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This is filed pursuant to Rule 497(c).
File Nos. 33-85850 and 811-8838.
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Alliance Money Market Fund (the "Fund") is an open-end management investment
company comprised of seven portfolios (the "Portfolios"), three of which are
offered by this Prospectus, each with investment objectives of safety,
liquidity and maximum current income (in the case of the General Municipal
Portfolio, exempt from Federal income taxes), to the extent consistent with the
first two objectives. The Prime, Government and General Municipal Portfolios
are diversified. This Prospectus sets forth the information about each
Portfolio that a prospective investor should know before investing. Please
retain it for future reference. You will receive semi-annual and annual reports
of your particular Portfolio.
AN INVESTMENT IN A PORTFOLIO IS (I) NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT; (II) NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK; AND (III) NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO
ASSURANCE THAT A PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
A "Statement of Additional Information" for the Fund dated April 20, 1995 (as
amended as of June 28, 1996), which provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, write the respective
Portfolio at the address shown on page 8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
ALLIANCE MONEY MARKET FUND
. PRIME PORTFOLIO
. GOVERNMENT PORTFOLIO
. GENERAL MUNICIPAL PORTFOLIO
PROSPECTUS APRIL 20, 1995
(AS AMENDED AS OF JUNE 28, 1996)
1
EXPENSE INFORMATION
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SHAREHOLDER TRANSACTION EXPENSES
The Portfolios have no sales load on purchases or reinvested dividends,
deferred sales load, redemption fee or exchange fee.
ESTIMATED ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets,
after expense reimbursement) GENERAL
PRIME GOVERNMENT MUNICIPAL
------- ---------- ---------
Management Fees .50% .50% .50%
12b-1 Fees .45% .45% .45%
Other Expenses .05% .05% .05%
Total Portfolio Operating Expenses 1.00% 1.00% 1.00%
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (cumulatively through the end of each time period):
1 YEAR 3 YEARS
------ -------
Prime $10 $32
Government 10 32
General Municipal 10 32
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Portfolio will bear
directly or indirectly. The expenses listed in the table for the Prime,
Government and General Municipal Portfolios are net of voluntary expense
reimbursements. The expenses of such Portfolios before expense reimbursements
would be: Prime Portfolio: Management Fees-.50%, 12b-1 fees-.45%, Other
Expenses-.12% and Total Operating Expenses-1.07%; Government Portfolio:
Management Fees-.50%, 12b-1 fees-.45%, Other Expenses-.20% and Total Operating
Expenses-1.15%; General Municipal Portfolio: Management Fees-.50%, 12b-1
fees-.45%, Other Expenses-.19% and Total Operating Expenses-1.14%. The category
'Other Expenses' is based on the estimated amounts expected to be incurred
during each Portfolio's first fiscal year. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
_______________________________________________________________________________
The following table sets forth unaudited per-share information for the Prime,
Government and General Municipal Portfolios of the Fund as of May 31, 1996.
Unaudited financial statements and related notes as of such date have also been
added to the Statement of Additional Information.
DECEMBER 29,1995* THROUGH MAY 31,1996
(UNAUDITED)
--------------------------------
GENERAL
PRIME GOVERNMENT MUNICIPAL
---------- ---------- ---------
Net asset value, beginning of period $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .019 .019 .013
LESS: DISTRIBUTIONS
Dividends from net investment income (.019) (.019) (.013)
Net asset value, end of period $1.00 $1.00 $1.00
TOTAL RETURNS
Total investment return based on net asset
value(a) 4.53% 4.52% 2.83%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2,408 $100 $117
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.00%(b) 1.00%(b) 1.00%(b)
Expenses, before waivers and reimbursements 1.21%(b) 1.50%(b) 1.46%(b)
Net investment income(c) 4.50%(b) 4.53%(b) 2.82%(b)
* Commencement of operations for each Portfolio except General Municipal
which commenced operations on December 13, 1995.
(a) 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.
(b) Annualized.
(c) Net of expenses reimbursed or waived by the Adviser.
2
INVESTMENT OBJECTIVES AND POLICIES
_______________________________________________________________________________
The investment objectives of each Portfolio are-in the following order of
priority-safety of principal, excellent liquidity and, to the extent consistent
with the first two objectives, maximum current income (exempt from income taxes
to the extent described below in the case of the General Municipal Portfolio).
As a matter of fundamental policy, each Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities. While no
Portfolio may change this policy or the "other fundamental investment policies"
described below without shareholder approval, it may, upon notice to
shareholders, but without such approval, change non-fundamental investment
policies or create additional series or classes of shares in order to establish
portfolios which may have different investment objectives. There can be no
assurance that any Portfolio's objectives will be achieved.
The Portfolios will comply with Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act"), as amended from time to time, including the diversity,
quality and maturity limitations imposed by the Rule. Accordingly, each
Portfolio will invest in securities which, at the time of investment, have
remaining maturities not exceeding 397 days, and the average maturity of each
Portfolio's investment portfolio will not exceed 90 days. A more detailed
description of Rule 2a-7 is set forth in the Fund's Statement of Additional
Information.
PRIME PORTFOLIO
The money market securities in which the Prime Portfolio invests include: (1)
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities (collectively, the "U.S. Government"); (2)
certificates of deposit, bankers' acceptances and interest-bearing savings
deposits issued or guaranteed by banks or savings and loan associations having
total assets of more than $1 billion and which are members of the Federal
Deposit Insurance Corporation and certificates of deposit and bankers'
acceptances denominated in U.S. dollars and issued by U.S. branches of foreign
banks having total assets of at least $1 billion that are believed by Alliance
Capital Management L.P. (the "Adviser") to be of quality equivalent to that of
other such instruments in which the Portfolio may invest; (3) commercial paper
of prime quality [i.e., rated A-1+ or A-1 by Standard & Poor's Corporation
("Standard & Poor's") or Prime-1 by Moody's Investors Service, Inc. ("Moody's")
or, if not rated, issued by companies having outstanding debt securities rated
AAA or AA by Standard & Poor's, or Aaa or Aa by Moody's] and participation
interests in loans extended by banks to such companies; and (4) repurchase
agreements that are collateralized in full each day by liquid securities of the
types listed above. These agreements are entered into with "primary dealers"
(as designated by the Federal Reserve Bank of New York) in U.S. Government
securities or The Bank of New York, the Fund's Custodian, and would create a
loss to the Prime Portfolio if, in the event of a dealer default, the proceeds
from the sale of the collateral were less than the repurchase price. The Prime
Portfolio may also invest in certificates of deposits issued by, and time
deposits maintained at, foreign branches of domestic banks described in (2)
above and prime quality dollar-denominated commercial paper issued by foreign
companies meeting the criteria specified in (3) above.
The Prime Portfolio also may invest in asset-backed securities that meet its
existing diversification, quality and maturity criteria. Asset-backed
securities are securities issued by special purpose entities whose primary
assets consist of a pool of loans or accounts receivable. The securities may be
in the form of a beneficial interest in a special purpose trust, limited
partnership interest, or commercial paper or other debt securities issued by a
special purpose corporation. Although the securities may have some form of
credit or liquidity enhancement, payments on the securities depend
predominately upon collection of the loans and receivables held by the issuer.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio diversification
and reduce investment risk, the Prime Portfolio may not: (1) invest more than
25% of its assets in the securities of issuers conducting their principal
business activities in any one industry although there is no such limitation
with respect to U.S. Government securities or certificates of deposit, bankers'
acceptances and interest bearing savings deposits; (2) invest more than 5% of
its assets in securities of any one issuer (except the U.S. Government)
although with respect to one-quarter of its total assets it may invest without
regard to such limitation; (3) purchase more than 10% of any class of the
voting securities of any one issuer (except the U.S. Government); (4) borrow
money except from banks on a temporary basis or by entering into reverse
repurchase
3
agreements in aggregate amounts not exceeding 15% of its assets and to
facilitate the orderly maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests; or (5) mortgage, pledge or
hypothecate its assets except to secure such borrowings.
As a matter of operating policy, fundamental policy number (2) would give the
Prime Portfolio the ability to invest, with respect to 25% of its assets, more
than 5% of its assets in any one issuer only in the event Rule 2a-7 is amended
in the future.
GOVERNMENT PORTFOLIO
The securities in which the Government Portfolio invests are: (1) marketable
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities (collectively, the "U.S. Government"), including issues of
the United States Treasury, such as bills, certificates of indebtedness, notes
and bonds, and issues of agencies and instrumentalities established under the
authority of an act of Congress; and (2) repurchase agreements that are
collateralized in full each day by the types of securities listed above. These
agreements are entered into with "primary dealers" (as designated by the
Federal Reserve Bank of New York) in U.S. Government securities or the Fund's
Custodian and would create a loss to the Government Portfolio if, in the event
of a dealer default, the proceeds from the sale of the collateral were less
than the repurchase price. The Government Portfolio may commit up to 15% of its
net assets to the purchase of when-issued U.S. Government securities, whose
value may fluctuate prior to their settlement, thereby creating an unrealized
gain or loss to the Government Portfolio.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio diversification
and reduce investment risk, the Government Portfolio may not: (1) borrow money
except from banks on a temporary basis or by entering into reverse repurchase
agreements in aggregate amounts not exceeding 10% of its assets and to be used
exclusively to facilitate the orderly maturation and sale of portfolio
securities during any periods of abnormally heavy redemption requests, if they
should occur; such borrowings may not be used to purchase investments and it
will not purchase any investment while any such borrowings exist; or (2)
pledge, hypothecate or in any manner transfer, as security for indebtedness,
its assets except to secure such borrowings.
GENERAL MUNICIPAL PORTFOLIO
As a matter of fundamental policy, the General Municipal Portfolio, except when
assuming a temporary defensive position, must maintain at least 80% of its
total assets in high-quality municipal securities (as opposed to the taxable
investments described below). Normally, substantially all of the General
Municipal Portfolio's income will be tax-exempt as described below. The General
Municipal Portfolio seeks maximum current income that is exempt from Federal
income taxes by investing principally in a diversified portfolio of
high-quality municipal securities. Such income may be subject to state or local
income taxes.
ALTERNATIVE MINIMUM TAX. The General Municipal Portfolio may invest without
limitation in tax-exempt municipal securities subject to the Federal
alternative minimum tax (the "AMT").
Under current Federal income tax law, (1) interest on tax-exempt municipal
securities issued after August 7, 1986 which are "specified private activity
bonds," and the proportionate share of any exempt-interest dividends paid by a
regulated investment company which receives interest from such specified
private activity bonds, will be treated as an item of tax preference for
purposes of the AMT imposed on individuals and corporations, though for regular
Federal income tax purposes such interest will remain fully tax-exempt, and (2)
interest on all tax-exempt obligations will be included in "adjusted current
earnings" of corporations for AMT purposes. Such bonds have provided, and may
continue to provide, somewhat higher yields than other comparable municipal
securities. See below, "Daily Dividends and Other Distributions" and "Taxes."
MUNICIPAL SECURITIES. The municipal securities in which the General Municipal
Portfolio invests include municipal notes and short-term municipal bonds.
Municipal notes are generally used to provide for short-term capital needs and
generally have maturities of one year or less. Examples include tax
anticipation and revenue anticipation notes which are generally issued in
anticipation of various seasonal revenues, bond anticipation notes, and
tax-exempt commercial paper. Short-term municipal bonds may include general
obligation bonds, which are secured by the issuer's pledge of its faith, credit
and taxing power for payment of principal and interest, and revenue bonds,
which are generally paid from the revenues of a particular facility or a
specific excise or other source.
The General Municipal Portfolio may invest in variable rate obligations whose
interest rates are adjusted either at predesignated periodic intervals or
whenever there is a change in the market rate to which the security's interest
rate is tied. Such adjustments tend to minimize changes
4
in the market value of the obligation and, accordingly, enhance the ability of
the Portfolio to maintain a stable net asset value. Variable rate securities
purchased may include participation interests in industrial development bonds
backed by letters of credit of Federal Deposit Insurance Corporation member
banks having total assets of more than $1 billion. The letters of credit of any
single bank in respect of all variable rate obligations will not cover more
than 10% of the General Municipal Portfolio's total assets.
Each of the General Municipal Portfolio's municipal securities at the time of
purchase are rated within the two highest quality ratings of Moody's (Aaa and
Aa, MIG 1 and MIG 2 or VMIG 1 and VMIG 2) or Standard & Poor's (AAA and AA or
SP-1 and SP-2), or judged by the Adviser to be of comparable quality.
Securities must also meet credit standards applied by the Adviser.
To further enhance the quality and liquidity of the securities in which the
General Municipal Portfolio invests, such securities frequently are supported
by credit and liquidity enhancements, such as letters of credit, from third
party financial institutions. The Portfolio continuously monitors the credit
quality of such third parties; however, changes in the credit quality of such a
financial institution could cause the Portfolio's investments backed by that
institution to lose value and affect the Portfolio's share price.
The General Municipal Portfolio also may invest in stand-by commitments, which
may involve certain expenses and risks, but such commitments are not expected
to comprise more than 5% of the Portfolio's net assets. The General Municipal
Portfolio may commit up to 15% of its net assets to the purchase of when-issued
securities. The Fund's Custodian will maintain, in a separate account of the
General Municipal Portfolio, liquid high-grade debt securities having value
equal to, or greater than, such commitments. The price of when-issued
securities, which is generally expressed in yield terms, is fixed at the time
the commitment to purchase is made, but delivery and payment for such
securities takes place at a later time. Normally the settlement date occurs
from within ten days to one month after the purchase of the issue. The value of
when-issued securities may fluctuate prior to their settlement, thereby
creating an unrealized gain or loss to the General Municipal Portfolio.
TAXABLE INVESTMENTS. The taxable investments in which the General Municipal
Portfolio may invest include obligations of the U.S. Government and its
agencies, high-quality certificates of deposit and bankers' acceptances, prime
commercial paper and repurchase agreements.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES. To reduce investment risk, the General
Municipal Portfolio may not invest more than 25% of its total assets in
municipal securities whose issuers are located in the same state and may not:
(1) invest more than 25% of its total assets in municipal securities the
interest upon which is paid from revenues of similar-type projects; (2) invest
more than 5% of its total assets in the securities of any one issuer except the
U.S. Government, although with respect to 25% of its total assets the General
Municipal Portfolio may invest up to 10% per issuer; or (3) purchase more than
10% of any class of the voting securities of any one issuer except those of the
U.S. Government.
POLICIES APPLICABLE TO EACH PORTFOLIO
No Portfolio will maintain more than 10% of its net assets in illiquid
securities which include "restricted securities" subject to legal restrictions
on resale arising from an issuer's reliance upon certain exemptions from
registration under the Securities Act of 1933, as amended (the "Securities
Act"). Each Portfolio may purchase restricted securities determined by the
Adviser to be liquid in accordance with procedures adopted by the Trustees of
the Fund, including securities eligible for resale under Rule 144A under the
Securities Act and commercial paper issued in reliance upon the exemption from
registration in Section 4(2) of the Securities Act.
PURCHASE AND REDEMPTION OF SHARES
_______________________________________________________________________________
OPENING ACCOUNTS
Instruct your broker to use one or more of Alliance Money Market Fund's
Portfolios-Prime, Government, or General Municipal Portfolio-in conjunction
with your brokerage account. There is no minimum for initial investment or
subsequent investments.
SUBSEQUENT INVESTMENTS
BY CHECK. Mail or deliver your check or negotiable draft, payable to your
broker dealer, who will deposit it into the Portfolio(s). Please designate the
appropriate Portfolio and indicate your brokerage account number on the check
or draft.
5
BY SWEEP. An automatic "sweep" is available for shareholders in the Alliance
Money Market Fund. All cash balances in your brokerage account in excess of
$100 but less than $1,000 will be "swept" into the Portfolio(s) of your choice
on a weekly basis. However, when the daily balance in your brokerage account
exceeds $1,000, all of the funds in your brokerage account will be "swept"
daily into the Portfolio(s) of your choice.
