AFD EXCHANGE RESERVES
ANNUAL REPORT
SEPTEMBER 30, 1997
LETTER TO SHAREHOLDERS AFD EXCHANGE RESERVES
_______________________________________________________________________________
October 29, 1997
Dear Shareholder,
We are pleased to provide an overview of market and Fund activity during AFD
Exchange Reserves annual reporting period ended September 30, 1997. AFD
Exchange Reserves serves as the money market fund exchange vehicle for the
Alliance mutual funds. The Fund's investment objective is to provide maximum
current income consistent with safety of principal and liquidity.
The Fund's net assets at the end of September totaled approximately $139.6
million. The Fund remains invested in high quality money market securities
which include marketable obligations issued or guaranteed by the U.S.
government and its agencies, certificates of deposits, and commercial paper. As
of September 30, the average weighted maturity of the portfolio was 47 days.
ECONOMIC COMMENTARY
During the reporting period, the Federal Reserve kept rates steady at 5.5%. The
U.S. economy grew at an above-trend 4.1% during the first half of 1997. We
expect the economy to decelerate to a 2.8% growth rate in the second half of
1997 and to a sustainable 2.5% rate in 1998. Consumer prices rose 2.2% in the
third quarter from the same period in 1996. Despite this excellent inflation
performance, strong growth and labor market pressures create a risk of higher
U.S. inflation in 1998. We expect the Federal Reserve to increase official
rates by 25 basis points during the next six months with little disruptive
impact on U.S. securities markets.
We appreciate your continued interest in AFD Exchange Reserves.
Sincerely,
John D. Carifa
Chairman and President
AN INVESTMENT IN THE FUND IS NOT (I) INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, (II) A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY ANY
BANK, OR (III) FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT
THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
1
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 AFD EXCHANGE RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------------
COMMERCIAL PAPER-79.0%
AGA Capital Corp.
$ 2,975 10/09/97 (a) 5.57% $ 2,971,318
Allianz of America Finance Corp.
6,000 11/12/97 (a) 5.53 5,961,290
BAA Plc
3,000 10/06/97 5.52 2,997,700
Banca CRT Financial Corp.
4,400 10/08/97 5.58 4,395,226
Banque Nationale de Paris
6,600 11/21/97 5.55 6,548,107
BAT Capital Corp.
3,000 10/14/97 (a) 5.53 2,994,009
3,000 10/24/97 (a) 5.55 2,989,362
Bayerische Vereinsbank
3,900 10/07/97 5.51 3,896,418
Bil North America, Inc.
6,000 10/20/97 5.52 5,982,520
Chiao Tung Bank Co., Ltd.
4,000 10/28/97 5.67 3,982,990
Cregem North America, Inc.
3,000 2/23/98 5.56 2,932,817
Eksportfinans
2,550 10/29/97 5.55 2,538,993
2,825 12/08/97 5.55 2,795,385
General Electric Capital Corp.
5,000 12/31/97 5.50 4,930,486
Glencore Finance, Ltd.
6,000 2/04/98 5.58 5,882,820
IMI Funding Corp. (USA)
3,146 2/17/98 5.55 3,078,584
3,000 2/19/98 5.57 2,934,553
International Lease Finance Corp.
6,000 11/21/97 5.55 5,952,825
International Nederland Bank
3,000 10/02/97 5.53 2,999,539
3,000 11/26/97 5.53 2,974,193
Merrill Lynch & Co., Inc.
2,700 10/16/97 5.53 2,693,779
4,000 10/31/97 5.53 3,981,567
Morgan Stanley Group, Inc.
3,000 10/22/97 5.51 2,990,357
ROSE Funding
3,000 11/03/97 (a) 5.57 2,984,683
Svenska Handelsbanken
6,000 11/25/97 5.53 5,949,308
Swedish Export Credit Corp.
6,000 11/25/97 5.52 5,949,400
UNI Funding, Inc.
6,000 11/10/97 5.53 5,963,133
Total Commercial Paper
(amortized cost $110,251,362) 110,251,362
CERTIFICATES OF DEPOSIT-7.9%
Norinchukin Bank
5,000 5.70%, 10/27/97 5.66 4,999,941
Sanwa Bank
6,000 5.65%, 10/23/97 5.63 6,000,034
Total Certificates of Deposit
(amortized cost $10,999,975) 10,999,975
U.S. GOVERNMENT AND AGENCY OBLIGATION-3.7%
Federal National Mortgage Association
5,200 10/30/97
(amortized cost $5,176,500) 5.61 5,176,500
TOTAL INVESTMENTS-90.6%
(amortized cost $126,427,837) 126,427,837
Other assets less liabilities-9.4% 13,179,038
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 41,167,958 Class A shares;
74,456,561 Class B shares;
23,949,949 Class C shares and 34,904
Advisor Class shares outstanding) $139,606,875
(a) Securities issued in reliance on Section (4) 2 or Rule 144A of the
Securities Act of 1933. Rule 144A securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
September 30, 1997, these securities amounted to $17,900,662, representing
12.8% of net assets.
