ALLIANCE
----------------------
LIMITED MATURITY
----------------------
GOVERNMENT
----------------------
FUND
Annual Report
November 30, 1999
Alliance Capital[LOGO](R)
<PAGE>
LETTER TO SHAREHOLDERS Alliance Limited Maturity Government Fund
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January 21, 2000
Dear Shareholder:
This report provides our investment strategy, performance and outlook for the
Alliance Limited Maturity Government Fund (the "Fund"), for the six-month period
ended November 30, 1999. The Fund is designed for investors who seek high
current income, consistent with low volatility of net asset value. The Fund
normally invests at least 65% of its total assets in U.S. government securities,
including mortgage-related securities and repurchase agreements. The Fund
confines maturities to 10 years or less, with durations not exceeding that of a
10-year Treasury note.
INVESTMENT RESULTS
The following table provides the investment results for the Alliance Limited
Maturity Government Fund for the six- and twelve-month periods ended November
30, 1999. For comparison, we have included performance for the Lipper
Intermediate U.S. Government Funds (IUG) Average, a universe of funds with
investment objectives similar to that of the Alliance Limited Maturity
Government Fund.
For the six-month period under review, your Fund outperformed the Lipper
Intermediate U.S. Government Funds Average. The Fund's allocation to the
mortgage sector enhanced performance during the period as rising interest rates
dampened prepayment risk. The Fund's U.S. Treasury holdings, however, hurt the
Fund's performance because that sector performed poorly in the rising rate
environment. Overall, the Fund's shift toward mortgage-related securities
allowed it to outperform the benchmark.
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INVESTMENT RESULTS*
Periods Ended November 30, 1999
Total Returns
6 Months 12 Months
------------- -------------
Alliance Limited
Maturity
Government Fund
Class A 0.47 -0.22
Class B 0.10 -1.04
Class C -0.01 -1.15
Lipper Intermediate
U.S. Government Funds
Average 0.30 -0.86
* The Fund's investment results are total returns for the periods and are
based on the net asset values of each class of shares. All fees and
expenses related to the operation of the Fund have been deducted, but no
adjustment has been made for sales charges that may apply when shares are
purchased or redeemed. Returns for the Fund include the reinvestment of
any distributions paid during each period. Past performance is no
guarantee of future results.
The unmanaged Lipper Intermediate U.S. Government ("IUG") Funds Average is
based on the performance of a universe of funds that invest at least 65%
of their assets in securities issued by the U.S. government, its agencies
or instrumentalities, with dollar-weighted average maturities of five to
ten years. For the six- and twelve-month periods ended November 30, 1999,
the Lipper IUG Average consisted of 130 and 123 funds, respectively. An
investor cannot invest directly in an average.
Additional investment results appear on page 3.
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INVESTMENT STRATEGY
Over the six-month period ended November 30, 1999, as interest rates rose, we
increased our allocation within the mortgage- and asset-backed sectors while we
decreased our allocation to the Treasury sector. Throughout the period, we also
opportunistically utilized higher-yielding commercial mortgage-backed securities
and London Interbank Offered Rate adjustable-rate mortgages. We expected these
securities to have superior performance in a rising rate environment.
MARKET OVERVIEW
During the six-month period ended November 30, 1999, global economic growth
improved and continued to broaden as Europe, Japan and Asia showed further signs
of strengthening. U.S. economic growth remained strong, while inflation and
unemployment stayed low. The U.S. economy grew 1.9% in the second quarter and a
robust 5.7% in the third quarter of 1999. With economic activity remaining
strong and global liquidity concerns abating,
1
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Alliance Limited Maturity Government Fund
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the U.S. Federal Reserve increased the Federal Funds rate three times during the
reporting period, from 4.75% to 5.50%. These increases reversed the three
interest rate cuts enacted late last year in response to the global liquidity
crisis. During the period, the yield curve flattened as short-term rates
increased more than long-term rates. Two-year Treasury yields increased from
5.40% to 6.01% and thirty-year Treasury yields increased from 5.82% to 6.29%.
In aggregate, the U.S. bond market as represented by the Lehman Brothers U.S.
Aggregate Index, posted a modest return of +0.72%, for the six-month period
ended November 30, 1999. Among the sectors of the U.S. bond market, the
asset-backed sector recorded the strongest performance followed by
mortgage-backed securities, while the corporate and high-yield sectors recorded
the weakest performance. The asset-backed sector, in particular securities
backed by home equity loans and manufactured housing, performed well over the
period as a result of strong investor demand. While rising interest rates,
uncertainty regarding future interest rate policy, large corporate debt issuance
and Y2K uncertainty hurt corporate bond performance. The performance of the U.S.
high-yield sector was dampened by the above factors as well as rising default
rates and mutual fund outflows. The mortgage sector was the main beneficiary of
the change in interest rate expectations. When interest rates rose, mortgage
refinancing slowed and prepayment levels fell, making mortgage-backed securities
more attractive.
