will, the fact that other persons

or entitles could have been reasonably expected to have detected

the error sooner than the time it was actually discovered, the

appropriateness of limiting or eliminating the benefit which

shareholders or former shareholders might have obtained by reason

of the error, and the possibility that other parties providing

services to the Fund might be induced to absorb a portion of the

loss incurred.

<PAGE>

E. Disbursements - Upon receipt of proper

instructions, to pay or cause to be paid, insofar as funds are

available for the purpose, bills, statements and other

obligations of the Fund (including but not limited to interest

charges, taxes, management fees, compensation to Fund officers

and employees, and other operating expenses of the Fund).

6. A. The Custodian shall not be liable for any

action taken or omitted in reliance upon proper instructions

believed by it to be genuine or upon any other written notice,

request, direction, instruction, certificate or other instrument

believed by it to be genuine and signed by the proper party or

parties.

The Secretary or Assistant Secretary of the Fund shall

certify to the Custodian the names, signatures and scope of

authority of all persons authorized to give proper instructions

or any other such notice, request, direction, instruction,

certificate or instrument on behalf of the Fund, the names and

signatures of the officers of the Fund, the name and address of

the Shareholder Servicing Agent, and any resolutions, votes,

instructions or directions of the Fund's Board of Directors or

shareholders. Such certificate may be accepted and relied upon by

the Custodian as conclusive evidence of the facts set forth

therein and may be considered in full force and effect until

receipt of a similar certificate to the contrary. So long as and

to the extent that it is in the exercise of reasonable care, the

<PAGE>

Custodian shall not be responsible for the title, validity or

genuineness of any property or evidence of title thereto received

by it or delivered by it pursuant to this Agreement.

The Custodian shall be entitled, at the expense of the

Fund, to receive and act upon advice of counsel (who may be

counsel for the Fund) on all matters, and the Custodian shall be

without liability for any action reasonably taken or omitted

pursuant to such advice.

B. With respect to the portfolio securities, cash and

other property of the Fund held by a Securities System, the

Custodian shall be liable to the Fund only for any loss or damage

to the Fund resulting from use of the Securities System if caused

by any negligence, misfeasance or misconduct of the Custodian or

any of its agents or of any of its or their employees or from any

failure of the Custodian or any such agent to enforce effectively

such rights as it may have against the Securities System.

C. Except as may otherwise be set forth in this

Agreement with respect to particular matters, the Custodian shall

be held only to the exercise of reasonable care and diligence in

carrying out the provisions of this Agreement, provided that the

Custodian shall not thereby be required to take any action which

is in contravention of any applicable law. However, nothing

herein shall exempt the Custodian from liability due to its own

negligence or willful misconduct. The Fund agrees to indemnify

and hold harmless the Custodian and its nominees from all claims

<PAGE>

and liabilities (including counsel fees) incurred or assessed

against it or its nominees in connection with the performance of

this Agreement, except such as may arise from its or its

nominee's breach of the relevant standard of conduct set forth in

this Agreement. Without limiting the foregoing indemnification

obligation of the Fund, the Fund agrees to indemnify the

Custodian and its nominees against any liability the Custodian or

such nominee may incur by reason of taxes assessed to the

Custodian or such nominee or other costs, liability or expense

incurred by the Custodian or such nominee resulting directly or

indirectly from the fact that portfolio securities or other

property of the Fund is registered in the name of the Custodian

or such nominee.

In order that the indemnification provisions contained

in this Paragraph 6-C shall apply, however, it is understood that

if in any case the Fund may be asked to indemnify or hold the

Custodian harmless, the Fund shall be fully and promptly advised

of all pertinent facts concerning the situation in question, and

it is further understood that the Custodian will use all

reasonable care to identify and notify the Fund promptly

concerning any situation which presents or appears likely to

present the probability of such a claim for indemnification

against the Fund. The Fund shall have the option to defend the

Custodian against any claim which may be the subject of this

indemnification, and in the event that the Fund so elects it will

<PAGE>

so notify the Custodian, and thereupon the Fund shall take over

complete defense of the claim, and the Custodian shall in such

situation initiate no further legal or other expenses for which

it shall seek indemnification under this Paragraph 6-C. The

Custodian shall in no case confess any claim or make any

compromise in any case in which the Fund will be asked to

indemnify the Custodian except with the Fund's prior written

consent.

It is also understood that the Custodian shall not be

liable for any loss involving any securities, currencies,

deposits or other property of the Fund, whether maintained by it,

a Subcustodian, an agent of the Custodian or a Subcustodian, a

Securities System, or a Banking Institution, or a loss arising

from a foreign currency transaction or contract, resulting from a

Sovereign Risk. A "Sovereign Risk" shall mean nationalization,

expropriation, devaluation, revaluation, confiscation, seizure,

cancellation, destruction or similar action by any governmental

authority, de facto or de jure; or enactment, promulgation,

imposition or enforcement by any such governmental authority of

currency restrictions, exchange controls, taxes, levies or other

charges affecting the Fund's property; or acts of war, terrorism,

insurrection or revolution; or any other similar act or event

beyond the Custodian's control.

D. The Custodian shall be entitled to receive

reimbursement from the Fund on demand, in the manner provided in

<PAGE>

Section 7, for its cash disbursements, expenses and charges

(including the fees and expenses of any Subcustodian or any

Agent) in connection with this Agreement, but excluding salaries

and usual overhead expenses.

E. The Custodian may at any time or times in its

discretion appoint (and may at any time remove) any other bank or

trust company as its agent (an "Agent") to carry out such of the

provisions of this Agreement as the Custodian may from time to

time direct, provided, however, that the appointment of such

Agent (other than an Agent appointed pursuant to the third

paragraph of Section 3) shall not relieve the Custodian of any of

its responsibilities under this agreement.

F. Upon request, the Fund shall deliver to the

Custodian such proxies, powers of attorney or other instruments

as may be reasonable and necessary or desirable in connection

with the performance by the Custodian or any Subcustodian of

their respective obligations under this Agreement or any

applicable subcustodian agreement.

7. The Fund shall pay the Custodian a custody fee

based on such fee schedule as may from time to time be agreed

upon in writing by the Custodian and the Fund. Such fee, together

with all amounts for which the Custodian is to be reimbursed in

accordance with Section 6D, shall be billed to the Fund in such a

manner as to permit payment by a direct cash payment to the

Custodian.