See notes to financial statements.
2
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 AFD EXCHANGE RESERVES
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $126,427,837) $ 126,427,837
Cash 628,919
Receivable for capital stock sold 15,147,402
Interest receivable 62,158
Other assets 46,139
Total assets 142,312,455
LIABILITIES
Payable for capital stock redeemed 2,414,587
Advisory fee payable 28,760
Distribution fee payable 751
Accrued expenses 261,482
Total liabilities 2,705,580
NET ASSETS $ 139,606,875
COMPOSITION OF NET ASSETS
Paid-in-capital $ 139,609,372
Accumulated net realized loss on investment transactions (2,497)
$ 139,606,875
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and offering price per share ($41,167,119/
41,167,958 shares of beneficial interest issued
and outstanding) $1.00
CLASS B SHARES
Net asset value and offering price per share ($74,455,256/
74,456,561 shares of beneficial interest issued
and outstanding) $1.00
CLASS C SHARES
Net asset value and offering price per share ($23,949,596/
23,949,949 shares of beneficial interest issued
and outstanding) $1.00
ADVISOR CLASS
Net asset value and offering price per share ($34,904/
34,904 shares of beneficial interest issued and
outstanding) $1.00
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997 AFD EXCHANGE RESERVES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 7,444,584
EXPENSES
Advisory fee $ 338,864
Distribution fee - Class A 199,655
Distribution fee - Class B 749,018
Distribution fee - Class C 155,080
Transfer agency 211,226
Registration fees 208,108
Custodian 102,235
Audit and legal 101,008
Administrative 96,000
Printing 66,168
Amortization of organization expenses 31,408
Trustees' fees 24,710
Miscellaneous 8,354
Total expenses 2,291,834
Net investment income 5,152,750
REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (311)
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,152,439
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEPT. 30,1997 SEPT. 30,1996
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 5,152,750 $ 4,590,571
Net realized gain (loss) on investment
transactions (311) 105
Net increase in net assets from operations 5,152,439 4,590,676
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,638,799) (1,654,846)
Class B (2,707,243) (2,424,825)
Class C (806,371) (510,900)
Advisor Class (337) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 19,187,747 3,761,761
Total increase 19,187,436 3,761,866
NET ASSETS
Beginning of year 120,419,439 116,657,573
End of year $139,606,875 $120,419,439
See notes to financial statements.
4
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AFD EXCHANGE RESERVES
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
AFD Exchange Reserves (the "Fund") is registered under the Investment Company
Act of 1940 as a diversified open-end investment company. The Fund's investment
objective is to provide maximum current income to the extent consistent with
safety of principal and liquidity. The Fund offers Class A, Class B, Class C
and Advisor Class shares. All four classes of shares have identical voting,
dividend, liquidation and other rights, except that each class bears its own
distribution and transfer agency expenses and has exclusive voting rights with
respect to its distribution plan.
Class A shares are sold for cash without any initial sales charge at the time
of purchase. On cash purchases of $1,000,000 or more, however, a contingent
deferred sales charge ("CDSC") equal to 1% of the lesser of net asset value at
the time of redemption or original cost if redeemed within one year will be
charged. Class A shares may be exchanged for Class A shares of other Alliance
Mutual Funds, subject, in the case of Class A shares of the Fund that were
purchased for cash, to any applicable initial sales charge at the time of
exchange. Class A shares of the Fund also are offered in exchange for Class A
shares of other Alliance Mutual Funds without any sales charge at the time of
purchase, but on Class A shares that were received in exchange for Alliance
Mutual Fund Class A shares that were not subject to an initial sales charge
when originally purchased for cash because the purchase was of $1,000,000 or
more, a 1% CDSC may be assessed if shares of the Fund are redeemed within one
year of the Alliance Mutual Fund Class A shares originally purchased for cash.