OUTLOOK
The global economy continues to gather momentum. We expect the U.S. economy to
remain strong with a 4.1% growth estimate for 2000. The risk of tighter monetary
policy in the U.S. remains and we expect two more 25 basis-point tightenings by
the middle of 2000. We also expect bond yields to continue to press higher and
surpass our 6.50% center of gravity before falling back later in 2000 when the
overall economy adjusts to the Fed tightenings. Later in the year, we see yields
stabilizing and the yield curve flattening in the vicinity of 6.25%.
Given the strong demand within the intermediate-duration sector, our outlook
remains constructive. Higher interest rates have led to diminishing supply and
moderating prepayment speeds, which should favor our mortgage-related holdings.
The Fund's focus will continue to be on the spread sectors of the intermediate
bond market.
Thank you for your continued interest and investment in the Alliance Limited
Maturity Government Fund. We look forward to reporting to you again in the
coming months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman
/s/ Jeffrey S. Phlegar
Jeffrey S. Phlegar
Senior Vice President
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Shares of the Fund are not deposits or obligations of, guaranteed or endorsed
by, any bank; further, such shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Shares of the Fund involve investment risks, including the possible loss of
principal.
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2
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INVESTMENT OBJECTIVE AND POLICIES Alliance Limited Maturity Government Fund
================================================================================
Alliance Limited Maturity Government Fund is an open-end, diversified investment
management company that seeks the highest level of current income, consistent
with low volatility of net asset value. The Fund normally invests at least 65%
of its total assets in U.S. government securities, including mortgage-related
securities and repurchase agreements related to U.S. government securities. 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
10-year Treasury note.
INVESTMENT RESULTS
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NAV and SEC Average Annual Total Returns as of November 30, 1999
----------------------------
CLASS A SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -0.22 -4.43
Five Years 4.67 3.77
Since Inception* 4.42 3.83
SEC Yield** 4.98
----------------------------
CLASS B SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -1.04 -3.88
Five Years 3.91 3.91
Since Inception* (a) 3.83 3.83
SEC Yield** 4.43
----------------------------
CLASS C SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -1.15 -2.09
Five Years 3.90 3.90
Since Inception* 3.38 3.38
SEC Yield** 4.45
SEC Average Annual Total Returns as of the most recent quarter-end (December 31,
1999)
Class A Class B Class C
-------- --------- ---------
1 Year -5.11 -4.56 -2.69
5 Years 3.82 3.94 3.95
Since Inception* 3.75 3.75 3.29
The Fund's investment results represent Average Annual Total Returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
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* Inception: 6/1/92 Class A and Class B; 5/3/93 Class C.
** SEC yield is for the 30 days ended November 30, 1999.
(a) Assumes conversion of Class B shares into Class A shares after six years.
3
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Alliance Limited Maturity Government Fund
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ALLIANCE LIMITED MATURITY GOVERNMENT FUND
GROWTH OF A $10,000 INVESTMENT
6/30/92* TO 11/30/99
[GRAPHIC OMITTED]
[The following information was depicted as a chart in the printed material.]
Lipper Intermediate U.S. Government Funds Average:
$14,752
Alliance Limited Maturity Government Fund Class A:
$13,206
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Limited Maturity Government Fund Class A shares (from 6/30/92 to
11/30/99). The chart reflects the deduction of the maximum 4.25% sales charge
from the initial $10,000 investment in the Fund and assumes the reinvestment of
dividends and capital gains. Performance for Class B and Class C shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The Lipper Intermediate U.S. Government Funds Average is based on the
performance of 40 funds (based on the number of funds in the average from
6/30/92 to 11/30/99) that invest at least 65% of their assets in securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
with dollar-weighted average maturities of five to ten years.
When comparing Alliance Limited Maturity Government Fund to the average shown
above, you should note that the Lipper average includes fees and expenses.
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* Closest month-end after the Fund's Class A share inception date of 6/1/92.