REDEMPTIONS
BY CONTACTING YOUR BROKER. Instruct your Broker to order a withdrawal from your
money market account.
BY SWEEP. The sweep arrangement moves money from your money market account to
cover security purchases in your brokerage account.
BY CHECK-WRITING. With this service, you may write checks made payable to any
payee in any amount of $100 or more. Checks cannot be written for more than the
principal balance (not including any accrued dividends) in your account. First
you must fill out the signature card which you can obtain from your Broker.
There is no separate charge for the check-writing service. THE CHECK-WRITING
SERVICE ENABLES YOU TO RECEIVE THE DAILY DIVIDENDS DECLARED ON THE SHARES TO BE
REDEEMED UNTIL THE DAY THAT YOUR CHECK IS PRESENTED FOR PAYMENT.
ADDITIONAL INFORMATION
_______________________________________________________________________________
SHARE PRICE
Shares are sold and redeemed on a continuous basis without sales or redemption
charges at their net asset value which is expected to be constant at $1.00 per
share, although this price is not guaranteed. The net asset value of each
Portfolio's shares is determined each business day (i.e., any weekday exclusive
of days on which the New York Stock Exchange or The Bank of New York is closed)
at 12:00 Noon and 4:00 p.m. (New York time). The net asset value per share of a
Portfolio is calculated by taking the sum of the value of that Portfolio's
investments (amortized cost value is used for this purpose) and any cash or
other assets, subtracting liabilities, and dividing by the total number of
shares of that Portfolio outstanding. All expenses, including the fees payable
to the Adviser, are accrued daily.
TIMING OF INVESTMENTS AND REDEMPTIONS
The Portfolios have two transaction times each business day, 12:00 Noon and
4:00 p.m. (New York time). New investments represented by Federal funds or bank
wire monies received by The Bank of New York at any time during a day prior to
4:00 p.m. are entitled to the full dividend to be paid to shareholders for that
day. Shares do not earn dividends on the day a redemption is effected
regardless of whether the redemption order is received before or after 12:00
Noon.
Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days, unless redemptions have
been suspended or postponed due to the determination of an "emergency" by the
Securities and Exchange Commission or to certain other unusual conditions.
DAILY DIVIDENDS AND OTHER DISTRIBUTIONS
All net income of each Portfolio is determined each business day at 4:00 p.m.
and is paid immediately thereafter pro rata to shareholders of record of that
Portfolio via automatic investment in additional full and fractional shares of
that Portfolio in each shareholder's account. As such additional shares are
entitled to dividends on following days, a compounding growth of income occurs.
Net income consists of all accrued interest income on a Portfolio's assets less
the Portfolio's expenses applicable to that dividend period. Realized gains and
losses of each Portfolio are reflected in its net asset value and are not
included in its net income.
TAXES
A prospective investor should review the more detailed discussion of Federal
income tax considerations relevant to each Portfolio that is contained in the
Statement of Additional Information. In addition, each prospec-
6
tive investor should consult with his/her own tax advisers as to the tax
consequences of an investment in the Portfolios, including the status of
distributions from a Portfolio in his/her own state and locality and the
possible applicability of the AMT to a portion of the distributions of the
General Municipal Portfolio.
The Fund intends to qualify each Portfolio each year as a separate "regulated
investment company" and as such, each Portfolio will not be subject to Federal
income and excise taxes on the investment company taxable income and net
capital gains, if any, distributed to shareholders.
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO. Shareholders of the Prime Portfolio
and Government Portfolio (other than tax-exempt shareholders) will be subject
to Federal income tax on the ordinary income dividends and any capital gains
dividends from these Portfolios and may also be subject to state and local
taxes. The laws of some states and localities, however, may exempt from some
taxes dividends paid on shares of the Prime Portfolio and Government Portfolio,
which are dividends attributable to interest from obligations of the U.S.
Government and certain of its agencies and instrumentalities.
DISTRIBUTIONS FROM THE GENERAL MUNICIPAL PORTFOLIO. Distributions to you out of
tax-exempt interest income earned by the General Municipal Portfolio are not
subject to Federal income tax (other than the AMT), but may be subject to state
or local income taxes. Any exempt-interest dividends derived from interest on
municipal securities subject to the AMT will be a specific preference item for
purposes of the Federal individual and corporate AMT. Distributions from the
General Municipal Portfolio to a corporate shareholder are not exempt from the
corporate taxes imposed by the respective jurisdictions. Distributions out of
taxable interest income, other investment income and short-term capital gains
are taxable to you as ordinary income and distributions of long-term capital
gains, if any, are taxable as long-term taxable gains irrespective of the
length of time you may have held your shares. Distributions of short and
long-term capital gains, if any, are normally made near year-end. Each year
shortly after December 31, the Fund will send to you tax information stating
the amount and type of all its distributions for the year just ended.
GENERAL. Distributions to shareholders will be treated in the same manner for
Federal income tax purposes whether received in cash or reinvested in
additional shares of a Portfolio. In general, distributions by a Portfolio are
taken into account by shareholders in the year in which they are made. However,
certain distributions made during January will be treated as having been paid
by a Portfolio and received by the shareholders on December 31 of the preceding
year. A statement setting forth the Federal income tax status of all
distributions made (or deemed made) during the calendar year, including any
portions which constitute ordinary income dividends, capital gains dividends
and exempt-interest dividends and U.S. Government interest dividends will be
sent to each shareholder of a Portfolio promptly after the end of each calendar
year.
MANAGEMENT OF THE FUND
_______________________________________________________________________________
ADVISER
Alliance Capital Management L.P., a New York Stock Exchange listed company with
principal offices at 1345 Avenue of the Americas, New York, New York 10105, has
been retained by the Fund, on behalf of each Portfolio, under an investment
advisory agreement (the "Advisory Agreement") to provide investment advice and,
in general, to conduct the management and investment program of the Fund under
the supervision and control of the Fund's Trustees.
Alliance Capital Management Corporation, the sole general partner of, and the
owner of a 1% general partnership interest in, the Adviser is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ('Equitable'), one of the largest life insurance companies in the United
States and a wholly-owned subsidiary of The Equitable Companies Incorporated, a
holding company controlled by AXA, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in the Statement of Additional Information under 'Management of the
Fund.'
7
Under its Advisory Agreement with the Fund, the Adviser provides investment
advisory services and order placement facilities for the Fund. Under the
Advisory Agreement, each Portfolio pays the Adviser a fee at the annual rate of
.50% of a Portfolio's average daily net assets. The Adviser may, from time to
time, voluntarily waive a portion of its advisory fees payable from one or more
of the Portfolios.
In addition to the payments to the Adviser under the Advisory Agreement
described above, the Fund may pay certain other costs, including (i) custody,
transfer and dividend disbursing expenses, (ii) fees of the Trustees who are
not affiliated persons, (iii) legal and auditing expenses, (iv) clerical,
accounting, administrative and other office costs, (v) costs of personnel
providing services to the Fund, as applicable, (vi) costs of printing
prospectuses and shareholder reports, (vii) expenses and fees related to
registration and filing with the Securities and Exchange Commission and with
state regulatory authorities and (viii) such promotional expenses as may be
contemplated by an effective plan pursuant to Rule 12b-1 under the 1940 Act.
Under a Distribution Services Agreement (the "Agreement"), each Portfolio pays
the Adviser at a maximum annual rate of .45 of 1% of the Portfolio's aggregate
average daily net assets. Substantially all such monies (together with
significant amounts from the Adviser's own resources) are paid by the Adviser
to broker-dealers and other financial intermediaries for their distribution
assistance and to banks and other depository institutions for administrative
and accounting services provided to the Portfolios, with any remaining amounts
being used to partially defray other expenses incurred by the Adviser in
distributing the Portfolios' shares. The Fund believes that the administrative
services provided by depository institutions are permissible activities under
present banking laws and regulations and will take appropriate actions (which
should not adversely affect the Portfolios or their shareholders) in the future
to maintain such legal conformity should any changes in, or interpretations of,
such laws or regulations occur.
ADMINISTRATOR
Pursuant to an Administration Agreement, ADP Financial Information Services,
Inc., a wholly-owned subsidiary of Automatic Data Processing, Inc., serves as
administrator of the Fund, on behalf of the Portfolios. The Administrator
performs or arranges for the performance of certain services, mainly remote
processing services through its propriety shareholder accounting system. ADP is
entitled to receive from each Portfolio a fee computed daily and paid monthly
at a maximum annual rate equal to .05% of such Portfolio's average daily net
assets. ADP may, from time to time, voluntarily waive all or a portion of its
fees payable to it under the Administration Agreement. ADP shall not have any
responsibility or authority for any Portfolio's investments, the determination
of investment policy, or for any matter pertaining to the distribution of
Portfolio shares.
TRANSFER AGENT AND DISTRIBUTOR
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and
Alliance Fund Distributors, Inc., 1345 Avenue of the Americas, New York, NY
10105, are the Fund's Transfer Agent and Distributor, respectively.
ORGANIZATION
Each of the Portfolios is a series of Alliance Money Market Fund, an open-end
management investment company registered under the 1940 Act and organized as a
Massachusetts business trust on October 26, 1994. The New Jersey, New York,
California and Connecticut Municipal Portfolios are non-diversified series of
the Fund and are not offered by this Prospectus. Each Portfolio's activities
are supervised by the Trustees of the Fund. Normally, shares of each series are
entitled to one vote per share, and vote as a single series, on matters that
affect each series in substantially the same manner. Massachusetts law does not
require annual meetings of shareholders and it is anticipated that shareholder
meetings will be held only when required by Federal law. Shareholders have
available certain procedures for the removal of Trustees.
8
<PAGE>
This is filed pursuant to Rule 497(c).
File Nos. 33-85850 and 811-8838.
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ALLIANCE MONEY MARKET FUND
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P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
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STATEMENT OF ADDITIONAL INFORMATION
April 20, 1995
(As Amended as of June 28, 1996)
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This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated April 20, 1995 (as amended as of
June 28, 1996). A copy of the Prospectus may be obtained by
contacting the Fund at the address or telephone number shown
above.
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVES AND POLICIES 2
INVESTMENT RESTRICTIONS 13
MANAGEMENT OF THE FUND 16
PURCHASE AND REDEMPTION OF SHARES 26
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE 27
TAXES 29
GENERAL INFORMATION 31
FINANCIAL STATEMENTS 35
APPENDIX A - DESCRIPTION OF MUNICIPAL SECURITIES A-1
APPENDIX B - DESCRIPTION OF SECURITIES RATINGS B-1
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INVESTMENT OBJECTIVES AND POLICIES
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Alliance Money Market Fund (the "Fund") is an open-end
management investment company. The Fund consists of seven
distinct portfolios, three of which, the Prime Portfolio, the
Government Portfolio and the General Municipal Portfolio (the
"Municipal Portfolio") (hereinafter sometimes referred to as a
"Portfolio" or the "Portfolios"), are offered by this SAI. Each
of Portfolio is, in effect, a separate series issuing a separate
class of shares.
The investment objectives of each Portfolio are - in the
following order of priority - safety of principal, excellent
liquidity, and, to the extent consistent with the first two
objectives, maximum current income (exempt from income taxes to
the extent described below in the case of the Municipal
Portfolio). As a matter of fundamental policy, each Portfolio
pursues its objectives by maintaining a portfolio of high-quality
money market securities. The Municipal Portfolio, except when
assuming a temporary defensive position, must maintain at least
80% of its total assets in high-quality municipal securities (as
opposed to taxable investments described below). While no
Portfolio may change this policy or the "other fundamental
investment policies" described below without shareholder
approval, it may, upon notice to shareholders, but without such
approval, change non-fundamental investment policies or create
additional series or classes of shares in order to establish
portfolios which may have different investment objectives.
Normally, substantially all of the Municipal Portfolio's income
will be tax-exempt as described below. There can be no assurance
that any Portfolio's objectives will be achieved.
Each Portfolio will comply with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), as amended from
time to time, including the diversity, quality and maturity
limitations imposed by the Rule. Accordingly, each Portfolio
will invest in securities which, at the time of investment, have
remaining maturities not exceeding 397 days and the average
maturity of each Portfolio's investment portfolio will not exceed
90 days. A more detailed description of Rule 2a-7 is set forth
on page 3.
PRIME AND GOVERNMENT PORTFOLIOS. The investment
objectives of each of the Prime Portfolio and the Government
Portfolio are - in the following order of priority - safety of
principal, excellent liquidity, and maximum current income to the
extent consistent with the first two objectives.
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GENERAL MUNICIPAL PORTFOLIO. The General Municipal
Portfolio seeks maximum current income that is exempt from
Federal income taxes by investing principally in a diversified
portfolio of high-quality municipal securities. Such income may
be subject to state or local income taxes.
POLICIES APPLICABLE TO EACH PORTFOLIO
RULE 2A-7 UNDER THE 1940 ACT. The Fund will comply with
Rule 2a-7 under the 1940 Act, as amended from time to time,
including the diversification, quality and maturity limitations
imposed by the Rule. Currently, pursuant to Rule 2a-7, a
Portfolio may invest only in "eligible securities" (as that term
is defined in the Rule) that have been determined by the Adviser
to present minimal credit risks pursuant to procedures approved
by the Trustees. Generally, an eligible security is a security
that (i) is denominated in U.S. Dollars and has a remaining
maturity of 397 days or less; and (ii) is rated, or is issued by
an issuer with short-term debt outstanding that is rated, in one
of the two highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO. A security that originally
had a maturity of greater than 397 days is an eligible security
if its remaining maturity at the time of purchase is 397 calendar
days or less and the issuer has outstanding short-term debt that
would be an eligible security. Unrated securities may also be
eligible securities if the Adviser determines that they are of
comparable quality to a rated eligible security pursuant to
guidelines approved by the Trustees. A description of the
ratings of some NRSROs appears in the Appendix attached hereto.
Under Rule 2a-7, the Prime Portfolio and the Government
Portfolio may not invest more than five percent of their
respective assets in the securities of any one issuer other than
the United States Government, its agencies and instrumentalities.
In addition, the Prime Portfolio and the Government Portfolio may
not invest in a security that has received, or is deemed
comparable in quality to a security that has received, the second
highest rating by the requisite number of NRSROs (a "second tier
security") if immediately after the acquisition thereof either
the Prime Portfolio or the Government Portfolio would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities.
ILLIQUID SECURITIES. The Fund has adopted the following
investment policy which may be changed by the vote of the
Trustees: Each Portfolio will not maintain more than 10% of a
Portfolio's net assets (taken at market value) in illiquid
securities. For this purpose, illiquid securities include, among
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others, (a) securities that are illiquid by virtue of the absence
of a readily available market or legal or contractual restriction
on resale and (b) repurchase agreements not terminable within
seven days.
RESTRICTED SECURITIES. A Portfolio may purchase
restricted securities determined by the Adviser to be liquid in
accordance with procedures adopted by the Trustees, including
securities eligible for resale under Rule 144A under the
Securities Act of 1933 (the "Securities Act") and commercial
paper issued in reliance upon the exemption from registration in
Section 4(2) of such Act. Restricted securities are securities
subject to contractual or legal restrictions on resale, such as
those arising from an issuer's reliance upon certain exemptions
from registration under the Securities Act.
In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues in which a Portfolio may invest
include, among others, securities issued by major corporations
without registration under the Securities Act in reliance on the
exemption from registration afforded by Section 3(a)(3) of such
Act and commercial paper issued in reliance on the private
placement exemption from registration which is afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the
Federal securities laws in that any resale must also be made in
an exempt transaction. Section 4(2) paper is normally resold to
other institutional investors through or with the assistance of
investment dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders. In recognition of
this fact, the Staff of the Securities and Exchange Commission
has stated that Section 4(2) paper may be determined to be liquid
by the Trustees, so long as certain conditions, which are
described below, are met.
In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Securities
and Exchange Commission (the "Commission") adopted Rule 144A
under the Securities Act to establish a safe harbor from the
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Securities Act's registration requirements for resale of certain
restricted securities to qualified institutional buyers.
