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As filed with the Securities and Exchange
Commission on March 28, 1997
File No. 33-85850
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 3
ALLIANCE MONEY MARKET FUND
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:(800) 221-5672
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
It is proposed that this filing will become effective (Check
appropriate line)
X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant's Rule 24f-2 notice for its
fiscal year ending November 30, 1996 was filed on January 28,
1997.
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CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectuses
(Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Financial Highlights Financial Highlights
Item 4. General Description of Investment Objectives and
Registrant Policies
Item 5. Management of the Fund Additional Information
Item 5a. Management's Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Other Additional Information
Securities
Item 7. Purchase of Securities Purchase and Redemption
Being Offered of Shares; Additional
Information
Item 8. Redemption or Repurchase Purchase and Redemption
of Shares
Item 9. Pending Legal Proceedings Inapplicable
PART B Location in Statements
Of Additional Information
(Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and Management; General
History Information
Item 13. Investment Objectives and Investment Objectives
Policies and Policies; Investment
Restrictions
Item 14. Management of the Fund Management
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Item 15. Control Persons and Management
Principal Holders of
Securities
Item 16. Investment Advisory and Management
Other Services
Item 17. Brokerage Allocation and General Information
Other Practices
Item 18. Capital Stock and Other Daily Dividends -
Securities Determination of Net
Asset Value; General
Information
Item 19. Purchase, Redemption and Purchase and Redemption
Pricing of Securities of Shares; Daily
Being Offered Dividends - Determination
of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance General Information
Data
Item 23. Financial Statements Financial Statements
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ALLIANCE MONEY MARKET FUND
Prime Portfolio
Government Portfolio
General Municipal Portfolio
New Jersey Municipal Portfolio
New York Municipal Portfolio
California Municipal Portfolio
Connecticut Municipal Portfolio
________________________________________________________________
PROSPECTUS
April __, 1997
________________________________________________________________
Alliance Money Market Fund (the "Fund") is an open-end management
investment company comprised of seven portfolios (the
"Portfolios") 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 and, in the case of the New Jersey, New York,
California and Connecticut Municipal Portfolios, exempt from
Federal and state income taxes of the respective states) to the
extent consistent with the first two objectives. The Prime,
Government and General Municipal Portfolios are diversified. The
New Jersey, New York, California and Connecticut Municipal
Portfolios are non-diversified, and are offered only to residents
of such states, respectively. 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. The Portfolios,
except for the Prime, Government and General Municipal
Portfolios, may invest a significant portion of their assets in
the securities of a single issuer. Accordingly, an investment in
each such Portfolio may be riskier than an investment in other
types of money market funds.
A "Statement of Additional Information" for the Fund dated
April __, 1997 which provides a further discussion of certain
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areas in this Prospectus and other matters which may be of
interest to some investors, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference.
For a free copy, write the respective Portfolio at the address
shown on page __.
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.
_______________________________________________________________
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Alliance Money Market Fund
_______________________________________________________________
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)
Prime Gov't Gen NJ* NY* CA* CT*
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 YEAR 5 YEAR 10 YEAR
Prime $10 $32 $55 $122
Government $10 $32 $55 $122
General Municipal $10 $32 $55 $122
New Jersey Municipal* - - - -
New York Municipal* - - - -
California Municipal* - - - -
Connecticut Municipal* - - - -
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
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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.
____________
* These Portfolios have not commenced operations.
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________________________________________________________________
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Period (audited)
________________________________________________________________
The following tables have 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
December 13, December 29, December 29,
1995* 1995* 1995*
to to to
November 30, November 30, November 30,
1996 1996 1996
Net asset value,
beginning of
period $ 1.00 $ 1.00 $ 1.00
Income from
Investment
Operations
Net investment
income 0.27 .041 .041
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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 the period.
(b) Annualized.
(c) Net of expenses reimbursed or waived by the Adviser.
From time to time the Fund 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 compounding, the dividends paid are
assumed 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
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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, New
Jersey, New York, California and Connecticut Municipal
Portfolios). 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
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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 deposit issued by, and time deposits maintained
at, foreign branches of domestic banks described in (2) above and
prime quality dollar-denominated commercial paper issued by
foreign companies meeting the criteria specified in (3) above.
The Prime Portfolio also may invest in asset-backed
securities that meet its existing diversification, quality and
maturity criteria. Asset-backed securities are securities issued
by special purpose entities whose primary assets consist of a
pool of loans or accounts receivable. The securities may be in
the form of a beneficial interest in a special purpose trust,
limited partnership interest, or commercial paper or other debt
securities issued by a special purpose corporation. Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer.
Certain Fundamental Investment Policies. To maintain
portfolio diversification and reduce investment risk, the Prime
Portfolio may not: (1) invest more than 25% of its assets in the
securities of issuers conducting their principal business
activities in any one industry although there is no such
limitation with respect to U.S. Government securities or
certificates of deposit, bankers' acceptances and interest
bearing savings deposits; (2) invest more than 5% of its assets
in securities of any one issuer (except the U.S. Government)
although with respect to one-quarter of its total assets it may
invest without regard to such limitation; (3) purchase more than
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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.
MUNICIPAL PORTFOLIOS
As a matter of fundamental policy, each 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
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described below). Normally, substantially all of each Municipal
Portfolio's income will be tax-exempt as described below.
Each Municipal Portfolio seeks maximum current income
that is exempt from income taxes, to the extent described below,
by investing principally in a portfolio of high-quality municipal
securities.
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.
NEW JERSEY MUNICIPAL PORTFOLIO. The New Jersey
Municipal Portfolio seeks maximum current income that is exempt
from Federal and State of New Jersey personal income taxes by
investing, except when assuming a temporary defensive position,
as a matter of fundamental policy, not less than 65% of its total
assets in a portfolio of high quality municipal securities issued
by the State of New Jersey or its political subdivisions. The
New Jersey Municipal Portfolio will invest not less than 80% of
its net assets in securities the interest on which is exempt from
New Jersey personal income taxes [i.e., New Jersey municipal
securities and obligations of the U.S. Government, its agencies
and instrumentalities ("U.S. Government Securities")]. In
addition, during periods when the Portfolio's Adviser believes
that New Jersey municipal securities that meet the Portfolio's
standards are not available, the Portfolio may invest a portion
of its assets in securities whose interest payments are only
federally tax-exempt.
NEW YORK MUNICIPAL PORTFOLIO. The New York Municipal
Portfolio seeks maximum current income that is exempt from
Federal, New York State and New York City personal income taxes
by investing, except when assuming a temporary defensive
position, as a matter of fundamental policy, not less than 65% of
its total assets in a portfolio of high-quality municipal
securities issued by New York State and its political
subdivisions.
CALIFORNIA MUNICIPAL PORTFOLIO. The California Municipal
Portfolio seeks maximum current income that is exempt from
Federal and California State personal income taxes by investing,
except when assuming a temporary defensive position, as a matter
of fundamental policy, not less than 65% of its total assets in a
portfolio of high-quality municipal securities issued by the
State of California or its political subdivisions.
CONNECTICUT MUNICIPAL PORTFOLIO. The Connecticut
Municipal Portfolio seeks maximum current income that is exempt
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from Federal and Connecticut personal income taxes by investing,
except when assuming a temporary defensive position, as a matter
of fundamental policy, not less than 65% of its total assets in a
portfolio of high-quality municipal securities issued by the
State of Connecticut or its political subdivisions.
ALTERNATIVE MINIMUM TAX. Each Municipal Portfolio of
the Fund 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."
Potential investors in the New Jersey, New York,
California and Connecticut Municipal Portfolios should consider
the greater risk of the concentration of such Portfolios versus
the safety that comes with less concentrated investments and
should compare yields available on portfolios of the relevant
state's issues with those of more diversified portfolios,
including other states' issues, before making an investment
decision. The Adviser believes that by maintaining each
Municipal Portfolio's investments in liquid, short-term, high-
quality investments, each Municipal Portfolio is largely
insulated from the credit risks that exist on long-term municipal
securities of the relevant state. See the Statement of
Additional Information for a more detailed discussion of the
financial condition of New Jersey, New York, California and
Connecticut.
MUNICIPAL SECURITIES. The municipal securities in which
each 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
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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.
Each 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 each
Municipal 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 of the 1940 Act, of a Municipal Portfolio's total
assets.
Each of the Municipal Portfolios' 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 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.
Each 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 any
Portfolio's net assets. A 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
respective Municipal Portfolio, liquid assets 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
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securities may fluctuate prior to their settlement, thereby
creating an unrealized gain or loss to a Municipal Portfolio.
TAXABLE INVESTMENTS. The taxable investments in which
each 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 no Municipal Portfolio
may: (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; and
each of the New Jersey, New York, California and Connecticut
Municipal Portfolios may invest 50% of their respective total
assets in as few as four issuers (but no more than 25% of total
assets in any one 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 the
General, New Jersey, New York, California or Connecticut
Municipal Portfolios in conjunction with your brokerage account.
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There is no minimum for initial investment or subsequent
investments.
SUBSEQUENT INVESTMENTS
BY CHECK. Mail or deliver your check or negotiable
draft, payable to your broker-dealer, who will deposit it into
the Portfolio(s). Please designate the appropriate Portfolio and
indicate your brokerage account number on the check or draft.
BY SWEEP. Your brokerage firm may offer an automatic
"sweep" for the Fund in the operation of brokerage cash accounts
for its customers. 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 in any amount of $100 or more.
Checks cannot be written for more than the principal balance (not
including any accrued dividends) in your account. First you must
fill out the signature card which you can obtain from your
broker. There is no separate charge for the check writing
service. The 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.
(Eastern time). The net asset value per share of a Portfolio is
calculated by taking the sum of the value of that Portfolio's
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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 Federal alternative minimum
tax to a portion of the distributions of the New Jersey, New
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York, Connecticut, California and General Municipal Portfolios
(the "Municipal Portfolios").
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 MUNICIPAL PORTFOLIOS.