4
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PORTFOLIO OF INVESTMENTS
November 30, 1999 Alliance Limited Maturity Government Fund
================================================================================
Principal
Amount
(000) Value
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MORTGAGE-RELATED
SECURITIES-58.3%
COLLATERALIZED
MORTGAGE
OBLIGATIONS-27.2%
FIXED RATE-25.3%
Allied Capital Commercial
Mortgage Trust
Series 1998-1 Cl. A
6.31%, 9/25/03 (a)............ $1,212 $ 1,191,615
Amresco Residential
Securities
Series 1998-3 Cl. A8
5.94%, 3/25/15................ 2,500 2,471,100
Delta Funding Home
Equity Loan Trust
Series 1999-2 Cl. A1F
6.14%, 3/15/18................ 2,711 2,698,104
Government Lease Trust
Series 1999-C1A Cl. B1
4.00%, 5/18/11 (a)............ 2,450 1,786,981
Green Tree Home
Improvement Loan Trust
Series 1998-D Cl. A4
6.25%, 8/15/29................ 3,000 2,952,000
Honda Auto Lease Trust
Series 1999-A Cl. A4
6.45%, 9/16/02................ 3,000 2,998,590
Providian Master Trust
Series 1999-2 Cl. A
6.60%, 4/16/07................ 2,750 2,748,295
The Money Store
Home Equity Loan Trust
Series 1994-A Cl. A5
6.73%, 6/15/24................ 3,000 2,839,680
-----------
19,686,365
-----------
ADJUSTABLE RATE-1.9%
Prudential Home Mortgage
Securities, Inc.
Series 1993-56 Cl. A1
7.63%, 1/25/24................ 230 230,215
Sears Mortgage Securities Corp.
Series 1992-18A Cl. A1
7.46%, 9/25/22................ 1,257 1,260,612
-----------
1,490,827
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Total Collateralized
Mortgage Obligations
(cost $21,574,626)............ 21,177,192
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FEDERAL NATIONAL
MORTGAGE
ASSOCIATION-24.5%
6.50%, 3/01/29................ 4,837 4,612,862
7.00%, TBA.................... 4,000 3,981,240
7.50%, TBA.................... 5,635 5,622,659
7.50%, 8/1/14-11/1/14......... 3,983 4,023,234
11.25%, 2/01/16............... 819 899,774
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Total Federal National
Mortgage Association
(cost $19,328,981)............ 19,139,769
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GOVERNMENT NATIONAL
MORTGAGE
ASSOCIATION-3.9%
8.00%, 12/15/99
(cost $3,020,564)............. 2,955 3,003,019
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STRIPPED MORTGAGE
BACKED SECURITIES-1.7%
Mortgage Capital Funding, Inc.
Series 1996-MC2 Cl. X, I/O
1.97%, 12/21/26
(cost $1,522,497)............. 17,990 1,349,234
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FEDERAL HOME LOAN
MORTGAGE CORP.-1.0%
11.00%, 1/01/11-9/01/20
(cost $852,245)............... 750 815,881
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Total Mortgage-Related
Securities
(cost $46,298,913)............ 45,485,095
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5
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PORTFOLIO OF INVESTMENTS (continued) Alliance Limited Maturity Government Fund
================================================================================
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS-49.3%
U.S. TREASURY
NOTES-42.6%
4.875%, 3/31/01............... $17,300 $17,062,125
6.00%, 8/15/04-8/15/09 (b) ... 15,245 15,139,874
6.125%, 12/31/01.............. 1,000 1,002,030
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33,204,029
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U.S TREASURY
BOND-6.7%
11.875%, 11/15/03............. 4,350 5,187,375
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Total U.S. Government
Obligations
(cost $39,553,367)............ 38,391,404
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SHORT-TERM
INVESTMENTS-27.7%
REPURCHASE
AGREEMENTS-20.5%
Lehman Brothers, Inc.
5.62%, dated 11/30/99,
due 12/01/99 in the
amount of $4,000,624,
(cost $4,000,000;
collateralized by
$4,059,702 FHLMC
7.00%, 12/15/26,
value $4,080,001)............. 4,000 4,000,000
Paine Webber, Inc.
5.65%, dated 11/30/99,
due 12/01/99 in the
amount of $4,000,628,
(cost $4,000,000;
collateralized by
$4,040,369 FHLMC
6.95%, 03/01/27,
value $4,000,000)............ 4,000 4,000,000
Contracts or
Principal
Amount
(000) Value
- --------------------------------------------------------------------------------
Prudential-Bache Securities, Inc.
5.62%, dated 11/30/99,
due 12/01/99 in the
amount of $4,000,624,
(cost $4,000,000;
collateralized by
$4,000,624 FNMA
9.00%, 10/01/25,
value $4,088,106)............. $4,000 $ 4,000,000
State Street Bank & Trust Co.
