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This is filed pursuant to Rule 497(c).
File Nos. 33-85850 and 811-08838.
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ALLIANCE MONEY MARKET FUND
. PRIME PORTFOLIO
. GOVERNMENT PORTFOLIO
. GENERAL MUNICIPAL PORTFOLIO
PROSPECTUS
APRIL 1, 1997
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. The Fund is a money market fund 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 1, 1997, 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 Distributor 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.
EXPENSE INFORMATION
_______________________________________________________________________________
SHAREHOLDER TRANSACTION EXPENSES
The Portfolios have no sales load on purchases or reinvested dividends,
deferred sales load, redemption fee or exchange fee.
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets, after voluntary 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 5 YEARS 10 YEARS
-------- --------- --------- ---------
Prime $10 $32 $55 $122
Government 10 32 55 122
General Municipal 10 32 55 122
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-.28% and Total Operating Expenses-1.23%; Government Portfolio:
Management Fees-.50%, 12b-1 fees-.45%, Other Expenses-.47% and Total Operating
Expenses-1.42%; General Municipal Portfolio: Management Fees-.50%, 12b-1
fees-.45%, Other Expenses-.44% and Total Operating Expenses-1.39%. 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 (AUDITED)
_______________________________________________________________________________
The following table has been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.
GENERAL MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- -------------
DEC. 13,1995* DEC. 29,1995* DEC. 29,1995*
TO TO TO
NOV. 30,1996 NOV. 30,1996 NOV. 30,1996
------------- ------------- -------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .027 .041 .041
LESS: DISTRIBUTIONS
Dividends from net investment income (.027) (.041) (.041)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on
net asset value (a)(b) 2.80% 4.58% 4.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(in millions) $123 $2,772 $100
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements (b) 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements (b) 1.39% 1.23% 1.42%
Net investment income (b)(c) 2.76% 4.50% 4.45%
* Commencement of operations.
(a) Total investment return is calculated assuming an initial investment made
at 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.
From time to time each Portfolio advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
2
compounding, the dividends paid are asumed to be reinvested. Dividends for the
Prime Portfolio for the seven days ended November 30, 1996, amounted to an
annualized yield of 4.49%, equivalent to an effective yield of 4.59%. Absent
expense reimbursement, the annualized yield for this period would have been
4.23%, equivalent to an effective yield of 4.32%. Dividends for the Government
Portfolio for the seven days ended November 30, 1996, amounted to an annualized
yield of 4.41%, equivalent to an effective yield of 4.51%. Absent expense
reimbursement, the annualized yield for this period would have been 4.19%,
equivalent to an effective yield of 4.28%. Dividends for the General Municipal
Portfolio for the seven days ended November 30, 1996, amounted to an annualized
yield of 2.78%, equivalent to an effective yield of 2.81%. Absent expense
reimbursement, the annualized yield for this period would have been 2.69%,
equivalent to an effective yield of 2.73%.
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
diversification, 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.
3
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 agreements for emergency or extraordinary purposes in aggregate
amounts not exceeding 15% of its assets; 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 for emergency or extraordinary purposes in aggregate amounts not
exceeding 10% of its assets; 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.
4
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 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%, as
determined under Rule 2a-7 under the 1940 Act, 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"), other than restricted securities determined by the Adviser to be liquid
in accordance with procedures adopted by the Trustees of the Fund, such as
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, 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. Your brokerage firm may offer an automatic "sweep" for the Fund in
the operation of brokerage cash accounts. Contact your broker to determine if a
sweep is available and what the sweep parameters are.
REDEMPTIONS
BY CONTACTING YOUR BROKER. Instruct your broker to order a withdrawal from your
Fund account.
BY SWEEP. If your brokerage firm offers an automatic sweep arrangement, the
sweep will automatically transfer from your Fund account sufficient amounts to
cover security purchases in your brokerage account.
BY CHECKWRITING. With this service, you may write checks made payable to any
payee. 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 checkwriting service. THE CHECKWRITING 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 prospective 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.
6
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."
Under its Advisory Agreement with the Fund, the Adviser provides investment
advisory services and order placement facilities for the Fund. For the fiscal
period ended November 30, 1996, the Prime, Government and General Municipal
Portfolios paid the Adviser an advisory fee equal to $5,993,058, $82,269 and
$131,941, respectively, net of any voluntary expense reimbursements for
expenses exceeding 1% of the average daily value of the net assets of each
Portfolio.
7
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 Fund's aggregate
average daily net assets. For the fiscal period ended November 30, 1996, the
Prime, Government and General Municipal Portfolios each paid the Adviser a
distribution fee at an annual rate of .45% of the average daily value of the
net assets of the Fund. 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. ("ADP"), 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 does
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.
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This is filed pursuant to Rule 497(c).
File Nos. 33-85850 and 811-08838.
<PAGE>
(LOGO) ALLIANCE MONEY MARKET FUND
_______________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1997
_______________________________________________________________
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 1, 1997. 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........................ 27
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE....... 28
TAXES.................................................... 30
GENERAL INFORMATION...................................... 32
FINANCIAL STATEMENTS..................................... 37
APPENDIX A DESCRIPTION OF MUNICIPAL SECURITIES.......... A-1
APPENDIX B DESCRIPTION OF SECURITIES RATINGS............ B-1
____________________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
_______________________________________________________________
INVESTMENT OBJECTIVES AND POLICIES
_______________________________________________________________
The Alliance Money Market Fund (the "Fund") is an open-
end management investment company. The Fund consists of seven
distinct portfolios, the Prime Portfolio, the Government
Portfolio, the New Jersey Municipal Portfolio, the New York
Municipal Portfolio, the Connecticut Municipal Portfolio, the
California Municipal Portfolio and the General Municipal
Portfolio. Three of the portfolios, The Prime Portfolio,
Government Portfolio and General Municipal Portfolio (hereinafter
sometimes referred to as a "Portfolio" or the "Portfolios"), each
of which is, in effect, a separate series issuing a separate
class of shares are presently being offered by the Fund.
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. 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 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 General 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 diversification, 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
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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.
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 OF 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 U.S. dollar-denominated "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) 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 (the "requisite NRSROs"). 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 is rated by the requisite NRSROs
in one of the two highest rating categories. 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.
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<PAGE>
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
others, (a) securities that are illiquid by virtue of the absence
of a readily available market or legal or contractual restriction
on resale, other than restricted securities determined by the
Adviser to be liquid in accordance with procedures adopted by the
Trustees 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
4
<PAGE>
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
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 Adviser, pursuant to
guidelines approved by the Trustees.
The Adviser 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
5
<PAGE>
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.
To make the determination that an issue of Section 4(2)
paper is liquid, the Adviser 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, the
Adviser must determine that the security is of
equivalent quality.
The Adviser 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, the Adviser 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.
6
<PAGE>
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
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 General 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 the
Adviser 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 the Adviser 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 the Adviser 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 General 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 General Municipal
Portfolio may invest without limitation in tax-exempt municipal
securities subject to the alternative minimum tax (the "AMT").
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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
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.
To further enhance the quality and liquidity of the
securities in which each Portfolio invests, such securities
frequently are supported by credit and liquidity enhancements,
such as letters of credit, from third party financial
institutions. Each 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.
TAXABLE SECURITIES. Although the General Municipal
Portfolio is, and expects to be, largely invested in municipal
securities, the Portfolio 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
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maturities not exceeding 397 days at the time of the Portfolio's
investment, and the 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 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
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.
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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
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. The Adviser will
monitor the pricing, quality and liquidity of variable rate
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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 the
Adviser 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
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 assets, having value equal to, or greater than, such
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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.