Distributions to you out of tax-exempt interest income earned by
each Municipal Portfolio are not subject to Federal income tax
(other than the AMT), but, in the case of the General Portfolio,
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 to residents of New Jersey out of income earned by
the New Jersey Portfolio from New Jersey municipal securities or
U.S. Government Securities are exempt from New Jersey state
personal income taxes. Distributions to residents of New York out
of income earned by the New York Portfolio from New York
municipal securities are exempt from and New York state and New
York City personal income taxes. Distributions to residents of
California out of income earned by the California Portfolio from
California municipal securities are exempt from California
personal income taxes. Distributions to individuals who are
residents of Connecticut out of income earned by the Connecticut
Portfolio from Connecticut municipal securities are exempt from
Connecticut personal income taxes. Distributions from each
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
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<PAGE>
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,
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$82,269 and $131,941, respectively, of the average daily value of
the net assets of each Portfolio.
In addition to the payments to the Adviser under the
Advisory Agreement described above, the Fund pays certain other
costs, including (i) custody, transfer and dividend disbursing
expenses, (ii) fees of the Trustees who are not affiliated
persons, (iii) legal and auditing expenses, (iv) clerical,
accounting, administrative and other office costs, (v) costs of
personnel providing services to the Fund, as applicable,
(vi) costs of printing prospectuses and shareholder reports,
(vii) expenses and fees related to registration and filing with
the Securities and Exchange Commission and with state regulatory
authorities and (viii) such promotional expenses as may be
contemplated by an effective plan pursuant to Rule 12b-1 under
the 1940 Act.
Under a Distribution Services Agreement (the
"Agreement"), each Portfolio pays the Adviser at a maximum annual
rate of .45 of 1% of the Portfolio's aggregate average daily net
assets. 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%, .45% and
.45%, respectively, of the average daily value of the net assets
of each Portfolio, Substantially all such monies (together with
significant amounts from the Adviser's own resources) are paid by
the Adviser to broker-dealers and other financial intermediaries
for their distribution assistance and to banks and other
depository institutions for administrative and accounting
services provided to the Portfolios, with any remaining amounts
being used to partially defray other expenses incurred by the
Adviser in distributing the Portfolios' shares. The Fund
believes that the administrative services provided by depository
institutions are permissible activities under present banking
laws and regulations and will take appropriate actions (which
should not adversely affect the Portfolios or their shareholders)
in the future to maintain such legal conformity should any
changes in, or interpretations of, such laws or regulations
occur.
ADMINISTRATOR
Pursuant to an Administration Agreement, ADP Financial
Information Services, Inc., a wholly-owned subsidiary of
Automatic Data Processing, Inc., serves as administrator of the
Fund, on behalf of the Portfolios. The Administrator performs or
arranges for the performance of certain services, mainly remote
processing services through its propriety shareholder accounting
system. ADP is entitled to receive from each Portfolio a fee
computed daily and paid monthly at a maximum annual rate equal to
.05% of such Portfolio's average daily net assets. ADP may, from
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time to time, voluntarily waive all or a portion of its fees
payable to it under the Administration Agreement. ADP shall not
have any responsibility or authority for any Portfolio's
investments, the determination of investment policy, or for any
matter pertaining to the distribution of Portfolio shares.
TRANSFER AGENT AND DISTRIBUTOR
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus,
NJ 07096-1520 and Alliance Fund Distributors, Inc., 1345 Avenue
of the Americas, New York, NY 10105, are the Fund's Transfer
Agent and Distributor, respectively.
ORGANIZATION
Each of the Portfolios is a series of Alliance Money
Market Fund, an open-end management investment company registered
under the 1940 Act and organized as a Massachusetts business
trust on October 26, 1994. The New Jersey, New York, California
and Connecticut Municipal Portfolios are non-diversified series
of the Fund. 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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<PAGE>
(LOGO) ALLIANCE MONEY MARKET FUND
_______________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
April __, 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 __, 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
INVESTMENT RESTRICTIONS
MANAGEMENT OF THE FUND
PURCHASE AND REDEMPTION OF SHARES
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
TAXES
GENERAL INFORMATION
SPECIAL RISK FACTORS IN CONCENTRATION IN A SINGLE STATE
APPENDIX A DESCRIPTION OF MUNICIPAL SECURITIES A-1
APPENDIX B DESCRIPTION OF SECURITIES RATINGS B-1
FINANCIAL STATEMENTS F-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 (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. (Each of the New Jersey, New
York, Connecticut, California and General Municipal Portfolios
are hereinafter sometimes referred to as a "Municipal Portfolio",
or collectively as or the "Municipal Portfolios"). The Prime,
Government and General Municipal Portfolios have commenced
operations.
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 New Jersey, New
York, Connecticut, California and the General Municipal
Portfolios). As a matter of fundamental policy, each Portfolio
pursues its objectives by maintaining a portfolio of high-quality
money market securities. Each 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 each 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 4.
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PRIME AND GOVERNMENT PORTFOLIOS. The investment
objectives of each of the Prime Portfolio and the Government
Portfolio are - in the following order of priority - safety of
principal, excellent liquidity, and maximum current income to the
extent consistent with the first two objectives.
MUNICIPAL PORTFOLIOS
GENERAL MUNICIPAL PORTFOLIO. The General Municipal
Portfolio (the "General 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.
NEW JERSEY MUNICIPAL PORTFOLIO. The New Jersey
Municipal Portfolio (the "New Jersey Portfolio") seeks maximum
current income that is exempt from Federal and State of New
Jersey personal income taxes by investing, as a matter of
fundamental policy, except when assuming a temporary defensive
position, not less than 65% of its total assets in a portfolio of
high quality municipal securities issued by the State of New
Jersey or its political subdivisions. The New Jersey Portfolio
will invest not less than 80% of its net assets in securities the
interest on which is exempt from New Jersey personal income taxes
[i.e., New Jersey municipal securities and obligations of the
U.S. Government, its agencies and instrumentalities ("U.S.
Government Securities")]. In addition, during periods when the
Portfolio's Adviser believes that New Jersey municipal securities
that meet the Portfolio's standards are not available, the
Portfolio may invest a portion of its assets in securities whose
interest payments are only federally tax-exempt. Shares of the
New Jersey Portfolio are offered only to New Jersey residents.
NEW YORK MUNICIPAL PORTFOLIO. The New York Municipal
Portfolio (the "New York Portfolio") seeks maximum current income
that is exempt from Federal, New York State and New York City
personal income taxes by investing principally in a non-
diversified portfolio of high-quality municipal securities issued
by New York State or its political subdivisions. Except when the
New York Portfolio assumes a temporary defensive position, not
less than 65% of its total assets will, as a matter of
fundamental policy, be so invested. Shares of the New York
Portfolio are offered only to New York State residents.
CONNECTICUT MUNICIPAL PORTFOLIO. The Connecticut
Municipal Portfolio (the "Connecticut Portfolio") seeks maximum
current income that is exempt from Federal and Connecticut
personal income taxes by investing principally in a non-
diversified portfolio of high-quality municipal securities issued
by Connecticut or its political subdivisions. Except when the
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Connecticut Portfolio assumes a temporary defensive position, not
less than 65% of its total assets will, as a matter of
fundamental policy, be so invested. Shares of the Connecticut
Portfolio are offered only to Connecticut residents.
CALIFORNIA MUNICIPAL PORTFOLIO. The California
Municipal Portfolio (the "California Portfolio") seeks maximum
current income that is exempt from both Federal income taxes and
California personal income tax by investing principally in a non-
diversified portfolio of high-quality municipal securities issued
by the State of California or its political subdivisions. Except
when the California Portfolio assumes a temporary defensive
position, not less than 65% of its total assets will, as a matter
of fundamental policy, be so invested. Shares of the California
Portfolio are available only to California residents.
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
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<PAGE>
security") if immediately after the acquisition thereof either
the Prime Portfolio or the Government Portfolio would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities.
ILLIQUID SECURITIES. The Fund has adopted the following
investment policy which may be changed by the vote of the
Trustees: Each Portfolio will not maintain more than 10% of a
Portfolio's net assets (taken at market value) in illiquid
securities. For this purpose, illiquid securities include, among
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
5
<PAGE>
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders. In recognition of
this fact, the Staff of the Securities and Exchange Commission
has stated that Section 4(2) paper may be determined to be liquid
by the Trustees, so long as certain conditions, which are
described below, are met.
In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Securities
and Exchange Commission (the "Commission") adopted Rule 144A
under the Securities Act to establish a safe harbor from the
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;
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<PAGE>
(iv) the number of dealers undertaking to make a
market in the security;
(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time
needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer);
and
(vi) any applicable Commission interpretation or
position with respect to such types of
securities.
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
7
<PAGE>
government supervision of issuers, the difficulty in enforcing
contractual obligations and the lack of uniform accounting and
financial reporting standards. There can be no assurance, as is
true with all investment companies, that a Portfolio's objective
will be achieved.
FUNDAMENTAL POLICIES. Each Portfolio's investment
objective may not be changed without the affirmative vote of a
majority of the Portfolio's outstanding shares as defined below.
Except as otherwise provided, each Portfolio's investment
policies are not designated "fundamental policies" within the
meaning of the Act and may, therefore, be changed by the Trustees
of the Portfolio without a shareholder vote. However, a
Portfolio will not change its investment policies without
contemporaneous written notice to shareholders.
SPECIAL CONSIDERATIONS OF MUNICIPAL PORTFOLIOS
NEW JERSEY, NEW YORK, CONNECTICUT AND CALIFORNIA
MUNICIPAL PORTFOLIOS. Apart from the risks associated with
investment in any money market fund seeking tax-exempt income,
such as default by municipal issuers and fluctuation in short-
term interest rates, investors in the New Jersey, New York,
California and Connecticut Municipal Portfolios should consider
the greater risks of each Municipal Portfolio's concentration
versus the safety that comes with a less concentrated investment
portfolio and should compare yields available on portfolios of
New Jersey, New York, California and Connecticut issues,
respectively, with those of more diversified portfolios,
including other states' issues, before making an investment
decision. Each of such Municipal Portfolios is a non-diversified
investment company and, accordingly, the permitted concentration
of investments may present greater risks than in the case of a
diversified company. (See below "Special Risk Factors in
Concentration in a Single State.")