<PAGE>

8. This Agreement shall continue in full force and

effect until terminated by either party by an instrument in

writing delivered or mailed, postage prepaid, to the other party,

such termination to take effect not sooner than seventy five (75)

days after the date of such delivery or mailing. In the event of

termination the Custodian shall be entitled to receive prior to

delivery of the securities, funds and other property held by it

and all accrued fees and unreimbursed expenses, the payment of

which is contemplated by Sections 6D and 7, upon receipt by the

Fund of a statement setting forth such fees and expenses.

In the event of the appointment of a successor

custodian, it is agreed that the funds and securities owned by

the Fund and held by the Custodian or any Subcustodian shall be

delivered to the successor custodian, and the Custodian agrees to

cooperate with the Fund in execution of documents and performance

of other actions necessary or desirable in order to substitute

the successor custodian for the Custodian under this Agreement.

9. This Agreement constitutes the entire understanding

and agreement of the parties hereto with respect to the subject

matter hereof. No provision of this Agreement may be amended or

terminated except by a statement in writing signed by the party

against which enforcement of the amendment or termination is

sought.

In connection with the operation of this Agreement, the

Custodian and the Fund may agree in writing from time to time on

<PAGE>

such provisions interpretative of or in addition to the

provisions of this Agreement as may in their joint opinion be

consistent with the general tenor of this Agreement. No

interpretative or additional provisions made as provided in the

preceding sentence shall be deemed to be an amendment of this

Agreement.

10. This instrument is executed and delivered in The

Commonwealth of Massachusetts and shall be governed by and

construed according to the laws of said Commonwealth.

11. Notices and other writings delivered or mailed

postage prepaid to the Fund addressed to the Fund at 500 Plaza

Drive 3rd Floor, Secaucus, NJ 07094 or to such other address as

the Fund may have designated to the Custodian in writing, or to

the Custodian at 40 Water Street, Boston, Massachusetts 02109,

Attention: Manager, Securities Department, or to such other

address as the Custodian may have designated to the Fund in

writing, shall be deemed to have been properly delivered or given

hereunder to the respective addressee.

12. This Agreement shall be binding on and shall inure

to the benefit of the Fund and the Custodian and their respective

successors and assigns, provided that neither party hereto may

assign this Agreement or any of its rights or obligations

hereunder without the prior written consent of the other party.

13. This Agreement may be executed in any number of

counterparts each of which shall be deemed an original. This

<PAGE>

Agreement shall become effective when one or more counterparts

have been signed and delivered by each of the parties.

IN WITNESS WHEREOF, each of the parties has caused this

Agreement to be executed in its name and behalf on the day and

year first above written.

ALLIANCE NORTH AMERICAN BROWN BROTHERS HARRIMAN & CO.
GOVERNMENT INCOME TRUST, INC.

By /s/David H. Dievler /s/Brown Brothers Harriman & Co.
___________________ ________________________________

35
00250117.AT2

<PAGE>

Exhibit 9

ALLIANCE FUND SERVICES, INC.

TRANSFER AGENCY AGREEMENT

AGREEMENT, dated as of February 21, 1992, between

Alliance North American Government Income Trust, Inc., a Maryland

Corporation and an open-end investment company registered with

the Securities and Exchange Commission (the "SEC") under the

Investment Company Act of 1940 (the "Investment Company Act"),

having its principal place of business at 1345 Avenue of

Americas, New York, New York 10105 (the "Fund"), and ALLIANCE

FUND SERVICES, INC., a Delaware corporation registered with the

SEC as a transfer agent under the Securities Exchange Act of

1934, having its principal place of business at 500 Plaza Drive,

Secaucus, New Jersey 07094 ("Fund Services"), provides as

follows:

WHEREAS, Fund Services has agreed to act as transfer

agent to the Fund for the purpose of recording the transfer,

issuance and redemption of shares of each series of the common

stock or shares of beneficial interest, as applicable, of the

Fund ("Shares" or "Shares of a Series"), transferring the Shares,

disbursing dividends and other distributions to shareholders of

the Fund, and performing such other services as may be agreed to

pursuant hereto;

<PAGE>

NOW THEREFORE, for and in consideration of the mutual

covenants and agreements contained herein, the parties do hereby

agree as follows:

SECTION 1. The Fund hereby appoints Fund Services as

its transfer agent, dividend disbursing agent and shareholder

servicing agent for the Shares, and Fund Services agrees to act

in such capacities upon the terms set forth in this Agreement.

Capitalized terms used in this Agreement and not otherwise

defined shall have the meanings assigned to them in SECTION 30.

SECTION 2.

(a) The Fund shall provide Fund Services with copies of

the following documents:

(1) Specimens of all forms of certificates for Shares;

(2) Specimens of all account application forms and

other documents relating to Shareholders' accounts;

(3) Copies of each Prospectus;

(4) Specimens of all documents relating to withdrawal

plans instituted by the Fund, as described in SECTION 16; and

(5) Specimens of all amendments to any of the foregoing

documents.

(b) The Fund shall furnish to Fund Services a supply of

blank Share Certificates for the Shares and, from time to time,

will renew such supply upon Fund Services' request. Blank Share

Certificates shall be signed manually or by facsimile signatures

of officers of the Fund authorized to sign by law or pursuant to

<PAGE>

the by-laws of the Fund and, if required by Fund Services, shall

bear the Fund's seal or a facsimile thereof.

SECTION 3. Fund Services shall make original issues of

Shares in accordance with SECTIONS 13 and 14 and the Prospectus

upon receipt of (i) Written Instructions requesting the issuance,

(ii) a certified copy of a resolution of the Fund's Board of

Directors authorizing the issuance, (iii) necessary funds for the

payment of any original issue tax applicable to such Shares, and

(iv) an opinion of the Fund's counsel as to the legality and

validity of the issuance, which opinion may provide that it is

contingent upon the filing by the Fund of an appropriate notice

with the SEC, as required by Rule 24f-2 of the Investment Company

Act, as amended from time to time.