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
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<PAGE>
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
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.
_______________________________________________________________
INVESTMENT RESTRICTIONS
_______________________________________________________________
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
13
<PAGE>
(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;
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 General 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;
14
<PAGE>
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 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 the Adviser 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 the Adviser 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 General 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. 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 1992.
JOHN D. CARIFA,** 52, Chairman of the Board, is the
President, Chief Operating Officer and a Director of ACMC*** with
which he has been associated since prior to 1992.
RICHARD S. BORISOFF,** 52, is a member of the law firm
of Paul, Weiss, Rifkind, Wharton & Garrison with which he has
been associated with since prior to 1992. 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.
JEFFREY M. COLE, 50, is a member of the law firm of Baer
Marks & Upham with which he has been associated since prior to
1992. 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., 64, is an investment adviser and
independent consultant. He was formerly Senior Manager of
_________________________
** Interested person of the Fund as defined in the 1940 Act.
*** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.
16
<PAGE>
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1992. His address is
2 Hekma Road, Greenwich, CT 06831.
ARTHUR S. KRANSELER, 62, 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 1992. His address is 3407 South
Ocean Boulevard, Suite 5-C, Highland Beach, Florida 33487.
ROBERT A. LEWIS, 43, is a member of the law firm
McCutchen, Doyle, Brown & Enersen with which he has been
associated since prior to 1992. His address is Three Embarcadero
Center, Suite 2800, San Francisco, California 94111.
CLIFFORD L. MICHEL, 57, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1992. He is also President, Chief Executive Officer and
Director of Wenonah Development Company (investment holding
company)since 1976 and a Director and Member of the Human
Resources, Environmental and Safety, and Executive Committees of
Placer Dome, Inc. (mining) and since 1996 he is Director, Vice
Chairman and Treasurer of Atlantic Health Systems, Inc. and
Atlantic Hospital. From 1988 to 1994 he was Director of Faber-
Castell Corporation (writing instruments), from 1988 to 1993 he
was President of the Board of Trustees of St. Mark's School and
from 1991 to 1996 he was Chairman of the Board of Trustees of
Morristown Memorial Hospital (and Memorial Health Foundation).
His address is St. Bernard's Road, Gladstone, New Jersey 07934.
PETER QUICK,** 41, 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.
WILLIAM L. RHOADS III, 68, is a financial consultant.
Previously, he was Chairman, Trust and Investment Committee, J.P.
Morgan Delaware (banking)and President and Chief Executive
Officer of C.F. Kettering, Incorporated (holding company).
Currently, President and Director of the following holding
companies: TRP Finance, Inc., Church Street Holdings, Inc. and
New Century Holdings, Inc., Vice Chairman and Director of
ADP Atlantic, Inc. and Affiliates and a Director of ADP Insurance
Company, Ltd. His address is 1009 Barley Drive, Wilmington,
Delaware.
RICHARD R. STUMM, 38, is Vice President of Automatic
Data Processing/Financial Information Services Division with
which he has been associated since prior to 1992. His address is
2 Journal Square Plaza, Jersey City, NJ 07306.
17
<PAGE>
OFFICERS
JOHN R. BONCZEK, 37, Senior Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1992.
KATHLEEN A. CORBET, 37, Senior Vice President, has been
a Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1992.
ROBERT I. KURZWEIL, 46, 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 1992.
PATRICIA NETTER, 46, Senior Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1992.
RONALD R. VALEGGIA, 49, Senior Vice President, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1992.
JOHN F. CHIODI, 30, Vice President, is a Vice President
of ACMC with which he has been associated since prior to 1992.
DORIS T. CILIBERTI, 33, Vice President, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1992.
LINDA D. NEIL, 36, 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 1992.
RAYMOND J. PAPERA, 41, Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1992.
PAMELA F. RICHARDSON, 44, Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1992.
EDMUND P. BERGAN, Jr., 46, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1992.
18
<PAGE>
MARK D. GERSTEN, 46, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc. with which he has been associated since prior to 1992.
JOSEPH J. MANTINEO, 38, Controller, is a Vice President
of Alliance Fund Services, Inc. with which he has been associated
since prior to 1992.
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, 1997
(estimating future payments based upon existing arrangements),
the aggregate compensation paid to each of the Trustees during
calendar year 1996 by all of the registered investment companies
to which the Adviser 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 Trustee
Name of Trustee from the Fund is a Director
of the Fund Fund* Complex** or Trustee
John D. Carifa $0 $0 50
Richard S. Borisoff $3,000 $1,750 1
Robert J. Casale $0 $0 1
Jeffrey M. Cole $3,000 $1,250 1
William H. Foulk, Jr. $3,000 $146,500 32
Arthur S. Kranseler $3,000 $1,750 1
Richard Kruyff $0 $0 1
Robert A. Lewis $3,000 $1,750 1
Clifford L. Michel $3,000 $133,750 38
Peter Quick $0 $0 1
William L. Rhoads III $3,000 $1,750 1
Richard R. Stumm $0 $0 1
Ronald M. Whitehill $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 1996.
As of March 19, 1997, 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.
The Adviser is a leading international investment
manager supervising client accounts with assets as of
December 31, 1996 of more than $182 billion (of which more than
$63 billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds and included as of December 31,
1996, 34 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employ approximately 1,450 employees
20
<PAGE>
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
53 registered investment companies comprising 111 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of June 30, 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% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of June 30, 1996, approximately 33% and
10% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Trustees of the Fund.