Class B shares are sold for cash without an initial sales charge. However, a
CDSC is charged if shares are redeemed within four years after purchase. The
CDSC charge declines from 4% to zero depending on the period of time the shares
are held. Class B shares purchased for cash will automatically convert to Class
A shares after eight years. Class B shares may be exchanged for Class B shares
of other Alliance Mutual Funds. Class B shares also are offered in exchange for
Class B shares of other Alliance Mutual Funds without any initial sales charge.
However, a CDSC may be charged if shares are redeemed within a certain number
of years of the original purchase of Alliance Mutual Fund Class B shares. When
redemption occurs, the applicable CDSC schedule is that which applied to the
Alliance Mutual Fund Class B shares originally purchased for cash at the time
of their purchase.
Class C shares are sold for cash or in exchange for Class C shares of another
Alliance Mutual Fund. Class C shares are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. Class C
shares do not convert to any other class of shares of the Fund. Class C shares
may be exchanged for Class C shares of other Alliance Mutual Funds.
Advisor Class shares are sold for cash or in exchange for Advisor Class shares
of another Alliance Mutual Fund without any initial sales charge or contingent
CDSC and are not subject to ongoing distribution expenses. Advisor Class shares
are offered solely to (i) investors participating in fee-based programs and to
certain retirement plan accounts.
The following is a summary of significant accounting policies followed by the
Fund.
1. VALUATION OF SECURITIES
Securities in which the Fund invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity.
2. ORGANIZATION EXPENSES
Organization expenses have been deferred and are being amortized on a
straight-line basis through March, 1999.
3. TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. DIVIDENDS
The Fund declares dividends daily and automatically reinvests such dividends in
additional shares at net asset value. Net realized capital gains on
investments, if any, are expected to be distributed near calendar year end.
5
NOTES TO FINANCIAL STATEMENTS (CONTINUED) AFD EXCHANGE RESERVES
_______________________________________________________________________________
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisory Class shares have no distribution fees.
6. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are recorded on the
date securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. It is the Fund's policy to take
possession of securities as collateral under repurchase agreements and to
determine on a daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund pays its Adviser, Alliance Capital Management L.P. an advisory fee at
the annual rate of .25 of 1% on the first $1.25 billion of average daily net
assets; .24 of 1% on the next $.25 billion; .23 of 1% on the next $.25 billion;
.22 of 1% on the next $.25 billion; .21 of 1% on the next $1 billion; and .20
of 1% in excess of $3 billion. In addition to the advisory fee, the Fund also
reimburses the Adviser for certain legal and accounting services provided to
the Fund by the Adviser. For the year ended September 30, 1997, the Fund
incurred costs of $96,000.
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. Such compensation amounted to
$160,742 for the year ended September 30, 1997.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C. Under the Agreement, the Fund pays a distribution fee to
the Distributor at an annual rate of up to .50 of 1% of the Fund's average
daily net assets attributable to Class A shares, 1.00% of the average daily net
assets attributable to Class B shares and .75 of 1% of the average daily net
assets attributable to Class C shares. There is no distribution fee on the
Advisor Class shares. Such fee is accrued daily and paid monthly. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
At September 30, 1997, the cost of securities for federal income tax purposes
was the same as the cost for financial reporting purposes. At September 30,
1997, the Fund had a capital loss carryforward of $2,497, of which $2,186
expires in 2003 and $311 expires in the year 2004.
6
AFD EXCHANGE RESERVES
_______________________________________________________________________________
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At September
30, 1997, capital paid-in aggregated $41,167,958 for Class A, $74,456,561 for
Class B, $23,949,949 for Class C and $34,904 for Advisor Class. Transactions,
all at $1.00 per share, were as follows:
CLASS A
-----------------------------
YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30,
1997 1996
------------- -------------
Shares sold 396,646,176 382,975,223
Shares issued on reinvestments of dividends 1,638,799 1,654,846
Shares converted from Class B 2,779,625 1,090,820
Shares redeemed (402,092,046) (384,645,564)
Net increase (decrease) (1,027,446) 1,075,325
CLASS B
-----------------------------
YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30,
1997 1996
------------- -------------
Shares sold 248,115,983 166,636,823
Shares issued on reinvestments of dividends 2,707,243 2,424,825
Shares converted to Class A (2,779,625) (1,090,820)
Shares redeemed (238,596,718) (168,231,937)
Net increase (decrease) 9,446,883 (261,109)
CLASS C
-----------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
Shares sold 263,291,205 90,072,507
Shares issued on reinvestments of dividends 806,371 510,900
Shares redeemed (253,364,170) (87,635,862)
Net increase 10,733,406 2,947,545
ADVISOR CLASS
-----------------------------
JAN. 30, 1997(a)
TO
SEPT. 30,
1997
----------------
Shares sold 120,464
Shares issued on reinvestments of dividends 337
Shares redeemed (85,897)
Net increase 34,904
(a) Commencement of distribution.
