<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Alliance Mortgage Strategy Trust, Inc.
- -----------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rule 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
- -----------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
- -----------------------------------------------------------------
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
- -----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------
(5) Total fee paid:
- -----------------------------------------------------------------
/ X / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
<PAGE>
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
00250224.AB4
<PAGE>
<PAGE>
[ALLIANCE CAPITAL LOGO] ALLIANCE MORTGAGE STRATEGY TRUST, INC.
- -------------------------------------------------------------------------------
1345 Avenue of the Americas New York, New York 10105
January 15, 1996
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To the Stockholders of Alliance Mortgage Strategy Trust, Inc. (the "Fund"):
The accompanying Notice of Special Meeting of Stockholders and Proxy
Statement present to the Fund's stockholders a proposal to be considered at a
Special Meeting of Stockholders to be held on February 22, 1996, to approve a
change in the Fund's investment orientation from investing primarily in
mortgage-related securities to investing primarily in U.S. Government
securities, including U.S. Government mortgage-backed securities. The proposal
also involves changing the Fund's name to "Alliance Limited Maturity
Government Fund, Inc." As discussed below, the Board of Directors recommends
that you vote to approve the proposal.
As you know, the Fund was designed by its investment adviser Alliance
Capital Management L.P. ("Alliance") to provide investors with a higher yield
than adjustable-rate mortgage securities funds could offer with less net asset
value volatility than traditional fixed-rate mortgage securities funds. While
Alliance believes that mortgage-related securities can continue to play an
important role in enabling the Fund to achieve its yield objectives, the
difficult bond market environment of 1994 has reduced the attractiveness of
all mortgage funds, including your Fund. Sales of the Fund's shares have
slowed and Alliance believes that unless the proposed changes are implemented,
the Fund's prospects for asset growth will remain limited. Your Board of
Directors has been concerned with the level of Fund sales, because the growth
of assets associated with new sales benefits a fund and its stockholders by
helping to reduce per share Fund expenses.
Alliance also believes that the proposed changes will help the Fund succeed
in generating superior investment performance in all market environments by
broadening the universe of investments available to the Fund. If you approve
the proposal, the Fund's fundamental investment policy of investing at least
65% of its assets in mortgage-related securities will be changed to one of
investing at least 65% of its assets in U.S. Government securities, whether or
not mortgage-related. These U.S. Government securities are obligations issued
or guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities, and include government guaranteed mortgage-backed
securities.
Under the proposal, the universe of other securities in which the Fund may
potentially invest up to 35% of its assets will also be slightly broadened.
The most significant change in this area will be in the minimum credit rating.
The Fund's current investment policies require these other securities all to
be rated AAA or the equivalent. Alliance believes that this restriction has at
times inhibited the Fund's ability to generate yield out of proportion to the
limited differences in credit and market risk between AAA and AA securities.
Accordingly, the proposal would modify this policy to require the Fund's other
investments to be rated at least AA or the equivalent.
The proposal also limits the maturity of the Fund's portfolio securities by
requiring each such security to have either a remaining maturity of not more
than ten years or a duration not exceeding
<PAGE>
that of a ten-year Treasury note. Alliance believes that this requirement will
help investors distinguish the Fund from longer-term Government funds. In
practice, the average maturity of the Fund's portfolio securities has been and,
for the foreseeable future is expected to remain, substantially below these
limits.
Your Board of Directors urges you to read the enclosed Proxy Statement
carefully. We welcome your attendance at the Special Meeting of Stockholders;
but if you are unable to attend, please sign, date and return the enclosed
proxy card promptly, in order to spare the Fund additional solicitation
expenses.
Sincerely,
John D. Carifa
Chairman
2
<PAGE>
[ALLIANCE CAPITAL LOGO] ALLIANCE MORTGAGE STRATEGY TRUST, INC.