5.65%, dated 11/30/99,
due 12/01/99 in the
amount of $4,000,628,
(cost $4,000,000;
collateralized by
$4,095,000 FHLB 5.25%,
08/24/01, value
$4,084,763) .................. 4,000 4,000,000
-----------
Total Repurchase
Agreements
(amortized cost
$16,000,000).................. 16,000,000
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COMMERCIAL PAPER-7.2%
Thames Asset Global Security
5.37%, 12/15/99
(amortized cost
$5,623,232)................... 5,635 5,623,232
-----------
Total Short-Term
Investments
(cost $21,623,232)............ 21,623,232
-----------
OPTIONS
PURCHASED-0.0%
Eurodollar Futures
expiring Dec '99
@ $.058, 93.75% (c)
(cost $2,755)................. 19 237
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6
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Alliance Limited Maturity Government Fund
================================================================================
Value
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TOTAL INVESTMENTS-135.3%
(cost $107,478,267)........... $105,499,968
Other assets less
liabilities-(35.3%)........... (27,513,160)
------------
NET ASSETS-100%.................. $ 77,986,808
============
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(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1999, these securities amounted to $2,978,596 or 3.8% of net assets.
(b) Securities, or portions thereof, with an aggregate market value of
$15,599,723 have been segregated to collateralize reverse repurchase
agreements.
(c) One contract relates to 2,500 shares.
Glossary of Terms:
FHLB - Federal Home Loan Bank.
FHLMC - Federal Home Loan Mortgage Corp.
FNMA - Federal National Mortgage Association.
I/O - Interest Only.
TBA - To Be Announced securities.
See notes to financial statements.
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999 Alliance Limited Maturity Government Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $107,478,267) ...................... $ 105,499,968
Receivable for capital stock sold ............................................ 1,508,377
Interest receivable .......................................................... 687,633
Receivable for initial margin deposit on futures contracts ................... 13,953
Variation margin receivable on futures contracts ............................. 700
-------------
Total assets ................................................................. 107,710,631
=============
LIABILITIES
Due to custodian ............................................................. 23,102
Reverse repurchase agreements ................................................ 15,430,894
Payable for investment securities purchased .................................. 12,708,111
Payable for capital stock redeemed ........................................... 1,219,614
Dividends payable ............................................................ 99,007
Distribution fee payable ..................................................... 49,824
Advisory fee payable ......................................................... 43,600
Interest payable on reverse repurchase agreements ............................ 6,154
Accrued expenses and other liabilities ....................................... 143,517
-------------
Total liabilities ............................................................ 29,723,823
-------------
NET ASSETS ...................................................................... $ 77,986,808
=============
COMPOSITION OF NET ASSETS
Capital stock, at par ........................................................ $ 8,652
Additional paid-in capital ................................................... 102,541,858
Distributions in excess of net investment income ............................. (99,007)
Accumulated net realized loss on investments, options and futures transactions (22,495,836)
Net unrealized depreciation of investments, options and futures transactions . (1,968,859)
-------------
$ 77,986,808
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($27,272,210 / 3,025,194 shares of capital stock issued and outstanding) ... $9.02
Sales charge--4.25% of public offering price ................................. .40
-----
Maximum offering price ....................................................... $9.42
=====
Class B Shares
Net asset value and offering price per share
($25,909,696 / 2,874,064 shares of capital stock issued and outstanding) ... $9.02
=====
Class C Shares
Net asset value and offering price per share
($24,804,902 / 2,752,266 shares of capital stock issued and outstanding) ... $9.01
=====
</TABLE>
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See notes to financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1999 Alliance Limited Maturity Government Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................. $ 6,393,302
EXPENSES
Advisory fee ......................................... $ 572,236
Distribution fee - Class A ........................... 89,652
Distribution fee - Class B ........................... 312,750
Distribution fee - Class C ........................... 268,771
Transfer agency ...................................... 152,941
Administrative ....................................... 130,601
Custodian ............................................ 104,310
Audit and legal ...................................... 89,121
Registration ......................................... 44,238
Printing ............................................. 39,053
Directors' fees ...................................... 23,338
Miscellaneous ........................................ 14,268
-----------
Total expenses before interest ....................... 1,841,279
Interest expense ..................................... 770,421
-----------
Net expenses ......................................... 2,611,700
-----------
Net investment income ................................ 3,781,602
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions ......... (3,122,027)
Net realized loss on written options transactions .... (30,586)
Net realized gain on futures transactions ............ 14,719
Net change in unrealized appreciation/depreciation of:
Investments ........................................ (1,456,344)
Futures transactions ............................... 9,440
-----------
Net loss on investments .............................. (4,584,798)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS .............. $ (803,196)
===========
</TABLE>
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See notes to financial statements.