Pursuant to Rule 144A, the institutional restricted securities
markets may provide both readily ascertainable values for
restricted securities and the ability to liquidate an investment
in order to satisfy share redemption orders on a timely basis.
An insufficient number of qualified institutional buyers
interested in purchasing certain restricted securities held by
each Portfolio, however, could affect adversely the marketability
of such portfolio securities and a Portfolio might be unable to
dispose of such securities promptly or at reasonable prices.
Rule 144A has already produced enhanced liquidity for many
restricted securities, and market liquidity for such securities
may continue to expand as a result of Rule 144A and the
consequent inception of the PORTAL System sponsored by the
National Association of Securities Dealers, Inc., an automated
system for the trading, clearance and settlement of unregistered
securities.
The Trustees have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
The Trustees have delegated the function of making day-to-day
determinations of liquidity to the Fund's adviser, Alliance
Capital Management L.P. ("Alliance"), pursuant to guidelines
approved by the Trustees.
Alliance takes into account a number of factors in
determining whether a restricted security being considered for
purchase is liquid, including at least the following:
(i) the frequency of trades and quotations for the
security;
(ii) the number of dealers making quotations to purchase
or sell the security;
(iii) the number of other potential purchasers of the
security;
(iv) the number of dealers undertaking to make a market
in the security;
(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time needed
to dispose of the security, the method of
soliciting offers and the mechanics of transfer);
and
(vi) any applicable Commission interpretation or
position with respect to such types of securities.
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To make the determination that an issue of Section 4(2)
paper is liquid, Alliance must conclude that the following
conditions have been met:
(i) the Section 4(2) paper must not be traded flat or
in default as to principal or interest; and
(ii) the Section 4(2) paper must be rated in one of the
two highest rating categories by at least two
NRSROs, or if only one NRSRO rates the security, by
that NRSRO; if the security is unrated, Alliance
must determine that the security is of equivalent
quality.
Alliance must also consider the trading market for the
specific security, taking into account all relevant factors.
Following the purchase of a restricted security by a
Portfolio, Alliance monitors continuously the liquidity of such
security and reports to the Trustees regarding purchases of
liquid restricted securities.
INVESTMENTS ISSUED BY FOREIGN BRANCHES OF BANKS.
Subject to its policy of not investing 25% or more of its total
assets in instruments issued by foreign branches of foreign banks
and other foreign entities, each Portfolio may make investments
in dollar-denominated certificates of deposit and bankers'
acceptances issued or guaranteed by, or dollar-denominated time
deposits maintained at, foreign branches of U.S. banks and U.S.
and foreign branches of foreign banks, and prime quality dollar-
denominated commercial paper issued by foreign companies. To the
extent that a Portfolio makes such investments, consideration is
given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations,
the possible impact of interruptions in the flow of international
currency transactions, potential political and social instability
or expropriation, imposition of foreign taxes, the lower level of
government supervision of issuers, the difficulty in enforcing
contractual obligations and the lack of uniform accounting and
financial reporting standards. There can be no assurance, as is
true with all investment companies, that a Portfolio's objective
will be achieved.
FUNDAMENTAL POLICIES. Each Portfolio's investment
objective may not be changed without the affirmative vote of a
majority of the Portfolio's outstanding shares as defined below.
Except as otherwise provided, each Portfolio's investment
policies are not designated "fundamental policies" within the
meaning of the Act and may, therefore, be changed by the Trustees
of the Portfolio without a shareholder vote. However, a
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Portfolio will not change its investment policies without
contemporaneous written notice to shareholders.
SPECIAL CONSIDERATIONS OF MUNICIPAL PORTFOLIOS
MUNICIPAL SECURITIES. The term "municipal securities,"
as used in reference to the Municipal Portfolio in the Prospectus
and this Statement of Additional Information, means obligations
issued by or on behalf of states, territories, and possessions of
the United States or their political subdivisions, agencies and
instrumentalities, the interest from which is exempt (subject to
the alternative minimum tax) from Federal income taxes. The
municipal securities in which each Portfolio invests are limited
to those obligations which at the time of purchase:
1. are backed by the full faith and credit of the United
States Government; or
2. are municipal notes rated MIG-1/VMIG-1 or MIG-2/VMIG-2
by Moody's Investors Service, Inc. ("Moody's") or SP-1
or SP-2 by Standard and Poor's Corporation ("S&P"), or,
if not rated, are of equivalent investment quality as
determined by Alliance and ultimately reviewed by the
Trustees; or
3. are municipal bonds rated Aa or higher by Moody's, AA or
higher by S&P or, if not rated, are of equivalent
investment quality as determined by Alliance and
ultimately reviewed by the Trustees; or
4. are other types of municipal securities, provided that
such obligations are rated Prime-1 by Moody's, A-1 or
higher by S&P or, if not rated, are of equivalent
investment quality as determined by Alliance and
ultimately reviewed by the Trustees. (See Appendix A
for a description of municipal securities and Appendix B
for a description of these ratings.)
The Municipal Portfolio will not invest 25% or more of
its total assets in the securities of non-governmental issuers
conducting their principal business activities in any one
industry.
ALTERNATIVE MINIMUM TAX. The Municipal Portfolio may
invest without limitation in tax-exempt municipal securities
subject to the alternative minimum tax (the "AMT"). Under
current Federal income tax law, (1) interest on tax-exempt
municipal securities issued after August 7, 1986 which are
"specified private activity bonds," and the proportionate share
of any exempt-interest dividend paid by a regulated investment
company which receives interest from such specified private
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activity bonds, will be treated as an item of tax preference for
purposes of the AMT imposed on individuals and corporations,
though for regular Federal income tax purposes such interest will
remain fully tax-exempt, and (2) interest on all tax-exempt
obligations will be included in "adjusted current earnings" of
corporations for AMT purposes. Such private activity bonds
("AMT-Subject Bonds") have provided, and may continue to provide,
somewhat higher yields than other comparable municipal
securities.
Investors should consider that, in most instances, no
state, municipality or other governmental unit with taxing power
will be obligated with respect to AMT-Subject Bonds. AMT-Subject
Bonds are in most cases revenue bonds and do not generally have
the pledge of the credit or the taxing power, if any, of the
issuer of such bonds. AMT-Subject Bonds are generally limited
obligations of the issuer supported by payments from private
business entities and not by the full faith and credit of a state
or any governmental subdivision. Typically the obligation of the
issuer of an AMT-Subject Bond is to make payments to bond holders
only out of and to the extent of, payments made by the private
business entity for whose benefit the AMT-Subject Bonds were
issued. Payment of the principal and interest on such revenue
bonds depends solely on the ability of the user of the facilities
financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide
specific detail on each of these obligations in which Fund assets
may be invested.
TAXABLE SECURITIES. Although the Municipal Portfolio
is, and expects to be, largely invested in municipal securities,
it may elect to invest up to 20% of its total assets in taxable
money market securities when such action is deemed to be in the
best interests of shareholders. Such taxable money market
securities also are limited to remaining maturities not exceeding
397 days at the time of the Municipal Portfolio's investment, and
the Municipal Portfolio's municipal and taxable securities are
maintained at a dollar-weighted average of 90 days or less.
Taxable money market securities purchased by the Municipal
Portfolio are limited to those described below:
1. marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities; or
2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation; or
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3. commercial paper of prime quality rated A-1 or
higher by S&P or Prime-1 by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AA or higher
by S&P, or Aa or higher by Moody's. (See Appendix B for a
description of these ratings.)
MUNICIPAL SECURITIES GENERALLY. Municipal securities
historically have not been subject to registration with the
Commission. Obligations of issuers of municipal securities are
subject to the provisions of bankruptcy, insolvency, and other
laws affecting the rights and remedies of creditors, such as the
Bankruptcy Code. In addition, the obligations of such issuers
may become subject to laws enacted in the future by Congress,
state legislatures, or referenda extending the time for payment
of principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon the ability of
municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the ability
of any issuer to pay, when due, the principal of, and interest
on, its municipal securities may be materially affected.
OTHER INVESTMENT PRACTICES
ASSET-BACKED SECURITIES. The Prime and Government
Portfolios (as applicable with respect to the Government
Portfolio) may invest in asset-backed securities that meet its
existing diversification, quality and maturity criteria. Asset-
backed securities are securities issued by special purpose
entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may be in the form of a
beneficial interest in a special purpose trust, limited
partnership interest, or commercial paper or other debt
securities issued by a special purpose corporation. Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer.
VARIABLE RATE OBLIGATIONS. The interest rate payable on
certain securities in which a Portfolio may invest, called
"variable rate" obligations, is not fixed and may fluctuate based
upon changes in market rates. The interest rate payable on a
variable rate security is adjusted either at pre-designated
periodic intervals or whenever there is a change in the market
rate to which the security's interest rate is tied. Other
features may include the right of a Portfolio to demand
prepayment of the principal amount of the obligation prior to its
stated maturity and the right of the issuer to prepay the
principal amount prior to maturity. The main benefit of a
variable rate security is that the interest rate adjustment
minimizes changes in the market value of the obligation. As a
result, the purchase of variable rate securities enhances the
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ability of a Portfolio to maintain a stable net asset value per
share and to sell an obligation prior to maturity at a price
approximately equal to the full principal amount. The payment of
principal and interest by issuers of certain securities purchased
by a Portfolio may be guaranteed by letters of credit or other
credit facilities offered by banks or other financial
institutions. Such guarantees will be considered in determining
whether a security meets a Portfolio's investment quality
requirements.
Variable rate obligations purchased by a Portfolio may
include participation interests in variable rate industrial
development bonds that are backed by irrevocable letters of
credit or guarantees of banks that meet the criteria for banks
described above in "Taxable Securities." Purchase of a
participation interest gives a Portfolio an undivided interest in
certain such bonds. A Portfolio can exercise the right, on not
more than 30 days' notice, to sell such an instrument back to the
bank from which it purchased the instrument and draw on the
letter of credit for all or any part of the principal amount of
such Portfolio's participation interest in the instrument, plus
accrued interest, but will do so only (i) as required to provide
liquidity to such Portfolio, (ii) to maintain a high quality
investment portfolio or (iii) upon a default under the terms of
the demand instrument. Banks retain portions of the interest
paid on such variable rate industrial development bonds as their
fees for servicing such instruments and the issuance of related
letters of credit and repurchase commitments. No single bank
will issue its letters of credit with respect to variable rate
obligations or participation interests therein covering more than
10% of the total assets of a Portfolio. Such Portfolio will not
purchase participation interests in variable rate industrial
development bonds unless it receives an opinion of counsel or a
ruling of the Internal Revenue Service that interest earned by
such Portfolio from the bonds in which it holds participation
interests is exempt from Federal income taxes. Alliance will
monitor the pricing, quality and liquidity of variable rate
demand obligations and participation interests therein held by
such Portfolio on the basis of published financial information,
rating agency reports and other research services to which
Alliance may subscribe.
STANDBY COMMITMENTS. A Portfolio may purchase
securities together with the right to resell them to the seller
at an agreed-upon price or yield within specified periods prior
to their maturity dates. Such a right to resell is commonly
known as a "standby commitment," and the aggregate price which
such Portfolio pays for securities with a standby commitment may
be higher than the price which otherwise would be paid. The
primary purpose of this practice is to permit a Portfolio to be
as fully invested as practicable in securities while preserving
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the necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, a Portfolio acquires standby
commitments solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. Since the
value of a standby commitment is dependent on the ability of the
standby commitment writer to meet its obligation to repurchase,
each Portfolio's policy is to enter into standby commitment
transactions only with securities dealers which are determined to
present minimal credit risks.
The acquisition of a standby commitment does not affect
the valuation or maturity of the underlying securities which
continue to be valued in accordance with the amortized cost
method. Standby commitments acquired by a Portfolio are valued
at zero in determining net asset value. Where a Portfolio pays
directly or indirectly for a standby commitment, its cost is
reflected as unrealized depreciation for the period during which
the commitment is held. Standby commitments do not affect the
average weighted maturity of a Portfolio's portfolio of
securities. Stand-by commitments are not expected to comprise
more than 5% of any Portfolio's net assets.
WHEN-ISSUED SECURITIES. Securities are frequently
offered on a "when-issued" basis. When so offered, the price,
which is generally expressed in yield terms, is fixed at the time
the commitment to purchase is made, but delivery and payment for
the when-issued securities take place at a later date. Normally,
the settlement date occurs within one month after the purchase of
bonds and notes. During the period between purchase and
settlement, no payment is made by a Portfolio to the issuer and,
thus, no interest accrues to such Portfolio from the transaction.
When-issued securities may be sold prior to the settlement date,
but a Portfolio makes when-issued commitments only with the
intention of actually acquiring the securities. To facilitate
such acquisitions, the Fund's Custodian will maintain, in a
separate account of each Portfolio, cash, U.S. Government or
other liquid high-grade debt securities, having value equal to,
or greater than, such commitments. Similarly, a separate account
will be maintained to meet obligations in respect of reverse
repurchase agreements. On delivery dates for such transactions,
a Portfolio will meet its obligations from maturities or sales of
the securities held in the separate account and/or from the
available cash flow. If a Portfolio, however, chooses to dispose
of the right to acquire a when-issued security prior to its
acquisition, it can incur a gain or loss. At the time a
Portfolio makes the commitment to purchase a security on a when-
issued basis, it records the transaction and reflects the value
of the security in determining its net asset value. No when-
issued commitments will be made if, as a result, more than 15% of
a Portfolio's net assets would be so committed.
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GENERAL. Yields on debt securities are dependent on a
variety of factors, including the general condition of the money
market and of the municipal bond and municipal note market, the
size of a particular offering, the maturity of the obligation and
the rating of the issue. Securities with longer maturities tend
to produce higher yields and are generally subject to greater
price movements than obligations with shorter maturities. (An
increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. There can
be no assurance, as is true with all investment companies, that a
Portfolio's objectives will be achieved. The achievement of a
Portfolio's investment objectives is dependent in part on the
continuing ability of the issuers of securities in which a
Portfolio invests to meet their obligations for the payment of
principal and interest when due. Each Portfolio generally will
hold securities to maturity rather than follow a practice of
trading. However, a Portfolio may seek to improve portfolio
income by selling certain portfolio securities prior to maturity
in order to take advantage of yield disparities that occur in
securities markets.)
REPURCHASE AGREEMENTS. Each Portfolio may also enter
into repurchase agreements pertaining to the types of securities
in which it may invest. A repurchase agreement arises when a
buyer purchases a security and simultaneously agrees to resell it
to the vendor at an agreed-upon future date, normally one day or
a few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Each Portfolio requires continuous
maintenance of collateral in an amount equal to, or in excess of,
the market value of the securities which are the subject of the
agreement. In the event that a vendor defaulted on its
repurchase obligation, a Portfolio might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. If the vendor became bankrupt,
the Portfolio might be delayed in selling the collateral.
Repurchase agreements may be entered into with member banks of
the Federal Reserve System (including the Fund's Custodian) or
"primary dealers" (as designated by the Federal Reserve Bank of
New York) in U.S. Government securities. It is each Portfolio's
current practice to enter into repurchase agreements only with
such primary dealers and its Custodian, and the Fund has adopted
procedures for monitoring the creditworthiness of such
organizations. Pursuant to Rule 2a-7, a repurchase agreement is
deemed to be an acquisition of the underlying securities,
provided that the obligation of the seller to repurchase the
securities from the money market fund is collateralized fully (as
defined in such Rule). Accordingly, the vendor of a fully
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collateralized repurchase agreement is deemed to be the issuer of
the underlying securities.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio may enter
into reverse repurchase agreements, which involve the sale of
securities held by such Portfolio with an agreement to repurchase
the securities at an agreed upon price, date and interest
payment, although no Portfolio currently intends to enter into
such agreements.