As of September 6, 1996, AXA and its subsidiaries own
approximately 60.7% 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 more than 20 countries, including France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Western 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, as well as in Western Europe and
the Asia Pacific area. Based on information provided by AXA, as
of September 9, 1996, 36.3% of the issued ordinary shares
(representing 49.1% of the voting power) of AXA were owned
directly or indirectly by Finaxa, a French holding company
("Finaxa"). As of September 6, 1996, 61.3% of the voting shares
(representing 73.5% of the voting power) of Finaxa were owned by
five French mutual insurance companies (the "Mutuelles AXA") (one
of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.8% of the
voting shares representing 40.6% of the voting power), and 23.7%
of the voting shares of Finaxa (representing 15.0% of the voting
power) were owned by Bangue Paribas, a French bank. Including
the ordinary shares directly or indirectly owned by Finaxa the
Mutelles AXA directly or indirectly owned 42.0% of the issued
21
<PAGE>
ordinary shares (representing 56.8% of the voting power) of AXA
as of September 9, 1996. Acting as a group, the Mutuelles AXA
control AXA and Finaxa. In addition, as of September 9, 1996,
7.8% of the issued ordinary shares of AXA without the power to
vote were owned by subsidiaries of AXA. Under the Advisory
Agreement, the Adviser 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 the Adviser. The Adviser 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. For the period December 29, 1995 (commencement of
operations) through November 30, 1996 for the Prime and
Government Portfolios, and for the period December 13, 1995
(commencement of operations) through November 30, 1996 for the
General Municipal Portfolio, the Adviser received from the Fund
advisory fees of $10,427,618, $412,525 and $500,241,
respectively. The Adviser may, from time to time, voluntarily
waive a portion of its advisory fees payable from one or more of
the Portfolios. For the period ended November 30, 1996, the
Adviser reimbursed the Prime, Government and General Municipal
$4,434,560, $330,256 and $368,300, respectively. 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 the Adviser'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 the
Adviser under the Advisory Agreement, each Portfolio may employ
its own personnel. For such services, it also may utilize
personnel employed by the Adviser 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. Continuance of the Advisory Agreement until February 28,
1998 was approved by the vote, cast in person by all the Trustees
22
<PAGE>
of the Trust who neither were interested persons of the Trust nor
had any direct or indirect financial interest in the Agreement or
any related agreement, at a meeting called for that purpose on
January 16, 1997. The Advisory Agreement remains in effect 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 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. The Adviser 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,
consisting primarily of remote processing services through its
proprietary shareholder accounting system 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
23
<PAGE>
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 Portfolio are qualified for sale, as such
limitations may be raised or lowered 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 pays 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 the Adviser 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 the Adviser 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 the Adviser, for distribution
24
<PAGE>
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. During the period December 29, 1995
(commencement of operations) through November 30, 1996, the Prime
Portfolio made payments to the Adviser for expenditures under the
Agreement in amounts aggregating $9,384,854 which constituted
.45% at an annual rate of the Portfolio's average daily net
assets and the Adviser made payments from its own resources as
described above aggregating $4,044,973. Of the $13,429,826 paid
by the Adviser and the Portfolio under the Agreement, $760,000
was paid for advertising, printing and mailing of prospectuses to
persons other than current shareholders; and $12,669,826 was paid
to broker-dealers and other financial intermediaries for
distribution assistance. During the period December 29, 1995
(commencement of operations) through November 30, 1996, the
Government Portfolio made payments to the Adviser for
expenditures under the Agreement in amounts aggregating $371,276
which constituted .45% at an annual rate of the Portfolio's
average daily net assets and the Adviser made payments from its
own resources as described above aggregating $165,035. Of the
$536,311 paid by the Adviser and the Portfolio under the
Agreement, $34,000 was paid for advertising, printing and mailing
of prospectuses to persons other than current shareholders; and
$502,311 was paid to broker-dealers and other financial
intermediaries for distribution assistance. During the period
December 13, 1995 (commencement of operations) through
November 30, 1996, the General Municipal Portfolio made payments
to the Adviser for expenditures under the Agreement in amounts
aggregating $450,217 which constituted .45% at an annual rate of
the Portfolio's average daily net assets and the Adviser made
payments from its own resources as described above aggregating
$173,609. Of the $623,826 paid by the Adviser and the Portfolio
under the Agreement, $48,000 was paid for advertising, printing
and mailing of prospectuses to persons other than current
shareholders; and $575,826 was paid to broker-dealers and other
financial intermediaries for distribution assistance.
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
25
<PAGE>
inquiries regarding each Portfolio. 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 became effective on March 16, 1995.
Continuance of the Agreement until February 28, 1998 was approved
by the vote, cast in person by all the Trustees of the Trust who
neither were interested persons of the Trust nor had any direct
or indirect financial interest in the Agreement or any related
agreement, at a meeting called for that purpose on January 16,
1997.
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 the Adviser. 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
majority of the outstanding shares of a Portfolio, or by the
26
<PAGE>
Adviser 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 following
receipt. Checks drawn on banks which are not members of the
27
<PAGE>
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.
28
<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 1940 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. 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 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.
29
<PAGE>
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 the
Adviser, 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 the General 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.
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
30
<PAGE>
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 the General Municipal
Portfolio.
Substantially all of the dividends paid by the General
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.
GENERAL MUNICIPAL PORTFOLIO. Shareholders of the
General Municipal Portfolio may be subject to state and local
taxes on distributions from the General 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 General
Municipal Portfolio in his particular state and locality.
31
<PAGE>
_______________________________________________________________
GENERAL INFORMATION
_______________________________________________________________
PORTFOLIO TRANSACTIONS. Subject to the general
supervision of the Trustees of the Fund, the Adviser 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, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with each Portfolio. The supplemental information
received from a dealer is in addition to the services required to
be performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. Portfolio securities
will not be purchased from or sold to the Adviser's affiliate,
Donaldson, Lufkin & Jenrette, Inc., or any subsidiary or
affiliate of the parent. During the period December 29, 1995
(commencement of operations) through November 30, 1996, the Prime
and Government Portfolios paid $-0- and $-0-, respectively, for
brokerage commissions. During the period December 13, 1995
(commencement of operations) through November 30, 1996, the
General Municipal Portfolio paid $-0- for brokerage commissions.
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
32
<PAGE>
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.
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.
As of March 19, 1997, there were 3,173,869,871.79 shares
of beneficial interest of the Fund outstanding. Of this amount
2,929,771,111.51 were for the Prime Portfolio; 108,849,904.37
were for the Government Portfolio and 135,248,855.91 were for the
General Municipal Portfolio. To the knowledge of the Fund the
following persons owned of record and no person owned
beneficially, 5% or more of the outstanding shares of the
Portfolio as of March 19, 1997.
% of
Name and Address No. of Shares Portfolio
________________ _____________ _________
Prime Portfolio
U.S. Clearing 2,914,467,673 99%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
Government Portfolio
U.S. Clearing 108,114,537 99%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
General Municipal Portfolio
U.S. Clearing 120,932,019 89%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
33
<PAGE>
New York, NY 10004-1801
Wayne Hummer 12,778,270 9%
Omnibus Acct.
300 South Wacker Drive
Chicago, IL 60606
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 review of the Adviser, such risk is not
material.
LEGAL MATTERS. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, New York, New
York, counsel for the Fund. Seward & Kissel has relied upon the
opinion of Sullivan & Worcester, Boston, Massachusetts, 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 advertisements may quote performance
rankings, ratings or data from independent organizations or
financial publications such as Lipper Analytical Services, Inc.,
Morningstar, 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.
Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
34
<PAGE>
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.
The Prime Portfolio's yield for the seven-day period
ended November 30, 1996 was 4.49% which is the equivalent of a
4.59% compounded effective yield. Absent expense reimbursement,
the annualized yield for this period would have been 4.23%. The
Government Portfolio's yield for the seven-day period ended
November 30, 1996 was 4.41% which is the equivalent of a 4.51%
compounded effective yield. Absent expense reimbursement, the
annualized yield for this period would have been 4.19%,
equivalent to an effective yield of 4.28%. The General Municipal
Portfolio's yield for the seven-day period ended November 30,
1996 was 2.78% which is the equivalent of a 2.81% compounded
effective yield. Absent expense reimbursement, the annualized
yield for this period would have been 2.69%.
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 General
Municipal Portfolio received by an investor subject to the top
1996 Federal personal income tax rate would be equivalent to a
taxable yield of 8.28%.
In this example 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 Portfolio that is
tax exempt (assumed for purposes of the example to be the entire
yield of 5%) by one minus the applicable marginal income tax rate
(39.6% in the case of the General Municipal Portfolio) and adding
the quotient to that portion, if any, of the yield of the General
Municipal Portfolio that is not tax-exempt.
From time to time the General Municipal Portfolio may
advertise hypothetical tax equivalent yields in advertising.
These will be used for illustrative purposes only and not as
representative of the General Municipal Portfolio's past or
future performance.
35
<PAGE>
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,
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.