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1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
FEBRUARY 22, 1996
To the Stockholders of Alliance Mortgage Strategy Trust, Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of Alliance Mortgage Strategy Trust, Inc. (the "Fund") will be held
at the offices of the Fund, 1345 Avenue of the Americas, 33rd Floor, New York,
New York 10105, on February 22, 1996 at 11:00 a.m., for the following
purposes, which are more fully described in the accompanying Proxy Statement
dated January 15, 1996.
1. To approve a proposal to change the Fund's investment emphasis from
mortgage-related securities to U.S. Government securities, broaden the scope
of investments available to the Fund and rename the Fund "Alliance Limited
Maturity Government Fund, Inc." This proposal involves changes in the Fund's
investment objective and certain of its fundamental and non-fundamental
investment policies.
2. To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on January 10, 1996
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting and any adjournment thereof. The enclosed
proxy is being solicited on behalf of the Board of Directors.
By order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
January 15, 1996
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, SIGN
AND DATE IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO SAVE THE FUND ANY ADDITIONAL EXPENSE
OF FURTHER SOLICITATION, PLEASE MAIL YOUR PROXY PROMPTLY.
- -------------------------------------------------------------------------------
(R)This registered mark used under license from the owner, Alliance Capital
Management L.P.
<PAGE>
PROXY STATEMENT
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
----------------
SPECIAL MEETING OF STOCKHOLDERS
FEBRUARY 22, 1996
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Alliance Mortgage Strategy
Trust, Inc., a Maryland corporation (the "Fund"), to be voted at a Special
Meeting of Stockholders of the Fund (the "Meeting"), to be held at the offices
of the Fund, 1345 Avenue of the Americas, New York, New York 10105, on
February 22, 1996 at 11:00 a.m. The solicitation will be by mail and the cost
will be borne by the Fund. The Notice of Meeting, Proxy Statement and Proxy
Card are being mailed to stockholders on or about January 16, 1996.
The Board of Directors of the Fund has fixed the close of business on
January 10, 1996 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Meeting and at any adjournment
thereof. The outstanding voting shares of the Fund as of January 10, 1996
consisted of 2,565,711 shares of Class A common stock, 8,422,440 shares of
Class B common stock and 6,738,906 shares of Class C common stock, each share
being entitled to one vote. All properly executed proxies received prior to
the Meeting will be voted at the Meeting in accordance with the instructions
marked thereon or otherwise provided therein. Accordingly, unless instructions
to the contrary are marked, proxies will be voted for the approval of the
Proposal set forth in the Notice of the Meeting. Any stockholder may revoke
that stockholder's proxy at any time prior to exercise thereof by giving
written notice to the Secretary of the Fund at the offices of the Fund at 1345
Avenue of the Americas, New York, New York 10105, by signing another proxy of
a later date or by personally voting at the Meeting.
A quorum for the Meeting will consist of a majority of the shares
outstanding and entitled to vote. In the event that a quorum is not
represented at the Meeting or, even if a quorum is represented, in the event
that sufficient votes in favor of the Proposal are not received by February
22, 1996, the persons named as proxies may propose and vote for one or more
adjournments of the Meeting with respect to the Fund or with respect to the
Proposal with no other notice than announcement at the Meeting, and further
solicitation of proxies with respect to the Proposal may be made. Shares
represented by proxies indicating a vote against the Proposal will be voted
against adjournment of the meeting.
As of January 10, 1996, the Directors and officers of the Fund as a group
owned less than 1% of the Fund's outstanding shares of any class of common
stock of the Fund.
<PAGE>
PROPOSAL
TO CHANGE THE FUND'S INVESTMENT EMPHASIS FROM MORTGAGE-RELATED SECURITIES TO
U.S. GOVERNMENT SECURITIES, BROADEN THE SCOPE OF INVESTMENTS AVAILABLE TO THE
FUND AND RENAME THE FUND "ALLIANCE LIMITED MATURITY GOVERNMENT FUND, INC."