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance Limited Maturity Government Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1999 1998
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................... $ 3,781,602 $ 3,517,530
Net realized gain (loss) on investments, options and futures transactions (3,137,894) 2,550,104
Net change in unrealized appreciation/depreciation
of investments and futures transactions ............................... (1,446,904) (802,731)
------------- -------------
Net increase (decrease) in net assets from operations ................... (803,196) 5,264,903
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ............................................................... (1,394,955) (1,077,771)
Class B ............................................................... (1,262,529) (1,330,682)
Class C ............................................................... (1,086,889) (1,109,077)
Distributions in excess of net investment income
Class A ............................................................... -0- (224,185)
Class B ............................................................... -0- (276,414)
Class C ............................................................... -0- (230,283)
Tax return of capital
Class A ............................................................... (213,501) -0-
Class B ............................................................... (193,233) -0-
Class C ............................................................... (166,351) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) ................................................. (20,538,632) 24,081,713
------------- -------------
Total increase (decrease) ............................................... (25,659,286) 25,098,204
NET ASSETS
Beginning of year ....................................................... 103,646,094 78,547,890
------------- -------------
End of year ............................................................. $ 77,986,808 $ 103,646,094
============= =============
</TABLE>
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See notes to financial statements.
10
<PAGE>
STATEMENT OF CASH FLOWS
Year Ended November 30, 1999 Alliance Limited Maturity Government Fund
================================================================================
<TABLE>
<S> <C> <C>
INCREASE (DECREASE) IN CASH FROM:
OPERATING ACTIVITIES:
Interest received .......................................... $ 6,765,023
Interest expense paid ...................................... (770,421)
Operating expenses paid .................................... (1,933,286)
-------------
Net increase in cash from operating activities ............. $ 4,061,316
INVESTING ACTIVITIES:
Proceeds from disposition of long-term portfolio investments 395,271,971
Purchase of long-term portfolio investments ................ (356,677,920)
Purchase of short-term portfolio investments, net .......... (21,654,055)
Initial margin deposit on open futures transactions ........ (13,953)
-------------
Net increase in cash from investing activities ............. 16,926,043
FINANCING ACTIVITIES*:
Net decrease in reverse repurchase agreements .............. (2,085,649)
Net redemptions from capital stock transactions ............ (17,695,955)
Cash dividends paid ........................................ (1,354,024)
Cash overdraft ............................................. 23,102
-------------
Net decrease in cash from financing activities ............. (21,112,526)
------------
Net decrease in cash ....................................... (125,167)
Cash at beginning of year .................................. 125,167
------------
Cash at end of year ........................................ $ -0-
============
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RECONCILIATION OF NET INCREASE IN NET ASSETS
FROM OPERATIONS TO NET INCREASE IN CASH
FROM OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations ....... $ (803,196)
ADJUSTMENTS:
Decrease in interest receivable ............................ $ 425,426
Net realized loss on investment transactions ............... 3,137,894
Net change in unrealized depreciation of investments ....... 1,446,904
Accretion of bond discount ................................. (53,705)
Decrease in accrued expenses ............................... (92,007)
-------------
Total adjustments .......................................... 4,864,512
------------
NET INCREASE IN CASH FROM OPERATING ACTIVITIES ................ $ 4,061,316
============
</TABLE>
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* Non-cash financing activities not included herein consist of reinvestment
of dividends.
See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1999 Alliance Limited Maturity Government Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance Limited Maturity Government Fund, Inc. (the "Fund") was incorporated in
the state of Maryland on April 8, 1992 as a diversified, open-end management
investment company. The Fund offers Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase may be subject to a contingent
deferred sales charge of 1%. Class B shares are currently sold with a contingent
deferred sales charge which declines from 3% to zero depending on the
period of time the shares are held. Class B shares will automatically convert to
Class A shares six years after the end of the calendar month of purchase. Class
C shares are subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase. All three classes of shares have
identical voting, dividend, liquidation and other rights, except that each
class bears different distribution expenses and has exclusive voting rights
with respect to its distribution plan. The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. If no bid prices are
quoted, then the security is valued at the mean of the bid and asked prices as
obtained on that day from one or more dealers regularly making a market in that
security. Securities traded on the over-the-counter market are valued at the
mean of the closing bid and asked prices provided by two or more dealers
regularly making a market in such securities. U.S. government securities and
other debt securities which mature in 60 days or less are valued at amortized
cost unless this method does not represent fair value. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by, or in accordance with procedures approved by, the
Board of Directors. Fixed income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed to reflect the fair
market value of such securities.