To the extent that suitable New Jersey, New York,
Connecticut and California municipal securities, as applicable,
are not available for investment by the respective Municipal
Portfolio, the respective Municipal Portfolio also may purchase
municipal securities issued by other states and political
subdivisions. The dividends designated as derived from interest
income on such municipal securities generally will be exempt from
Federal income taxes but, with respect to: (i) non-New Jersey
municipal securities earned by the New Jersey Portfolio, such
dividends will be subject to New Jersey personal income taxes;
(ii) non-New York municipal securities owned by the New York
Portfolio, such dividends will be subject to New York state and
New York City personal income taxes; (iii) non-Connecticut
municipal securities owned by the Connecticut Portfolio, such
dividends will be subject to Connecticut personal income taxes;
8
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and (iv) non-California municipal securities owned by the
California Portfolio, such dividends will be subject to
California personal income taxes.
MUNICIPAL SECURITIES. The term "municipal securities,"
as used in reference to the Municipal Portfolios 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.)
No Municipal Portfolio will 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. Each Municipal Portfolio of
the Fund may invest without limitation in tax-exempt municipal
securities subject to the alternative minimum tax (the "AMT").
Under current Federal income tax law, (1) interest on tax-exempt
municipal securities issued after August 7, 1986 which are
"specified private activity bonds," and the proportionate share
of any exempt-interest dividend paid by a regulated investment
company which receives interest from such specified private
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
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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 each Municipal Portfolio
of the Fund is, and expects to be, largely invested in municipal
securities, each such Municipal 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 maturities not exceeding 397 days at the
time of a Municipal Portfolio's investment, and such Municipal
Portfolio's municipal and taxable securities are maintained at a
dollar-weighted average of 90 days or less. Taxable money market
securities purchased by a Municipal Portfolio are limited to
those described below:
10
<PAGE>
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.
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
11
<PAGE>
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
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.
12
<PAGE>
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
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
13
<PAGE>
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
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
14
<PAGE>
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
(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
15
<PAGE>
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 (50% in the case of the New Jersey Municipal Portfolio,
the New York Municipal Portfolio, the Connecticut Municipal
Portfolio and the California Municipal Portfolio), (i) the
General Municipal Portfolio may invest not more than 10% of such
total assets in the securities of any one issuer and (ii) each of
the New Jersey, New York, Connecticut and California Municipal
Portfolios may invest in the securities of as few as four issuers
(provided that no more than 25% of the respective Municipal
Portfolio's total assets are invested 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;
16
<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, each 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, except that subsection (a) of this restriction applies
only to the General Municipal Portfolio.
_________________________
* Pursuant to Rule 2a-7, the seller of a fully collateralized
repurchase agreement is deemed to be the issuer of the
underlying securities.
17
<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 Alliance
Capital Management Corporation ("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.
_________________________
** 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.
18
<PAGE>
WILLIAM H. FOULK, JR., 64, is an investment adviser and
independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 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
19
<PAGE>
which he has been associated since prior to 1992. His address is
2 Journal Square Plaza, Jersey City, NJ 07306.
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.
20
<PAGE>
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.
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.
21
<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
22
<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
52 registered investment companies comprising 110 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
23
<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
24
<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
25
<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
26
<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
27
<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
28
<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
29
<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.
30
<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.
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<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 each Municipal Portfolio of the Fund. See,
however, "Alternative Minimum Tax" above.
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the dividends-
received deduction available to corporations. Long-term capital
gains, if any, distributed by the Fund to a shareholder are
taxable to the shareholder as long-term capital gain,
irrespective of the length of time he may have held his shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year near calendar year-end, although
such distributions may be made more frequently if necessary in
order to maintain the Fund's net asset value at $1.00 per share.
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
32
<PAGE>
purchasing or carrying particular assets, shares may be
considered to have been purchased or carried with borrowed funds
even though those funds are not directly linked to the shares.
Further, persons who are "substantial users" (or related persons)
of facilities financed by private activity bonds (within the
meaning of Sections 147(a) of the Code) should consult their tax
advisers before purchasing shares of a Municipal Portfolio.
Substantially all of the dividends paid by each
Municipal Portfolio are anticipated to be exempt from Federal
income taxes. Shortly after the close of each calendar year, a
notice is sent to each shareholder advising him of the total
dividends paid into his account for the year and the portion of
such total that is exempt from Federal income taxes. This
portion is determined by the ratio of the tax-exempt income to
total income for the entire year and, thus, is an annual average
rather than a day-by-day determination for each shareholder.
Each Portfolio generally will be required to withhold
tax at the rate of 31% with respect to dividends of net ordinary
income and net realized capital gains payable to a noncorporate
shareholder unless the shareholder certifies on his subscription
application that the social security or taxpayer identification
number provided is correct and that the shareholder has not been
notified by the Internal Revenue Service that he is subject to
backup withholdings.
STATE INCOME TAX CONSIDERATIONS
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO. Shareholders
of the Prime Portfolio and the Government Portfolio may be
subject to state and local taxes on distributions from the Prime
Portfolio and Government Portfolio. The laws of some states may
exempt from some taxes dividends from the Prime Portfolio or the
Government Portfolio to the extent such dividends are
attributable to interest from obligations of the U.S. Government
and certain of its agencies and instrumentalities.
GENERAL PORTFOLIO. Shareholders of the General
Portfolio may be subject to state and local taxes on
distributions from the General 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 Portfolio in his particular state
and locality.
NEW YORK PORTFOLIO. Shareholders of the New York
Portfolio who are individual residents of New York are not
subject to the New York State or New York City personal income
taxes on distributions from the New York Portfolio which are
designated as derived from municipal securities issued by the
33
<PAGE>
State of New York or is political subdivisions. Distributions
from the New York Portfolio are, however, subject to the New York
Corporate Franchise Tax payable by corporate shareholders.
CALIFORNIA PORTFOLIO. Shareholders of the California
Portfolio who are individual residents of California are not
subject to the California personal income tax on distributions
from the California Portfolio which are designated as derived
from municipal securities issued by the State of California or
its political subdivisions. Distributions from the California
Portfolio are, however, subject to the California Corporate
Franchise Tax payable by corporate shareholders.
CONNECTICUT PORTFOLIO. Shareholders of the Connecticut
Portfolio who are individual residents of Connecticut are not
subject to Connecticut personal income taxes on distributions
from the Connecticut Portfolio which are designated as derived
from municipal securities issued by the State of Connecticut or
its political subdivisions.
NEW JERSEY PORTFOLIO. Shareholders of the Portfolio who
are individual residents of New Jersey are not subject to the New
Jersey personal income tax on distributions from the Portfolio
which are designated as derived from municipal securities issued
by the State of New Jersey or its political subdivisions or U.S.
Government Securities as defined in the Prospectus.
Distributions from the Portfolio are, however, subject to the New
Jersey Corporation Business (Franchise) Tax and the New Jersey
Corporation Income Tax payable by corporate shareholders.
_______________________________________________________________
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.
34
<PAGE>
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
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
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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
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
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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
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
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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 New Jersey
Portfolio for an investor in the top 1996 Federal (39.6%) and New
Jersey (6.37%) personal income tax brackets would be equivalent
to a taxable yield of 8.84%. A 5% tax- exempt yield of the New
York Portfolio for an investor in the top 1996 Federal, New York
state (7.13%), and New York City (4.40%) personal income tax
brackets would be equivalent to a taxable yield of 9.36%. A 5%
tax-exempt yield of the Connecticut Portfolio for an investor in
the top 1996 Federal and Connecticut (4.50%) personal income tax
brackets would be equivalent to a taxable yield of 8.67%. A 5%
tax-exempt yield of the California Portfolio for an investor in
the top 1996 Federal and California (11.00%) personal income tax
brackets would be equivalent to a taxable yield of 9.30%. A 5%
tax- exempt yield of the General 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 each of these examples it is assumed that an investor
can fully deduct the state and local income taxes for Federal
income tax purposes and that the investor is not subject to
federal or state alternative minimum taxes. Taxable equivalent
yield is computed by dividing that portion of the yield of a
Municipal Portfolio that is tax exempt (assumed for purposes of
these examples to be the entire yield of 5%) by one minus the
applicable marginal income tax rate (39.6% in the case of the
General Municipal Portfolio; the combined effective federal and
state marginal income tax rates in the case of a State Municipal
Portfolio) and adding the quotient to that portion, if any, of
the yield of the Municipal Portfolio that is not tax-exempt.
From time to time the Municipal Portfolios may advertise
hypothetical tax equivalent yields in advertising. These will be
used for illustrative purposes only and not as representative of
a Municipal Portfolio's past or future performance.
PERIODIC DISTRIBUTION PLANS. Without affecting
shareholders' right of using any of the methods of redemption
described above, by checking the appropriate boxes on the
Application Form shareholders may elect to participate
additionally in the following plans without any separate charge.
Under the Income Distribution Plan shareholders receive monthly
payments of all the income earned in his or her Portfolio
account, with payments forwarded shortly after the close of the
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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.
_______________________________________________________________
SPECIAL RISK FACTORS IN CONCENTRATION IN A SINGLE STATE
_______________________________________________________________
The primary purpose of investing in a portfolio of a
single state's municipal securities is the special tax treatment
accorded that state's resident individual investors. However,
payment of interest and preservation of principal is dependent
upon the continuing ability of the state's issuers and/or
obligors of its state, municipal and public authority debt
obligations to meet their obligations thereunder. Investors
should consider the greater risk of the concentration of the New
Jersey, New York, Connecticut or California Municipal Portfolio
(individually, a "State Portfolio") versus the safety that comes
with a less concentrated investment portfolio and should compare
yields available on portfolios of the relevant state's issues
with those of more diversified portfolios, including other
states' issues, before making an investment decision. The
Adviser believes that by maintaining each State Portfolio's
investment portfolio in liquid, short-term, high-quality
investments, including the participation interests and other
variable rate obligations that have credit support such as
letters of credit from major financial institutions, the State
Portfolio is largely insulated from the credit risks that exist
on long-term municipal securities of the relevant state.
The following summaries are included for the purpose of
providing a general description of credit and financial
conditions of New Jersey, New York, Connecticut, and California
and are based on information from official statements made
available during 1996 in connection with the issuance of certain
securities and does not purport to be complete. While the Fund
has not undertaken to independently verify such information, it
has no reason to believe that such information is not correct in
all material aspects. These summaries do not provide specific
information regarding all securities in which each Portfolio is
permitted to invest and in particular do not provide specific
information on the private business entities whose obligations
support the payments on AMT-Subject Bonds.