36
00250132.AJ6
<PAGE>
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-86.0%
ALABAMA-1.2%
ABBEVILLE IDR
(Greenish Woods Project) AMT VRDN*
$ 455 4/01/04 3.80% $ 455,000
ALABAMA HIGHER EDUCATION FSA
Student Loan Revenue Series C AMT
1,000 3/01/97 3.70 1,002,874
-----------
1,457,874
ARKANSAS-1.5%
ARKANSAS DEVELOPMENT FINANCE
AUTHORITY SFMR
Series PG-H AMT VRDN*
1,855 1/01/30 3.60 1,855,000
ARIZONA-1.1%
MARICOPA COUNTY TAN
(Cartwright Elementary School)
No. 83 Series B
600 7/31/97 4.05 601,736
MARICOPA COUNTY TAN
(Chandler Unified School District)
No. 80 Series B
700 7/31/97 4.00 702,249
-----------
1,303,985
CALIFORNIA-2.7%
CALIFORNIA MBIA
School Cash Reserve Program Authority
Series A
500 7/02/97 3.95 502,156
CALIFORNIA HIGHER EDUCATION
Student Loan Revenue Series D-2 PPB*
700 4/01/00 3.95 700,000
CALIFORNIA HOUSING FINANCE
(Home Mortgage Revenue)
Series J AMT PPB*
500 8/01/28 4.00 500,000
LOS ANGELES FSA TRAN
Series PG-A
800 6/30/97 4.05 803,092
SAN JOSE COUNTY GO TRAN
(Unified School District) Series '96
800 8/05/97 3.95% 802,861
-----------
3,308,109
COLORADO-0.9%
COLORADO CERTIFICATE OF
PARTICIPATION MBIA
(Master Lease Purchase Agreement II)
1,090 11/01/97 3.90 1,120,040
DELAWARE-0.3%
DELAWARE ECONOMIC DEVELOPMENT
AUTHORITY
(Orient Chemical Company) AMT VRDN*
400 11/01/99 3.83 400,000
DISTRICT OF COLUMBIA-4.6%
DISTRICT OF COLUMBIA GO MBIA
Series 88A
400 12/01/96 3.80 400,000
DISTRICT OF COLUMBIA HFA MFHR
(McLean Apts.) Series '85A VRDN*
1,390 12/01/05 3.70 1,390,000
DISTRICT OF COLUMBIA HFA MFHR
(Tyler Housing Trust) AMT VRDN*
2,900 8/01/25 3.85 2,900,000
DISTRICT OF COLUMBIA HFA SFMR
GNMA/FNMA Mortgage Series B AMT PPB*
1,000 12/01/29 3.75 1,000,000
-----------
5,690,000
FLORIDA-2.1%
ORANGE COUNTY HFA SFMR
GNMA/FNMA Mortgage Program Series '96B
AMT PPB*
1,000 4/01/29 3.65 1,000,000
1
STATEMENT OF NET ASSETS
(CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PINELLAS COUNTY SFMR
Multi-County Program
GNMA/FNMA Mortgage
Program Series B AMT PPB*
$ 1,600 4/01/29 3.40% $1,600,000
-----------
2,600,000
GEORGIA-2.6%
THOMASTON-UPSON COUNTY IDR
(De Ster Production Corp.)
Series A AMT VRDN*
3,200 10/01/09 3.90 3,200,000
ILLINOIS-3.7%
ILLINOIS DEVELOPMENT FINANCE AUTHORITY
(U.G.N. Inc. Project) Series '86
AMT VRDN*
3,000 9/15/11 3.95 3,000,000
ILLINOIS DEVELOPMENT FINANCE AUTHORITY
(U.G.N. Inc. Project) Series '87
AMT VRDN*
790 4/01/99 3.95 790,000
WOOD DALE CITY IDR
(Nippon Express USA, Inc.)
Series '85 VRDN*
800 6/01/00 3.70 800,000
-----------
4,590,000
INDIANA-6.8%
ALLEN COUNTY ECONOMIC DEVELOPMENT
AUTHORITY
(Mattel Power Wheels, Inc.)
AMT VRDN*
3,300 12/01/18 3.70 3,300,000
AUBURN ECONOMIC DEVELOPMENT AUTHORITY
(R.J. Tower Corp. Project)
Series '88 AMT VRDN*
865 9/01/00 3.80 865,000
JEFFERSONVILLE ECONOMIC DEVELOPMENT
AUTHORITY
(Apollo America Corp. Project)
AMT VRDN*
2,500 10/01/11 3.75 2,500,000
SEYMOUR ECONOMIC DEVELOPMENT
AUTHORITY
(Kobelco Metal Powder Co. Project)
Series '87 AMT VRDN*
1,775 12/01/97 3.95% 1,775,000
-----------
8,440,000
KANSAS-1.0%
SPRING HILL IDR
(Abrasive Engineering Project) VRDN*
1,200 9/01/16 3.75 1,200,000
KENTUCKY-4.4%
RUSSELLVILLE IDB
(JS Technos Corp. Project)
Series '89 AMT VRDN*
3,000 12/01/09 3.95 3,000,000
SCOTT COUNTY IDR
(Interstate Transformer Co.)
Series '90 AMT VRDN*
1,400 9/01/05 3.75 1,400,000
WARSAW INDUSTRIAL BUILDING AUTHORITY
(SDI Operating Partners)
Series '88 AMT VRDN*
1,050 8/01/09 3.65 1,050,000
-----------
5,450,000
LOUISIANA-0.4%
NEW ORLEANS FGIC
(Louisiana International Airport)
Series '87A AMT VRDN*
500 8/01/17 3.65 527,618
MAINE-4.2%
MAINE FINANCE AUTHORITY
Series H AMT VRDN*
560 6/01/01 3.80 560,000
MAINE FINANCE AUTHORITY
Series '88C AMT VRDN*
260 12/01/04 3.80 260,000
MAINE FINANCE AUTHORITY
Series '89D AMT VRDN*
75 6/01/00 3.80 75,000
MAINE FINANCE AUTHORITY
Series '89 K AMT VRDN*
145 12/01/97 3.80 145,000
2
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MAINE FINANCE AUTHORITY
Economic Development Revenue
Series B AMT VRDN*
$ 440 6/01/99 3.80% $ 440,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
Series D-F AMT VRDN*
715 6/01/04 3.80 715,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
Series K AMT VRDN*
125 12/01/06 3.80 125,000
MAINE FINANCE AUTHORITY
Insured Loan Revenue Series '88A-D
AMT VRDN*
1,580 12/01/03 3.80 1,580,000
ORRINGTON RESOURCE RECOVERY
(Penobscot Energy Project B) VRDN*
1,285 5/01/03 3.70 1,285,000
-----------
5,185,000
MARYLAND-0.8%
MARYLAND ENERGY FINANCE
ADMINISTRATION
(Keywell LLC Project)
Series '96 AMT VRDN*
1,000 9/01/06 3.50 1,000,000
MICHIGAN-1.6%
Michigan Strategic Fund
(Donnelly Corp. Project)
Series A AMT VRDN*
2,000 3/01/10 3.95 2,000,000
MISSOURI-4.7%
MISSOURI ECONOMIC DEVELOPMENT
AUTHORITY
Plastic Enterprises
Series 90A AMT VRDN*
270 9/01/05 3.75 270,000
MISSOURI ECONOMIC DEVELOPMENT
AUTHORITY
Variform Inc.
Series 90C AMT VRDN*
1,455 9/01/05 3.75 1,455,000
MISSOURI ECONOMIC DEVELOPMENT
AUTHORITY
Export & Infrastructure
Series D AMT VRDN*
2,530 9/01/10 3.75% 2,530,000
MISSOURI INDUSTRIAL DEVELOPMENT
AUTHORITY
(Kawasaki Motor Corp.)
Series '89 AMT VRDN*
200 4/01/99 3.80 200,000
MISSOURI INDUSTRIAL DEVELOPMENT
AUTHORITY
(Tradco Inc.) Series H AMT VRDN*
555 10/01/03 3.75 555,000
MISSOURI INDUSTRIAL DEVELOPMENT
AUTHORITY
(Wainwright Industries Inc.)