SECTION 4. Transfers of Shares shall be registered and,

subject to the provisions of SECTION 10 in the case of Shares

evidenced by Share Certificates, new Share Certificates shall be

issued by Fund Services upon surrender of outstanding Share

Certificates in the form deemed by Fund Services to be properly

endorsed for transfer, which form shall include (i) all necessary

endorsers' signatures guaranteed by a member firm of a national

securities exchange or a domestic commercial bank or through

other procedures mutually agreed to between the Fund and Fund

Services, (ii) such assurances as Fund Services may deem

necessary to evidence the genuineness and effectiveness of each

endorsement and (iii) satisfactory evidence of compliance with

<PAGE>

all applicable laws relating to the payment or collection of

taxes.

SECTION 5. Fund Services shall forward Share

Certificates in "non-negotiable" form by first-class or

registered mail, or by whatever means Fund Services deems equally

reliable and expeditious. While in transit to the addressee, all

deliveries of Share Certificates shall be insured by Fund

Services as it deems appropriate. Fund Services shall not mail

Share Certificates in "negotiable" form, unless requested in

writing by the Fund and fully indemnified by the Fund to Fund

Services' satisfaction.

SECTION 6. In registering transfers of Shares, Fund

Services may rely upon the Uniform Commercial Code as in effect

from time to time in the State in which the Fund is incorporated

or organized or, if appropriate, in the State of New Jersey;

provided, that Fund Services may rely in addition or

alternatively on any other statutes in effect in the State of New

Jersey or in the state under the laws of which the Fund is

incorporated or organized that, in the opinion of Fund Services'

counsel, protect Fund Services and the Fund from liability

arising from (i) not requiring complete documentation in

connection with an issuance or transfer, (ii) registering a

transfer without an adverse claim inquiry, (iii) delaying

registration for purposes of an adverse claim inquiry or (iv)

refusing registration in connection with an adverse claim.

<PAGE>

SECTION 7. Fund Services may issue new Share

Certificates in place of those lost, destroyed or stolen, upon

receiving indemnity satisfactory to Fund Services; and may issue

new Share Certificates in exchange for, and upon surrender of,

mutilated Share Certificates as Fund Services deems appropriate.

SECTION 8. Unless otherwise directed by the Fund, Fund

Services may issue or register Share Certificates reflecting the

signature, or facsimile thereof, of an officer who has died,

resigned or been removed by the Fund. The Fund shall file

promptly with Fund Services' approval, adoption or ratification

of such action as may be required by law or by Fund Services.

SECTION 9. Fund Services shall maintain customary stock

registry records for Shares of each Series noting the issuance,

transfer or redemption of Shares and the issuance and transfer of

Share Certificates. Fund Services may also maintain for Shares

of each Series an account entitled "Unissued Certificate

Account," in which Fund Services will record the Shares, and

fractions thereof, issued and outstanding from time to time for

which issuance of Share Certificates has not been requested.

Fund Services is authorized to keep records for Shares of each

Series containing the names and addresses of record of

Shareholders, and the number of Shares, and fractions thereof,

from time to time owned by them for which no Share Certificates

are outstanding. Each Shareholder will be assigned a single

account number for Shares of each Series, even though Shares for

<PAGE>

which Certificates have been issued will be accounted for

separately.

SECTION 10. Fund Services shall issue Share

Certificates for Shares only upon receipt of a written request

from a Shareholder and as authorized by the Fund. If Shares are

purchased or transferred without a request for the issuance of a

Share Certificate, Fund Services shall merely note on its stock

registry records the issuance or transfer of the Shares and

fractions thereof and credit or debit, as appropriate, the

Unissued Certificate Account and the respective Shareholders'

accounts with the Shares. Whenever Shares, and fractions

thereof, owned by Shareholders are surrendered for redemption,

Fund Services may process the transactions by making appropriate

entries in the stock transfer records, and debiting the Unissued

Certificate Account and the record of issued Shares outstanding;

it shall be unnecessary for Fund Services to reissue Share

Certificates in the name of the Fund.

SECTION 11. Fund Services shall also perform the usual

duties and function required of a stock transfer agent for a

corporation, including but not limited to (i) issuing Share

Certificates as treasury Shares, as directed by Written

Instructions, and (ii) transferring Share Certificates from one

Shareholder to another in the usual manner. Fund Services may

rely conclusively and act without further investigation upon any

list, instruction, certification, authorization, Share

<PAGE>

Certificate or other instrument or paper reasonably believed by

it in good faith to be genuine and unaltered, and to have been

signed, countersigned or executed or authorized by a duly-

authorized person or persons, or by the Fund, or upon the advice

of counsel for the Fund or for Fund Services. Fund Services may

record any transfer of Share Certificates which it reasonably

believes in good faith to have been duly authorized, or may

refuse to record any transfer of Share Certificates if, in good

faith, it reasonably deems such refusal necessary in order to

avoid any liability on the part of either the Fund or Fund

Services.

SECTION 12. Fund Services shall notify the Fund of any

request or demand for the inspection of the Fund's share records.

Fund Services shall abide by the Fund's instructions for granting

or denying the inspection; provided, however, Fund Services may

grant the inspection without such instructions if it is advised

by its counsel that failure to do so will result in liability to

Fund Services.

SECTION 13. Fund Services shall observe the following

procedures in handling funds received:

(a) Upon receipt at the office designated by the Fund

of any check or other order drawn or endorsed to the Fund or

otherwise identified as being for the account of the Fund, and,

in the case of a new account, accompanied by a new account

application or sufficient information to establish an account as

<PAGE>

provided in the Prospectus, Fund Services shall stamp the

transmittal document accompanying such check or other order with

the name of the Fund and the time and date of receipt and shall

forthwith deposit the proceeds thereof in the custodial account

of the Fund.

(b) In the event that any check or other order for the

purchase of Shares is returned unpaid for any reason, Fund

Services shall, in the absence of other instructions from the

Fund, advise the Fund of the returned check and prepare such

documents and information as may be necessary to cancel promptly

any Shares purchased on the basis of such returned check and any

accumulated income dividends and capital gains distributions paid

on such Shares.

or at such other times as the Fund may specify in Written or Oral

Instructions for any Series (the "Valuation Time") on each

Business Day Fund Services shall obtain from the Fund's Adviser a

quotation (on which it may conclusively rely) of the net asset

value, determined as of the Valuation Time on that day. On each

Business Day Fund Services shall use the net asset value(s)

determined by the Fund's Adviser to compute the number of Shares

and fractional Shares to be purchased and the aggregate purchase

proceeds to be deposited with the Custodian. As necessary but no

more frequently than daily (unless a more frequent basis is

agreed to by Fund Services), Fund Services shall place a purchase

<PAGE>

order with the Custodian for the proper number of Shares and

fractional Shares to be purchased and promptly thereafter shall

send written confirmation of such purchase to the Custodian and

the Fund.