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INVESTMENT RESTRICTIONS
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Unless specified to the contrary, the following
restrictions apply to each Portfolio and are fundamental policies
which may not be changed with respect to each Portfolio without
the affirmative vote of the holders of a majority of such
Portfolio's outstanding voting securities, which means with
respect to any Portfolio (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are present in person or by proxy or (2) more
than 50% of the outstanding shares, whichever is less. If a
percentage restriction is adhered to at the time of an
investment, a later increase or decrease in percentage resulting
from a change in values of portfolio securities or in the amount
of a Portfolio's assets will not constitute a violation of that
restriction.
Each Portfolio:
1. May not, in the case of the Prime Portfolio, invest more
than 25% of its total assets in the securities of
issuers conducting their principal business activities
in any one industry, provided that for purposes of this
policy (a) there is no limitation with respect to
investments in municipal securities (including
industrial development bonds), securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, certificates of deposit, bankers'
acceptances and interest-bearing savings deposits, and
(b) consumer finance companies, industrial finance
companies and gas, electric, water and telephone utility
companies are each considered to be separate industries.
For purposes of this restriction and those set forth in
restrictions 2 and 3 below, a Portfolio will regard the
entity which has the primary responsibility for the
payment of interest and principal as the issuer;
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2. May not invest more than 5% of its total assets in the
securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) except that with respect
to 25% of its total assets, the Municipal Portfolio may
invest not more than 10% of such total assets in the
securities of any one issuer. For purposes of such 5%
and 10% limitations, the issuer of the letter of credit
or other guarantee backing a participation interest in a
variable rate industrial development bond is deemed to
be the issuer of such participation interest;
3. May not purchase more than 10% of any class of the
voting securities of any one issuer except securities
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
4. May not, in the cases of the Prime Portfolio and the
Government Portfolio, borrow money except from banks on
a temporary basis or via entering into reverse
repurchase agreements for extraordinary or emergency
purposes in an aggregate amount not to exceed 15% (10%
in the case of the Government Portfolio) of the
Portfolio's total assets. Such borrowings may be used,
for example, to facilitate the orderly maturation and
sale of portfolio securities during periods of
abnormally heavy redemption requests, if they should
occur, such borrowings may not be used to purchase
investments and such Portfolio will not purchase any
investment while any such borrowings exist;
5. May not, in the cases of the Prime Portfolio and the
Government Portfolio, pledge, hypothecate, mortgage or
otherwise encumber its assets except to secure
borrowings, including reverse repurchase agreements,
effected within the limitations set forth in restriction
4. To meet the requirements of regulations in certain
states, a Portfolio, as a matter of operating policy,
will limit any such pledging, hypothecating or
mortgaging to 15% of its total assets, valued at market,
so long as shares of such Portfolio are being sold in
those states;
6. May not make loans of money or securities except by the
purchase of debt obligations in which a Portfolio may
invest consistent with its investment objectives and
policies and by investment in repurchase agreements;
7. May not enter into repurchase agreements (i) not
terminable within seven days if, as a result thereof,
more than 10% of a Portfolio's total assets would be
14
<PAGE>
committed to such repurchase agreements (whether or not
illiquid) or other illiquid investments, or (ii) with a
particular issuer* if immediately thereafter more than
5% of such Portfolio's assets would be committed to
repurchase agreements entered into with such issuer; or
8. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other
investment companies, except in connection with a
merger, consolidation, acquisition or reorganization;
(c) invest in real estate (other than securities secured
by real estate or interests therein or securities issued
by companies which invest in real estate or interests
therein), commodities or commodity contracts;
(d) purchase securities on margin, or maintain more than
10% of its net assets in illiquid securities (which
include "restricted securities" subject to legal
restrictions on resale arising from an issuer's reliance
upon certain exemptions from registration under the
Securities Act), however, a Portfolio may purchase
restricted securities determined by Alliance to be
liquid in accordance with procedures adopted by the
Trustees of the Fund; (e) make short sales of securities
or maintain a short position or write, purchase or sell
puts (except for standby commitments as described in the
Prospectus and above), calls, straddles, spreads or
combinations thereof; (f) purchase or retain securities
of any issuer if those officers and Trustees of the Fund
and officers and directors of Alliance who own
individually more than 1/2 of 1% of the outstanding
securities of such issuer together own more than 5% of
the securities of such issuer; or (g) act as an
underwriter of securities.
In addition, the Municipal Portfolio may not invest more
than 25% of its total assets in municipal securities (a) whose
issuers are located in the same state, or (b) the interest upon
which is paid from revenues of similar-type projects.
____________________
*Pursuant to Rule 2a-7, the seller of a fully collateralized
repurchase agreement is deemed to be the issuer of the
underlying securities.
15
<PAGE>
- -----------------------------------------------------------------
MANAGEMENT OF THE FUND
- -----------------------------------------------------------------
TRUSTEES AND OFFICERS
The Trustees and principal officers of the Fund and
their primary occupations during the past five years are set
forth below. Certain of the Trustees and officers also may be a
trustee, director or officer of other registered investment
companies sponsored by the Adviser. An asterisk follows the
names of those Trustees who are considered "interested persons"
as defined in the 1940 Act. Unless otherwise specified, the
address of each such person is 1345 Avenue of the Americas, New
York, NY 10105.
TRUSTEES
RONALD M. WHITEHILL*, 58, President, is President and
Chief Executive Officer of Alliance Cash Management Services with
which he has been associated since 1993. Previously, he was
Senior Vice President and Managing Director of Reserve Fund since
prior to 1991.
JOHN D. CARIFA*, 51, Chairman of the Board, is the
President, Chief Operating Officer and a Director of Alliance
Capital Management Corporation ("ACMC")** with which he has been
associated since prior to 1991.
RICHARD S. BORISOFF,* 51, is a member of the law firm of
Paul, Weiss, Rifkind, Wharton & Garrison with which he has been
associated with since prior to 1991. He is a Director of Stanley
and Elsie Roth Foundation (charitable foundation) and BAR
Assurance and Reinsurance Limited (insurance company). His
address is 1285 Avenue of the Americas, New York, NY 10019.
________________
* "Interested person" of the Fund as defined in the Act.
** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the sole
general partner of the Investment Adviser, and to the predecessor
general partner of the Investment Adviser of the same name.
16
<PAGE>
ROBERT J. CASALE, 57, is Group President of Automatic
Data Processing/Brokerage Information Service Group with which he
has been associated since prior to 1991. He is a Director of
Provident Mutual Life Insurance, Quantum Corporation, Tricord
Systems and Compression Labs. His address is 2 Journal Square
Plaza, Jersey City, New Jersey 07306.
JEFFREY M. COLE, 50, is a member of the law firm of Baer
Marks & Upham with which he has been associated since prior to
1991. He is a Director of Rigel Communications, Inc. (cable
systems) and Vice President/Director of 25 East 86 Street Corp.
(residential co-op board). His address is 805 Third Avenue, New
York, New York 10022.
WILLIAM H. FOULK, JR., 63, is an investment adviser and
independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1991. His address is
2 Hekma Road, Greenwich, CT 06831.
ARTHUR S. KRANSELER, 61, was previously Corporate Vice-
President of Corporate Development for Automatic Data Processing,
Inc. (information services data processing) with which he had
been associated since prior to 1991. His address is 3407 South
Ocean Boulevard, Suite 5-C, Highland Beach, Florida 33487.
RICHARD KRUYFF, 60, is Vice President of Sales and
Business Development of Automatic Data Processing/Brokerage
Information Services Group with which he has been associated
since prior to 1991. His address is 2 Journal Square Plaza,
Jersey City, New Jersey 07306
ROBERT A. LEWIS, 42, is a member of the law firm
McCutchen, Doyle, Brown & Enersen with which he has been
associated since prior to 1991. His address is Three Embarcadero
Center, Suite 2800, San Francisco, California 94111.
CLIFFORD L. MICHEL, 56, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1991. He is President Chief Executive Officer of
Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining) and Teapo Technology Corporation
(manufacturer of abrasives). His address is St. Bernard's Road,
Gladstone, New Jersey 07934.
PETER QUICK, 40, is President and Director of Quick &
Reilly Group, Inc. since March 1994. Prior to March 1994, he was
President of U.S. Clearing Corp. His address is 230 South County
Road, Palm Beach, Florida.
17
<PAGE>
WILLIAM L, RHOADS III, 68, is a financial consultant.
Previously, he was Chairman of Trust and Investment Committees
(banking), President and Chief Executive Officer of C.F.
Kettering, Incorporated (holding company), President and Director
of the following holding companies: TRP Finance, Inc., Church
Street Holdings, Inc. and New Century Holdings, Inc., Director of
the following holding companies: ADP Delaware and Affiliates,
W.W. Venture Corporation, Turner Investment Corporation, Caribe
Investment Corporation and Director of the following insurance
companies: New Castle Mutual Insurance Company and ADP Insurance
Company, Ltd. His address is 282 Vista Royal Circle, Palm
Desert, California 92211.
OFFICERS
JOHN R. BONCZEK, 35, Senior Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1991.
KATHLEEN A. CORBET, 36, Senior Vice President, has been
a Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1991.
ROBERT I. KURZWEIL, 45, Senior Vice President, has been
a Vice President of ACMC since May 1994. Previously, he was Vice
President of Sales and Business Development for Automatic Data
Processing with which he had been associated since prior to 1991.
PATRICIA NETTER, 45, Senior Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1991.
RONALD R. VALEGGIA, 49, Senior Vice President, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1991.
JOHN F. CHIODI, 30, Vice President, is a Vice President
of ACMC with which he has been associated since prior to 1991.
DORIS T. CILIBERTI, 32, Vice President, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1991.
LINDA D. NEIL, 35, Vice President, is an Assistant Vice
President of ACMC with which she has been associated since August
1993. Previously, she was an Associate Director of The Reserve
Fund since prior to 1991.
18
<PAGE>
RAYMOND J. PAPERA, 40, Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1991. Previously, he was Assistant Treasurer and Portfolio
Manager for the Scudder International Funds, Inc.
PAMELA F. RICHARDSON, 43, Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1991. Previously, she was a Vice President of Mitchell
Hutchins Asset Management with which she had been associated
since prior to 1991.
EDMUND P. BERGAN, JR., 46, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors,
Inc. with which he has been associated since prior to 1991.
MARK D. GERSTEN, 45, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc. with which he has been associated since prior to 1991.
JOSEPH J. MANTINEO, 37, Controller, is a Vice President
of Alliance Fund Services, Inc. with which he has been associated
since prior to 1991.
The Fund does not pay any fees to, or reimburse expenses
of, its Trustees who are "affiliated persons" of the Adviser.
The aggregate compensation to be paid by the Fund to each of the
Trustees during its current fiscal year ending November 30, 1996
(estimating future payments based upon existing arrangements),
the aggregate compensation paid to each of the Trustees during
calendar year 1995 by all of the registered investment companies
to which Alliance provides investment advisory services
(collectively, the "Alliance Fund Complex") and the total number
of funds in the Alliance Fund Complex with respect to which each
of the Trustees serves as a director or trustee, are set forth
below. Neither the Fund nor any other fund in The Alliance Fund
Complex provides compensation in the form of pensions or
retirement benefits to any of its directors or trustees. Certain
of the Trustees and Officers also may be a director, trustee or
officer of other registered investment companies sponsored by the
Adviser.
19
<PAGE>
Total Number of
Funds in The
Total Alliance Fund
Compensation Complex, Including
Aggregate From the The Fund as to
Compensation Alliance which the Director
Name of Trustee from the Fund is a Director
of the Fund Fund* Complex** or Trustee
- --------------- ------------ ------------- ------------------
John D. Carifa $0 $0 48
Richard S. Borisoff $3,000 $3,000 1
Robert J. Casale $0 $0 1
Jeffrey M. Cole $3,000 $3,000 1
William H. Foulk, Jr. $3,000 $143,500 29
Arthur S. Kranseler $3,000 $3,000 1
Richard Kruyff $0 $0 1
Robert A. Lewis $3,000 $3,000 1
Clifford L. Michel $3,000 $131,500 35
Peter Quick $0 $0 1
William L. Rhoads III $3,000 $3,000 1
Ronald M. Whitehall $0 $0 1
- ----------------
* The information in this column represents an estimate of
amounts to be paid during the Fund's current fiscal year.
** The information in this column represents amounts actually
paid during calendar year 1995.
As of May 31, 1996, the Trustees and officers of the Fund as a
group owned less than 1% of the shares of the Fund.
ADVISER
Alliance Capital Management L.P., a New York Stock
Exchange listed company with principal offices at 1345 Avenue of
the Americas, New York, New York 10105, has been retained under
an investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Trustees.
Alliance is a leading international investment manager
supervising client accounts with assets as of March 31, 1996 of
more than $163 billion (of which more than $53 billion
represented the assets of investment companies). Alliance's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. Alliance and its subsidiaries
20
<PAGE>
employ approximately 1,350 employees who operate out of domestic
offices and the offices of subsidiaries in Bombay, Istanbul,
London, Paris, Sao Paulo, Sydney, Tokyo, Toronto, Bahrain,
Luxembourg and Singapore. The 50 registered investment companies
comprising 107 separate investment portfolios managed by Alliance
currently have more than two million shareholders. As of
March 31, 1996, Alliance was retained as an investment manager by
34 of the FORTUNE 100 Companies.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, Alliance, is an indirect wholly-owned subsidiary of
The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of March 31, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57.6% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in Alliance
("Units"). As of March 31, 1996, approximately 32.4% and 10% of
the Units were owned by the public and employees of Alliance and
its subsidiaries, respectively, including employees of Alliance
who serve as Trustees of the Fund.
AXA and its subsidiaries own approximately 63.9% of the
issued and outstanding shares of capital stock of ECI. AXA is
the holding company for an international group of insurance and
related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty
insurance and reinsurance. The insurance operations are diverse
geographically, with activities in France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Europe and the Asia Pacific area. AXA is also
engaged in asset management, investment banking, securities
trading, brokerage, real estate and other financial services
activities in the United States, Europe and the Asia Pacific
area. Based on information provided by AXA, as of March 31,
1996, 42.1% of the issued ordinary shares (representing 53.4% of
the voting power) of AXA were owned by Midi Participations, a
French holding company ("Midi"). The shares of Midi were, in
turn, owned 61.4% (representing 62.5% of the voting power) by
Finaxa, a French holding company, and 38.6% (representing 37.5%
of the voting power) by subsidiaries of Assicurazioni Generali
S.p.A., an Italian corporation (one of which, Belgica Insurance
Holding S.A., a Belgian corporation, owned 30.8%, representing
33.1% of the voting power). As of March 31, 1996, 61.1% of the
voting shares (representing 73.4% of the voting power) of Finaxa
were owned by five French mutual insurance companies (the
21
<PAGE>
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 34.7% of the voting shares representing 40.4% of the voting
power), and 25.5% of the voting shares (representing 16% of the
voting power) of Finaxa were owned by Banque Paribas, a French
bank. Including the ordinary shares owned by Midi, as of
March 31, 1996, the Mutuelles AXA directly or indirectly owned
51% of the issued ordinary shares (representing 64.7% of the
voting power) of AXA. Acting as a group, the Mutuelles AXA
control AXA, Midi and Finaxa.
Under the Advisory Agreement, Alliance provides
investment advisory services and order placement facilities for
each Portfolio of the Fund and pays all compensation of Trustees
of the Fund who are affiliated persons of Alliance. Alliance or
its affiliates also furnish the Fund, without charge, with
management supervision and assistance and office facilities.