Series F AMT VRDN*
800 10/01/03 3.75 800,000
-----------
5,810,000
NEBRASKA-1.0%
NEBRASKA FINANCE AUTHORITY
(Single Family Housing)
Series '96C AMT PPB*
1,200 9/01/28 3.85 1,200,000
NEW HAMPSHIRE-4.1%
NASHUA HOUSING AUTHORITY MFHR
(Clocktower Project) AMT VRDN*
2,500 10/20/28 3.90 2,500,000
NEW HAMPSHIRE IDA
(Connecticut Light & Power Co.
Project) Series '86 AMT VRDN*
1,700 11/01/16 3.60 1,700,000
NEW HAMPSHIRE IDA
(SCI Manufacturing Inc.)
Series '89 AMT VRDN*
800 6/01/14 3.80 800,000
-----------
5,000,000
NEW JERSEY-2.8%
JERSEY CITY (School Promissory Note)
500 3/07/97 3.60 500,080
JERSEY CITY GO BAN
1,300 3/27/97 3.80 1,302,858
3
STATEMENT OF NET ASSETS
(CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------------
JERSEY CITY GO BAN
$ 1,100 9/26/97 4.05% $1,103,894
PLEASANTVILLE
(School District Temporary Notes)
500 8/28/97 4.00 500,885
-----------
3,407,717
NEW MEXICO-1.4%
NEW MEXICO MORTGAGE FINANCE
AUTHORITY
(GNMA/FNMA/FHLMC Mortgage Program)
Series '96 F-2 AMT PPB*
1,765 7/01/30 4.05 1,765,000
NEW YORK-0.8%
NEW YORK GO RAN
Series A
1,000 4/15/97 3.70 1,002,901
NORTH CAROLINA-5.3%
BLADEN COUNTY PCR
(BCH Energy LP Project)
Series '93 AMT VRDN*
1,000 11/01/20 3.75 1,000,000
LENOIR COUNTY IDR PCR
(Carolina Energy Project)
Series '95 AMT VRDN*
5,500 7/01/22 3.75 5,500,000
-----------
6,500,000
OHIO-2.5%
OHIO HOUSING FINANCE AGENCY
Residential Mortgage Revenue
Series '96A-3 AMT PPB*
1,000 9/01/28 3.40 1,000,000
OHIO HOUSING FINANCE AGENCY
Residential Mortgage Revenue
Series '96B-3 AMT PPB*
1,700 9/01/28 4.00 1,700,000
OHIO WATER DEVELOPMENT AUTHORITY
(Ohio Edison Company)
Series A AMT PPB*
400 5/01/18 3.80 400,000
-----------
3,100,000
OKLAHOMA-1.6%
BROKEN ARROW
(Paragon Films Project) AMT VRDN*
1,970 8/01/04 3.83% 1,970,000
OREGON-3.0%
OREGON HOUSING & COMMUNITY SERVICE SFMR
Mortgage Revenue Series '96C AMT
300 5/15/97 3.85 300,000
OREGON ECONOMIC DEVELOPMENT REVENUE IDR
(McFarland Cascade Project)
Series 175 AMT VRDN*
1,690 11/01/16 3.80 1,690,000
PORTLAND HOUSING MFHR
(Union Station Project)
Phase B Series '96 AMT VRDN*
1,750 10/01/31 3.80 1,750,000
-----------
3,740,000
PENNSYLVANIA-1.3%
PENNSYLVANIA ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Ram Forest Products Inc.)
Series '88A-3 AMT VRDN*
580 12/01/99 3.85 580,000
PHILADELPHIA GO TRAN
Series '96A
1,000 6/30/97 3.95 1,003,054
-----------
1,583,054
RHODE ISLAND-0.5%
RHODE ISLAND HOUSING & FINANCE CORP.
Homeownership Opportunity Series 19D
AMT PPB*
600 10/01/26 3.55 600,000
SOUTH CAROLINA-0.3%
YORK COUNTY PCR
(N C Elec. Project)
Series '84N-6 VRDN*
400 9/15/14 3.80 400,000
4
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
SOUTH DAKOTA-1.0%
SOUTH DAKOTA HFA SFMR
Homeownership Mortgage
Series G AMT
$ 1,200 5/01/97 3.90-4.00% $1,201,473
TENNESSEE-1.2%
TENNESSEE HOUSING DEVELOPMENT
AGENCY SFMR
(Homeownership Program)
Series '96-5 AMT PPB*
1,500 7/01/28 4.00 1,499,145
TEXAS-7.4%
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
HARRIS COUNTY IDR
(Nippon Pigment USA Project)
Series '87 AMT VRDN*
500 7/01/02 3.95 500,000
NORTH TEXAS HIGHER EDUCATION
Student Loan Revenue Series '87
AMT VRDN*
2,950 12/01/05 3.60 2,950,000
SAN ANTONIO IDA
(Gruma Corporation Project)
AMT VRDN*
500 11/01/09 3.80 500,000
TEXAS GOTRAN
1,000 8/29/97 3.97 1,005,569
TRAVIS COUNTY FGIC
Certificates of Obligation
Insured Series B
2,000 3/01/97 3.65 2,010,790
-----------
9,166,359
UTAH-0.4%
UTAH HOUSING FINANCE AGENCY SFMR
Home Mortgage Revenue
Series 4 AMT VRDN*
500 7/01/28 3.75% 500,000
VIRGINIA-2.2%
AMELIA COUNTY IDA
(Chambers Waste Systems, Inc.)
AMT VRDN*
1,500 7/01/07 3.80 1,500,000
FAIRFAX COUNTY IDA
(Fairfax Hospital System)
Series '88D VRDN*
200 10/01/25 3.55 200,000
RICHMOND REDEVELOPMENT & HOUSING
AUTHORITY
Series '89B-2 AMT VRDN*
1,000 10/01/24 3.80 1,000,000
-----------
2,700,000
WASHINGTON-4.5%
KINGS COUNTY ECONOMIC CORP.
(Barriers Inc. Project) AMT VRDN*
1,000 5/01/07 3.60 1,000,000
PORT OF PORT ANGELES IDR
(Daishowa America Project)
AMT VRDN*
700 8/01/07 3.95 700,000
PORT OF VANCOUVER IDR
(United Grain Corp.)