SECTION 14. Having made the calculations required by

SECTION 13, Fund Services shall thereupon pay the Custodian the

aggregate net asset value of the Shares purchased. The aggregate

number of Shares and fractional Shares purchased shall then be

issued daily and credited by Fund Services to the Unissued

Certificate Account. Fund Services shall also credit each

Shareholder's separate account with the number of Shares

purchased by such Shareholder. Fund Services shall mail written

confirmation of the purchase to each Shareholder or the

Shareholder's representative and to the Fund if requested. Each

confirmation shall indicate the prior Share balance, the new

Share balance, the Shares for which Stock Certificates are

outstanding (if any), the amount invested and the price paid for

the newly-purchased Shares.

SECTION 15. Prior to the Valuation Time on each

Business Day, as specified in accordance with SECTION 13, Fund

Services shall process all requests to redeem Shares and, with

respect to each Series, shall advise the Custodian of (i) the

total number of Shares available for redemption and (ii) the

number of Shares and fractional Shares requested to be redeemed.

Upon confirmation of the net asset value by the Fund's Adviser,

<PAGE>

Fund Services shall notify the Fund and the Custodian of the

redemption, apply the redemption proceeds in accordance with

SECTION 16 and the Prospectus, record the redemption in the stock

registry books, and debit the redeemed Shares from the Unissued

Certificates Account and the individual account of the

Shareholder.

In lieu of carrying out the redemption procedures

described in the preceding paragraph, Fund Services may, at the

request of the Fund, sell Shares to the Fund as repurchases from

Shareholders, provided that the sale price is not less than the

applicable redemption price. The redemption procedures shall

then be appropriately modified.

SECTION 16. Fund Services will carry out the following

procedures with respect to Share redemptions:

(a) As to each request received by the Fund from or on

behalf of a Shareholder for the redemption of Shares, and unless

the right of redemption has been suspended as contemplated by the

Prospectus, Fund Services shall, within seven days after receipt

of such redemption request, either (i) mail a check in the amount

of the proceeds of such redemption to the person designated by

the Shareholder or other person to receive such proceeds or, (ii)

in the event redemption proceeds are to be wired through the

Federal Reserve Wire System or by bank wire pursuant to

procedures described in the Prospectus, cause such proceeds to be

wired in Federal funds to the bank or trust company account

<PAGE>

designated by the Shareholder to receive such proceeds. Funds

Services shall also prepare and send a confirmation of such

redemption to the Shareholder. Redemptions in kind shall be made

only in accordance with such Written Instructions as Fund

Services may receive from the Fund. The requirements as to

instruments of transfer and other documentation, the

determination of the appropriate redemption price and the time of

payment shall be as provided in the Prospectus, subject to such

additional requirements consistent therewith as may be

established by mutual agreement between the Fund and Fund

Services. In the case of a request for redemption that does not

comply in all respects with the requirements for redemption, Fund

Services shall promptly so notify the Shareholder and shall

effect such redemption at the price in effect at the time of

receipt of documents complying with such requirements. Fund

Services shall notify the Fund's Custodian and the Fund on each

Business Day of the amount of cash required to meet payments made

pursuant to the provisions of this paragraph and thereupon the

Fund shall instruct the Custodian to make available to Fund

Services in timely fashion sufficient funds therefor.

(b) Procedures and standards for effecting and

accepting redemption orders from Shareholders by telephone or by

such check writing service as the Fund may institute may be

established by mutual agreement between Fund Services and the

Fund consistent with the Prospectus.

<PAGE>

purchased by check within fifteen (15) days prior to receipt of

the redemption request, the Fund shall provide Fund Services with

Written Instructions concerning the time within which such

requests may be honored.

(d) Fund Services shall process withdrawal orders duly

executed by Shareholders in accordance with the terms of any

withdrawal plan instituted by the Fund and described in the

Prospectus. Payments upon such withdrawal orders and redemptions

of Shares held in withdrawal plan accounts in connection with

such payments shall be made at such times as the Fund may

determine in accordance with the Prospectus.

(e) The authority of Fund Services to perform its

responsibilities under SECTIONS 15 and 16 with respect to the

Shares of any Series shall be suspended if Fund Services receives

notice of the suspension of the determination of the net asset

value of the Series.

SECTION 17. Upon the declaration of each dividend and

each capital gains distribution by the Fund's Board of Directors,

the Fund shall notify Fund Services of the date of such

declaration, the amount payable per Share, the record date for

determining the Shareholders entitled to payment, the payment and

the reinvestment date price.

SECTION 18. Upon being advised by the Fund of the

declaration of any income dividend or capital gains distribution

<PAGE>

on account of its Shares, Fund Services shall compute and prepare

for the Fund records crediting such distributions to

Shareholders. Fund Services shall, on or before the payment date

of any dividend or distribution, notify the Fund and the

Custodian of the estimated amount required to pay any portion of

a dividend or distribution which is payable in cash, and

thereupon the Fund shall, on or before the payment date of such

dividend or distribution, instruct the Custodian to make

available to Fund Services sufficient funds for the payment of

such cash amount. Fund Services will, on the designated payment

date, reinvest all dividends in additional shares and promptly

mail to each Shareholder at his address of record a statement

showing the number of full and fractional Shares (rounded to

three decimal places) then owned by the Shareholder and the net

asset value of such Shares; provided, however, that if a

Shareholder elects to receive dividends in cash, Fund Services

shall prepare a check in the appropriate amount and mail it to

the Shareholder at his address of record within five (5) business

days after the designated payment date, or transmit the

appropriate amount in Federal funds in accordance with the

Shareholder's agreement with the Fund.