THIS PROPOSAL INVOLVES CHANGES IN THE FUND'S INVESTMENT OBJECTIVE AND CERTAIN
OF ITS FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT POLICIES.
INTRODUCTION
The Board of Directors of the Fund has approved, and recommended to the
Fund's stockholders for their approval, a proposal to modify the investment
emphasis of the Fund and to broaden the scope of investments available to the
Fund. If the stockholders approve the proposal, the Fund would invest
primarily in U.S. Government securities (as defined below), including
mortgage-related securities, rather than invest primarily in mortgage-related
securities as is currently the case and would change its name to "Alliance
Limited Maturity Government Fund, Inc." The proposal was initiated by Alliance
Capital Management L.P., the Fund's investment adviser (the "Adviser"), and
unanimously approved at the November 28, 1995 Special Meeting of the Board of
Directors.
REASONS FOR THE PROPOSED CHANGES
At the Special Meeting, the Adviser noted to the Board of Directors that the
Fund is an investment vehicle with an investment objective of seeking the
highest level of current income, consistent with low volatility of net asset
value, available from a portfolio of mortgage-related securities of the
highest quality. The Fund, as a fundamental policy, normally invests at least
65% of the value of its total assets in mortgage-related securities. The
Adviser explained that the Fund was designed to provide investors with a
higher yield than adjustable-rate mortgage securities funds could offer, but
with less volatility of net asset value than that experienced by more
traditional fixed-rate mortgage securities funds. The Adviser explained
further that, at the time the Fund commenced operations, the Adviser believed
that the Fund could attract investors by offering mortgage securities fund
yields to relatively conservative investors seeking greater stability of net
asset value than a typical mortgage securities fund might provide.
The Adviser stated its belief that as a consequence of the adverse bond
market of 1994 and changes in the market for mortgage-related securities that
have occurred during 1994 and 1995, the Fund has experienced difficulties
producing a yield at the higher end of the mortgage fund band. The Adviser
also noted that the Fund's policy requiring investment solely in instruments
of the highest credit quality inhibited the Fund's ability to generate yield
in comparison to the increased yield available from a portfolio only
moderately different from the Fund's portfolio in terms of overall credit and
interest rate risk.
To deal with these concerns, the Adviser recommended to the Board of
Directors approval of the proposal to change the investment emphasis of the
Fund and to expand the scope of investments available to the Fund. The Adviser
expressed to the Board its belief that a change from a portfolio consisting
primarily of mortgage-related securities to a portfolio consisting primarily
of obligations
2
<PAGE>
issued or guaranteed by the United States Government, its agencies,
authorities or instrumentalities, ("U.S. Government securities"), including
mortgage-related securities, and repurchase agreements relating to U.S.
Government securities, would allow the Fund additional flexibility in seeking
a high level of current income consistent with low volatility of net asset
value while enhancing the marketability of the Fund's shares.
The Adviser also recommended that, in keeping with the new name, the Fund
limit the maturity of the securities in its portfolio. Under the Proposal, at
all times each security held by the Fund would have either a final 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.
At the Special Meeting the Adviser noted that the Fund's current average
duration is approximately 1.6 years, and that the Adviser's present intention
is to lengthen it to approximately 3 years. The Adviser stated its belief that
moderately lengthening the average duration of the Fund's portfolio would
enhance yield opportunities and be a reasonable compromise between yield and
volatility concerns.
The Adviser recommended further that the Fund's name be changed to "Alliance
Limited Maturity Government Fund, Inc.", indicating to the Board of Directors
in this regard that the new name would better reflect the principal components
of the Fund's revised investment objective and policies than the current name.