Series '92 AMT VRDN*
500 12/01/10 3.90 500,000
WASHINGTON HOUSING FINANCE
COMMISSION MFHR
(LTC Properties Inc. Project)
AMT VRDN*
1,500 12/01/15 3.65 1,500,000
WASHINGTON STUDENT LOAN FINANCE
ASSOCIATION
Third Program Series B AMT VRDN*
500 12/01/02 3.70 500,000
5
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
YAKIMA COUNTY IDR
(Can-Am Millwork LTD) AMT VRDN*
$ 1,415 12/01/14 3.75% $ 1,415,000
-------------
5,615,000
Total Municipal Bonds
(amortized cost $106,188,275) 106,188,275
COMMERCIAL PAPER-14.4%
ALABAMA-0.6%
PHENIX CITY IDB
(Mead Board Project) AMT
700 2/26/97 3.55 700,000
COLORADO-1.6%
DENVER AIRPORT REVENUE
Series B AMT
2,000 2/18/97 3.60 2,000,000
FLORIDA-0.3%
HILLSBOROUGH COUNTY
(Tampa International Airport Revenue)
Series '94 AMT
400 12/20/96 3.65 400,000
GEORGIA-0.2%
ATHENS-CLARKE IDA
(Rhode-Merieux Project)
300 Series '88 AMT
3/05/97 3.55 300,000
HAWAII-0.6%
HAWAII BUDGET & FINANCE
(Citizens Utility Company)
Series '88 AMT
700 12/06/96 3.65 700,000
INDIANA-2.2%
INDIANA DEVELOPMENT FINANCE AUTHORITY
SOLID WASTE REVENUE
(Pure Air Lake) Series '91A AMT
1,000 3/13/97 3.65 1,000,000
JASPER COUNTY
(North Indiana Public Service Project)
Series '88C
1,700 12/10/96 3.75 1,700,000
-------------
2,700,000
PENNSYLVANIA-2.9%
CARBON COUNTY
Res. Rec.: (Panther Creek Project)
Series '90B AMT
600 12/12/96 3.60% 600,000
CARBON COUNTY
Res. Rec.: (Panther Creek Project)
Series '91 AMT
1,300 12/06/96 3.55 1,300,000
CARBON COUNTY
Res. Rec.: (Panther Creek Project)
Series '91 AMT
500 3/14/97 3.65 500,000
VENANGO INDUSTRIAL AUTHORITY
Res. Rec.: (Scrubgrass Project)
Series '90B AMT
400 3/14/97 3.65 400,000
VENANGO INDUSTRIAL AUTHORITY
Res. Rec.: (Scrubgrass Project)
Series '93 AMT
800 3/14/97 3.65 800,000
-------------
3,600,000
TEXAS-2.3%
BRAZOS RIVER AUTHORITY PCR
(Texas Utilities Project)
Series '94A AMT
1,400 3/14/97 3.65 1,400,000
HOUSTON AIRPORT
Series A AMT
1,000 2/18/97 3.55 1,000,000
PORT OF CORPUS CHRISTI NUECES
COUNTY PCR
(Koch Refining Project) AMT
500 12/11/96 3.70 500,000
-------------
2,900,000
6
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
UTAH-2.6%
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.)
Series A AMT
$ 1,700 12/05/96 3.65% $ 1,700,000
TOOELE COUNTY WASTE REVENUE
(Rollins Environmental, Inc.)
Series A AMT
1,500 12/05/96 3.70 1,500,000
-------------
3,200,000
WEST VIRGINIA-1.1%
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.)
Series '89A AMT
900 12/06/96 3.55 900,000
WEST VIRGINIA PUBLIC ENERGY AUTHORITY
(Morgantown Energy Assoc.)
Series '89A AMT
400 3/14/97 3.65% 400,000
-------------
1,300,000
Total Commercial Paper
(amortized cost $17,800,000) 17,800,000
TOTAL INVESTMENTS-100.3%
(amortized cost $123,888,275) 123,888,275
Other assets less liabilities-(0.3)% (401,864)
NET ASSETS-100%
(offering and redemption price
of $1.00 per share; 123,485,796
shares outstanding) $123,486,411
# 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
FGIC Financial Guaranty Insurance Company
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
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
MBIA Municipal Bond Investors Assurance
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
RAN Revenue Anticipation Note
SFMR Single Family Mortgage Revenue
TAN Tax Anticipation Note
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
7
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- ---------------------------------------------------------------------------
COMMERCIAL PAPER-67.6%
ABN AMRO NORTH AMERICA FINANCE, INC.
$ 35,000 3/06/97 5.58% $34,484,625
ALAMO FUNDING L.P.
20,000 12/04/96* 5.27 19,991,217
17,000 12/13/96* 5.27 16,970,137
19,525 12/06/96* 5.30 19,510,627
ALLIANZ OF AMERICA FINANCE
8,000 12/20/96* 5.47 7,976,904
ASSET SECURIZATION CO-OP CORP.
10,000 12/26/96* 5.32 9,963,056
25,000 12/11/96* 5.35 24,962,847
ATLAS FUNDING CORP.
25,000 12/03/96* 5.33 24,992,597
35,000 12/24/96* 5.37 34,879,921
BARTON CAPITAL CORP.
45,877 12/12/96* 5.29 45,802,845
33,117 1/31/97* 5.35 32,816,785
BAYER CORP.
26,000 12/30/96 5.25 25,890,042
CAISSE CENTRALE DES JARDINES
DU QUEBEC
10,000 3/19/97 5.65 9,830,500
CAISSE D'AMORTISSEMENT DE LA SOCIALE
15,000 3/10/97 5.64 14,767,556
CENTAURI CORP.
60,700 3/13/97* 5.32 59,785,049
17,000 2/25/97* 5.35 16,782,731
CHIAO TUNG BANK CO., LTD.
10,000 1/08/97 5.47 9,942,261
CLIPPER RECEIVABLES CORP.
35,000 12/18/96* 5.30 34,912,403
10,000 12/30/96* 5.31 9,957,225
DELAWARE FUNDING CORP.
63,029 12/19/96* 5.29 62,862,062
ENTERPRISE FUNDING CORP.
13,000 12/05/96* 5.28 12,992,373
7,721 2/14/97* 5.35 7,634,943
30,835 2/18/97* 5.35 30,472,989
EUREKA SECURIZATION
30,000 12/11/96* 5.27% 29,956,083
50,000 12/23/96* 5.27 49,838,972
15,000 12/04/96* 5.28 14,993,400
26,000 2/03/97* 5.35 25,752,711
10,000 12/13/96* 5.37 9,982,100
GENERAL ELECTRIC CAPITAL CORP.
21,000 3/03/97 5.59 20,700,003
GOTHAM FUNDING CORP.
25,000 2/03/97* 5.38 24,760,889
GREENWICH ASSET FUNDING, INC.
25,533 3/26/97* 5.32 25,099,081
GREENWICH FUNDING CORP.
37,619 12/02/96 5.30 37,613,462
7,800 12/20/96* 5.30 7,778,182
40,000 12/23/96* 5.52 39,865,067
INTERNATIONAL SECURITIZATION CORP.
30,300 12/02/96* 5.35 30,295,497
25,000 12/27/96* 5.40 24,902,500
16,482 12/17/96* 5.41 16,442,370
4,547 12/24/96* 5.50 4,531,022
5,149 3/17/97* 5.67 5,063,037
INTERNATIONALE NEDERLANDEN
30,000 12/30/96* 5.28 29,872,400
JEFFERSON SMURFIT FINANCE CORP.
11,500 12/31/96* 5.27 11,449,496
KINGDOM OF SWEDEN
40,000 1/10/97* 5.38 39,760,889
KOREAN DEVELOPMENT BANK
5,000 12/05/96* 5.48 4,996,956
MARKET STREET FUNDING
21,200 12/30/96* 5.32 21,109,146
25,000 12/31/96* 5.32 24,889,167
OLD LINE FUNDING CORP.
28,573 12/11/96* 5.32 28,530,775
17,000 2/12/97* 5.38 16,814,712
PREFERRED RECEIVABLES FUNDING CORP.
23,100 12/18/96* 5.30 23,042,186
5,825 12/26/96* 5.30 5,803,561
8
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- ---------------------------------------------------------------------------
PREMIUM FUNDING, INC. SERIES B
$ 10,000 12/04/96* 5.50% $ 9,995,417
PREMIUM FUNDING, INC. SERIES E
21,000 12/04/96* 5.27 20,990,777
29,905 12/05/96* 5.30 29,887,389
22,786 12/13/96* 5.33 22,745,517
19,945 12/24/96* 5.40 19,876,190
PRIME ASSET VEHICLE, LTD. SERIES B
35,559 12/30/96* 5.34 35,406,037
15,290 2/25/97* 5.35 15,094,585
19,219 12/19/96* 5.52 19,165,956
RANGER FUNDING CORP.
15,135 12/17/96* 5.27 15,099,550
15,000 2/13/97* 5.35 14,835,042
15,000 12/10/96* 5.47 14,979,487
RECEIVABLES CAPITAL CORP.