Under the Advisory Agreement, each of the Portfolios pays an
advisory fee at the annual rate of .50 of 1% of the average daily
net assets of each Portfolio. The fee is accrued daily and paid
monthly. Alliance may, from time to time, voluntarily waive a
portion of its advisory fees payable from one or more of the
Portfolios. In accordance with the Distribution Services
Agreement described below, each Portfolio of the Fund may pay a
portion of advertising and promotional expenses in connection
with the sale of shares of the Portfolio. Each Portfolio also
pays for printing of prospectuses and other reports to
shareholders and all expenses and fees related to registration
and filing with the Securities and Exchange Commission and with
state regulatory authorities. Each Portfolio pays all other
expenses incurred in its operations, including Alliance's fees;
the Administration fees (as described below); custody, transfer
and dividend disbursing expenses; legal and auditing costs;
clerical, accounting and other office costs; fees and expenses of
Trustees who are not affiliated persons; and interest charges,
taxes, brokerage fees, and commissions. As to the obtaining of
clerical and accounting services not required to be provided to
each Portfolio by Alliance under the Advisory Agreement, each
Portfolio may employ its own personnel. For such services, it
also may utilize personnel employed by Alliance or its
affiliates; if so done, the services may be provided to each
Portfolio at cost, as applicable, and the payments therefore must
be specifically approved in advance by the Fund's Trustees.
The Advisory Agreement became effective on March 16,
1995. The Advisory Agreement shall remain in effect until
February 28, 1997 and thereafter from year to year provided that
such continuance is specifically approved at least annually by a
vote of a majority of the outstanding shares of each Portfolio or
by the Fund's Trustees, including in either case approval by a
majority of the Trustees who are not parties to the Agreement, or
interested persons as defined in the Act. The Advisory Agreement
22
<PAGE>
may be terminated without penalty on 60 days' written notice at
the option of either party or by a vote of the outstanding voting
securities of each Portfolio; and it will automatically terminate
in the event of assignment. Alliance is not liable for any
action or inaction with regard to its obligations under the
Advisory Agreement as long as it does not exhibit willful
misfeasance, bad faith, gross negligence, or reckless disregard
of its obligations.
THE ADMINISTRATOR
Pursuant to an Administration Agreement, dated as of
March 16, 1995 (the "Administration Agreement"), ADP Financial
Information Services, Inc., a wholly-owned subsidiary of
Automatic Data Processing, Inc., serves as administrator of the
Fund, on behalf of the Portfolios. The Administrator provides
certain administrative and shareholder accounting services,
including, among other responsibilities, providing a direct
interface between the Fund's Transfer Agent and the
Administrator's proprietary shareholder accounting system,
coordinating the negotiation of contracts and fees with, and the
monitoring of performance of, the Fund's independent contractors
and agents; arranging for or overseeing of, the computation of
performance data, including net asset value and yield; responding
to shareholder inquiries; and providing accounting and
bookkeeping services. ADP does not have any responsibility or
authority for the management of the Portfolios, the determination
of investment policy, or for any matter pertaining to the
distribution of the Fund's shares.
Under the Administration Agreement, ADP may render
similar administrative services to others. The Administration
Agreement is terminable without penalty by the Fund on behalf of
each Portfolio on 60 days' written notice to ADP (which notice
may be waived by ADP) or by ADP on 60 days' written notice to the
Fund (which notice may be waived by the Fund). The
Administration Agreement also provides that ADP shall not be
liable for any error of judgment or mistake of law, except for
willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of
its duties under the Administration Agreement.
In addition, the Administration Agreement provides that,
in the event the operating expenses of any Fund or Portfolio,
including all investment advisory and administration fees, but
excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses such as litigation, for any fiscal year
exceed the most restrictive expense limitation applicable to a
Portfolio imposed by the securities laws or regulations
thereunder of any state in which the shares of each Portfolio are
qualified for sale, as such limitations may be raised or lowered
23
<PAGE>
from time to time, ADP shall reduce its administration fee (which
fee is described below). The amount of any such reduction to be
borne by ADP shall be deducted from the monthly administration
fee otherwise payable to ADP during such fiscal year; and if such
amounts should exceed the monthly fee, shall pay to each
Portfolio its share of such excess expenses no later than the
last day of the first month of the next succeeding fiscal year.
In consideration of the services provided by ADP
pursuant to the Administration Agreement, ADP receives from each
Portfolio a fee computed daily and paid monthly at a maximum
annual rate equal to .05% of each of the Portfolio's average
daily net assets. ADP may voluntarily waive a portion of the
fees payable to it with respect to each Portfolio under the
Administration Agreement. ADP shall pay the fees and expenses of
the Trustees who are affiliated with ADP.
DISTRIBUTION SERVICES AGREEMENT
Rule 12b-1 adopted by the Commission under the 1940 Act
permits an investment company to directly or indirectly pay
expenses associated with the distribution of its shares in
accordance with a duly adopted and approved plan. The Fund, on
behalf of the Portfolios, has entered into a Distribution
Services Agreement (the "Agreement") which includes a plan
adopted pursuant to Rule 12b-1 (the "Plan"). Pursuant to the
Plan, each Portfolio pays to Alliance a Rule 12b-1 distribution
services fee, which may not exceed an annual rate of .45% of each
Portfolio's aggregate average daily net assets. In addition,
under the Agreement, Alliance may make payments for distribution
assistance and for administrative and accounting services from
its own resources which may include the management fee paid by
each Portfolio. The Agreement became effective on March 16,
1995.
Payments under the Agreement are used in their entirety
for (i) payments to broker-dealers and other financial
intermediaries, including Donaldson, Lufkin & Jenrette Securities
Corporation, an affiliate of Alliance, for distribution
assistance and to banks and other depository institutions for
administrative and accounting services, and (ii) otherwise
promoting the sale of shares of the Fund such as by paying for
the preparation, printing and distribution of prospectuses and
other promotional materials sent to existing and prospective
shareholders and by directly or indirectly purchasing radio,
television, newspaper and other advertising. In approving the
Agreement, the Trustees determined that there was a reasonable
likelihood that the Agreement would benefit each Portfolio and
its shareholders.
24
<PAGE>
The administrative and accounting services provided by
broker-dealers, depository institutions and other financial
institutions may include, but are not limited to, establishing
and maintaining shareholder accounts, sub-accounting, processing
of purchase and redemption orders, sending confirmations of
transactions, forwarding financial reports and other
communications to shareholders and responding to shareholder
inquiries regarding each Portfolio. The State of Texas requires
that shares of a Portfolio may be sold in that state only by
dealers or other financial institutions that are registered there
as broker-dealers. As interpreted by courts and administrative
agencies, certain laws and regulations limit the ability of a
bank or other depository institution to become an underwriter or
distributor of securities. However, in the opinion of the Fund's
management based on the advice of counsel, these laws and
regulations do not prohibit such depository institutions from
providing other services for investment companies such as the
administrative and accounting services described above. The
Trustees will consider appropriate modifications to the Fund's
operations, including discontinuance of payments under the
Agreement to banks and other depository institutions, in the
event of any future change in such laws or regulations which may
affect the ability of such institutions to provide the above-
mentioned services.
The Treasurer of the Fund reports the amounts expended
under the Agreement and the purposes for which such expenditures
were made to the Trustees on a quarterly basis. Also, the
Agreement provides that the selection and nomination of
disinterested Trustees (as defined in the 1940 Act) are committed
to the discretion of the disinterested Trustees then in office.
The Agreement may be continued annually if approved by a
majority vote of the Trustees who neither are interested persons
of the Fund or a Portfolio nor have any direct or indirect
financial interest in the Agreement or in any related agreement,
cast in person at a meeting called for that purpose.
All material amendments to the Agreement must be
approved by a vote of the Trustees, including a majority of the
disinterested Trustees, cast in person at a meeting called for
that purpose, and the Agreement may not be amended in order to
increase materially the costs which a Portfolio may bear pursuant
to the Agreement without the approval of a majority of the
outstanding shares of the Portfolio. The Agreement may also be
terminated at any time by a majority vote of the disinterested
Trustees, or by a majority of the outstanding shares of a
Portfolio or by Alliance. Any agreement with a qualifying
broker-dealer or other financial intermediary may be terminated
without penalty on not more than 60 days' written notice by a
vote of the majority of non-party Trustees, by a vote of a
25
<PAGE>
majority of the outstanding shares of a Portfolio, or by Alliance
and will terminate automatically in the event of its assignment.
The Agreement is in compliance with rules of the
National Association of Securities Dealers, Inc. (the "NASD")
which became effective July 7, 1993 and which limit the annual
asset-based sales charges and service fees that a mutual fund may
impose to .75% and .25%, respectively, of average annual net
assets.
- -----------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -----------------------------------------------------------------
The Fund, on behalf of each Portfolio, may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.
Shareholders maintaining Portfolio accounts through
brokerage firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Portfolio itself so that the institutions may
properly process such orders prior to their transmittal to The
Bank of New York ("BONY"). Should an investor place a
transaction order with such an institution after its deadline,
the institution may not effect the order with the Portfolio until
the next business day. Accordingly, an investor should
familiarize himself or herself with the deadlines set by his or
her institution. For example, the Portfolio's distributor
accepts purchase orders from its customers up to 2:15 p.m. (New
York time) for issuance at the 4:00 p.m. transaction time and
price. A brokerage firm acting on behalf of a customer in
connection with transactions in Portfolio shares is subject to
the same legal obligations imposed on it generally in connection
with transactions in securities for a customer, including the
obligation to act promptly and accurately.
Orders for the purchase of Portfolio shares become
effective at the next transaction time after Federal funds or
bank wire monies become available to BONY for a shareholder's
investment. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve
wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately
available funds; similar immediate availability is accorded
monies received at BONY by bank wire. Money transmitted by a
check drawn on a member of the Federal Reserve System is
converted to Federal funds in one business day following receipt.
26
<PAGE>
Checks drawn on banks which are not members of the Federal
Reserve System may take longer. All payments (including checks
from individual investors) must be in United States dollars.
All shares purchased are confirmed to each shareholder
and are credited to his or her account at the net asset value.
To avoid unnecessary expense to a Portfolio and to facilitate the
immediate redemption of shares, share certificates, for which no
charge is made, are not issued except upon the written request of
a shareholder. Certificates are not issued for fractional
shares. Shares for which certificates have been issued are not
eligible for any of the optional methods of withdrawal; namely,
the telephone, telegraph, check-writing or periodic redemption
procedures. The Fund, on behalf of each Portfolio, reserves the
right to reject any purchase order.
A "business day," during which purchases and redemptions
of Portfolio shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday exclusive of national holidays on which the New York
Stock Exchange is closed and Good Friday; if one of these
holidays falls on a Saturday or Sunday, purchases and redemptions
will likewise not be processed on the preceding Friday or the
following Monday, respectively. The right of redemption may be
suspended or the date of a redemption payment postponed for any
period during which the New York Stock Exchange is closed (other
than customary weekend and holiday closings), when trading on the
New York Stock Exchange is restricted, or an emergency (as
determined by the Commission) exists, or the Commission has
ordered such a suspension for the protection of shareholders.
The value of a shareholder's investment at the time of redemption
may be more or less than his or her cost, depending on the market
value of the securities held by each Portfolio at such time and
the income earned.
- -----------------------------------------------------------------
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
- -----------------------------------------------------------------
All net income of each Portfolio is determined after the
close of each business day, currently 4:00 p.m. New York time
(and at such other times as the Trustees may determine) and is
paid immediately thereafter pro rata to shareholders of record of
that Portfolio via automatic investment in additional full and
fractional shares in each shareholder's account at the rate of
one share for each dollar distributed. As such additional shares
are entitled to dividends on following days, a compounding growth
of income occurs.
27
<PAGE>
A Portfolio's net income consists of all accrued
interest income on Portfolio assets less expenses allocable to
that Portfolio (including accrued expenses and fees payable to
the Adviser) applicable to that dividend period. Realized gains
and losses are reflected in a Portfolio's net asset value and are
not included in net income. Net asset value per share of each
Portfolio is expected to remain constant at $1.00 since all net
income of each Portfolio is declared as a dividend each time net
income is determined and net realized gains and losses are
expected to be relatively small.
The valuation of each Portfolio's securities is based
upon their amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of a Portfolio may be higher than that
of a fund with identical investments utilizing a method of
valuation based upon market prices for its portfolio instruments;
the converse would apply in a period of rising interest rates.
Each Portfolio utilizes the amortized cost method of
valuation of its securities in accordance with the provisions of
Rule 2a-7 under the Act. Pursuant to such Rule, each Portfolio
maintains a dollar-weighted average portfolio maturity of 90 days
or less, purchases instruments which, at the time of investment,
have remaining maturities of no more than 397 days, and invests
only in securities of high quality. Under Rule 2a-7, the Fund
treats a municipal security which has a variable or floating rate
of interest as having a maturity equal to the longer of either
the period, if any, remaining until the interest rate is next
scheduled to be readjusted or the period remaining until the
principal amount can be recovered by exercising the security's
demand feature. The Fund maintains procedures designed to
stabilize, to the extent reasonably possible, the price per share
of each Portfolio as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of each
Portfolio's holdings by the Trustees at such intervals as they
deem appropriate to determine whether and to what extent the net
asset value of each Portfolio calculated by using available
market quotations or market equivalents deviates from net asset
value based on amortized cost. If such deviation as to any
Portfolio exceeds 1/2 of 1%, the Trustees will promptly consider
what action, if any, should be initiated. In the event the
Trustees determine that such a deviation may result in material
dilution or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the affected Portfolio
28
<PAGE>
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares of that Portfolio; or (3) establishing a net
asset value per share of that Portfolio by using available market
quotations or equivalents.
The net asset value of the shares of each Portfolio is
determined each business day (and on such other days as the
Trustees deem necessary) at 12:00 Noon and 4:00 p.m. New York
time. The net asset value per share of a Portfolio is calculated
by taking the sum of the value of that Portfolio's investments
and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares of that Portfolio
outstanding. All expenses, including the fees payable to
Alliance, are accrued daily.
- -----------------------------------------------------------------
TAXES
- -----------------------------------------------------------------
FEDERAL INCOME TAX CONSIDERATIONS
Each of the Fund's Portfolios has qualified for each
fiscal year to date and intends to qualify in each future year to
be taxed as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code") and, as such, will
not be liable for Federal income and excise taxes on the net
income and capital gains distributed to its shareholders. Since
each Portfolio of the Fund distributes all of its net income and
capital gains, each Portfolio should thereby avoid all Federal
income and excise taxes.
Shareholders generally are not subject to Federal income
tax with respect to distributions out of tax-exempt interest
income earned by each Municipal Portfolio of the Fund. See,
however, "Alternative Minimum Tax" above.
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the dividends-
received deduction available to corporations. Long-term capital
gains, if any, distributed by the Fund to a shareholder are
taxable to the shareholder as long-term capital gain,
irrespective of the length of time he may have held his shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year near calendar year-end, although
such distributions may be made more frequently if necessary in
order to maintain the Fund's net asset value at $1.00 per share.
29
<PAGE>
Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Fund is not deductible for
Federal income tax purposes. Under rules of the Internal Revenue
Service for determining when borrowed funds are used for
purchasing or carrying particular assets, shares may be
considered to have been purchased or carried with borrowed funds
even though those funds are not directly linked to the shares.
Further, persons who are "substantial users" (or related persons)
of facilities financed by private activity bonds (within the
meaning of Sections 147(a) of the Code) should consult their tax
advisers before purchasing shares of a Municipal Portfolio.
Substantially all of the dividends paid by each
Municipal Portfolio are anticipated to be exempt from Federal
income taxes. Shortly after the close of each calendar year, a
notice is sent to each shareholder advising him of the total
dividends paid into his account for the year and the portion of
such total that is exempt from Federal income taxes. This
portion is determined by the ratio of the tax-exempt income to
total income for the entire year and, thus, is an annual average
rather than a day-by-day determination for each shareholder.
Each Portfolio generally will be required to withhold
tax at the rate of 31% with respect to dividends of net ordinary
income and net realized capital gains payable to a noncorporate
shareholder unless the shareholder certifies on his subscription
application that the social security or taxpayer identification
number provided is correct and that the shareholder has not been
notified by the Internal Revenue Service that he is subject to
backup withholdings.
STATE INCOME TAX CONSIDERATIONS
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO. Shareholders
of the Prime Portfolio and the Government Portfolio may be
subject to state and local taxes on distributions from the Prime
Portfolio and Government Portfolio. The laws of some states may
exempt from some taxes dividends from the Prime Portfolio or the
Government Portfolio to the extent such dividends are
attributable to interest from obligations of the U.S. Government
and certain of its agencies and instrumentalities.