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NEW JERSEY PORTFOLIO
ECONOMIC CLIMATE. New Jersey is the ninth largest state
in population and the fifth smallest in land area. With an
average of 1,062 persons per square mile, it is the most densely
populated of all the states. New Jersey's .59% rate of annual
population growth between 1990 and 1993, while comparing
favorably with other Middle Atlantic States, was less than the
national ratio of increase.
The State's economic base is diversified, consisting of
a variety of manufacturing, construction and service industries,
supplemented by commercial agriculture. In 1976, voters approved
casino gambling for Atlantic City, and that city has again become
an important State tourist attraction.
Total personal income in New Jersey stood at $187.2
billion for 1990 and increased to $210.6 billion for 1993.
Personal income increased 3.2% between 1992 and 1993 but was
below the national rate at 4.4%. Historically, New Jersey's
average per capita income has been well above the national
average. The differential narrowed during the 1970s but widened
in the 1980s. In 1993, the State ranked second among all states
in per capita personal income ($26,732).
After experiencing a boom during the mid-1980s, New
Jersey as well as the rest of the Northeast United States slipped
into a slowdown well before the onset of the national recession
which officially began in July 1990 (according to the National
Bureau of Economic Research). Initially, this slowdown was an
expected response to the State's tight labor market and the fewer
number of persons entering the labor force. By the beginning of
the national recession, there had already been a decline in
construction activity and the growth in the service sectors and
the long-term downtrend of factory employment had accelerated,
partly because of a leveling off of industrial demand nationally.
The onset of recession caused an acceleration of New Jersey's job
losses in construction and manufacturing as well as an employment
downturn in such previously growing sectors as wholesale trade,
retail trade, finance, utilities and trucking and warehousing.
Reflecting the downturn, the rate of unemployment in New
Jersey rose from 3.6% during the first quarter of 1989 to an
estimated 6.6% in 1991. In 1992, the State's unemployment rate
moved ahead of the nation's for the first time in a decade to an
annual average of 8.4% versus 7.4% nationally. In 1993,
unemployment fell to 7.4% in New Jersey and 6.8% in the United
States.
In the first nine months of 1994, relative to the same
period a year ago, job growth took place in services (3.5%) and
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construction (5.7%), more moderate growth took place in trade
(1.9%), transportation and utilities (1.2%) and
finance/insurance/real estate (1.4%), while manufacturing and
government declined (by 1.5% and 0.1%, respectively). The net
result was a 1.6% increase in average employment during the first
nine months of 1994 compared to the first nine months of 1993.
Just as New Jersey was hurt by the national recession,
the State should benefit by national recovery a rising consumer
and business spending generate increased factory orders, building
activity and a flow of commerce without regard to State lines.
Total construction contracts awarded in New Jersey
increased by 8.6% in 1993 period compared with the same time
period in 1992. Nonbuilding construction awards have been at
high levels since 1991 due to substantial outlays for roads,
bridges and other infrastructure projects, although as compared
with 1992, 1993 figures show a decline in awards. In addition,
new car and light truck registrations increased 12.7% in the
State during the first five months in 1993.
FINANCIAL CONDITION. The State Constitution provides,
in part, that no money may be drawn from the State Treasury
except for appropriations made by law and that no law
appropriating money for any State purpose shall be enacted if the
amount of money appropriated therein, together with all other
prior appropriations made for the same fiscal year, exceeds the
total amount of revenue on hand and anticipated to be available
for such fiscal year, as certified by the Governor. Should it
appear that revenues will be less than the amount anticipated in
the budget for a fiscal year, the Governor may take steps to
reduce State expenditures. In addition, no supplemental
appropriation may be enacted after adoption of an appropriations
act except where there are sufficient revenues on hand or
anticipated, as certified by the Governor, to meet such
appropriation.
For the fiscal year ended June 30, 1993, the
undesignated fund balances in the General Fund in which the
largest part of the financial operations of the State is
accounted for, were $937.4 million. Such balance was $688
million (unaudited) for the 1994 fiscal year and is estimated to
be $148 million for the 1995 fiscal year. There have been
positive undesignated Fund Balances in the General Fund at the
end of each year since the State Constitution was adopted in
1947.
There are 567 municipalities and 21 counties in New
Jersey. During 1990, 1991 and 1992 no county exceeded its
statutory debt limitations or incurred a cash deficit in excess
of 4% of its tax levy. The number of municipalities which
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exceeded statutory debt limits was five as of December 31, 1992.
No municipality incurred a cash deficit greater than 4% of its
tax levy for 1992. No New Jersey municipality or county has
defaulted on the payment of interest or principal on any
outstanding debt obligation since the 1930's.
State supervision of school finance and of the fiscal
operations and debt issuance practices of local financing
authorities, autonomous public bodies created by counties or
municipalities empowered to issue bonds, impose facility or
service charges or levy taxes in their districts (sewerage,
municipal utilities, parking, pollution control, improvement,
etc.) and special taxing districts (fire, water, etc.), is
similar to that of local governments. As of June 30, 1992, there
were 202 locally created authorities with a total outstanding
capital debt of $6.3 billion (figures do not include housing
authorities and redevelopment agencies). This amount reflects
outstanding bonds, notes, loans and mortgages payable by the
authorities as of their respective fiscal years ended nearest to
June 30, 1992.
On July 12, 1994, the New Jersey Supreme Court ruled
that the State's 1991 School funding law was unconstitutional.
the Court gave the Legislature a deadline of 1997-1998 for the
State to close the spending gap between school districts. It is
not clear at this time what effect this judgment will have on
State finances or school district budgets. It is expected that
the Legislative will consider this issue in the 1995 session.
For the fiscal year ended June 30, 1993, the
undesignated fund balances in the General Fund in which the
largest part of the financial operations of the State is
accounted for, were $937.4 million. Such balance was $688
million (unaudited) for the 1994 fiscal year and is estimated to
be $148 million for the 1995 fiscal year. There have been
positive undesignated Fund Balances in the General Fund at the
end of each year since the State Constitution was adopted in
1947.
There are 567 municipalities and 21 counties in New
Jersey. During 1990, 1991 and 1992 no county exceeded its
statutory debt limitations or incurred a cash deficit in excess
of 4% of its tax levy. The number of municipalities which
exceeded statutory debt limits was five as of December 31, 1992.
No municipality incurred a cash deficit greater than 4% of its
tax levy for 1992. No New Jersey municipality or county has
defaulted on the payment of interest or principal on any
outstanding debt obligation since the 1930's.
State supervision of school finance and of the fiscal
operations and debt issuance practices of local financing
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authorities, autonomous public bodies created by counties or
municipalities empowered to issue bonds, impose facility or
service charges, or levy taxes in their districts (sewerage,
municipal utilities, parking, pollution control, improvement,
etc.) and special taxing districts (fire, water, etc.), is
similar to that of local governments. As of June 30, 1992, there
were 202 locally created authorities with a total outstanding
capital debt of $6.3 billion (figures do not include housing
authorities and redevelopment agencies). This amount reflects
outstanding bonds, notes, loans and mortgages payable by the
author ended nearest to June 30, 1992.
LITIGATION. On July 12, 1994, the New Jersey Supreme
Court ruled that the State's 1991 School funding law was
unconstitutional. The Court gave the Legislature a deadline of
1997-1998 for the State to close the spending gap between school
districts. It is not clear at this time what effect this
decision will have on State finances or school district budgets.
It is expected that the Legislature will consider alternative
financing mechanisms, including increases in the sales tax or
income tax, a statewide property tax, or a combination of all
three taxes in the 1995 Session. There are also a number of
suits making monetary claims against the State, its agencies and
employees that together if decided in favor of the complainants
would significantly increase State expenditures above those
anticipated. There are also individual suits that could have
that effect. Among them are suit challenging (a) the method by
which the State Department of Human Services shares with county
governments costs and costs recoveries for residents in State
psychiatric hospitals and residential facilities for the
developmentally disabled; (b) the allegedly low level of Medicaid
payment rates set by the State for long-term care facilities in
New Jersey; (c) the right of the State to retain certain amounts
paid to the Spill Compensation Fund for uses that were
subsequently pre-empted by federal law; (d) the automobile
insurance reform act impact on various insurance firms; (e) the
revaluation of public employee pension funds that has resulted in
smaller contributions by public employers; (f) the deregulation
of hospital rates in the State; and (g) the hospital rate-setting
system and its application for meeting the cost of uncompensated
care, for shifting Medicaid costs and for granting discounts to
payors.
NEW YORK PORTFOLIO
ECONOMIC OVERVIEW. The State is the third most populous
state in the nation with over 18 million residents and has a per
capita personal income of $24,623 which is 18.3% above the
national average. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a
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comparatively small share of the nation's farming and mining
activity. The State's location and its excellent air transport
facilities and natural harbors have made it an important link in
international commerce. The State has a declining proportion of
its workforce engaged in manufacturing, and an increasing
proportion engaged in service industries. This transition
reflects a national trend.
The State has historically been one of the wealthiest
states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its
relative economic affluence. Statewide, urban centers have
experienced significant changes involving migration of the more
affluent to the suburbs and an influx of generally less affluent
residents. Regionally, the older Northeast cities have suffered
because of the relative success that the South and the West have
had in attracting people and business. During most of the 1980's
the State's economic position improved in a manner consistent
with that for the Northeast as a whole.
During the recession of 1982-1983 the State's economy in
most respects performed better than that of the nation. However,
in the calendar years 1984 through 1991, the State's rate of
economic expansion was somewhat slower than that of the nation.
The unemployment rate in the State dipped below the national rate
in the second half of 1981 and generally remained lower until
1991. In 1993, the state unemployment rate was 7.7%. During the
past 10 years, total personal income in the State has risen
slightly faster than the national average only in 1986 through
1989. Overall economic activity declined less than that of the
nation as a whole during the 1982-83 recession. In the recent
recession, however, the State, and the rest of the Northeast, has
been more heavily impacted than the nation as a whole and has
been slower in recovering. The national recession has been
exacerbated in the State by a significant retrenchment in the
financial services industry, cutbacks in defense spending and an
overbuilt real estate market.