24,536 12/11/96* 5.30 24,499,878
34,413 12/03/96* 5.31 34,402,848
43,308 12/17/96* 5.32 43,205,601
3,907 12/16/96* 5.35 3,898,291
SIGMA FINANCE CORP.
26,000 5/16/97* 5.32 25,362,191
83,700 2/10/97* 5.35 82,817,833
10,000 4/28/97* 5.36 9,779,644
10,000 12/10/96* 5.38 9,986,550
10,000 2/03/97* 5.39 9,904,178
SOUTHERN CO.
6,900 12/04/96 5.32 6,896,941
THAMES ASSET GLOBAL SECURITIZATION
20,000 2/18/97* 5.35 19,765,194
10,000 2/19/97* 5.38 9,880,555
22,000 12/16/96* 5.40 21,950,500
42,477 2/28/97* 5.40 41,909,932
THREE RIVERS FUNDING CORP.
2,600 12/27/96* 5.32 2,590,010
TRIPLE ASSET FUNDING CORP.
30,192 12/09/96* 5.29 30,156,508
21,518 12/11/96* 5.29 21,486,380
7,000 12/13/96* 5.30 6,987,633
17,000 1/21/97* 5.36 16,870,913
WOOD STREET FUNDING CORP.
4,000 12/26/96* 5.33 3,985,194
18,886 12/27/96* 5.40 18,812,345
WORKING CAPITAL MANAGEMENT CO.
19,041 12/12/96* 5.32% 19,010,048
20,000 12/16/96* 5.34 19,955,500
28,336 12/19/96* 5.35 28,260,201
Total Commercial Paper
(amortized cost $1,872,476,174) 1,872,476,174
CERTIFICATES OF DEPOSIT-14.5%
BANK OF TOKYO, LTD.
50,000 5.45%, 2/20/97 5.45 50,000,000
20,000 5.66%, 12/27/96 5.66 20,000,000
COMMERZBANK AG
50,000 5.47%, 12/02/96 5.45 50,000,027
DEUTSCHE BANK
50,000 5.30%, 12/31/96 5.30 50,000,000
15,000 5.48%, 1/03/97 5.65 14,996,573
20,000 5.53%, 4/02/97 5.80 19,982,119
HESSICHE LANDESBANK
10,000 5.70%, 4/29/97* 5.80 9,995,981
40,000 6.05%, 6/13/97* 5.95 39,993,909
NORINCHUKIN BANK, LTD.
25,000 5.46%, 2/18/97 5.45 25,000,541
SALT III CAYMAN ISLAND CORP.
76,000 5.68%, 1/23/97* 5.68 76,000,000
SANWA BANK, LTD.
25,000 5.52%, 1/29/97 5.52 25,000,000
SOCIETE GENERALE
2,000 5.57%, 4/04/97 5.40 1,999,850
SUMITOMO BANK, LTD.
20,000 5.38%, 12/04/96 5.38 20,000,000
Total Certificates of Deposit
(amortized cost $402,969,000) 402,969,000
CORPORATE OBLIGATIONS-13.1%
BANKERS TRUST N.Y. CO.
27,000 5.52%, 2/05/97 FRN 5.52 27,000,000
BETA FINANCE
25,000 5.92%, 6/06/97* 5.92 25,000,000
CORPORATE ASSET FUNDING CO., INC.
50,000 5.37%, 6/10/97 FRN* 5.38 49,997,384
50,000 5.40%, 12/02/97 FRN* 5.43 49,990,000
9
STATEMENT OF NET ASSETS
(CONTINUED)
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- ---------------------------------------------------------------------------
GOLDMAN SACHS GROUP L.P.
$ 50,000 5.38%, 2/14/97 5.38% $ 50,000,000
50,000 5.53%, 3/13/97 FRN 5.53 50,000,000
J.P. MORGAN & CO.
40,000 5.34%, 8/15/97 FRN 5.39 39,986,461
60,000 5.43%, 3/21/97 FRN* 5.48 60,008,609
TOYOTA MOTOR CREDIT CORP.
10,000 5.00%, 2/26/97 5.10 9,997,266
Total Corporate Obligations
(amortized cost $361,979,720) 361,979,720
U.S. GOVERNMENT AND AGENCIES-5.4%
FEDERAL FARM CREDIT BANK
25,000 5.21%, 1/22/97 FRN 5.25 24,998,627
32,000 5.43%, 8/03/98 FRN 5.48 31,974,901
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
12,000 5.23%, 1/27/97 FRN 5.35 11,997,826
40,000 5.33%, 8/25/97 FRN 5.37 39,988,697
U.S. TREASURY NOTE
40,000 6.63%, 3/31/97 5.23% 40,176,339
Total U.S. Government and Agencies
(amortized cost $149,136,390) 149,136,390
BANK OBLIGATIONS-0.7%
MORGAN GUARANTY TRUST OF NY
20,000 5.50%, 1/08/97
(amortized cost $20,000,000) 5.50 20,000,000
TOTAL INVESTMENTS-101.3%
(amortized cost $2,806,561,284) 2,806,561,284
Other assets less liabilities-(1.3)% (34,789,606)
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 2,771,770,903
shares outstanding) $2,771,771,678
# All securities either mature or their interest rate changes in one year or
less.
* Restricted security.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
10
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- ---------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES-79.9%
FEDERAL HOME LOAN MORTGAGE CORP.-33.7%
$ 5,500 12/11/96 5.19% $ 5,492,071
1,391 12/06/96 5.20 1,389,995
2,780 12/03/96 5.22 2,779,194
1,300 12/16/96 5.22 1,297,172
5,000 1/03/97 5.22 4,976,075
1,000 3/05/97 5.22 986,370
2,500 12/24/96 5.23 2,491,647
9,500 1/17/97 5.23 9,435,133
2,000 12/18/96 5.35 1,994,947
3,000 12/04/96 5.41 2,998,647
------------
33,841,251
FEDERAL NATIONAL MORTGAGE
ASSOCIATION-17.1%
5,000 2/24/97 5.20 4,938,611
2,200 12/30/96 5.21 2,190,767
4,500 2/18/97 5.22 4,448,453
2,600 1/17/97 5.24 2,582,213
3,000 5.45%, 9/12/97 5.52 2,999,051
------------
17,159,095
U.S. TREASURY NOTE-8.0%
8,000 6.50%, 5/15/97 5.66 8,029,384
STUDENT LOAN MARKETING
ASSOCIATION-7.8%
3,810 12/31/96 5.23 3,793,395
2,000 5.40%, 9/03/97 5.46 1,999,124
2,000 6.13%, 6/30/97 FRN 5.87 2,000,583
------------
7,793,102
FEDERAL FARM CREDIT BANK-7.5%
2,500 5.28%, 5/20/97 FRN 5.40 2,498,641
5,000 4.55%, 12/06/96 5.65 4,999,195
------------
7,497,836
FEDERAL HOME LOAN BANK-5.8%
1,000 1/23/97 5.28% 992,227
2,000 12/11/96 5.37 1,997,017
2,800 12/02/96 5.85 2,799,545
------------
5,788,789
Total U.S. Government and Agencies
(amortized cost $80,109,457) 80,109,457
REPURCHASE AGREEMENTS-19.9%
CS FIRST BOSTON CORP.
4,000 5.33%, dated 11/25/96, due 2/24/97
in the amount of $4,053,892
(cost $4,000,000; collateralized by
$4,197,455 Federal National
Mortgage Assn., 6.00%, 2/01/09,
value $4,099,077) 5.33 4,000,000
GOLDMAN SACHS & CO.