SECTION 19. Fund Services shall prepare and maintain

for the Fund records showing for each Shareholder's account the

following:

<PAGE>

A. The name, address and tax identification number of

the Shareholder;

B. The number of Shares of each Series held by the

Shareholder;

C. Historical information including dividends paid and

date and price for all transactions;

D. Any stop or restraining order placed against such

account;

E. Information with respect to the withholding of any

portion of income dividends or capital gains distributions as are

required to be withheld under applicable law;

F. Any dividend or distribution reinvestment election,

withdrawal plan application, and correspondence relating to the

current maintenance of the account;

G. The certificate numbers and denominations of any

Share Certificates issued to the Shareholder; and

H. Any additional information required by Fund

Services to perform the services contemplated by this Agreement.

Fund Services agrees to make available upon request by

the Fund or the Fund's Adviser and to preserve for the periods

prescribed in Rule 31a-2 of the Investment Company Act any

records related to services provided under this Agreement and

required to be maintained by Rule 31a-1 of that Act, including:

(i) Copies of the daily transaction register for each

Business Day of the Fund;

<PAGE>

(ii) Copies of all dividend, distribution and

reinvestment blotters;

(iii) Schedules of the quantities of Shares of each

Series distributed in each state for purposes of any state's laws

or regulations as specified in Oral or Written Instructions given

to Fund Services from time to time by the Fund or its agents; and

(iv) Such other information, including Shareholder

lists, and statistical information as may be agreed upon from

time to time by the Fund and Fund Services.

SECTION 20. Fund Services shall maintain those records

necessary to enable the Fund to file, in a timely manner, form N-

SAR (Semi-Annual Report) or any successor report required by the

Investment Company Act or rules and regulations thereunder.

SECTION 21. Fund Services shall cooperate with the

Fund's independent public accountants and shall take reasonable

action to make all necessary information available to such

accountants for the performance of their duties.

SECTION 22. In addition to the services described

above, Fund Services will perform other services for the Fund as

may be mutually agreed upon in writing from time to time, which

may include preparing and filing Federal tax forms with the

Internal Revenue Service, and, subject to supervisory oversight

by the Fund's Adviser, mailing Federal tax information to

Shareholders, mailing semi-annual Shareholder reports, preparing

the annual list of Shareholders, mailing notices of Shareholders'

<PAGE>

meetings, proxies and proxy statements and tabulating proxies.

Fund Services shall answer the inquiries of certain Shareholders

related to their share accounts and other correspondence

requiring an answer from the Fund. Fund Services shall maintain

dated copies of written communications from Shareholders, and

replies thereto.

SECTION 23. Nothing contained in this Agreement is

intended to or shall require Fund Services, in any capacity

hereunder, to perform any functions or duties on any day other

than a Business Day. Functions or duties normally scheduled to

be performed on any day which is not a Business Day shall be

performed on, and as of, the next Business Day, unless otherwise

required by law.

SECTION 24. For the services rendered by Fund Services

as described above, the Fund shall pay to Fund Services an

annualized fee at a rate to be mutually agreed upon from time to

time. Such fee shall be prorated for the months in which this

Agreement becomes effective or is terminated. In addition, the

Fund shall pay, or Fund Services shall be reimbursed for, all

out-of-pocket expenses incurred in the performance of this

Agreement, including but not limited to the cost of stationery,

forms, supplies, blank checks, stock certificates, proxies and

proxy solicitation and tabulation costs, all forms and statements

used by Fund Services in communicating with Shareholders of the

Fund or especially prepared for use in connection with its

<PAGE>

services hereunder, specific software enhancements as requested

by the Fund, costs associated with maintaining withholding

accounts (including non-resident alien, Federal government and

state), postage, telephone, telegraph (or similar electronic

media) used in communicating with Shareholders or their

representatives, outside mailing services, microfiche/microfilm,

freight charges and off-site record storage. It is agreed in

this regard that Fund Services, prior to ordering any form in

such supply as it estimates will be adequate for more than two

years' use, shall obtain the written consent of the Fund. All

forms for which Fund Services has received reimbursement from the

Fund shall be the property of the Fund.

SECTION 25. Fund Services shall not be liable for any

taxes, assessments or governmental charges that may be levied or

assessed on any basis whatsoever in connection with the Fund or

any Shareholder, excluding taxes assessed against Fund Services

for compensation received by it hereunder.

SECTION 26.

(a) Fund Services shall at all times act in good faith

and with reasonable care in performing the services to be

provided by it under this Agreement, but shall not be liable for

any loss or damage unless such loss or damage is caused by the

negligence, bad faith or willful misconduct of Fund Services or

its employees or agents.

<PAGE>

(b) The Fund shall indemnify and hold Fund Services

harmless from all loss, cost, damage and expense, including

reasonable expenses for counsel, incurred by it resulting from

any claim, demand, action or suit in connection with the

performance of its duties hereunder, or as a result of acting

upon any instruction reasonably believed by it to have been

properly given by a duly authorized officer of the Fund, or upon

any information, data, records or documents provided to Fund

Services or its agents by computer tape, telex, CRT data entry or

other similar means authorized by the Fund; provided that this

indemnification shall not apply to actions or omissions of Fund

Services in cases of its own bad faith, willful misconduct or

negligence, and provided further that if in any case the Fund may

be asked to indemnify or hold Fund Services harmless pursuant to

this Section, the Fund shall have been fully and promptly advised

by Fund Services of all material facts concerning the situation

in question. The Fund shall have the option to defend Fund

Services against any claim which may be the subject of this

indemnification, and in the event that the Fund so elects it will

so notify Fund Services, and thereupon the Fund shall retain

competent counsel to undertake defense of the claim, and Fund

Services shall in such situations incur no further legal or other

expenses for which it may seek indemnification under this

paragraph. Fund Services shall in no case confess any claim or

make any compromise in any case in which the Fund may be asked to

<PAGE>

indemnify Fund Services except with the Fund's prior written

consent.