7
FINANCIAL HIGHLIGHTS AFD EXCHANGE RESERVES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
MARCH 25,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
--------------------------------------- SEPT. 30,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0411 .0416 .0453 .0126
LESS: DIVIDENDS
Dividends from net investment income (.0411) (.0416) (.0453) (.0126)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 4.19% 4.24% 4.64% 2.45%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $41 $41 $41 $18
Ratio of average net assets to:
Expenses, net of waivers 1.38% 1.29% 1.21% 1.82%(c)
Expenses, before waivers 1.38% 1.29% 1.29% 1.82%(c)
Net investment income 4.10% 4.15% 4.63%(d) 2.62%(c)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
MARCH 25,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
--------------------------------------- SEPT. 30,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0361 .0366 .0404 .0101
LESS: DIVIDENDS
Dividends from net investment income (.0361) (.0366) (.0404) (.0101)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.67% 3.72% 4.12% 1.95%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $74 $65 $65 $31
Ratio of average net assets to:
Expenses, net of waivers 1.88% 1.79% 1.70% 2.35%(c)
Expenses, before waivers 1.88% 1.79% 1.78% 2.35%(c)
Net investment income 3.61% 3.67% 4.17%(d) 1.91%(c)
</TABLE>
See footnote summary on page 9.
8
FINANCIAL HIGHLIGHTS (CONTINUED) AFD EXCHANGE RESERVES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
MARCH 25,
1994(A)
YEAR ENDED SEPTEMBER 30, TO
--------------------------------------- SEPT. 30,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0386 .0390 .0430 .0112
LESS: DIVIDENDS
Dividends from net investment income (.0386) (.0390) (.0430) (.0112)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on
net asset value (b) 3.93% 3.98% 4.39% 2.18%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $24 $13 $10 $5
Ratio of average net assets to:
Expenses, net of waivers 1.61% 1.55% 1.45% 2.08%(c)
Expenses, before waivers 1.61% 1.55% 1.52% 2.08%(c)
Net investment income 3.90% 3.89% 4.41%(d) 2.14%(c)
</TABLE>
ADVISOR CLASS
---------------------
JANUARY 30, 1997(A)
TO
SEPTEMBER 30, 1997
---------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0254
LESS: DIVIDENDS
Dividends from net investment income (.0254)
Net asset value, end of period $1.00
TOTAL RETURN
Total investment return based on net asset value (b) (c) 4.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $35
Ratio of expenses to average net assets (c) .88%
Ratio of net investment income to average net assets (c) 4.15%
(a) Commencement of distribution.
(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. Contingent deferred sales charge is
not reflected in the calculation of total investment return.
(c) Annualized.
(d) Net of expenses waived by the Adviser.
9
REPORT OF INDEPENDENT ACCOUNTANTS AFD EXCHANGE RESERVES
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS AFD EXCHANGE RESERVES
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of AFD Exchange Reserves as of September 30, 1997
and the related statements of operations, changes in net assets, and financial
highlights for the periods indicated in the accompanying financial statements.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997 by correspondence with the custodian. 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 AFD
Exchange Reserves as of September 30, 1997, and the results of its operations,
changes in its net assets, and financial highlights for the periods indicated,
in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
October 23, 1997
10
AFD EXCHANGE RESERVES
_______________________________________________________________________________
AFD EXCHANGE RESERVES
1345 Avenue of the Americas
New York, NY 10105
Toll-free 1(800) 221-5672
TRUSTEES
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
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
KENNETH T. CARTY, VICE PRESIDENT
JOHN F. CHIODI, JR., VICE PRESIDENT
MARIA R. CONA, VICE PRESIDENT
RAYMOND J. PAPERA, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
AUDITORS
MCGLADREY & PULLEN, LLP
555 Fifth Avenue
New York, NY 10017
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
(1) Member of the audit committee.
DISTRIBUTION OF THIS REPORT OTHER THAN TO SHAREHOLDERS MUST BE PRECEDED OR
ACCOMPANIED BY THE FUND'S CURRENT PROSPECTUS, WHICH CONTAINS FURTHER
INFORMATION ABOUT THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
11
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
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 Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment 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
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
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
Government Portfolio
General Municipal Portfolio
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