The State has the second highest per capita state and
local tax burden in the United States. The State and its
localities have used these taxes to develop and maintain their
transportation networks, public schools and colleges, public
health systems, other social services and recreational
facilities. Despite these benefits, the burden of the State and
local taxation, in combination with the many other causes of
regional economic dislocation, may have contributed to the
decisions of some businesses and individuals to relocate outside,
or not locate within, the State.
To stimulate the State's economic growth, the State has
developed programs, including the provision of direct financial
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assistance by State-related sources, designed to assist
businesses to expand existing operations located within the State
and to attract new businesses to the State. Local industrial
development agencies raised an aggregate of approximately $7.8
billion in separate tax-exempt bond issues through December 31,
1993. There are currently more than 100 county, city, town and
village agencies. In addition, the New York State Urban
Development Corporation ("UDC") is empowered to issue, subject to
approval by the Public Authorities Control Board, bonds and notes
on behalf of private corporations for economic development
projects.
NEW YORK LOCAL GOVERNMENT ASSISTANCE CORPORATION. In
the past the State's financial practices have required it to
issue tax and revenue anticipation notes, with maturities of one
year or less, each spring in amounts which, in recent years
ranged from approximately $2.6 billion to approximately $4.1
billion. Such notes were issued primarily because the State of
New York makes nearly one-half of its local assistance payments
during the first quarter of its fiscal year but receives taxes
and revenues at a more even rate throughout its fiscal year. In
June 1990, legislation was enacted creating the "New York Local
Government Assistance Corporation" (the "Corporation"), a public
benefit corporation empowered to issue long-term obligations to
fund certain payments to local governments traditionally funded
through the State's annual seasonal borrowing. Over a period of
the next several years, the issuance of those long-term
obligations, which will be amortized over no more than 30 years,
is expected to result in eliminating the need for continuing
short-term seasonal borrowing for those purposes, because the
timing of local assistance payments in future years will
correspond more closely with the State's available cash flow. The
legislation also imposed a cap on the annual seasonal borrowing
of the State at $4.7 billion, less net proceeds of bonds issued
by the Corporation, except in cases where the Governor and the
legislative leaders have certified both the need for additional
borrowing and a schedule for reducing it to the cap. If
borrowing above the cap is thus permitted in any fiscal year, it
is required by law to be reduced to the cap by the fourth fiscal
year after the limit was first exceeded. Through December 1994,
the Corporation has issued its bonds to provide net proceeds of
$3.856 billion. The Corporation has been authorized to issue its
bonds to provide net proceeds of up to an additional $315 million
during the State's 1994-95 fiscal year.
STATE FINANCIAL PRACTICES: GAAP BASIS. Historically,
the State has accounted for, reported and budgeted its operations
on a cash basis. The State currently formulates a financial plan
which includes all funds required by generally accepted
accounting principles ("GAAP"). The State, as required by law,
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continues to prepare its financial plan and financial reports on
the cash basis of accounting as well.
1994-95 FISCAL YEAR. The major uncertainties in the
1994-95 State Financial Plan continue to be those related to the
economy and tax collections, and could produce either favorable
or unfavorable variances during the balance of the year. While
adjustments to the forecast have been made to reflect emerging
relative weakness in the financial services industry, due in
large part to currency and credit market volatility, it is
possible that the weakness in that sector could precipitate
further deterioration in State receipts. On the other hand,
recent evidence suggests that the national economy may perform
better than projected, with potentially short-term results on
State receipts.
The State issued its second quarterly update to the
cash-basis 1994-95 State Financial Plan on October 28, 1994.
Revisions have been made to estimates of both receipts and
disbursements, based on: updated economic forecasts for both the
nation and the State, an analysis of actual receipts and
disbursements through the first six months of the fiscal year,
and an assessment of changing program requirements and cost
savings initiatives. The update projects a year-end surplus of
$14 million in the General Fund, with estimated receipts reduced
by $267 million and estimated disbursements reduced by $281
million, compared to the State Financial Plan as initially
formulated.
The State has updated its forecast of national and State
economic activity through the end of calendar year 1995. This
national economic forecast is basically unchanged from that on
which the initial formulation of the State Financial Plan was
based. The State economic forecast is marginally weaker than
that on which the initial formulation of the State Financial Plan
was based. The forecast calls for employment to increase in 1994
and 1995. Employment growth will moderate in 1995 when the pace
of national economic growth is projected to slacken and entire
industries adjust to changing markets and the State's economy
absorbs the full impact of these developments. Personal income
is estimated to increase by 5.3% in 1994, and at a more moderate
rate in 1995.
Receipts through the first two quarters of the 1994- 95
fiscal year fell short of expectations by $132 million. These
shortfalls were concentrated in the personal and business income
taxes, where quarterly personal income, bank and insurance tax
payments were lower than expected. Based on the revised economic
outlook and actual receipts for the first six months of the 1994-
95 fiscal year, projected General Fund receipts for the 1994-95
fiscal year have been reduced by $267 million. Estimates of the
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yield of the personal income tax were lowered by $334 million,
primarily reflecting weak estimated tax collections through
September and lower withholding collections due to reduced
expectations for wage and salary growth - particularly securities
industry bonuses - during the balance of the year. It has been
estimated that, due to lower than expected tax revenues in the
final months of 1994, the State of New York will finish its 1994-
1995 fiscal year with a budget deficit of at least $300 million.
The Governor has stated that tax revenues for the final period of
1994 were $430 million lower than projected in October, while
spending was $110 million lower than expected.
The State issued its first update to the GAAP-basis
Financial Plan for the State's 1994-95 fiscal year on
September 1, 1994. The GAAP-basis update is based on the first
quarterly cash-basis update to the 1994-95 State Financial Plan
completed in July. In the February 1994 projection, General Fund
operation results over the 1993-94 and 1994-95 fiscal year
projection period were anticipated to reduce the accumulated
deficit by $256 million. The impact of the reported results for
the State's 1993-94 fiscal year and the revised projection on the
accumulated deficit is substantially the same. Combining the
$914 million operating surplus for the State's 1993-94 fiscal
year with the projected $690 million operating deficit for the
1994-95 fiscal year results in an anticipated $224 million
reduction in the accumulated deficit.
1993-94 FISCAL YEAR. The State's financial operations
have improved during recent fiscal years. During the period
1989-90 through 1991-92, the state incurred General Fund
operating deficits that were closed with receipts from the
issuance of tax and revenue anticipation notes. First, the
national recession and then the lingering economic slowdown in
the New York and regional economy, resulted in repeated
shortfalls in receipts and three budget deficits. For its 1992-
93 and 1993-94 fiscal years, the state recorded balanced budgets
on a cash basis.
The State ended its 1993-94 fiscal year on a cash basis
with a balance of $1.140 billion in the tax refund reserve
account, $265 million in its Contingency Reserve Fund ("CRF") and
$134 million in its Tax Stabilization Reserve Fund. These fund
balances were primarily the result of an improving national
economy, State employment growth, tax collections that exceeded
earlier projections and disbursements that were below
expectations. Before the deposit of $1.140 billion in the tax
refund reserve account, General Fund receipts in 1993-94 exceeded
those originally projected when the State Financial Plan for that
year was formulated by $1.002 billion. Greater-than-expected
receipts in the personal income tax, the bank tax, the
corporation franchise tax and the estate tax accounted for most
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of this variance, and more than offset weaker-than-projected
collections from the sales and use tax and miscellaneous
receipts.
The higher receipts resulted, in part, because the New
York economy performed better than forecasted. Employment growth
started in the first quarter of the State's 1993-94 fiscal year,
and, although this lagged behind the national economic recovery,
the growth in New York began earlier than forecasted. The New
York economy exhibited signs of strength in the service sector,
in construction, and in trade. The State Division of the Budget
believes that approximately 100,000 jobs were added during the
1993-94 fiscal year.
During the 1993-94 fiscal year, the State also
established and funded a Contingency Reserve Fund ("CRF") as a
way to assist the State in financing the cost of litigation
affecting the State. A year-end transfer of $36 million was made
to the CRF, which, after a disbursement for authorized fund
purposes, brought the CRF balance at the end of 1993-94 to $265
million. This amount was $165 million higher than the amount
originally targeted for this reserve fund. The State completed
its 1993-94 fiscal year on a GAAP basis with an accumulated
surplus in its combined governmental funds of $370 million.
STATE AUTHORITIES. The fiscal stability of the State is
related to the fiscal stability of its public authorities
("Authorities"), which generally have responsibility for
financing, constructing and operating revenue-producing public
benefit facilities. Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply
to the State itself and may issue bonds and notes within the
amounts of, and as otherwise restricted by, their legislative
authorization. As of September 30, 1993 there were 18
Authorities that had outstanding debt of $100 million or more.
The aggregate outstanding debt, including refunding bonds, of
these 18 Authorities was $63.5 billion as of September 30, 1993.
As of March 31, 1994, aggregate public authority debt outstanding
as State-supported debt was $21.1 billion and as State-related
debt was $29.4 billion.
Several Authorities have, in the past experienced
financial difficulties. Certain authorities including, without
limitation, the Metropolitan Transportation Authority (the "MTA")
continue to experience financial difficulties, requiring
financial assistance from the State. The MTA oversees the New
York City's subway and bus lines by its affiliates, the New York
City Transit Authority and the Manhattan and Bronx Surface
Transit Operating Authority (collectively, the "TA"). Because
fare revenues are not sufficient to finance the mass transit
portion of these operations, the MTA has depended and will
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continue to depend for operating support upon a system of State,
local government and TBTA support and, to the extent available,
Federal operating assistance, including loans, grants and
operating subsidies.
Over the past several years the State has enacted
several taxes-including a surcharge on the profits of banks,
insurance corporations and general business corporations doing
business in the 12-county Metropolitan Transportation Region
served by the MTA and a special one-quarter of 1% regional sales
and use tax-that provide revenues for mass transit purposes,
including assistance to the MTA. In addition, since 1987 State
law has required that the proceeds of a one-quarter of 1%
mortgage recording tax paid on certain mortgages in the
Metropolitan Transportation Region be deposited in a special MTA
fund for operating or capital expenses. Further in 1993, the
State dedicated a portion of the State petroleum business tax to
fund operating or capital assistance to the MTA. For the 1994-95
State fiscal year, total State assistance to the MTA is estimated
at approximately $1.3 billion.