MUNICIPAL PORTFOLIO. Shareholders of the Municipal
Portfolio may be subject to state and local taxes on
distributions from the Municipal Portfolio, including
distributions which are exempt from Federal income taxes. Each
investor should consult his own tax adviser to determine the tax
status of distributions from the Municipal Portfolio in his
particular state and locality.
30
<PAGE>
- -----------------------------------------------------------------
GENERAL INFORMATION
- -----------------------------------------------------------------
PORTFOLIO TRANSACTIONS. Subject to the general
supervision of the Trustees of the Fund, Alliance is responsible
for the investment decisions and the placing of the orders for
securities transactions for each Portfolio. Because the
Portfolios invest in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Portfolio's shares since the Portfolio's
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which do not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.
The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, Alliance may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to Alliance. Such services may be used by
Alliance for all of its investment advisory accounts and,
accordingly, not all such services may be used by Alliance in
connection with each Portfolio. The supplemental information
received from a dealer is in addition to the services required to
be performed by Alliance under the Advisory Agreement, and the
expenses of Alliance will not necessarily be reduced as a result
of the receipt of such information. Portfolio securities will
not be purchased from or sold to Alliance's affiliate, Donaldson,
Lufkin & Jenrette, Inc., or any subsidiary or affiliate of the
parent.
CAPITALIZATION. All shares of each Portfolio, when
issued, are fully paid and non-assessable. The Trustees are
authorized to reclassify and issue any unissued shares to any
number of additional classes or series without shareholder
approval. Accordingly, the Trustees in the future, for reasons
such as the desire to establish one or more additional portfolios
with different investment objectives, policies or restrictions,
may create additional classes or series of shares. Any issuance
of shares of another class would be governed by the 1940 Act and
the law of the Commonwealth of Massachusetts. Shares of each
Portfolio are normally entitled to one vote for all purposes.
31
<PAGE>
Generally, shares of all Portfolios vote as a single series for
the election of Trustees and on any other matter affecting all
Portfolios in substantially the same manner. As to matters
affecting each Portfolio differently, such as approval of the
Advisory Agreement and changes in investment policy, shares of
each Portfolio vote as separate classes. Certain procedures for
the removal by shareholders of trustees of investment trusts,
such as the Fund, are set forth in Section 16(c) of the 1940 Act.
SHAREHOLDER LIABILITY. Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of each Portfolio.
However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Fund and
requires that the Trustees use their best efforts to ensure that
notice of such disclaimer be given in each note, bond, contract,
instrument, certificate or undertaking made or issued by the
trustees or officers of the Fund. The Agreement and Declaration
of Trust provides for indemnification out of the property of the
Portfolios for all loss and expense of any shareholder of a
Portfolio held personally liable for the obligations of the
Portfolio. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to
circumstances in which a Portfolio would be unable to meet its
obligations. In the view of Alliance, such risk is not material.
LEGAL MATTERS. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, One Battery Park
Plaza, New York, New York, 10004, counsel for the Fund. Seward &
Kissel has relied upon the opinion of Sullivan & Worcester, One
Post Office Square, Boston, Massachusetts, 02109, for matters
relating to Massachusetts law.
ACCOUNTANTS. An opinion relating to each Portfolio's
financial statements is given herein by McGladrey & Pullen LLP,
New York, New York, independent auditors for the Fund.
YIELD QUOTATIONS AND PERFORMANCE INFORMATION.
Advertisements containing yield quotations for one or more
Portfolios for the Fund may from time to time be sent to
investors or placed in newspapers, magazines or other media on
behalf of the Fund. These advertisments may quote performance
rankings, ratings or data from independent organizations or
financial publications such as Lipper Analytical Services, Inc.,
Mornignstar Inc., IBC's Money Fund Report, IBC's Money Market
Insight or Bank Rate Monitor or compare the Fund's performance to
bank money market deposit accounts, certificates of deposit or
various indices. Yield quotations are calculated in accordance
with the standardized method referred to in Rule 482 under the
Securities Act of 1933.
32
<PAGE>
Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
of the capital changes, in the value of a hypothetical pre-
existing account having a balance of one share of such Portfolio
at the beginning of such period, (ii) dividing the net change in
account value by the value of the account at the beginning of the
base period to obtain the base period return, and
(iii) multiplying the base period return by (365/7) with the
resulting yield figure carried to the nearest hundredth of one
percent. A Portfolio's effective annual yield represents a
compounding of the annualized yield according to the formula:
effective yield = [(base period return + 1) 365/7] - 1.
Depending on an investor's tax bracket, an individual
investor may earn a substantially higher after-tax return from a
Portfolio than from comparable investments whose income is
taxable. For example, a 5% tax-exempt yield of the Municipal
Portfolio received by an investor subject to the top 1994 Federal
personal income tax rate would be equivalent to a taxable yield
of 8.28%.
In each of these examples it is assumed that an investor
can fully deduct the state and local income taxes for federal
income tax purposes and that the investor is not subject to
federal or state alternative minimum taxes. Taxable equivalent
yield is computed by dividing that portion of the yield of the
Municipal Portfolio that is tax exempt (assumed for purposes of
these examples to be the entire yield of 5%) by one minus the
applicable marginal income tax rate (39.6% in the case of the
Municipal Portfolio) and adding the quotient to that portion, if
any, of the yield of the Municipal Portfolio that is not tax-
exempt.
From time to time the Municipal Portfolio may advertise
hypothetical tax equivalent yields in advertising. These will be
used for illustrative purposes only and not as representative of
the Municipal Portfolio's past or future performance.
PERIODIC DISTRIBUTION PLANS. Without affecting
shareholders' right of using any of the methods of redemption
described above, by checking the appropriate boxes on the
Application Form shareholders may elect to participate
additionally in the following plans without any separate charge.
Under the Income Distribution Plan shareholders receive monthly
payments of all the income earned in his or her Portfolio
account, with payments forwarded shortly after the close of the
month. Under the Systematic Withdrawal Plan, shareholders may
request checks in any specified amount of $50 or more each month
or in any intermittent pattern of months. If desired,
33
<PAGE>
shareholders can order, via signature-guaranteed letter to the
Portfolio, such periodic payments to be sent to another person.
REPORTS. You will receive semi-annual and annual
reports of the Portfolio(s) in which you are a shareholder as
well as a monthly summary of your account. You can arrange for a
copy of each of your account statements to be sent to other
parties.
ADDITIONAL INFORMATION. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT FILED BY THE FUND WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933. COPIES OF
THE REGISTRATION STATEMENT MAY BE OBTAINED AT A REASONABLE CHARGE
FROM THE COMMISSION OR MAY BE EXAMINED, WITHOUT CHARGE, AT THE
COMMISSION'S OFFICES IN WASHINGTON, D.C.
34
<PAGE>
ALLIANCE MONEY MARKET FUND
- -GENERAL MUNICIPAL PORTFOLIO
- -PRIME PORTFOLIO
- -GOVERNMENT PORTFOLIO
SEMI-ANNUAL REPORT
MAY 31, 1996
(UNAUDITED)
STATEMENT OF NET ASSETS
MAY 31, 1996 (UNAUDITED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------------
MUNICIPAL BONDS56.0%
ALABAMA2.1%
ABBEVILLE IDR
(Greenbush Woods Project) AMT VRDN*
$ 455 4/01/04 3.90% $ 455,000
ALABAMA HIGHER EDUCATION
Student Loan Revenue Series C AMT
1,000 3/01/97 3.70 1,008,719
DECATUR IDB SOLID WASTE REVENUE
(Trico Steel Co. Project) AMT VRDN*
1,000 3/01/26 3.90 1,000,000
----------
2,463,719
CALIFORNIA2.1%
LOS ANGELES TRAN
(Unified School District)
2,400 7/03/96 3.62 2,401,660
DELAWARE0.3%
DELAWARE ECONOMIC DEVELOPMENT AUTHORITY
(Orient Chemical Company) AMT VRDN*
400 11/01/99 3.88 400,000
DISTRICT OF COLUMBIA1.5%
DISTRICT OF COLUMBIA GO
Series '92 A-6 VRDN*
400 10/01/07 4.15 400,000
DISTRICT OF COLUMBIA HFA MFHR
(McLean Apts.) Series '85A VRDN*
1,390 12/01/05 3.85 1,390,000
----------
1,790,000
FLORIDA2.8%
ORANGE COUNTY HFA SFMR
GNMA/FNMA Mortgage Program Series '96
AMT PPB*
1,000 4/01/29 3.65 1,000,000
PINELLAS COUNTY SFMR
Multi-County Program GNMA/FNMA Mortgage
Program Series B AMT PPB*
1,600 4/01/29 3.40% $1,600,000
WAUCHULA IDR
(Hardee County CenterProject) VRDN*
650 12/01/13 3.70 650,000
----------
3,250,000
ILLINOIS5.3%
CHICAGO AIRPORT REVENUE
(O'Hare International Airport)
Series '88A AMT VRDN*
1,900 1/01/18 3.75 1,900,000
CITY OF CHICAGO SFMR
Series '96B AMT PPB*
500 9/01/27 3.30 500,000
ILLINOIS DEVELOPMENT FINANCE AUTHORITY
(U.G.N. Inc. Project)
Series '86 AMT VRDN*
3,000 9/15/11 4.15 3,000,000
WOOD DALE CITY IDR
(Nippon Express USA, Inc.)
Series '85 VRDN*
800 6/01/00 3.85 800,000
----------
6,200,000
INDIANA5.2%
ALLEN COUNTY ECONOMIC DEVELOPMENT AUTHORITY
(Mattel Power Wheels, Inc.) AMT VRDN*
1,300 12/01/18 3.90 1,300,000
JEFFERSONVILLE ECONOMIC DEVELOPMENT AUTHORITY
(Apollo America Corp. Project) AMT VRDN*
3,000 10/01/11 3.90 3,000,000
SEYMOUR ECONOMIC DEVELOPMENT AUTHORITY
(Kobelco Metal Powder Co. Project)
Series '87 AMT VRDN*
1,775 12/01/97 4.15 1,775,000
----------
6,075,000
1
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------------
KENTUCKY5.6%
BEREA IDR
(Tokico Manufacturing Corp.)
Series '87 AMT VRDN*
$ 2,400 12/01/97 4.15% $2,400,000
RUSSELLVILLE IDB
(JS Technos Corp. Project)
Series '89 AMT VRDN*
3,000 12/01/09 4.15 3,000,000
WARSAW INDUSTRIAL BUILDING AUTHORITY
(SDI Operating Partners)
Series '88 AMT VRDN*
1,150 8/01/09 3.70 1,150,000
----------
6,550,000
LOUISIANA0.3%
WEST BATON ROUGE IDR
(Dow Chemical Corp.) Series '95 AMT VRDN*
400 11/01/25 4.15 400,000
MAINE4.1%
MAINE FINANCE AUTHORITY
Series H AMT VRDN*
610 6/01/01 4.05 610,000
MAINE FINANCE AUTHORITY
Series '88C AMT VRDN*
260 12/01/04 4.05 260,000
MAINE FINANCE AUTHORITY
Series '89D AMT VRDN*
120 6/01/00 4.05 120,000
MAINE FINANCE AUTHORITY
Series '89K AMT VRDN*
145 12/01/97 4.05 145,000
MAINE FINANCE AUTHORITY
Economic Development Revenue Series B
AMT VRDN*
510 6/01/99 4.05 510,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
Series D-F AMT VRDN*
745 6/01/04 4.05 745,000
MAINE FINANCE AUTHORITY
Insured Loan Revenue Series '88A-D AMT VRDN*
1,595 12/01/03 4.05 1,595,000
ORRINGTON RESOURCE RECOVERY
(Penobscot Energy Project B) VRDN*
800 5/01/03 3.75% $ 800,000
----------
4,785,000
MICHIGAN1.7%
MICHIGAN STRATEGIC FUND
(Donnelly Corp. Project)
Series A AMT VRDN*
2,000 3/01/10 4.05 2,000,000
MISSOURI2.1%
MISSOURI ECONOMIC DEVELOPMENT AUTHORITY
Export & Infrastructure Series A AMT VRDN*
290 9/01/05 3.95 290,000
MISSOURI ECONOMIC DEVELOPMENT AUTHORITY
Export & Infrastructure Series C AMT VRDN*
1,465 9/01/05 3.95 1,465,000
MISSOURI INDUSTRIAL DEVELOPMENT AUTHORITY
(Excelsior Manufacturing) Series B AMT VRDN*
645 2/01/09 3.95 645,000
----------
2,400,000
NEBRASKA1.0%
NEBRASKA FINANCE AUTHORITY
(Single Family Housing) Series '96C AMT PPB*
1,200 9/01/28 3.85 1,200,000
NEW HAMPSHIRE1.3%
NASHUA HOUSING AUTHORITY MFHR
(Clocktower Project) AMT VRDN*
1,500 10/20/28 4.20 1,500,000
NEW YORK3.6%
NEW YORK GO
Series F-6 VRDN*
3,500 2/15/18 3.80 3,500,000
2
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------------
NEW YORK AIRPORT REVENUE
(Nippon Cargo Air) AMT VRDN*
$ 700 11/01/15 4.35% $ 700,000
----------
4,200,000
NORTH CAROLINA0.9%
BLADEN COUNTY PCR
(BCH Energy LP Project) Series '93 AMT VRDN*
1,000 11/01/20 3.95 1,000,000
OHIO1.2%
OHIO HOUSING FINANCE AGENCY
Residential Mortgage Revenue
Series '96A-3 AMT PPB*
1,000 9/01/28 3.40 1,000,000
OHIO WATER DEVELOPMENT AUTHORITY
(Ohio Edison Company) Series A AMT PPB*
400 5/01/18 3.80 400,000
----------
1,400,000
OKLAHOMA1.7%
BROKEN ARROW
(Paragon Films Project) AMT VRDN*
1,970 8/01/04 3.88 1,970,000
OREGON0.2%
OREGON HOUSING & COMMUNITY SERVICE SFMR
Mortgage Revenue Series '96C AMT
300 5/15/97 3.85 300,000
PENNSYLVANIA0.9%
PENNSYLVANIA ECONOMIC DEVELOPMENT
AUTHORITY IDR
(Jones Partnership) Series '88A-4 AMT VRDN*
440 12/01/03 3.90 440,000
PENNSYLVANIA ECONOMIC DEVELOPMENT
AUTHORITY IDR
(Ram Forest Products Inc.)
Series '88A-3 AMT VRDN*
580 12/01/99 3.90% $580,000
----------
1,020,000
RHODE ISLAND0.5%
RHODE ISLAND HOUSING & FINANCE CORP.
Homeownership Opportunity Series 19D AMT PPB*
600 10/01/26 3.55 600,000
SOUTH DAKOTA0.6%
SOUTH DAKOTA HFA SFMR
Homeownership Mortgage Series G
700 5/01/97 4.25 702,166
TEXAS5.1%
GREATER EAST TEXAS HIGHER EDUCATION
Student Loan Revenue Series '95A AMT PPB*
1,000 5/01/11 3.85 1,000,000
GREATER TEXAS STUDENT LOAN CORP.