The Adviser indicated that in its view the proposed changes described herein
are not a significant departure from the Fund's current investment
orientation. Further, the Adviser noted that the Fund's new investment
emphasis would not be intended to radically alter the composition of the
Fund's investment portfolio, but would allow the Fund to take advantage of the
additional stability that might be offered by investment in non-mortgage
related U.S. Government securities while still retaining the ability to invest
in mortgage-related securities. In reliance upon the Adviser's presentation,
and following a meeting among the disinterested Directors and their
independent counsel, the Board unanimously approved, and recommended to the
stockholders for their approval, the changes described in this Proxy
Statement.
CURRENT INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek the highest level of current
income, consistent with low volatility of net asset value, that is available
from a portfolio of mortgage-related securities of the highest quality. The
Fund's investment objective is fundamental and therefore cannot be changed
without stockholder approval. As an additional fundamental policy, except when
the Fund assumes a temporary defensive position, the Fund has at least 65% of
the value of its total assets invested in mortgage-related securities. The
Fund purchases only mortgage-related securities that are U.S. Government
securities, or are rated Aaa by Moody's Investors Service, Inc. ("Moody's") or
AAA by Standard & Poor's Ratings Services ("S&P"), Duff & Phelps Credit Rating
Co. ("Duff & Phelps"), or Fitch Investors Service, Inc. ("Fitch"), or, if not
rated, are determined by the Adviser to be of equivalent investment quality
("triple-A" securities).
As more fully described in the Fund's prospectus and Statement of Additional
Information, the Fund is also permitted to invest up to 35% of the value of
its total assets in (i) triple-A asset-backed
3
<PAGE>
securities, (ii) non-mortgage-related U.S. Government securities, including
certain zero coupon Treasury securities, (iii) "zero coupon" Treasury
securities issued by private corporate issuers, (iv) qualifying bank deposits,
(v) prime commercial paper or, if not rated, issued by companies which have
outstanding triple-A debt issues and (vi) triple-A debt securities secured by
mortgages on commercial real estate or residential rental properties. The Fund
is also permitted to invest up to 15% of the value of its total assets in
triple-A mortgage-related securities denominated in U.S. Dollars or in foreign
currencies and issued or guaranteed by foreign governments or issued by
foreign non-governmental issuers.
PROPOSED NEW INVESTMENT OBJECTIVE AND POLICIES
If the Proposal is approved by the stockholders, the Fund would change its
investment objective to eliminate the reference to investing in mortgage-
related securities of the highest quality. The Fund's investment objective
would otherwise remain unchanged. Accordingly, the Fund's new investment
objective would be to seek the highest level of current income, consistent
with low volatility of net asset value. To enable the Fund to achieve its
proposed investment objective, the Adviser has recommended, and the Board of
Directors has approved and recommended to stockholders as part of the
Proposal, a change in the Fund's fundamental policy of investing, under normal
circumstances, at least 65% of the value of its total assets in mortgage-
related securities. If approved by the stockholders, the Fund's changed
fundamental investment policy would require the Fund to invest, under normal
circumstances, at least 65% of the value of its total assets in U.S.
Government securities, including mortgage-related securities, and repurchase
agreements relating to U.S. Government securities.
In addition to the proposed changes to the Fund's investment objective and
the fundamental policy described above, the Proposal contemplates that, with
respect to the up to 35% of the Fund's total assets not required to be
invested in accordance with the proposed new fundamental policy described
above, the Fund be provided with the flexibility to invest in debt securities
that, while not of triple-A quality, are of high quality, as defined below,
including high quality corporate debt securities. Thus, under the Proposal the
Fund would be permitted to invest up to 35% of its total assets in (i) asset-
backed securities (including mortgage-related securities that are not U.S.
Government securities) rated at least Aa by Moody's or AA by S&P, Duff &
Phelps or Fitch or, if not rated, of equivalent investment quality as
determined by the Adviser ("high quality" securities); (ii) commercial paper
rated at least Prime-2 by Moody's or A-2 by S&P, Duff 2 by Duff & Phelps or
Fitch 2 by Fitch or, if not rated, issued by companies which have outstanding
high quality debt issues ("higher quality" commercial paper); and (iii) high
quality debt securities of corporate issuers.