Mortgage backed and asset backed securities may be valued at prices obtained
from a bond pricing service or at a price obtained from one or more of the major
broker/dealers in such securities. In cases where broker/dealer quotes are
obtained, the Adviser may establish procedures whereby changes in market yields
or spreads are used to adjust, on a daily basis, a recently obtained quoted bid
price on a security.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to share
holders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. The Fund accretes discounts as
adjustments to interest income. Investment gains and losses are determined on
the identified cost basis.
4. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A shares.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally
12
<PAGE>
Alliance Limited Maturity Government Fund
================================================================================
accepted accounting principles. During the current fiscal year, permanent
differences, primarily due to a tax return of capital, resulted in a net
decrease in distributions in excess of net investment income and a corresponding
decrease in additional paid-in capital. This reclassification had no effect on
net assets.
- --------------------------------------------------------------------------------
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 the Fund's average daily net assets. The fee is accrued daily and paid
monthly.
Pursuant to the advisory agreement, the Fund paid $130,601 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 1999.
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 $103,144 for the year ended November 30, 1999.
For the year ended November 30, 1999, the Fund's expenses were reduced by $6,651
under an expense offset arrangement with Alliance Fund Services, Inc.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor has advised the Fund that it has received front-end sales charges of
$13,078 from the sales of Class A shares and $245, $120,824 and $15,719 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, 1999.
Brokerage Commissions paid on investment transactions for the year ended
November 30, 1999 amounted to $1,240, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
- --------------------------------------------------------------------------------
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 distribution and servicing fees 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. The fees are accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The Distributor
has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $601,265 and
$3,425,729 for Class B and Class C shares, respectively; such costs may be
recovered from the Fund in future periods as 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
fiscal 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 $23,361,499 and $15,377,153,
respectively, for the year ended November 30, 1999. There were purchases of
$346,024,532 and sales of $373,270,933 of U.S. government and government agency
obligations for the year ended November 30, 1999.
At November 30, 1999, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $22,522 and gross
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont.) Alliance Limited Maturity Government Fund
================================================================================
unrealized depreciation of investments was $2,000,821 resulting in net
unrealized depreciation of $1,978,299.
At November 30, 1999, the Fund had a net capital loss carryforward of
$22,486,396 of which $9,645,920 expires in the year 2002, $7,728,928 expires in
the year 2003, $1,668,167 expires in the year 2004, $250,987 expires in the year
2005 and $3,192,394 expires in the year 2007.
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the time it was closed. At November 30, 1999, the Fund had outstanding futures
contracts as follows:
<TABLE>
<CAPTION>
Value at Unrealized
Number of Expiration Original November 30, Appreciation
Type Contracts Position Month Value 1999 November 30, 1999
- --------------- -------------- -------------- -------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Eurodollar
Futures 28 Short December 1999 $6,584,715 $6,575,275 $9,440
</TABLE>
2. Interest Rate Swap Agreements
The Fund enters into interest rate swaps to protect itself from interest rate
fluctuations on the underlying debt instruments. A swap is an agreement that
obligates two parties to exchange a series of cash flows at specified intervals
based upon or calculated by reference to changes in specified prices or rates
for a specified amount of an underlying asset. The payment flows are usually
netted against each other, with the difference being paid by one party to the
other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counterparty is generally limited to the net interest payment to be
received by the Fund, and/or the termination value at the end of the contract.
Therefore, the Fund considers the creditworthiness of each counterparty to a
swap contract in evaluating potential credit risk. Additionally, risks may arise
from unanticipated movements in interest rates or in the value of the underlying
securities.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as interest
income (or as an offset to interest income). Fluctuations in the value of
investments are recorded for financial statement purposes as unrealized
appreciation or depreciation of investments. Realized gains and losses from
terminated swaps are included in net realized gains on investment transactions.
There were no outstanding interest rate swap contracts at November 30, 1999.
3. Options Transactions
For hedging and investment purposes, the Portfolio purchases and writes (sells)
put and call options on debt securities that are traded on U.S. and foreign
securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
14
<PAGE>
Alliance Limited Maturity Government Fund
================================================================================
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market value
of the option written. Premiums received from writing options which expire
unexercised are recorded by the Portfolio on the expiration date as realized
gains from option transactions. The difference between the premium received and
the amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid for the closing purchase transaction, as a realized
loss. If a call option is exercised, the premium received is added to the
proceeds from the sale of the underlying security in determining whether the
Portfolio has realized a gain or loss. If a put option is exercised, the premium
received reduces the cost basis of the security purchased by the Portfolio. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Portfolio at a
disadvantageous price.