In 1993, State legislation authorized the funding of a
five-year $9.56 billion MTA capital plan for the five-year
period, 1992 through 1996 (the "1992-96 Capital Program"). The
MTA has received approval of the 1992-96 Capital Program based on
this legislation from the 1992-96 Capital Program Review Board,
as State law requires. This is the third five- year plan since
the Legislature authorized procedures for the adoption, approval
and amendment of a five-year plan in 1981 for a capital program
designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities
and equipment. The MTA, the Triborough Bridge and Tunnel
Authority and the TA are collectively authorized to issue an
aggregate of $3.1 billion of bonds (net of certain statutory
exclusions) to finance a portion of the 1992-96 Capital Program.
The 1992-96 Capital Program is expected to be financed in
significant part through dedication of State petroleum business
taxes referred to above.
There can be no assurance that all the necessary
governmental actions for the Capital Program will be taken, that
funding sources currently identified will not be decreased or
eliminated, or that the 1992-96 Capital Programs or parts
thereof, will not be delayed or reduced. Furthermore, the power
of the MTA to issue certain bonds expected to be supported by the
appropriation of State petroleum business taxes is currently the
subject of a court challenge. If the Capital Program is delayed
or reduced, ridership and fare revenues may decline, which could,
among other things, impair the MTA's ability to meet its
operating expenses without additional State assistance.
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NEW YORK CITY. The fiscal health of the State is also
closely related to the fiscal health of its localities,
particularly the City, which has required and continues to
require significant financial assistance from the State. The
City's independently audited operating results for each of its
1981 through 1993 fiscal years show a General Fund surplus
reported in accordance with GAAP. In addition, the City's
financial statements for the 1993 fiscal year received an
unqualified opinion from the City's independent auditors, the
eleventh consecutive year the City has received such an opinion.
The Office of the State Deputy Comptroller for the City
of New York ("OSDC"), and the New York State Financial Control
Board (the "Control Board") issue periodic reports on the City's
financial plans, as modified, analyzing forecasts of revenues and
expenditures, cash flow, and debt service requirements, as well
as compliance with the City's financial plan. OSDC staff reports
issued during the mid-1980's noted that the City's budgets
benefited from a rapid rise in the City's economy, which boosted
the City's collection of property, business and income taxes.
These resources were used to increase the City's workforce and
the scope of discretionary and mandated City services.
Subsequent OSDC staff reports examined the 1987 stock market
crash and the 1989-92 recession, which affected the New York City
region more severely than the nation, and attributed an erosion
of City revenues and increasing strain on City expenditures to
that recession. According to a recent OSDC staff report, the
City's economy is now slowly recovering, but the scope of that
recovery is uncertain and unlikely, in the foreseeable future, to
match the expansion of the mid-1980's. Also, staff reports of
OSDC and the Control Board have indicated that the City's recent
balanced budgets have been accomplished, in part, through the use
of non-recurring resources, tax increases and additional State
assistance; that the City has not yet brought its long-term
expenditures in line with recurring revenues; and that the City
is therefore likely to continue to face future projected budget
gaps requiring the City to increase revenues and/or reduce
expenditures.
The City prepares and operates under a four-year
financial plan which is submitted annually to the Control Board
for approval and is periodically updated. On October 25, 1994,
the City published the Financial Plan for the 1995-1998 fiscal
years, which is a proposed modification to a financial plan
submitted to the Control Board on July 8, 1994 (the "July
Financial Plan") and which relates to the City, the Board of
Education ("BOE") and the City University of New York ("CUNY").
The City's July Financial Plan set forth proposed actions for the
1995 fiscal year to close a previously projected gap of
approximately $2.3 billion for the 1995 fiscal year, which
included City actions aggregating $1.9 billion, a $288 million
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increase in State actions over the 1994 and 1995 fiscal years,
and a $200 million increase in Federal assistance. The 1995-1998
Financial Plan published on October 25, 1994 reflects actual
receipts and expenditures and changes in forecast revenues and
expenditures since the July Financial Plan and projects revenues
and expenditures for the 1995 fiscal year balanced in accordance
with GAAP. For the 1995 fiscal year, the Financial Plan includes
actions to offset an additional potential $1.1 billion budget
gap.
The gap closing measures for the 1995 fiscal year
include additional proposed agency actions, additional
expenditure reductions and greater than forecast miscellaneous
revenues. The $851 million of agency actions proposed in the
Financial Plan for the 1995 fiscal year, together with the $1.1
billion of agency actions proposed in the July Financial Plan,
are substantial and may be difficult to implement. Agency
actions proposed in the Financial Plan for the 1995 fiscal year
include reduced expenditures for the Police Department, a
reduction in the City's subsidy to the New York City Health and
Hospitals Corporation, reduced allocations to BOE, expenditure
reductions for the Human Resources Administration, expenditure
reductions for the Department of Corrections, and a reduction in
the City's subsidy to the MTA. The Financial Plan is subject to
the ability of the City to implement proposed reductions in City
personnel and other cost reduction initiatives. In addition,
legislation has been adopted by the State Legislature that would
impose a maintenance of effort requirement on the level of
funding required of the City for the BOE.
There is currently much debate over the exact amount of
the City's budget deficit. In the past few months, the official
figure has been set at $1.1 billion (approximately 3% of the
City's $31.6 billion budget). In response to the deficit, Mayor
Giuliani in December 1994 imposed $800 million in spending cuts
and has proposed to cut another 3% from the budgets of city
agencies. Even taking these measures into account, however, it
has been estimated that the City will still be left with a
deficit of up to $700 million for the current fiscal year. In
order to compensate for significantly lower than forecasted tax
revenues, the City has announced its intention to refinance
certain existing debt obligations. As a result of this
announcement, Standard & Poor's has placed the general obligation
bonds of the City on credit watch.
The Financial Plan also sets forth projections for the
1996 through 1998 fiscal years and outlines a proposed gap-
closing program to close projected gaps of $1.0 billion, $1.5
billion and $2.0 billion for the 1996 through 1998 fiscal years,
respectively, after successful implementation of the $1.1 billion
gap-closing program for the 1995 fiscal year. The City's
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financial plans have been the subject of extensive public comment
and criticism. On October 14, 1994, the City Comptroller issued
a report concluding that the budget gap for the 1995 fiscal year
had increased to $1.4 billion, due, in part, to continuing
shortfalls in tax revenues. There can be no assurance that the
gap closing actions proposed in the Financial Plan can be
successfully implemented or that the City will maintain a
balanced budget in future years without additional state aid,
revenue increases or expenditure reductions. Additional tax
increases and reductions in essential city services could
adversely affect the City's economic base.
The City since 1981 has fully satisfied its seasonal
financing needs in the public credit markets, repaying all short-
term obligations within their first year of issuance. The City
has issued $2.2 billion of short-term obligations in fiscal year
1995 to finance the City's current estimate of seasonal cash flow
needs for the 1995 fiscal year. Seasonal financing requirements
for the 1994 fiscal year increased to $1.75 billion from $1.4
billion in the 1993 fiscal year.
OTHER LOCALITIES. Certain localities in addition to the
City could have financial problems leading to requests for
additional State assistance during the State's 1994-95 fiscal
year and thereafter. The potential impact on the State of such
actions by localities is not included in projections of State
receipts and disbursements in the State's 1994-95 fiscal year.
CONNECTICUT PORTFOLIO
1993-1994 AND 1994-1995 ADOPTED BUDGETS. The adopted
budget was prepared in compliance with Public Act 91-3 of the
June 1991 Special Session which required a biennial budget
beginning in fiscal 1993-94. The biennial budget is a separate
budget for each of the two fiscal years. The budget adopted by
the General Assembly for fiscal year 1993-94 had actual General
Fund expenditures of $7,894.5 million and General Fund revenues
of $7,914.2 million. For fiscal 1994- 95, the adopted budget
anticipates General Fund expenditures of $8,569.7 million and
General Fund revenues of $8,590.4 million.
On November 3, 1992, Connecticut voters approved a
constitutional amendment which requires a balanced budget for
each year and imposes a cap on the growth of expenditures. The
General Assembly is required by the constitutional amendment to
adopt by three-fifths vote certain spending cap definitions,
which has not yet occurred. Accordingly, the adopted budget
complies with the current statutory spending cap definitions
enacted in 1991. The statutory spending cap limits the growth of
expenditures to either (1) the average of the annual increase in
personal income in the State for each of the preceding five
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years, or (2) the increase in the consumer price index for urban
consumers during the preceding twelve-month period, whichever is
greater. Expenditures for the payment of bonds, notes and other
evidences of indebtedness are excluded from the constitutional
and statutory definitions of general budget expenditures. To
preclude shifting expenditures out of the General Fund to other
funds, the spending cap applies to all appropriated funds
combined. For fiscal 1993-94 and for fiscal 1994-95, permitted
growth in capped expenditures is 5.82% and 4.49% respectively.
The adopted budget is approximately $53.4 million below the cap
in fiscal 1994-95.
In order to promote economic stability and provide a
positive business climate, several tax changes were adopted
during the 1993 legislative session. Among the most significant
changes were the changes to the Corporation Business Tax based on
income--a four year gradual rate reduction was adopted reducing
the tax to 11.25% beginning January 1, 1995; 11% beginning
January 1, 1996; 10.5% beginning January 1, 1997 and 10%
beginning January 1, 1998. Additionally, the Corporation
Business Tax based on capital was eliminated for regulated
investment companies and real estate investment trusts.
1993-94 and 1994-1995 GENERAL FUND OPERATIONS. The
budget adopted by the General Assembly for fiscal year 1993-94
had actual General Fund expenditures of $7,894.5 million and
General Fund revenues of $7,914.2 million.
Pursuant to Section 3-115 of the Connecticut General
Statutes, the State's fiscal position is reported monthly by the
Comptroller. This report compares revenues already received and
expenditures already made with estimated revenues to be collected
and estimated expenditures to be made during the balance of the
year. The Comptroller's final report for fiscal year 1994,
issued September 1, 1994, reflected a surplus of $19.7
million.****
BUDGET ADJUSTMENT 1994-95. During the 1994 legislative
session, the General Assembly made several modifications to the
budget originally adopted for fiscal year 1994-95. The
adjustments to the budget now anticipate expenditures of $8,571.2
million and revenues of $8,571.2 million and the budget is $53.4
million below the expenditure cap.