The Proposal also contemplates that, with respect to the up to 35% of the
Fund's total assets not subject to the proposed new fundamental policy, the
Fund be permitted to invest in certificates of deposit, bankers' acceptances
and interest bearing savings deposits of domestic and foreign banks that have
total assets of more than $1 billion, instead of limiting such investments, as
is currently the case, to deposits in and instruments issued by domestic banks
that have total assets of more than $1 billion and are members of the Federal
Deposit Insurance Corporation. Under the Proposal, the Fund would also be
permitted to invest up to 15% of the value of its total assets in high quality
foreign debt securities, instead of limiting the Fund's investments in foreign
securities to triple-A mortgage-related securities. The Adviser believes these
proposed changes to the Fund's non-fundamental investment policies described
above will enhance the Fund's ability to increase income, with only a moderate
and manageable increase in the risk of net asset volatility of the Fund.
4
<PAGE>
The Fund's proposed new investment objective and its policy of investing,
under normal circumstances, at least 65% of the value of its total assets in
U.S. Government securities, including mortgage-related securities, and
repurchase agreements relating to U.S. Government securities, would be
fundamental and therefore could not be changed without stockholder approval.
For temporary defensive purposes, the Fund would be permitted to vary from its
investment policies during periods in which the Adviser believes that business
or financial conditions warrant and invest without limit in high-quality debt
securities or higher quality commercial paper or hold its assets in cash
equivalents.
If the Proposal is approved by the stockholders, the foregoing changes to
the Fund's name and its investment objective and policies would be implemented
as soon thereafter as practicable. It is not expected that the Fund would
incur significant transaction costs in order to make its asset composition
consistent with the new investment objective and policies.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE STOCKHOLDERS OF THE
FUND VOTE FOR THE PROPOSAL TO CHANGE THE FUND'S INVESTMENT EMPHASIS FROM
MORTGAGE-RELATED SECURITIES TO GOVERNMENT SECURITIES (INCLUDING MORTGAGE-
RELATED GOVERNMENT SECURITIES) AND TO BROADEN THE SCOPE OF INVESTMENTS
AVAILABLE TO THE FUND, INCLUDING CHANGES IN THE FUND'S INVESTMENT OBJECTIVE
AND CERTAIN OF ITS FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT POLICIES
NECESSARY TO IMPLEMENT THE FOREGOING, AND TO RENAME THE FUND "ALLIANCE LIMITED
MATURITY GOVERNMENT FUND, INC."
REQUIRED VOTE
Under the Investment Company Act of 1940 (the "Act"), approval of the
Proposal requires the affirmative vote of the lesser of (i) 67% or more of the
voting securities of the Fund present or represented at any meeting, if the
holders of more than 50% of the outstanding voting securities of the Fund are
present or represented by proxy, and (ii) more than 50% of the outstanding
voting securities of the Fund. The only voting securities of the Fund are its
outstanding shares of Class A, Class B and Class C common stock. If the
Proposal is approved by the stockholders at the Meeting, the Fund will be
renamed "Alliance Limited Maturity Government Fund, Inc.," the Fund's
investment objective will change to one of seeking the highest level of
current income consistent with low volatility of net asset value, the Fund
will have a fundamental investment policy of investing, under normal
circumstances, at least 65% of the value of its total assets in U.S.
Government securities, including mortgage-related securities, and repurchase
agreements related to U.S. Government securities and certain of the Fund's
non-fundamental investment policies will be revised in the manner described
above.
SUBMISSION OF PROPOSALS FOR THE NEXT
MEETING OF STOCKHOLDERS
Under the current By-Laws of the Fund, annual meetings of stockholders are
required to be held only when necessary under the Act to elect Directors (for
example, when fewer than a majority of the Fund's Directors have been selected
by the stockholders). It is therefore likely that stockholder meetings will
not be held on an annual basis. A stockholder proposal intended to be
presented at any meeting hereafter called must be received by the Fund within
a reasonable time before the solicitation relating thereto is made in order to
be included in the proxy statement and form of proxy card related to such
5
<PAGE>
meeting. The submission by a stockholder of a proposal for inclusion in the
proxy statement does not guarantee that it will be included. Stockholder
proposals are subject to certain regulations under the federal securities laws.