Transactions in written options for the year ended November 30, 1999 were as
follows:
Number of
Contracts Premiums
--------- --------
Options oustanding at beginning of year ........... -0- $ -0-
Options written ................................... 41 56,068
Options terminated in closing purchase transactions (41) (56,068)
------- -------
Options outstanding at November 30, 1999 .......... -0- $ -0-
======= =======
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 9,000,000,000 shares of $.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:
<TABLE>
<CAPTION>
---------------------------------- ----------------------------------
SHARES AMOUNT
---------------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 11,324,771 10,880,057 $ 106,114,644 $ 103,443,782
Shares issued in reinvestment of
dividends and distributions . 113,310 84,454 1,047,732 802,978
Shares converted from Class B .. 660,301 906,354 6,136,167 8,638,581
Shares redeemed ................ (13,420,957) (9,239,629) (125,801,772) (87,992,978)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (1,322,575) 2,631,236 $ (12,503,229) $ 24,892,363
============= ============= ============= =============
Class B
Shares sold .................... 2,901,961 6,265,395 $ 26,899,281 $ 59,605,093
Shares issued in reinvestment of
dividends and distributions . 108,767 107,647 1,007,191 1,022,249
Shares converted to Class A .... (660,301) (906,010) (6,136,167) (8,638,581)
Shares redeemed ................ (2,994,286) (5,511,144) (27,622,898) (52,344,955)
------------- ------------- ------------- -------------
Net decrease ................... (643,859) (44,112) $ (5,852,593) $ (356,194)
============= ============= ============= =============
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont.) Alliance Limited Maturity Government Fund
================================================================================
<TABLE>
<CAPTION>
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Class C
Shares sold .................... 3,106,178 1,687,166 $ 28,753,002 $ 16,129,568
Shares issued in reinvestment of
dividends and distributions . 102,244 109,292 945,740 1,037,674
Shares redeemed ................ (3,447,618) (1,850,396) (31,881,552) (17,621,698)
------------ ------------ ------------ ------------
Net decrease ................... (239,196) (53,938) $ (2,182,810) $ (454,456)
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Fund sells securities and agrees to
repurchase them at a mutually agreed upon date and price. At the time the Fund
enters into a reverse repurchase agreement, it will establish a segregated
account with the custodian containing liquid assets having a value at least
equal to the repurchase price.
As of November 30, 1999, the Fund had entered into the following reverse
repurchase agreements:
Amount Broker Interest Rate Maturity
-------------- --------------- -------------- ---------------
$2,769,019 Lehman Brothers, Inc. 5.50% December 1, 1999
$8,616,875 PaineWebber, Inc. 5.40% December 6, 1999
$4,045,000 Lehman Brothers, Inc. 5.40% December 7, 1999
For the year ended November 30, 1999, the maximum amount of reverse repurchase
agreements outstanding was $45,258,063, the average amount outstanding was
approximately $20,125,984, and the daily weighted average interest rate was
3.78%.
- --------------------------------------------------------------------------------
NOTE G: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the year ended November 30, 1999.
16
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Limited Maturity Government Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-----------------------------------------------------------
Class A
-----------------------------------------------------------
Year Ended November 30,
-----------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.54 $ 9.44 $ 9.45 $ 9.52 $ 9.51
------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ........................... .43 .47 .51 .51 .52
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.45) .17 .02 (.04) .02
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from
operations ....................................... (.02) .64 .53 .47 .54
------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ................ (.43) (.47) (.52) (.51) (.50)
Distributions in excess of net investment income .... -0- (.07) -0- -0- -0-
Tax return of capital ............................... (.07) -0- (.02) (.03) (.03)
------- ------- ------- ------- -------
Total dividends and distributions ................... (.50) (.54) (.54) (.54) (.53)
------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 9.02 $ 9.54 $ 9.44 $ 9.45 $ 9.52
======= ======= ======= ======= =======
Total Return
Total investment return based on net asset value (b) (.22)% 6.94% 5.79% 5.11% 5.91%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $27,272 $41,493 $16,197 $16,248 $27,887
Ratio of expenses to average net assets ............. 2.48% 3.27% 2.41% 2.22% 2.14%
Ratio of expenses to average net assets excluding
interest expense ................................. 1.62% 1.68% 1.65% 1.58% 1.41%
Ratio of net investment income to average net assets 4.75% 4.74% 5.52% 5.44% 5.53%
Portfolio turnover rate ............................. 374% 500% 249% 159% 293%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
17
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Limited Maturity Government Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-----------------------------------------------------------
Class B
-----------------------------------------------------------
Year Ended November 30,
-----------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.55 $ 9.44 $ 9.45 $ 9.52 $ 9.52
------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ........................... .37 .39 .45 .44 .46