Without limiting the foregoing:

(i) Fund Services may rely upon the advice of the Fund

or counsel to the Fund or Fund Services, and upon statements of

accountants, brokers and other persons believed by Fund Services

in good faith to be expert in the matters upon which they are

consulted. Fund Services shall not be liable for any action

taken in good faith reliance upon such advice or statements;

(ii) Fund Services shall not be liable for any action

reasonably taken in good faith reliance upon any Written

Instructions or certified copy of any resolution of the Fund's

Board of Directors, including a Written Instruction authorizing

Fund Services to make payment upon redemption of Shares without a

signature guarantee; provided, however, that upon receipt of a

Written Instruction countermanding a prior Instruction that has

not been fully executed by Fund Services, Fund Services shall

verify the content of the second Instruction and honor it, to the

extent possible. Fund Services may rely upon the genuineness of

any such document, or copy thereof, reasonably believed by Fund

Services in good faith to have been validly executed;

(iii) Fund Services may rely, and shall be protected by

the Fund in acting, upon any signature, instruction, request,

letter of transmittal, certificate, opinion of counsel,

statement, instrument, report, notice, consent, order, or other

<PAGE>

paper or document reasonably believed by it in good faith to be

genuine and to have been signed or presented by the purchaser,

the Fund or other proper party or parties; and

(d) Fund Services may, with the consent of the Fund,

subcontract the performance of any portion of any service to be

provided hereunder, including with respect to any Shareholder or

group of Shareholders, to any agent of Fund Services and may

reimburse the agent for the services it performs at such rates as

Fund Services may determine; provided that no such reimbursement

will increase the amount payable by the Fund pursuant to this

Agreement; and provided further, that Fund Services shall remain

ultimately responsible as transfer agent to the Fund.

SECTION 27. The Fund shall deliver or cause

to be delivered over to Fund Services (i) an accurate list of

Shareholders, showing each Shareholder's address of record,

number of Shares of each Series owned and whether such Shares are

represented by outstanding Share Certificates or by non-

certificated Share accounts and (ii) all Shareholder records,

files, and other materials necessary or appropriate for proper

performance of the functions assumed by the under this Agreement

(collectively referred to as the "Materials"). The Fund shall

indemnify Fund Services and hold it harmless from any and all

expenses, damages, claims, suits, liabilities, actions, demands

and losses arising out of or in connection with any error,

omission, inaccuracy or other deficiency of such Materials, or

<PAGE>

out of the failure of the Fund to provide any portion of the

Materials or to provide any information in the Fund's possession

needed by Fund Services to knowledgeably perform its functions;

provided the Fund shall have no obligation to indemnify Fund

Services or hold it harmless with respect to any expenses,

damages, claims, suits, liabilities, actions, demands or losses

caused directly or indirectly by acts or omissions of Fund

Services or the Fund's Adviser.

SECTION 28. This Agreement may be amended from time to

time by a written supplemental agreement executed by the Fund and

Fund Services and without notice to or approval of the

Shareholders; provided this Agreement may not be amended in any

manner which would substantially increase the Fund's obligations

hereunder unless the amendment is first approved by the Fund's

Board of Directors, including a majority of the Directors who are

not a party to this Agreement or interested persons of any such

party, at a meeting called for such purpose, and thereafter is

approved by the Fund's Shareholders if such approval is required

under the Investment Company Act or the rules and regulations

thereunder. The parties hereto may adopt procedures as may be

appropriate or practical under the circumstances, and Fund

Services may conclusively rely on the determination of the Fund

that any procedure that has been approved by the Fund does not

conflict with or violate any requirement of its Articles of

<PAGE>

Incorporation or Declaration of Trust, By-Laws or Prospectus, or

any rule, regulation or requirement of any regulatory body.

SECTION 29. The Fund shall file with Fund Services a

certified copy of each operative resolution of its Board of

Directors authorizing the execution of Written Instructions or

the transmittal of Oral Instructions and setting forth authentic

signatures of all signatories authorized to sign on behalf of the

Fund and specifying the person or persons authorized to give Oral

Instructions on behalf of the Fund. Such resolution shall

constitute conclusive evidence of the authority of the person or

persons designated therein to act and shall be considered in full

force and effect, with Fund Services fully protected in acting in

reliance therein, until Fund Services receives a certified copy

of a replacement resolution adding or deleting a person or

persons authorized to give Written or Oral Instructions. If the

officer certifying the resolution is authorized to give Oral

Instructions, the certification shall also be signed by a second

officer of the Fund.

SECTION 30. The terms, as defined in this Section,

whenever used in this Agreement or in any amendment or supplement

hereto, shall have the meanings specified below, insofar as the

context will allow.

(a) Business Day: Any day on which the Fund is open

for business as described in the Prospectus.

<PAGE>

(b) Custodian: The term Custodian shall mean the

Fund's current custodian or any successor custodian acting as

such for the Fund.

Alliance Capital Management L.P. or any successor thereto who

acts as the investment adviser or manager of the Fund.

(d) Oral Instructions: The term Oral Instructions

shall mean an authorization, instruction, approval, item or set

of data, or information of any kind transmitted to Fund Services

in person or by telephone, vocal telegram or other electronic

means, by a person or persons reasonably believed in good faith

by Fund Services to be a person or persons authorized by a

resolution of the Board of Directors of the Fund to give Oral

Instructions on behalf of the Fund. Each Oral Instruction shall

specify whether it is applicable to the entire Fund or a specific

Series of the Fund.

(e) Prospectus: The term Prospectus shall mean a

prospectus and related statement of additional information

forming part of a currently effective registration statement

under the Investment Company Act and, as used with the respect to

Shares or Shares of a Series, shall mean the prospectuses and

related statements of additional information covering the Shares

or Shares of the Series.

(f) Securities: The term Securities shall mean bonds,

debentures, notes, stocks, shares, evidences of indebtedness, and

<PAGE>

other securities and investments from time to time owned by the

Fund.

(g) Series: The term Series shall mean any series of

Shares of the common stock of the Fund that the Fund may

establish from time to time.

(h) Share Certificates: The term Share Certificates

shall mean the stock certificates for the Shares.

(i) Shareholders: The term Shareholders shall mean the

registered owners from time to time of the Shares, as reflected

on the stock registry records of the Fund.

(j) Written Instructions: The term Written

Instructions shall mean an authorization, instruction, approval,

item or set of data, or information of any kind transmitted to

Fund Services in original writing containing original signatures,

or a copy of such document transmitted by telecopy, including

transmission of such signature, or other mechanical or

documentary means, at the request of a person or persons

reasonably believed in good faith by Fund Services to be a person

or persons authorized by a resolution of the Board of Directors

of the Fund to give Written Instruction shall specify whether it

is applicable to the entire Fund or a specific Series of the

Fund.