OTHER MATTERS
Management of the Fund does not know of any matters to be presented at the
Meeting other than those mentioned in this Proxy Statement. If any other
matters properly come before the Meeting, the shares represented by proxies
will be voted with respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
REPORTS TO STOCKHOLDERS
The Fund will furnish to each person to whom the proxy statement is delivered
a copy of the Fund's latest annual report to stockholders and any succeeding
semi-annual report to stockholders, upon request and without charge. To request
a copy, please call Alliance Fund Services, Inc. at (800) 227-4618 or contact
Christina A. Santiago at Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
January 15, 1996
New York, New York
6
<PAGE>
TABLE OF CONTENTS PAGE
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<TABLE>
<S> <C>
Introduction............................................................... 1
Proposal: To Change The Fund's Investment Emphasis from Mortgage-Related
Securities to U.S. Government Securities, Broaden the Scope of Investments
Available to the Fund and Rename the Fund "Alliance Limited Maturity
Government Fund, Inc.".................................................... 2
Required Vote.............................................................. 5
Submission of Proposals for the Next Meeting of Stockholders............... 5
Other Matters.............................................................. 6
Reports to Stockholders.................................................... 6
</TABLE>
ALLIANCE MORTGAGE STRATEGY
TRUST, INC.
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[ALLIANCE CAPITAL LOGO]
Alliance Capital Management L.P.
- -------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS AND
PROXY STATEMENT
FEBRUARY 22, 1996
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE, AND RETURN
PROMPTLY.
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
PROXY SERVICES
POST OFFICE BOX 9156
FARMINGDALE, NY 11735-9858
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
Instructions to the stockholders of Alliance Mortgage Strategy
Trust, Inc. in connection with the Special Meeting of
Stockholders to be held on February 22, 1996.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
The undersigned hereby instructs Duncan McCuaig and Carol H.
Rappa to vote all shares of the Common Stock of Alliance
Mortgage Strategy Trust, Inc. (the "Fund") registered in the
name of the undersigned at the Special Meeting of Stockholders
of the Fund to be held at 11:00 a.m., Eastern Standard Time, on
February 22, 1996 at the offices of the Fund, 1345 Avenue of the
Americas, 33rd Floor, New York, New York, 10105, and at all
adjournments thereof. The undersigned hereby acknowledges
receipt of the Notice of Special Meeting and accompanying Proxy
Statement and hereby instructs said proxies to vote said shares
as indicated thereon.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO
VOTE THE PROPOSAL AS MARKED, OR, IF NOT MARKED, TO VOTE "FOR"
THE PROPOSAL AND TO USE THEIR DISCRETION TO VOTE ANY OTHER
MATTER AS MAY PROPERLY COME BEFORE THE MEETING.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS / X /
KEEP THIS PORTION FOR YOUR RECORDS
00250224.AB4
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
VOTE ON PROPOSAL
FOR AGAINST ABSTAIN 1. To change the Fund's investment
emphasis from mortgage-related
/ / / / / / securities to U.S. Government
securities, broaden the scope of
investments available to the Fund
and rename the Fund "Alliance
Limited Maturity Government Fund,
Inc." This proposal involves
changes in the Fund's investment
objective and certain of its
fundamental and non-fundamental
investment policies.
PLEASE SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books
of the Fund. Joint owners should each sign personally. Trustees
and other fiduciaries should indicate the capacity in which they
sign and where more than one name appears, a majority must sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
____________________ ________________________ _________
Signature Signature (Joint Owners) Date
00250224.AB4