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.47) .19 .01 (.04) .01
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from
operations ....................................... (.10) .58 .46 .40 .47
------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ................ (.37) (.39) (.45) (.44) (.44)
Distributions in excess of net investment income .... -0- (.08) -0- -0- -0-
Tax return of capital ............................... (.06) -0- (.02) (.03) (.03)
------- ------- ------- ------- -------
Total dividends and distributions ................... (.43) (.47) (.47) (.47) (.47)
------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 9.02 $ 9.55 $ 9.44 $ 9.45 $ 9.52
======= ======= ======= ======= =======
Total Return
Total investment return based on net asset value (b) (1.04)% 6.30% 5.04% 4.36% 5.05%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $25,910 $33,591 $33,613 $50,386 $84,362
Ratio of expenses to average net assets ............. 3.23% 3.84% 3.14% 2.94% 2.85%
Ratio of expenses to average net assets excluding
interest expense ................................. 2.34% 2.39% 2.39% 2.30% 2.11%
Ratio of net investment income to average net assets 4.06% 4.10% 4.80% 4.73% 4.83%
Portfolio turnover rate ............................. 374% 500% 249% 159% 293%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
18
<PAGE>
Alliance Limited Maturity Government Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-----------------------------------------------------------
Class C
-----------------------------------------------------------
Year Ended November 30,
-----------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 9.55 $ 9.44 $ 9.45 $ 9.52 $ 9.52
------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a) ........................... .38 .39 .45 .45 .46
Net realized and unrealized gain (loss) on investment
transactions ..................................... (.49) .19 .01 (.05) .01
------- ------- ------- ------- -------
Net increase (decrease) in net asset value from
operations ....................................... (.11) .58 .46 .40 .47
------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ................ (.38) (.39) (.45) (.45) (.44)
Distributions in excess of net investment income .... -0- (.08) -0- -0- -0-
Tax return of capital ............................... (.05) -0- (.02) (.02) (.03)
------- ------- ------- ------- -------
Total dividends and distributions ................... (.43) (.47) (.47) (.47) (.47)
------- ------- ------- ------- -------
Net asset value, end of year ........................ $ 9.01 $ 9.55 $ 9.44 $ 9.45 $ 9.52
======= ======= ======= ======= =======
Total Return
Total investment return based on net asset value (b) (1.15)% 6.30% 5.05% 4.38% 5.06%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............. $24,805 $28,562 $28,738 $43,457 $68,459
Ratio of expenses to average net assets ............. 3.21% 3.84% 3.13% 2.92% 2.85%
Ratio of expenses to average net assets excluding
interest expense ................................. 2.33% 2.38% 2.37% 2.29% 2.10%
Ratio of net investment income to average net assets 4.06% 4.11% 4.82% 4.75% 4.84%
Portfolio turnover rate ............................. 374% 500% 249% 159% 293%
</TABLE>
- --------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(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 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.
19
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance Limited Maturity Government Fund
================================================================================
To the Shareholders and Board of Directors
Alliance Limited Maturity Government Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Alliance
Limited Maturity Government Fund, Inc., including the portfolio of investments,
as of November 30, 1999, 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 auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of November 30, 1999, by correspondence with
the custodian and others. 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 Limited Maturity Government Fund, Inc. at November 30, 1999, 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 accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
January 14, 2000
20
<PAGE>
Alliance Limited Maturity Government Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
OFFICERS
Kathleen A. Corbet, Senior Vice President
Wayne D. Lyski, Senior Vice President
Jeffrey S. Phlegar, Senior Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Juan J. Rodriguez, Controller
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee.
21
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Quality Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Limited Maturity Government Fund
Alliance Mortgage Securities Income Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
Tax-Free Income
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Money Market
AFD Exchange Reserves
Growth
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
Aggressive Growth
Alliance Global Small Cap Fund
Alliance Health Care Fund
Alliance Quasar Fund
Alliance Technology Fund
International
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
Closed-End Funds
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund The
Spain Fund
The Southern Africa Fund
Cash Management Services
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
22
<PAGE>
(This page left intentionally blank.)
<PAGE>
---------------
Alliance Limited Maturity Government Fund BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
(800) 221-5672 New York, NY
Permit No. 7131
---------------
Alliance Capital[LOGO](R)
This report is intended solely for distribution to current shareholders of the
Fund.
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
LMGAR1199