SECTION 31. Fund Services shall not be liable for the

loss of all or part of any record maintained or preserved by it

pursuant to this Agreement or for any delays or errors occurring

<PAGE>

by reason of circumstances beyond its control, including but not

limited to acts of civil or military authorities, national

emergencies, fire, flood or catastrophe, acts of God,

insurrection, war, riot, or failure of transportation,

communication or power supply, except to the extent that Fund

Services shall have failed to use its best efforts to minimize

the likelihood of occurrence of such circumstances or to mitigate

any loss or damage to the Fund caused by such circumstances.

SECTION 32. The Fund may give Fund Services sixty (60)

days and Fund Services may give the Fund (90) days written notice

of the termination of this Agreement, such termination to take

effect at the time specified in the notice. Upon notice of

termination, the Fund shall use its best efforts to obtain a

successor transfer agent. If a successor transfer agent is not

appointed within ninety (90) days after the date of the notice of

termination, the Board of Directors of the Fund shall, by

resolution, designate the Fund as its own transfer agent. Upon

receipt of written notice from the Fund of the appointment of the

successor transfer agent and upon receipt of Oral or Written

Instructions Fund Services shall, upon request of the Fund and

the successor transfer agent and upon payment of Fund Services

reasonable charges and disbursements, promptly transfer to the

successor transfer agent the original or copies of all books and

records maintained by Fund Services hereunder and cooperate with,

and provide reasonable assistance to, the successor transfer

<PAGE>

agent in the establishment of the books and records necessary to

carry out its responsibilities hereunder.

SECTION 33. Any notice or other communication required

by or permitted to be given in connection with this Agreement

shall be in writing, and shall be delivered in person or sent by

first-class mail, postage prepaid, to the respective parties.

Notice to the Fund shall be given as follows until

further notice:

1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary

Notice to Fund Services shall be given as follows until

further notice:

Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094

SECTION 34. The Fund represents and warrants to Fund

Services that the execution and delivery of this Agreement by the

undersigned officer of the Fund has been duly and validly

authorized by resolution of the Fund's Board of Directors. Fund

Services represents and warrants to the Fund that the execution

and delivery of this Agreement by the undersigned officer of Fund

Services has also been duly and validly authorized.

SECTION 35. This Agreement may be executed in more than

one counterpart, each of which shall be deemed to be an original,

and shall become effective on the last date of signature below

unless otherwise agreed by the parties. Unless sooner terminated

<PAGE>

pursuant to SECTION 32, this Agreement will continue until

October 31, 1992 and will continue in effect thereafter for

successive 12 month periods only if such continuance is

specifically approved at least annually by the Board of Directors

or by a vote of the stockholders of the Fund and in either case

by a majority of the Directors who are not parties to this

Agreement or interested persons of any such party, at a meeting

called for the purpose of voting on this Agreement.

SECTION 36. This Agreement shall extend to and shall

bind the parties hereto and their respective successors and

assigns; provided, however, that this Agreement shall not be

assignable by the Fund without the written consent of Fund

Services or by Fund Services without the written consent of the

Fund, authorized or approved by a resolution of the Fund's Board

of Directors. Notwithstanding the foregoing, either party may

assign this Agreement without the consent of the other party so

long as the assignee is an affiliate, parent or subsidiary of the

assigning party and is qualified to act under the Investment

Company Act, as amended from time to time.

<PAGE>

SECTION 38. This Agreement shall be governed by the laws of

the State of New Jersey.

WITNESS the following signatures:

ALLIANCE NORTH AMERICAN
GOVERNMENT INCOME TRUST, INC.

BY: /s/David H. Dievler
__________________
David H. Dievler
TITLE: Chairman and President

ALLIANCE FUND SERVICES, INC.
BY: /s/George Hrabovsky
__________________
George Hrabovsky
TITLE: President

28
00250117.AT1

<PAGE>

[Seward & Kissel letterhead]

February 21, 1992

Alliance North American Government
Income Trust, Inc.
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

We have acted as counsel for Alliance North American
Government Income Trust, Inc., a Maryland corporation (the
"Company"), in connection with the organization of the Company,
the registration of the Company under the Investment Company Act
of 1940, as amended, and the registration of an indefinite number
of shares of its common stock, par value $.001 per share (the
"Common Stock"), under the Securities Act of 1933, as amended.

As counsel for the Company we have participated in the
preparation of the Registration Statement on Form N-1A relating
to such shares and have examined and relied upon such corporate
records of the Company and such other documents and certificates
as to factual matters as we have deemed to be necessary to render
the opinion expressed herein.

Based on such examination, we are of the opinion that:

1. The Company is a duly organized and validly
existing corporation in good standing under the laws of the State
of Maryland.

2. The 10,000 shares of presently issued and
outstanding Common Stock of the Company have been validly and
legally issued and are fully paid and nonassessable shares of
Common Stock of the Company.

3. The shares of Common Stock of the Company to be
offered for sale pursuant to the Prospectus and Statement of
Additional Information contained in said Registration Statement
are, to the extent of the number of shares authorized to be
issued by the Company in its Articles of Incorporation, duly
authorized and unissued shares and when such shares have been
duly sold, issued and paid for as contemplated in the Prospectus
and Statement of Additional Information, such shares will have
been validly and legally issued and will be fully paid and
nonassessable shares of Common Stock of the Company under the

<PAGE>

laws of the State of Maryland (assuming that the sale price of
each share is not less then the par value thereof).

<PAGE>

Alliance North American Government
Income Trust, Inc.
February 21, 1992
Page 1

As to matters of Maryland law contained in the foregoing
opinion we have relied on the opinion of Venable, Baetjer and
Howard of Baltimore, Maryland, dated February 21, 1992, a copy of
which is attached hereto.

We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement and to the reference of our firm under the
caption "Counsel" in the related Statement of Additional
Information included therein.