Student Loan Revenue Series '96A AMT PPB*
1,200 4/01/05 3.35 1,200,000
GULF COAST
(Amoco Oil Co) Series '93 AMT VRDN*
200 4/01/28 4.00 200,000
HARRIS COUNTY IDR
(Nippon Pigment USA Project)
Series '87 AMT VRDN*
1,500 7/01/02 4.00 1,500,000
TRAVIS COUNTY
Insured Series B
2,000 3/01/97 3.65 2,032,729
----------
5,932,729
3
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------------------------------
UTAH0.4%
UTAH HOUSING FINANCE AGENCY SFMR
Home Mortgage Revenue Series 4 AMT VRDN*
$ 500 7/01/28 3.80% $ 500,000
VIRGINIA1.3%
AMELIA COUNTY IDA
(Chambers Waste Systems, Inc.) AMT VRDN*
1,500 7/01/07 3.95 1,500,000
WASHINGTON4.2%
PORT OF VANCOUVER IDR
(United Grain Corp.) Series '92 AMT VRDN*
500 12/01/10 4.05 500,000
WASHINGTON HOUSING FINANCE COMMISSION MFHR
(LTC Properties Inc. Project) AMT VRDN*
1,500 12/01/15 4.30 1,500,000
WASHINGTON PUBLIC POWER SUPPLY
(Nuclear Project #2)
1,500 7/01/96 3.50 1,501,381
YAKIMA COUNTY IDR
(Can-Am Millwork LTD) AMT VRDN*
1,415 12/01/14 3.85 1,415,000
----------
4,916,381
Total Municipal Bonds
(amortized cost $65,456,655) 65,456,655
COMMERCIAL PAPER43.6%
ALABAMA1.7%
PHENIX CITY IDB
(Mead Board Project)
2,000 7/11/96 3.60 2,000,000
CALIFORNIA3.4%
CALIFORNIA PCR
(Pacific Gas & Electric) Series '88D AMT
4,000 7/25/96 3.50 4,000,000
COLORADO3.4%
DENVER AIRPORT REVENUE
Series B AMT
1,500 8/08/96 3.85 1,500,000
DENVER AIRPORT REVENUE
Series B AMT
1,500 8/07/96 3.95% $1,500,000
DENVER AIRPORT REVENUE
Series E AMT
1,000 8/08/96 3.85 1,000,000
----------
4,000,000
FLORIDA5.1%
FLORIDA LOCAL GOVERMENT COMMISSION
(Florida Association of Counties)
3,080 7/25/96 3.45 3,080,000
FLORIDA LOCAL GOVERMENT COMMISSION
(Florida Association of Counties)
1,000 7/25/96 3.45 1,000,000
JACKSONVILLE PCR
(Florida Power & Light) Series '94
400 10/17/96 3.65 400,000
SARASOTA PUBLIC HOSPITAL REVENUE
(Sarasota Memorial Hospital) Series B
1,500 8/19/96 3.80 1,500,000
----------
5,980,000
GEORGIA5.3%
FULCO COUNTY HOSPITAL REVENUE
(St. Joseph's Hospital of Atlanta)
5,000 7/10/96 3.55 5,000,000
MUNICIPAL GAS AUTHORITY
Gas Revenue Bonds Series '85B
1,200 8/23/96 3.70 1,200,000
----------
6,200,000
ILLINOIS1.3%
DECATUR WATER REVENUE
(New South Water Treatment) Series '85
800 7/18/96 3.70 800,000
DECATUR WATER REVENUE
(New South Water Treatment) Series '85
700 7/18/96 3.80 700,000
----------
1,500,000
4
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------------
MICHIGAN0.7%
MICHIGAN BUILDING AUTHORITY
AMT
$ 800 8/28/96 3.70% $ 800,000
NEVADA2.1%
WASHOE COUNTY WATER FACILITIES
(Sierra Pacific Power Co.) Series '90 AMT
2,400 6/19/96 3.60 2,400,000
NEW YORK3.0%
NEW YORK GO
Series '96
1,000 8/22/96 3.50 1,000,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series '94
600 8/08/96 3.70 600,000
NEW YORK MUNICIPAL WATER AUTHORITY
Series '94
600 8/12/96 3.80 600,000
NIAGARA COUNTY IDA
(American Ref. Fuel Co.) Series '94B AMT
1,000 7/30/96 3.70 1,000,000
NIAGARA COUNTY IDA
(American Ref. Fuel Co.) Series '94C AMT
300 8/16/96 3.60 300,000
----------
3,500,000
OHIO2.8%
OHIO WATER DEVELOPMENT AUTHORITY PCR
(Duquesne Light) Series '88 AMT
3,300 6/12/96 3.50 3,300,000
PENNSYLVANIA2.0%
CARBON COUNTY
Rec. Rec: (Panther Creek Project)
Series '90B AMT
300 10/18/96 3.75 300,000
VENANGO INDUSTRIAL DEVELOPMENT AUTHORITY
Res. Rec: (Scrubgrass Project)
Series '93 AMT
2,000 8/23/96 3.50% $2,000,000
----------
2,300,000
PUERTO RICO0.7%
PUERTO RICO DEVELOPMENT BANK
800 8/21/96 3.65 800,000
TEXAS9.5%
BRAZOS RIVER AUTHORITY
(Dow Chemical Project) Series '88 AMT
700 8/13/96 3.75 700,000
BRAZOS RIVER AUTHORITY
(Dow Chemical Project) Series '92 AMT
800 8/13/96 3.75 800,000
BRAZOS RIVER AUTHORITY PCR
(Texas Utilities Project) Series '94B AMT
1,500 8/15/96 3.30 1,500,000
DALLAS AREA RAPID TRANSIT
Sales Tax Revenue Series A
2,400 8/22/96 3.50 2,400,000
HOUSTON AIRPORT
Series A AMT
3,700 7/11/96 3.60 3,700,000
PORT DEVELOPMENT CORP.
(Mitsui Marine Terminal Project) Series '85A
850 8/14/96 3.80 850,000
UNIVERSITY OF TEXAS
(Board of Regents) Series A
1,200 10/18/96 3.65 1,200,000
----------
11,150,000
5
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------------
UTAH1.2%
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.) Series A AMT
$ ,400 8/21/96 3.75% $ 1,400,000
VIRGINIA1.0%
LOUISA PCR
(Virginia Electric & Power Co.) Series '87
1,100 7/24/96 3.70 1,100,000
WEST VIRGINIA0.4%
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.) Series '89A AMT
500 8/06/96 3.30 500,000
VALUE
- ------------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $50,930,000) $ 50,930,000
TOTAL INVESTMENTS99.6%
(amortized cost $116,386,655) 116,386,655
Other assets less liabilities0.4% 519,388
NET ASSETS100%
(offering and redemption price of $1.00
per share; 116,905,668 shares outstanding) $116,906,043
+ All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date) or
whose interest rates vary with changes in a designated base rate (such as the
prime interest rate). These instruments are payable on demand and are secured
by letters of credit or other credit support agreements from major banks.
Periodic Put Bonds (PPB) are payable on demand quarterly, semi-annually or
annually and their interest rates change less frequently than rates on Variable
Rate Demand Notes.
Glossary of Terms:
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
SFMR Single Family Mortgage Revenue
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
6
STATEMENT OF NET ASSETS
MAY 31, 1996 (UNAUDITED) ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
COMMERCIAL PAPER72.1%
AGA CAPITAL INC.
$ 16,000 6/14/96 5.32% $15,969,262
5,000 6/03/96 5.35 4,998,514
AKZO NOBEL, INC.
15,000 7/22/96 5.31 14,887,162
ALAMO FUNDING L.P.
5,000 6/11/96 5.32 4,992,611
10,000 6/04/96 5.33 9,995,558
9,000 6/11/96 5.35 8,986,625
ALLIANZ OF AMERICA FINANCE
9,640 7/08/96 5.30 9,587,489
ALPHA FINANCE
20,000 6/03/96 5.10 19,994,333
ASI FUNDING CORP.
20,686 8/09/96 5.33 20,474,675
BANCA CRT FINANCIAL CORP.
6,200 6/27/96 5.31 6,176,223
8,500 6/03/96 5.35 8,497,474
BARTON CAPITAL CORP.
13,571 6/28/96 5.30 13,517,055
9,273 6/10/96 5.31 9,260,690
BAYERISCHE VEREINSBANK
50,000 6/12/96 5.30 49,919,028
BIL NORTH AMERICA, INC.
25,000 7/31/96 5.30 24,779,167
BRIARCLIFF CAPITAL CORP.
28,048 6/25/96 5.30 27,948,897
17,324 6/24/96 5.32 17,265,118
CARGILL FINANCIAL SERVICES CORP.
10,000 8/21/96 5.00 9,887,500
CEMEX, S.A.
25,000 7/22/96 5.33 24,811,229
CHIAO TUNG BANK CO., LTD.
10,000 6/28/96 5.22 9,960,850
3,000 6/12/96 5.32 2,995,096
40,000 7/11/96 5.38 39,760,889
CLIPPER RECEIVABLES CORP.
30,000 6/18/96 5.32 29,924,633
25,000 6/13/96 5.34 24,955,500
COPLEY FINANCING CORP.
22,000 06/24/96 5.34 21,924,943
CORPORATE ASSET SECURITIZATION
AUSTRALIA
7,000 7/19/96 5.32 6,950,347
26,500 6/21/96 5.33 26,421,531
CS FIRST BOSTON
22,000 6/20/96 5.30% $21,938,461
DELAWARE FUNDING CORP.
13,000 6/17/96 5.30 12,969,378
54,812 7/23/96 5.33 54,390,008
ENTERPRISE FUNDING CORP.
25,629 6/04/96 5.32 25,617,638
EQUIPMENT FUNDING, INC.
11,000 6/05/96 5.33 10,993,486
EQUIPMENT INTERMEDIATION L.P.
35,000 6/05/96 5.32 34,979,311
EXPORT DEVELOPMENT CORP.
25,000 6/10/96 5.30 24,966,875
FALCON ASSET SECURITIZATION
22,420 6/17/96 5.30 22,367,188
FINANCE ONE FUNDING CORP.
10,000 6/27/96 5.32 9,961,578
12,000 8/09/96 5.32 11,877,640
FLETCHER CHALLENGE FINANCE
50,000 06/28/96 5.30 49,801,250
FORD MOTOR CREDIT CO.
35,000 6/13/96 5.00 34,941,667
11,000 7/19/96 5.30 10,922,267
GENERAL ELECTRIC CAPITAL CORP.
30,000 6/12/96 5.32 29,951,233
GREENWICH ASSET FUNDING, INC.
7,000 6/17/96 5.30 6,983,511
31,661 6/03/96 5.34 31,651,607
IMI FUNDING
10,422 8/26/96 5.30 10,290,046
8,000 7/16/96 5.33 7,946,700
35,427 6/17/96 5.35 35,342,762
INTERNATIONAL SECURITIZATION CORP.
25,000 6/28/96 5.32 24,900,250
JEFFERSON SMURFIT FINANCE CORP.
7,500 6/25/96 5.32 7,473,400
9,500 7/15/96 5.32 9,438,229
5,000 6/11/96 5.35 4,992,569
7
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
KINGDOM OF SWEDEN
$ 20,000 6/05/96 5.20% $19,988,445
40,000 1/10/97 5.38 38,666,956
MARKET STREET FUNDING
12,272 6/12/96 5.33 12,252,014
10,000 6/18/96 5.33 9,974,831
MITSUBISHI ELECTRIC FINANCE
7,620 6/26/96 5.33 7,591,795
MORGAN STANLEY GROUP, INC.
50,000 8/22/96 5.30 49,396,389
OLD LINE FUNDING CORP.
15,338 7/02/96 5.32 15,267,735
10,000 6/13/96 5.33 9,982,233
25,000 6/10/96 5.35 24,966,563
PACIFIC DUNLOP
16,000 6/07/96 5.30 15,985,867
PREMIUM FUNDING, INC.
SERIES B
9,213 6/24/96 5.33 9,181,627
11,100 7/19/96 5.33 11,021,116
PREMIUM FUNDING, INC.
SERIES E
12,000 7/10/96 5.33 11,930,710
13,963 6/19/96 5.35 13,925,649
5,034 6/28/96 5.35 5,013,801
27,562 7/10/96 5.35 27,402,623
10,135 7/02/96 5.38 10,088,047
PRIME ASSET VEHICLE, LTD.
20,000 8/16/96 5.30 19,776,222
19,882 6/24/96 5.32 19,814,423
11,935 6/28/96 5.32 11,887,379
16,000 8/12/96 5.32 15,829,760
RANGER FUNDING CORP.
13,000 7/25/96 5.30 12,896,650
6,000 6/03/96 5.35 5,998,217
RECEIVABLES CAPITAL CORP.
4,560 6/18/96 5.32 4,548,544
25,000 7/10/96 5.32 24,855,917
SHEFFIELD RECEIVABLES CORP.
35,000 6/12/96 5.30 34,943,319
SIGMA FINANCE CORP.
35,000 7/08/96 5.30% $34,809,347
10,000 10/25/96 5.31 9,784,650
7,500 7/01/96 5.33 7,466,688
6,500 7/22/96 5.33 6,450,920
9,000 8/16/96 5.33 8,898,730
SUMITOMO CORP. OF AMERICA
7,000 8/22/96 5.31 6,915,335
15,000 7/03/96 5.32 14,929,067
20,000 8/05/96 5.33 19,807,528
15,000 9/09/96 5.35 14,777,083
THAMES ASSET GLOBAL SECURITIZATION
35,066 8/30/96 5.38 34,594,362
THREE RIVERS FUNDING CORP.
8,000 6/07/96 5.32 7,992,907
TRIPLE-A ONE FUNDING CORP.
40,000 6/21/96 5.31 39,882,000
6,606 7/09/96 5.32 6,568,904
47,626 6/07/96 5.33 47,583,692
18,000 6/14/96 5.33 17,965,355
UBS FINANCE (DELAWARE) INC.
5,000 6/03/96 5.41 4,998,497
UNILEVER CAPITAL CORP.
20,000 10/22/96 4.94 19,607,544
VATTENFALL TREASURY AB
30,000 7/22/96 5.30 29,774,750
Total Commercial Paper
(amortized cost $1,735,533,644) 1,735,533,644
CERTIFICATES OF DEPOSIT15.3%
BANK OF TOKYO LTD.
45,000 5.50%, 7/15/96 5.50 45,000,000
BANK ONE, DAYTON, OHIO
55,000 5.30%, 6/25/96 5.31 54,999,635
BANQUE NATIONALE DE PARIS
15,000 5.33%, 7/01/96 5.40 15,000,125
10,000 5.36%, 6/19/96 5.38 9,999,802
20,000 5.39%, 8/13/96 5.35 20,001,377
8
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
COMMERZBANK AG
$ 50,000 5.47%, 12/02/96 5.45% $ 50,004,970
DAI-ICHI KANGYO BANK LTD.
20,000 5.43%, 6/19/96 5.42 20,000,100
DEUTSCHE BANK
15,000 5.48%, 1/03/97 5.65 14,977,567
20,000 5.53%, 4/02/97 5.80 19,955,297
HESSICHE LANDESBANK
10,000 5.70%, 4/29/97 5.80 9,991,046
NORINCHUKIN BANK LTD.
20,000 5.48%, 7/26/96 5.47 20,000,301
20,000 5.56%, 7/10/96 5.55 20,000,214
SANWA BANK LTD.
23,000 5.43%, 6/10/96 5.41 23,000,110
SOCIETE GENERALE
25,000 5.36%, 6/04/96 5.34 25,000,038
SUMITOMO BANK LTD.
7,000 5.43%, 6/03/96 5.43 7,000,000
15,000 5.45%, 6/07/96 5.44 15,000,025
Total Certificates of Deposit
(amortized cost $369,930,607) 369,930,607
CORPORATE OBLIGATIONS7.1%
BETA FINANCE
25,000 5.92%, 6/06/97 5.92 25,000,000
GENERAL ELECTRIC CAPITAL CORP.
25,000 7.85%, 7/17/96 5.35 25,074,092
GOLDMAN SACHS GROUP L.P.
50,000 5.45%, 9/13/96 FRN 5.45 50,000,000
J.P. MORGAN & CO.
60,000 5.39%, 3/21/97 FRN 5.44 60,022,930
TOYOTA MOTOR CREDIT CORP.