4,000 5.32%, dated 11/26/96,
due 2/25/97 in the amount of
$4,053,791 (cost $4,000,000;
collateralized by $4,121,145 Federal
National Mortgage Assn., 6.50%,
1/01/11, value $4,100,110) 5.32 4,000,000
J.P. MORGAN & CO.
4,000 5.25%, dated 11/18/96,
due 12/09/96 in the amount of
$4,012,250 (cost $4,000,000;
collateralized by $3,933,000 U.S.
Treasury Note, 7.25%, 2/15/98,
value $4,093,793) 5.25 4,000,000
11
STATEMENT OF NET ASSETS
(CONTINUED)
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- ---------------------------------------------------------------------------
LEHMAN BROTHERS INC.
$ 4,000 5.28%, dated 11/04/96,
due 12/04/96 in the amount of
$4,017,600 (cost $4,000,000;
collateralized by $4,131,894
Federal National Mortgage Assn.,
7.50%, 6/01/09, value $4,197,031) 5.28% $ 4,000,000
MERRILL LYNCH & CO., INC.
4,000 5.29%, dated 11/13/96,
due 12/04/96 in the amount of
$4,012,343 (cost $4,000,000;
collateralized by $4,189,465
Federal Home Loan Mortgage Corp.,
7.00%, 2/01/26, value $4,174,045) 5.29 4,000,000
Total Repurchase Agreements
(amortized cost $20,000,000) 20,000,000
TOTAL INVESTMENTS-99.8%
(amortized cost $100,109,457) $100,109,457
Other assets less liabilities-0.2% 198,796
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 100,308,076
shares outstanding) $100,308,253
# All securities either mature or their interest rate changes in one year or
less.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
12
STATEMENT OF OPERATIONS
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- -------------
DEC. 13,1995* DEC. 29,1995* DEC. 29,1995*
TO TO TO
NOV. 30,1996 NOV. 30,1996 NOV. 30,1996
------------- ------------- -------------
INVESTMENT INCOME
Interest $3,760,880 $114,660,456 $4,496,740
EXPENSES
Advisory fee (Note B) 500,241 10,427,618 412,525
Distribution assistance fee
(Note C) 450,217 9,384,854 371,276
Administrative fee (Note C) 50,024 1,042,760 41,253
Custodian fees 101,578 258,902 81,482
Registration fees 94,927 1,272,234 96,349
Transfer agency 114,026 2,942,602 99,731
Audit and legal fees 32,931 33,359 23,073
Organization 14,160 13,858 13,520
Printing 11,559 301,274 10,916
Trustees' fees 6,663 8,122 7,126
Miscellaneous 13,931 14,453 13,906
Total expenses 1,390,257 25,700,036 1,171,157
Less: fee waiver and reimbursement (389,775) (4,844,801) (346,104)
------------ ------------- -------------
1,000,482 20,855,235 825,053
Net investment income 2,760,398 93,805,221 3,671,687
REALIZED GAIN ON INVESTMENTS
Net realized gain on investments 615 775 177
NET INCREASE IN NET ASSETS FROM
OPERATIONS $2,761,013 $ 93,805,996 $3,671,864
* Commencement of operations.
See notes to financial statements.
13
STATEMENTS OF CHANGES IN NET ASSETS
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- -------------
DEC. 13,1995* DEC. 29,1995* DEC. 29,1995*
TO TO TO
NOV. 30,1996 NOV. 30,1996 NOV. 30,1996
------------- --------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income $ 2,760,398 $ 93,805,221 $ 3,671,687
Net realized gain on
investments 615 775 177
Net increase in net assets
from operations 2,761,013 93,805,996 3,671,864
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,760,398) (93,805,221) (3,671,687)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase 123,452,463 2,771,737,569 100,274,743
Total increase 123,453,078 2,771,738,344 100,274,920
NET ASSETS
Beginning of period 33,333 33,334 33,333
End of period $123,486,411 $2,771,771,678 $100,308,253
* Commencement of operations.
See notes to financial statements.
14
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
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. At the time of investment,
such securities 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 $74,000 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 November 30, 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 unless such reimbursement is eliminated or
modified upon approval of the Trustees prior thereto. For the period December
13, 1995 through November 30, 1996 for General Municipal Portfolio and for the
period December 29, 1995 through November 30, 1996 for Prime Portfolio and
Government Portfolio, the Adviser reimbursed $368,300, $4,434,560 and $330,256,
respectively. The General Municipal, Prime and Government Portfolios do not
compensate Alliance Fund Services, Inc. (a wholly-owned subsidiary of the
Adviser) for providing personnel and facilities to perform transfer agency
services.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
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,
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 November 30, 1996 for General Municipal
Portfolio and for the period December 29, 1995 through November 30, 1996 for
Prime Portfolio and Government Portfolio, the Portfolios paid fees of $450,217,
$9,384,854 and $371,276, respectively.
Pursuant to an Administration Agreement, ADP Financial Information Services,
Inc. ("ADP"), 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 November 30, 1996 for General Municipal
Portfolio and for the period December 29, 1995 through November 30, 1996 for
Prime Portfolio and Government Portfolio, the General Municipal Portfolio
incurred fees of $50,024 of which $21,475 was waived, the Prime Portfolio
incurred fees of $1,042,760 of which $410,241 was waived and the Government
Portfolio incurred fees of $41,253 of which $15,848 was waived.
NOTE D: INVESTMENT TRANSACTIONS
At November 30, 1996, the cost of portfolio securities for federal income tax
purposes was the same as the cost for financial reporting purposes.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At November 30,
1996, capital paid-in aggregated $123,485,796, $2,771,770,903 and $100,308,076
for the General Municipal Portfolio, Prime Portfolio and Government Portfolio,
respectively. Transactions, all at $1.00 per share, were as follows:
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- -------------
DEC. 13,1995* DEC. 29,1995* DEC. 29,1995*
TO TO TO
NOV. 30,1996 NOV. 30,1996 NOV. 30,1996
------------- --------------- -------------
Shares sold 494,868,947 11,085,409,424 372,258,638
Shares issued on reinvestments
of dividends 2,760,398 93,805,221 3,671,687
Shares redeemed (374,176,882) (8,407,477,076) (275,655,582)
Net increase 123,452,463 2,771,737,569 100,274,743
* Commencement of operations.
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
DECEMBER 13, DECEMBER 29, DECEMBER 29,
1995* 1995* 1995*
TO TO TO
NOV. 30,1996 NOV. 30,1996 NOV. 30,1996
------------ ------------ ------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .027 .041 .041
LESS: DISTRIBUTIONS
Dividends from net investment income (.027) (.041) (.041)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on:
net asset value (a)(b) 2.80% 4.58% 4.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $123 $2,772 $100
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements (b) 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements (b) 1.39% 1.23% 1.42%
Net investment income (b)(c) 2.76% 4.50% 4.45%
* 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.
17
INDEPENDENT AUDITOR'S REPORT
ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE MONEY MARKET FUND
We have audited the accompanying statement of net assets of Alliance Money
Market Fund - General, Prime, and Government Portfolios as of November 30, 1996
and the related statements of operations, changes in net assets, and financial
highlights for the periods indicated in the accompanying financial statements.
These financial statements and financial highlights are the responsibility of
the Portfolio's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Money Market Fund - General, Prime, and Government Portfolios as of
November 30, 1996, and the results of its operations, changes in its net
assets, and its financial highlights for the periods indicated, in conformity
with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
January 3, 1997
18
<PAGE>
_______________________________________________________________
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
00250132.AJ6
<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 MIG1/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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