Very truly yours,

/s/ Seward & Kissel

00250117.AU1

<PAGE>

Exhibit 10(b)
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1800 MERCANTILE BANK & TRUST BUILDING
2 HOPKINS PLAZA
BALTIMORE, MARYLAND 21201-2978
(410) 244-7400
FAX (410) 244-7742
TELEX 898032

February 21, 1992

Seward & Kissel
One Battery Park Plaza
New York, NY 10004

Re: Alliance North American Government Income Trust, Inc.

Ladies and Gentlemen:

We have acted as special Maryland counsel for Alliance North
American Government Income Trust, Inc., a Maryland corporation
(the "Fund"), in connection with the organization of the Fund and
the issuance of shares of its common stock, par value $.001 per
share (the "Common Stock").

As Maryland counsel for the Fund, we are familiar with its
Charter and Bylaws. We have examined the prospectus included in
its Registration Statement on Form N-1A, substantially in the
form in which it is to become effective (the "Prospectus"). We
have further examined and relied upon a certificate of the
Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the
laws of the State of Maryland and is in good standing and duly
authorized to transact business in the State of Maryland.

We have also examined and relied upon such corporate records
of the Fund and other documents and certificates with respect to
factual matters as we have deemed necessary to render the opinion
expressed herein. We have assumed, without independent
verification the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity
with originals of all documents submitted to us as copies.

Based on such examination, we are of the opinion and so
advise you that:

<PAGE>

Seward & Kissel
February 21, 1992
Page Two

(1) The Fund is duly organized and validly existing as a
corporation in good standing under the laws of the
State of Maryland.

(2) The 10,000 shares of presently issued and outstanding
Common Stock of the Fund have been validly and legally
issued and are fully paid and nonassessable.

(3) The shares of Common Stock of the Fund to be offered
for sale pursuant to the Prospectus are, to the extent
of the number of shares authorized to be issued by the
Fund in its Articles of Incorporation, duly authorized
and, when sold, issued and paid for as contemplated by
the Prospectus, will have been validly and legally
issued and will be fully paid and nonassessable.

This letter expresses our opinion with respect to the
Maryland General Corporation Law governing matters such as due
organization and the authorization and issuance of stock, but it
does not extend to the securities or "Blue Sky" laws of Maryland,
to federal securities laws or to other laws.

You may rely upon the foregoing opinion in rendering your
opinion to the Fund that is to be filed as an exhibit to the
Registration Statement. We consent to the reference to us in the
Statement of Additional Information supplementing the Prospectus
under the caption "General Information - Counsel" and to the
filing of this opinion as an exhibit to the Registration
Statement. We do not thereby admit that we are "experts" within
the meaning of the Securities Act of 1933 and the rules and
regulations thereunder.

Very truly yours,

/s/Venable, Baetjer
____________________
and Howard

00250117.AT0

<PAGE>

Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105

February 19, 1992

Alliance North American
Government Income Trust, Inc.
1345 Avenue of the Americas
New York, New York 10105

Gentlemen:

In connection with our purchase of 5,000 shares of
Class A Common Stock of Alliance North American Government Income
Trust, Inc. (the "Corporation") for an aggregate cash
consideration of Fifty Thousand Dollars ($50,000), and 5,000
shares of Class B Common Stock of the Corporation for an
aggregate cash consideration of Fifty Thousand Dollars ($50,000),
this will confirm that we are buying such shares for investment
for our account only, and not with a view to reselling or
otherwise distributing them.

Very truly yours,

ALLIANCE CAPITAL MANAGEMENT L.P.

By: Alliance Capital Management
Corporation,
its General Partner

By:/s/ David H. Dievler
______________________________
David H. Dievler
Senior Vice President

00250117.AU2

<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 8, 1997 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 28, 1997

00250117.AR0

<PAGE>

EXHIBIT 16

ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST, INC.
COMPUTATION OF AVERAGE ANNUAL COMPOUNDED TOTAL RETURN

ERV = P(1+T)n

Definitions:

P = Initial investment by shareholder

T = Average annual total return

ERV = Ending redeemable value of shareholder investment

n = Number of periods

Formula to solve for "T"

ERV
For year one T = --- - 1
P

*For subsequent years T = nth root of ((ERV/P) - 1)

To solve for ERV:

1. Take an initial shareholder investment of $1,000 on 1/1/91 at
maximum offering price of $10.00. The result is 100 shares.

2. Assume that all dividends and distributions by the Fund are
reinvested on reinvest date for the creation of additional
shares. (1.917 shares created).

3. Add initial share balance to additional shares created due to
reinvestment and multiply by ending net asset value
(12/31/91) to obtain ending redeemable value (ERV).

(100 + 2.766 = 102.766 x $9.64 = $991)
(ERV)

991
T = ----- - 1
1,000

T = .991 - 1

<PAGE>

T = (.009)
T = (0.9%)
----

T = Average annual total return

* For subsequent years repeat steps 1 through 3 for the
required periods and apply to formula shown above.

COMPUTATION OF STANDARDIZED YIELD

a-b 6
Formula: Yield = 2[(---- +1) -1]
cd

Where: a = dividends and interest earned during the
period
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the
last day of the period.

(a) = Interest earned for 30 days or one month.

MORTGAGE BACKED SECURITIES

Current principal amount per debt obligation multiplied by coupon
rate divided by 360 multiplied by 30 minus losses due to payment
of principal ("paydowns"). No amortization of discounts or
premiums on mortgage backed securities.

NON-MORTGAGE BACKED SECURITIES

1. Determine the yield to maturity ("YTM") per debt obligation
as follows:

(i) Using the market value per security at the end of the
period plus accrued interest;

(ii) Compute the YTM on each obligation by analyzing the cash
flow from the beginning of the period until maturity or
call date utilizing the Internal Rate of Return function
of Lotus 123.

<PAGE>

2. Divide the YTM by 360 and multiply the quotient by the
market value of each obligation including accrued interest,
and multiply by 30 to derive a monthly income accrual.

(b) = Expenses accrued for the period (net of reimbursement).

(d) = The maximum offering price per share on the last day of the
period.

5,797,073 - 655,368
Example: Yield = 2 [(------------------- +1)6 - 1]
74,730,965 x 9.81

5,141,705
2 [(----------- +1)6 - 1]
733,110,767

2 [(1.00701354588)6- 1]

2 [(1.04282605894) - 1]

2 [ .04282605894 ]

8.57%

3
00250117.AU3