10,000 5.00%, 2/26/97 5.10 9,991,516
Total Corporate Obligations
(amortized cost $170,088,538) 170,088,538
U.S. GOVERNMENT AND AGENCIES5.1%
FEDERAL FARM CREDIT BANK
25,000 5.21%, 1/22/97 FRN 5.25% $ 24,993,794
FEDERAL HOME LOAN BANK
25,000 5.23%, 10/16/96 5.33 24,991,789
FEDERAL NATIONAL MORTGAGE ASSOCIATION
12,000 5.19%, 1/27/97 FRN 5.31 11,990,843
20,000 5.47%, 9/27/96 FRN 5.37 20,001,729
U.S. TREASURY NOTE
40,000 6.63%, 3/31/97 5.23 40,445,256
Total U.S. Government and Agencies
(amortized cost $122,423,411) 122,423,411
BANK OBLIGATIONS1.2%
BANK OF NEW YORK CO., INC.
10,000 5.14%, 9/09/96 5.15 9,999,730
MORGAN GUARANTY TRUST OF NY
20,000 5.50%, 1/08/97 5.50 20,000,000
Total Bank Obligations
(amortized cost $29,999,730) 29,999,730
TOTAL INVESTMENTS100.8%
(amortized cost $2,427,975,930) 2,427,975,930
Other assets less liabilities(0.8)% (19,969,655)
NET ASSETS100%
(offering and redemption price of $1.00
per share; 2,408,004,366 shares outstanding) $2,408,006,275
+ All securities either mature or their interest rate changes in one year or
less.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
9
STATEMENT OF NET ASSETS
MAY 31, 1996 (UNAUDITED) ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES99.5%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION30.5%
$ 500 6/24/96 5.23% $ 498,329
15,000 5.47%, 9/27/96 FRN 5.37 15,001,297
15,000 5.47%, 10/04/96 FRN 5.39 15,002,679
-----------
30,502,305
FEDERAL HOME LOAN MORTGAGE CORP.26.5%
600 6/28/96 5.20 597,660
3,500 7/29/96 5.21 3,470,621
1,000 8/19/96 5.21 988,567
7,600 6/20/96 5.23 7,579,025
14,000 8/12/96 5.24 13,853,280
-----------
26,489,153
FEDERAL HOME LOAN BANK26.5%
8,000 10/18/96 5.16 7,840,613
1,000 8/12/96 5.19 989,620
11,000 6/17/96 5.20 10,974,602
1,700 7/31/96 5.23 1,685,182
5,000 5.23%, 10/16/96 FRN 5.33 4,998,358
-----------
26,488,375
U.S. TREASURY NOTE 8.1%
8,000 6.50%, 5/15/97 5.66% $ 8,061,974
FEDERAL FARM CREDIT BANK5.9%
3,400 6/06/96 5.20 3,397,545
2,500 5.15%, 5/20/97 FRN 5.27 2,497,178
-----------
5,894,723
STUDENT LOAN MARKETING ASSOCIATION2.0%
2,000 6.13%, 6/30/97 FRN 5.87 2,001,094
TOTAL INVESTMENTS99.5%
(amortized cost $99,437,624) 99,437,624
Other assets less liabilities0.5% 548,200
NET ASSETS100%
(offering and redemption price of $1.00
per share; 99,985,751 shares outstanding) $99,985,824
+ All securities either mature or their interst rate changes in one year or
less.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
10
STATEMENT OF OPERATIONS
(UNAUDITED) ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
DEC. 13, DEC. 29, DEC. 29,
1995* TO 1995* TO 1995* TO
MAY 31,1996 MAY 31,1996 MAY 31,1996
----------- ------------ ------------
INVESTMENT INCOME
Interest $1,500,081 $45,089,108 $1,837,909
EXPENSES
Advisory fee (Note B) 196,171 4,096,554 166,121
Distribution assistance fee (Note C) 176,554 3,686,898 149,509
Administrative fee (Note C) 19,617 409,656 16,612
Registration fees 56,318 341,465 61,792
Custodian fees 39,588 119,660 36,114
Audit and legal fees 22,013 23,965 15,151
Printing 2,956 31,775 2,192
Transfer agency 45,500 1,182,290 39,833
Organization 5,472 4,960 4,960
Trustees' fees 3,310 2,945 3,067
Miscellaneous 3,605 11,315 3,262
Total expenses 571,104 9,911,483 498,613
Less: fee waiver and reimbursement (178,762) (1,718,375) (166,372)
----------- ------------ ------------
392,342 8,193,108 332,241
----------- ------------ ------------
Net investment income 1,107,739 36,896,000 1,505,668
REALIZED GAIN ON INVESTMENTS
Net realized gain on investments 375 1,909 73
NET INCREASE IN NET ASSETS FROM
OPERATIONS $1,108,114 $36,897,909 $1,505,741
* Commencement of operations.
See notes to financial statements.
11
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED) ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
a GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- ------------
DEC. 13, DEC. 29, DEC. 29,
1995* TO 1995* TO 1995* TO
MAY 31,1996 MAY 31,1996 MAY 31,1996
------------- --------------- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income $ 1,107,739 $ 36,896,000 $ 1,505,668
Net realized gain on investments 375 1,909 73
Net increase in net assets
from operations 1,108,114 36,897,909 1,505,741
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,107,739) (36,896,000) (1,505,668)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase 116,872,335 2,407,971,032 99,952,418
Total increase 116,872,710 2,407,972,941 99,952,491
NET ASSETS
Beginning of period 33,333 33,334 33,333
End of period $116,906,043 $2,408,006,275 $99,985,824
* Commencement of operations.
See notes to financial statements.
12
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED) ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Money Market Fund (the 'Fund') is an open-end diversified investment
company registered under the Investment Company Act of 1940. The Fund consists
of three Portfolios: General Municipal Portfolio, Prime Portfolio and
Government Portfolio (the 'Portfolios'). Each Portfolio is considered to be a
separate entity for financial reporting and tax purposes. As a matter of
fundamental policy, each Portfolio pursues its objectives by maintaining a
portfolio of high-quality money market securities all of which, at the time of
investment, have remaining maturities of 397 days or less. The following is a
summary of significant accounting policies followed by the Portfolios.
1. VALUATION OF SECURITIES
Securities in which the Portfolios invest 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 of approximately $58,000 for each of the Portfolios have
been deferred and are being amortized on a straight-line basis through
December, 2000.
3. TAXES
It is the Portfolios' 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 Portfolios declare dividends daily and automatically reinvest such
dividends in additional shares at net asset value. Net realized capital gains
on investments, if any, are expected to be distributed near year end. Dividends
paid from net investment income for the period ended May 31, 1996 from the
General Municipal Portfolio are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
5. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
6. GENERAL
Interest income is accrued as earned. Security transactions are recorded on a
trade date basis. Realized gain (loss) from security transactions is recorded
on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
Under the Advisory Agreement, each Portfolio pays the Adviser, Alliance Capital
Management L.P., an advisory fee at the annual rate of .50 of 1% of each
Portfolio's average daily net assets. The Adviser has voluntarily agreed to
reimburse the Portfolios to the extent that its aggregate expenses (excluding
taxes, brokerage, interest and, where permitted, extraordinary expenses) exceed
1% of its average daily net assets for the fiscal year until February 28, 1997
unless such reimbursement is eliminated or modified upon approval of the
Trustees prior thereto. For the period December 13, 1995 through May 31, 1996
for General Municipal Portfolio and for the period December 29, 1995 through
May 31, 1996 for Prime Portfolio and Government Portfolio, the Adviser
reimbursed $171,969, $1,595,856 and $161,275, respectively.
NOTE C: DISTRIBUTION SERVICES AGREEMENT AND ADMINISTRATION AGREEMENT
Under the Distribution Services Agreement, which includes a distribution plan
adopted pursuant to Rule 12b-1 of the Investment Company Act of 1940 (the
'Plan'), the Fund pays the Adviser a distribution fee at the annual rate of up
to .45 of 1% of the average daily value of the Fund's net assets. The Plan
provides that the Adviser will use amounts payable under the Plan in their
entirety for (i) payments to broker-dealers and other financial intermediaries,
13
NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
including the Portfolios' distributor, for distribution assistance and payments
to banks and other depository institutions for administrative and accounting
services and (ii) otherwise promoting the sale of shares of the Portfolios. For
the period December 13, 1995 through May 31, 1996 for General Municipal
Portfolio and for the period December 29, 1995 through May 31, 1996 for Prime
Portfolio and Government Portfolio, the Portfolios incurred fees of $176,554,
$3,686,898 and $149,509, respectively.
Pursuant to an Administration Agreement, ADP Financial Information Services,
Inc., a wholly-owned subsidiary of Automatic Data Processing, Inc., serves as
administrator of the Fund, on behalf of the Portfolios. The Administrator
performs or arranges for the performance of certain services, mainly remote
processing services through its propriety shareholder accounting system. ADP is
entitled to receive from each Portfolio a fee computed daily and paid monthly
at a maximum annual rate equal to .05% of such Portfolio's average daily net
assets. ADP may, from time to time, voluntarily waive all or a portion of its
fees payable to it under the Administration Agreement. For the period December
13, 1995 through May 31, 1996 for General Municipal Portfolio and for the
period December 29, 1995 through May 31, 1996 for Prime Portfolio and
Government Portfolio, the Portfolios incurred fees of $19,617 of which $6,793
was waived, $409,656 of which $122,519 was waived and $16,612 of which $5,097
was waived, respectively.
NOTE D: INVESTMENT TRANSACTIONS
At May 31, 1996, the cost of portfolio securities for federal income tax
purposes was the same as the cost for financial reporting purposes.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At May 31,
1996, capital paid-in aggregated $116,905,668, $2,408,004,366 and $99,985,751
for the General Municipal Portfolio, Prime Portfolio and Government Portfolio,
respectively. Transactions, all at $1.00 per share, were as follows:
DECEMBER 13,1995*
TO
MAY 31, 1996
(UNAUDITED)
-----------------
GENERAL MUNICIPAL PORTFOLIO
Shares sold 300,749,053
Shares issued on reinvestments of dividends 1,107,739
Shares redeemed (184,984,457)
Net increase 116,872,335
DECEMBER 29,1995*
TO
MAY 31, 1996
(UNAUDITED)
-----------------
PRIME PORTFOLIO
Shares sold 5,848,381,895
Shares issued on reinvestments of dividends 36,896,000
Shares redeemed (3,477,306,862)
Net increase 2,407,971,033
* Commencement of operations.
14
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
DECEMBER 29,1995*
TO
MAY 31, 1996
(UNAUDITED)
-----------------
GOVERNMENT PORTFOLIO
Shares sold 212,039,041
Shares issued on reinvestments of dividends 1,505,668
Shares redeemed (113,592,291)
Net increase 99,952,418
* Commencement of operations.
15
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -----------
DEC. 13, DEC. 29, DEC. 29,
1995* 1995* 1995*
TO TO TO
MAY 31,1996 MAY 31,1996 MAY 31,1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
Net asset value, beginning of period $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .013 .019 .019
LESS: DISTRIBUTIONS
Dividends from net investment income (.013) (019) (.019)
Net asset value, end of period $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on:
net asset value (a) 2.83% 4.53% 4.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $117 $2,408 $100
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.00%(b) 1.00%(b) 1.00%(b)
Expenses, before waivers and
reimbursements 1.46%(b) 1.21%(b) 1.50%(b)
Net investment income (c) 2.82%(b) 4.50%(b) 4.53%(b)
* Commencement of operations.
(a) 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 period.
(b) Annualized.
(c) Net of expenses reimbursed or waived by the Adviser.
16
35
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APPENDIX A
DESCRIPTION OF MUNICIPAL SECURITIES
- -----------------------------------------------------------------
MUNICIPAL NOTES generally are used to provide for short-
term capital needs and usually have maturities of one year or
less. They include the following:
1. PROJECT NOTES, which carry a U.S. Government
guarantee, are issued by public bodies (called "local issuing
agencies") created under the laws of a state, territory, or U.S.
possession. They have maturities that range up to one year from
the date of issuance. Project Notes are backed by an agreement
between the local issuing agency and the Federal Department of
Housing and Urban Development. These Notes provide financing for
a wide range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income housing
programs and renewal programs).
2. TAX ANTICIPATION NOTES are issued to finance
working capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenues, such as
income, sales, use and business taxes, and are payable from these
specific future taxes.
3. REVENUE ANTICIPATION NOTES are issued in
expectation of receipt of other types of revenues, such as
Federal revenues available under the Federal Revenue Sharing
Programs.
4. BOND ANTICIPATION NOTES are issued to provide
interim financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money for the
repayment of the Notes.
5. CONSTRUCTION LOAN NOTES are sold to provide
construction financing. After successful completion and
acceptance, many projects receive permanent financing through the
Federal Housing Administration under the Federal National
Mortgage Association or the Government National Mortgage
Association.
6. TAX-EXEMPT COMMERCIAL PAPER is a short-term
obligation with a stated maturity of 365 days or less. It is
issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in
anticipation of longer term financing.
A-1
<PAGE>
MUNICIPAL BONDS, which meet longer term capital needs
and generally have maturities of more than one year when issued,
have three principal classifications:
1. GENERAL OBLIGATION BONDS are issued by such
entities as states, counties, cities, towns, and regional
districts. The proceeds of these obligations are used to fund a
wide range of public projects, including construction or
improvement of schools, highways and roads, and water and sewer
systems. The basic security behind General Obligation Bonds is
the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. The taxes that can be
levied for the payment of debt service may be limited or
unlimited as to the rate or amount of special assessments.
2. REVENUE BONDS generally are secured by the net
revenues derived from a particular facility, group of facilities,
or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue Bonds are issued to finance a
wide variety of capital projects including electric, gas, water
and sewer systems; highways, bridges, and tunnels; port and
airport facilities; colleges and universities; and hospitals.
Many of these Bonds provide additional security in the form of a
debt service reserve fund to be used to make principal and
interest payments. Housing authorities have a wide range of
security, including partially or fully insured mortgages, rent
subsidized and/or collateralized mortgages, and/or the net
revenues from housing or other public projects. Some authorities
provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt service
reserve fund.
3. INDUSTRIAL DEVELOPMENT BONDS are considered
municipal bonds if the interest paid thereon is exempt from
Federal income tax and are issued by or on behalf of public
authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing, sports, and
pollution control. These Bonds are also used to finance public
facilities such as airports, mass transit systems, ports, and
parking. The payment of the principal and interest on such Bonds
is dependent solely on the ability of the facility's user to meet
its financial obligations and the pledge, if any, of real and
personal property as security for such payment.
A-2
<PAGE>
- -----------------------------------------------------------------
APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
- -----------------------------------------------------------------
Municipal and Corporate
BONDS AND MUNICIPAL LOANS
The two highest ratings of Moody's Investors Service,
Inc. ("Moody's") for municipal and corporate bonds are Aaa and
Aa. Bonds rated Aaa are judged by Moody's to be of the best
quality. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's states that Aa
bonds are rated lower than the best bonds because margins of
protection or other elements make long-term risks appear somewhat
larger than Aaa securities. The generic rating Aa may be
modified by the addition of the numerals 1, 2 or 3. The modifier
1 indicates that the security ranks in the higher end of the Aa
rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower
end of such rating category.
The two highest ratings of Standard & Poor's Corporation
("Standard & Poor's") for municipal and corporate bonds are AAA
and AA. Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong. Bonds rated AA have a
very strong capacity to pay interest and repay principal and
differ from the highest rated issues only in a small degree. The
AA rating may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing within that rating category.
SHORT-TERM MUNICIPAL LOANS
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
Standard & Poor's highest rating for short-term
municipal loans is SP-1. Standard & Poor's states that short-
term municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming
B-1
<PAGE>
safety characteristics will be given a plus (+) designation.
Issues rated SP-2 have satisfactory capacity to pay principal and
interest.
OTHER MUNICIPAL SECURITIES AND COMMERCIAL PAPER
"Prime-1" is the highest rating assigned by Moody's for
other short-term municipal securities and commercial paper, and
"A-1+" and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured, current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available.
While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Commercial paper issuers rated "A" by Standard & Poor's have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward
trend. Typically, the issuer is a strong company in a well-
established industry and has superior management.
B-2
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