The primary change from the originally adopted budget
has been the incorporation into the General Fund of the formerly
_________________________
****The Comptroller's monthly report of November 1, 1994 (for the
three months ended September 30, 1994) reflected a surplus of
$20.7 million.
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separate Uncompensated Care Pool which provides payments to
hospitals for their unreimbursed client expenditures. Most other
changes are the result of modifications made to the 1993-94
budget which roll-out into the ensuing fiscal year. The 1994-95
budget adjustment also anticipates the carry-forward of a $149.6
million surplus from the 1993-94 fiscal year to be used for debt
service payments in the Economic Recovery Fund.
ECONOMIC OVERVIEW. Connecticut is a mature and highly
developed state located in proximity to significant centers of
consumer and industrial activity. Connecticut's economy is
diverse, with manufacturing, services and trade accounting for
approximately 70% of total non-agricultural employment. Non-
manufacturing employment has risen significantly. The rapid
relative growth in the non- manufacturing sector as compared to
the manufacturing sector is a trend that is in evidence
nationwide and reflects the increased importance of the service
industry. From 1970 to 1993, manufacturing employment in the
State declined 33.5%, while non-manufacturing employment rose
63.3%, particularly in the service, trade and finance categories,
resulting in an increase of 27.6% in total growth in non-
agricultural establishment sectors.
Manufacturing has traditionally been of prime economic
importance to Connecticut. Manufacturing is diversified, with
transportation equipment (primarily aircraft engines, helicopters
and submarines) the dominant industry, followed by non-electrical
machinery, fabricated metal products and electrical machinery.
Defense-related business plays an important role in the
Connecticut economy. In the past 10 years, Connecticut has
ranked from sixth to twelfth among all states in total defense
contract awards, receiving 2.5% of all such contracts in 1993.
However, the Federal government has reduced the amount of
defense-related spending and the future effect of such reductions
cannot be predicted.
The State derives approximately 70% of its revenues from
taxes imposed by the State. Miscellaneous fees, receipts and
transfers and Federal grants account for most of the other State
revenues. The State finances its operations primarily through
the General Fund which receives most tax and non-tax revenues of
the State, with the exception of certain transportation-related
taxes, fees and revenues.
STATE INDEBTEDNESS. There can be no assurance that
general economic difficulties or the financial circumstances of
Connecticut or its towns and cities will not adversely affect the
market value of its obligations or the ability of Connecticut
issuers or obligors of state, municipal and public authority debt
obligations to meet their obligations thereunder.
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The State has established various statewide authorities
and two regional water authorities, one of which has since become
independent, to finance revenue-producing projects. Five of
these authorities have the power to incur, under certain
circumstances, indebtedness for which the State has contingent
or, in limited cases, direct liability. In addition, recent
State statutes have been enacted and implemented with respect to
certain bonds issued by the City of Bridgeport for which the
State has contingent liability and by the City of West Haven for
which the State has direct guarantee liability.
The General Assembly has power to authorize the issuance
of bonds of the State or to impose limited or contingent
liabilities upon the State in such manner as it may deem
appropriate and as may serve a public purpose.
LITIGATION. The State, its officers and employees, are
defendants in numerous lawsuits. The Attorney General's Office
has reviewed the status of pending lawsuits and reports that an
adverse decision in certain cases could materially affect the
State's financial position.
CALIFORNIA PORTFOLIO
RECENT TRENDS IN STATE ECONOMIC CONDITIONS.
California's economy is the largest among the 50 states and one
of the largest in the world. The State's July 1, 1993 population
of approximately 31 million represented more than 12.0% of the
total United States population and total personal income in the
State, at $683 million in 1993, accounted for 12.7% of all
personal income in the nation. Total employment is approximately
14 million, the majority of which is in the service, trade and
manufacturing sectors.
Since the start of the 1990-91 fiscal year, the state
has faced the worst economic, fiscal and budget conditions since
the 1930's. Construction, manufacturing (especially aerospace),
exports and financial services, among others, have all been
severely affected. Job losses have been the worst of any post-
war recession and continued through the end of 1993. The State's
Department of Finance has projected slow recovery from the
recession beginning in 1994, although prerecession job levels are
not expected to be reached until 1997.
There is growing evidence, however, that California is
showing signs of an economic upturn. Sectors which are
contributing to the upturn include construction and related
manufacturing, wholesale and retail trade, transportation and
several service industries such as amusements and recreation,
business services and management consulting. Electronics is
showing modest growth and the rate of decline in aerospace
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manufacturing is diminishing. These trends are expected to
continue, and by next year, much of the restructuring in the
finance and utilities industries should be nearly completed. It
is expected that California's economic upturn should gain
momentum during the next two years.
Retail sales through the first eight months of 1994
increased 5.1% from the same period a year earlier. Employment
growth continues to be tenuous with small monthly increases
followed by small monthly decreases in the early month of 1994.
Despite the Northridge earthquake, the housing forecast remains
unchanged with building permits increasing slightly from
recession lows. The expected rise in interest rates will likely
offset any increase in housing.
CONSTITUTIONAL LIMITS ON SENDING AND TAXES. Certain
California constitutional amendments, legislative measures,
executive orders, civil actions and voter initiatives could
adversely affect the ability of issuers of California municipal
securities to pay interest and principal on municipal securities.
ARTICLE XIII B. On November 6, 1979, California voters
approved Proposition 4, which added Article XIII B to the
California Constitution. Pursuant to Article XIII B, the State
is subject to an annual appropriations limit (the "Appropriations
Limit").
Article XIII B was modified substantially by
Propositions 98 and 111 in 1988 and 1990, respectively. (See
"Proposition 98" below.) "Appropriations subject to limitation,"
with respect to the State, are authorizations to spend "proceeds
of taxes" which consist of tax revenues, and certain other funds,
including proceeds from regulatory licenses, user charges or
other fees to the extent that such proceeds exceed "the cost
reasonably borne by the entity in providing the regulation,
product or service," but "proceeds of taxes" exclude most state
subsidies to local governments, tax refunds and some benefit
payments such as unemployment insurance. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such
as reasonable user charges or fees, and certain other non-tax
funds.
Debt service costs for certain bonds, and revenues
derived from new taxes such as increased cigarette and tobacco
taxes are expressly exempted from the Appropriations Limit. In
addition, the Appropriations Limit may be exceeded in certain
emergency situations.
The State's yearly Appropriations Limit is based on the
limit for the prior year with annual adjustments for changes in
California per capita personal income and population and any
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transfers of financial responsibility of providing services
between units of government.
As originally enacted in 1979, the State's
Appropriations Limit was based on 1978-79 fiscal year
authorizations to expend proceeds of taxes and was adjusted
annually to reflect changes in the cost of living and population.
Starting in the 1990-91 Fiscal Year, the State's Appropriations
Limit was recalculated by taking the actual 1986-87 limit, and
applying the annual adjustments as if Proposition 111 had been in
effect. This recalculation resulted in an increase of $1 billion
to the State's Appropriations Limit in 1990-91.
PROPOSITION 98. On November 8, 1988, voters approved
Proposition 98, a combined initiative constitutional amendment
and statute called the "Classroom Instructional Improvement and
Accountability Act". Proposition 98 changed State funding of
public education below the university level, and the operation of
the State Appropriations Limit, primarily by guaranteeing local
schools and community colleges ("K-14") a minimum share of
General Fund revenues. Under Proposition 98 (as modified by
"Proposition 111"), K-14 schools are guaranteed the greater of
(a) 34% (this amount is subject to a legal challenge) of General
Fund revenues (the "first test"), (b) the amount appropriated to
K-14 schools in the prior year, adjusted for changes in the cost
of living (measured as in Article XIII B by reference to
California per capita personal income) and enrollment (the
"second test"), or (c) the amount appropriated in the prior year
adjusted by changes in enrollment and per capita General Fund
revenues, plus an additional small adjustment factor (the "third
test"). If the third test is used in any year, the difference
between the third test and the second test would become a
"credit" to schools which would be the basis of payments in
future years when per capita General Fund revenue growth exceeds
per capita personal income growth. Proposition 98 permits the
Legislature by two-thirds vote of both houses, with the
Governor's concurrence, to suspend the K-14 schools' minimum
funding for a one-year period.
AUTOMATIC BUDGET REDUCTION. Legislation was enacted in
July 1990 providing for an automatic mechanism to control State
expenditures. The Legislature may suspend the operation of this
mechanism for any fiscal year; the mechanism was so suspended in
the 1992-93 Budget Act, the 1993-94 Budget Act and the 1994-95
Budget Act.
SEASONAL BORROWINGS OF THE STATE. As part of its cash
management program, California regularly issues short- term
obligations such as Revenue Anticipation Notes to meet cash flow
needs during the course of a fiscal year. The accumulated budget
deficits over the past several years, together with expenditures
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for school funding which have not been reflected in the budget
and reduction of available internal borrowable funds, have
combined to significantly deplete the state's cash resources to
pay its ongoing expenses. Since spring 1992, the state has
depended upon repeated external borrowings, including borrowings
extending into the subsequent fiscal year to meet its cash needs,
including repayment of maturing Revenue Anticipation Notes and
Revenue Anticipation Warrants. To meet its cash flow needs in
the 1994-95 fiscal year, in July and August 1994 the state issued
$4.0 billion of Revenue Anticipation Warrants which mature on
April 25, 1996 and $3.0 billion of Revenue Anticipation Notes
maturing on June 28, 1995.
1993-94 FISCAL YEAR. The Governor's Budget introduced
on January 8, 1993 disclosed that the continuing recession made
further budget cuts necessary. To balance the budget in the face
of declining revenues, the Governor proposed a series of revenue
shifts from local government, reliance on increased federal aid,
and reductions in State spending. The May revision of the
Governor's Budget projected the State would have an accumulated
deficit of about $2.75 billion by June 30, 1993, essentially
unchanged from the prior year. The Governor proposed to
eliminate this deficit over an 18-month period. Unlike previous
years, the Governor's Budget and May revision did not calculate a
"gap" to be closed, but rather set forth revenue and expenditure
forecasts and proposals designed to produce a balanced budget.
The 1993-94 Budget Act was predicated on General Fund
revenues and transfers estimated at $40.6 billion, about $400
million below 1992-93 (and the second consecutive year of actual
decline). The principal reasons for declining revenue were the
continued weak economy and the expiration or repeal of three
fiscal steps taken in 1991. Administration reports during the
course of the 1993-94 fiscal year indicated that while economic
recovery appeared to have started in the second half of the
fiscal year, recessionary conditions continued longer than had
been anticipated when the 1993-94 Budget Act was adopted.
Overall, revenues for the 1993-94 fiscal year were about $800
million lower than original projections, and expenditures were
about $780 million higher.
During the 1993-94 fiscal year, the State implemented
the Deficit Retirement Plan as part of the Budget Act in order to
retire the existing deficit of $2.8 billion over two fiscal
years. Under the Deficit Retirement Plan, the State issued $1.2
billion of Revenue Anticipation warrants in February 1994 that
matured on December 21, 1994. This borrowing reduced the cash
deficit at the end of the 1993-94 fiscal year. Nevertheless,
because of the $1.5 billion variance from the original 1993-94
Budget Act assumptions, the General Fund ended the fiscal year at
June 30, 1994 carrying forward an accumulated deficit of
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approximately $2 billion. Because of the revenue shortfall and
the State's reduced internal borrowable cash resources, in
addition to the $1.2 billion of Revenue Anticipation Warrants
issued as part of the Deficit Retirement Plan, the State issued
an additional $2.0 billion of Revenue Anticipation Warrants,
maturing July 26, 1994, which were needed to fund the State's
obligations and expenses through the end of the 1993-94 fiscal
year.
On January 17, 1994, a major earthquake measuring an
estimated 6.8 on the Richter Scale struck the Los Angeles
metropolitan area, centered in the Northridge area of the City of
Los Angeles. Significant property damage to private and public
facilities occurred in a four-county area including northern Los
Angeles County, Ventura County, and parts of Orange and San
Bernardino Counties, which were declared as State and federal
disaster areas by January 18. Current estimates of total
property damage (private and public) are in the range of $20
billion, but these estimates are still subject to change. The
State in conjunction with the federal government is committed to
providing assistance to local governments, individuals and
businesses suffering damage as a result of the earthquake, as
well as to providing for the repair and replacement of State-
owned facilities. The federal government will provide
substantial earthquake assistance.
1994-95 FISCAL YEAR. The 1994-95 fiscal year represents
the fourth consecutive year the Governor and Legislature were
faced with a very difficult budget environment to produce a
balanced budget. The State has experienced recurring budget
deficits and many program cuts and budgetary adjustments have
already been made in the last three years. The Governor's Budget
Proposal, as updated in May and June, 1994, recognized that the
accumulated deficit could not be repaid in one year, and proposed
a two-year solution. The budget proposal sets forth revenue and
expenditure forecasts and proposals which result in operating
surpluses for the budget for both 1994-95 and 1995-96, and lead
to the elimination of the accumulated budget deficit, estimated
at about $2.0 billion at June 30, 1994, by June 30, 1996. The
1994-95 Budget Act projects General Fund expenditures of $40.9
billion, an increase of $1.6 billion over the 1993-94 fiscal
year. The 1994-95 Budget Act assumes that the State will use a
cash flow borrowing program in 1994-95 which combines one-year
notes and two-year warrants, which have been issued. Issuance of
the warrants allows the State to defer repayment of approximately
$1.0 billion of its accumulated budget deficit into the 1995-96
fiscal year. The Budget Adjustment Law enacted along with the
1994-95 Budget Act is designed to ensure that the warrants will
be repaid in the 1995-96 fiscal year.
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Administration reports during the course of the fiscal
year indicate that revenues for the first four months of the
fiscal year were 3.2% above the forecast. Pursuant to the Budget
Adjustment Law, the State Controller issued a report on
November 15, 1994 on the projected cash resources for the General
Fund as of June 30, 1995 that indicated that the cash position of
the General Fund would be $581 million better than was estimated
in the July 1994 cash flow projections and therefore, no budget
adjustment procedures will be invoked for the 1994-95 fiscal
year.
On December 6, 1994, after announcing that it had
unrealized losses totaling $1.5 billion in its pooled investment
fund, Orange County filed for protection under Chapter 9 of the
United States Bankruptcy Code. Various cities and other
municipalities as well as school districts, sewer agencies and
other public entities within Orange County were invested in the
pooled investment fund, along with Orange County itself. County
officials currently estimate that the investment fund's total
losses will be approximately $2.0 billion. Investment fund
participants are currently experiencing difficulties meeting
their operating and debt service requirements due, in part, to
their limited access to funds. In addition, rating agencies have
downgraded or placed on credit watch certain debt obligations of
Orange County and of other participants in its investment fund.
There can be no assurance that Orange County and the other
investment fund participants will be able to meet scheduled
payments of interest and principal on their respective short-term
and long-term debt obligations.
The foregoing summaries do not provide information
regarding most securities in which the Portfolios are permitted
to invest and in particular do not provide specific information
on the issuers or types of municipal securities in which the
Portfolios invest or the private business entities whose
obligations support the payments on AMT-Subject Bonds in which
the Portfolios will invest.
LITIGATION. While at any given time, including the
present, there are numerous civil actions pending against
California which could, if determined adversely to California,
affect California's expenditures and, in some cases, its
revenues, the Attorney General of the State of California is
currently of the opinion that no pending actions are likely to
have a material adverse effect on California's ability to pay
debt service on general obligation intermediate- and long-term
debt as they become due.
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
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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.
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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.AI7
<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
00250132.AI7
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits for the Fund
(a) Financial Highlights
Included in the Prospectus:
Included in the Registrant's Statement of
Additional Information:
Statement of Net Assets for year ended-
November 30, 1996.
Statement of Operations for period-
December 13, 1995* to November 30, 1996 for
General Municipal Portfolio, December 29, 1995*
to November 30, 1996 for Prime and Government
Portfolios.
Statement of Changes in Net Assets - for period
December 13, 1995* to November 30, 1996 for
General Municipal Portfolio, December 29, 1995*
to November 30, 1996 for Prime and Government
Portfolios.
Notes to Financial Statements - November 30, 1996.
Included in Part C of the Registration Statement:
All other schedules are omitted as the required
information is inapplicable.
(b) Exhibits
(1) Copy of Declaration of Trust of the
Registrant - Incorporated by reference to
Exhibit No. 1 to Pre- Effective Amendment
No. 1 of the Registrant's Form N-1A,
filed March 17, 1995.
(2) Copy of By-Laws of the Registrant -
Incorporated by reference to Exhibit No.2
to Pre-Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
____________________
* Commencement of operations.
C-1
<PAGE>
(3) Not applicable.
(4)(a-g) Form of Specimen Share Certificates for
the Prime, Government, General, New York,
California, Connecticut and New Jersey
Portfolios - Incorporated by reference to
Exhibit No. 4 (-g) to Pre-Effective
Amendment No. 1 of the Registrant's Form
N-1A, filed March 17, 1995.
(5) Copy of Advisory Agreement between the
Registrant and Alliance Capital
Management L.P. - Incorporated by
reference to Exhibit No. 5 to Pre-
Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
(6) Copy of Distribution Services Agreement
between the Registrant and Alliance Fund
Distributors, Inc. - Incorporated by
reference to Exhibit No. 6 to Pre-
Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
(7) Not applicable.
(8) Copy of Custodian Contract between the
Registrant and The Bank of New York -
Incorporated by reference to Exhibit No.
8 to Pre-Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
(9)(a) Copy of Transfer Agency Agreement between
the Registrant and Alliance Fund
Services, Inc. - Incorporated by
reference to Exhibit No. 9(a) to Pre-
Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
(b) Copy of Administration Agreement between
the Registrant and ADP Financial
Information Services, Inc. - Incorporated
by reference to Exhibit No. 9(b) to Pre-
Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17,
1995.
C-2
<PAGE>
(c) Copy of Fund Accounting Agreement between
the Registrant and The Bank of New York
-Incorporated by reference to Exhibit No.
9(c) to Pre-Effective Amendment No. 1 of
the Registrant's Form N-1A, filed
March 17, 1995.
(10)(a) Opinion and Consent of Seward & Kissel -
Incorporated by reference to Exhibit No.
10(a) to Pre-Effective Amendment No. 1 of
the Registrant's Form N-1A, filed
March 17, 1995.
(b) Opinion and Consent of Sullivan &
Worcester - Incorporated by reference to
Exhibit No. 10(b) to Pre- Effective
Amendment No. 1 of the Registrant's Form
N-1A, filed March 17, 1995.
(11) Consent of Independent Auditors - Filed
herewith.
(12) Not applicable.
(13) Investment Representation Letter of
Alliance Capital Management L.P. -
Incorporated by reference to Exhibit No.
13 to Pre-Effective Amendment No. 1 of
the Registrant's Form N-1A, filed
March 17, 1995.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6 (a)
hereto.
(16) Schedule of Computation of Performance
Quotation.
Other Exhibits: Powers of Attorney of Richard S.
Borisoff, John D. Carifa, Robert J. Casale,
Jeffrey M. Cole, William H. Foulk, Jr., Carl D.
Ingrassia, Arthur S. Kranseler, Robert A. Lewis,
Clifford L. Michel, William Rhoads III and James P.
Syrett - Incorporated by reference to Other
Exhibits to Pre-Effective Amendment No. 1 of the
Registrant's Form N-1A, filed March 17, 1995.
Powers of Attorney of Peter Quick, Richard R. Stumm
and Ronald M. Whitehill - Filed herewith.
C-3
<PAGE>
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of March 19, 1997, the following
record holders of shares of beneficial interest:
Prime Portfolio 2
Government Portfolio 2
General Municipal Portfolio 3
ITEM 27. Indemnification.
Reference is hereby made to Article V of the
Registrant's Declaration of Trust.
The Trustees and officers of the Registrant and the
personnel of the Registrant's investment adviser,
administrator and distributor are insured under an
errors and omissions liability insurance policy. The
Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the
Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of
Trust, the Registrant may indemnify any person who was
or is a Trustee, officer or employee of the Registrant
to the maximum extent permitted by law; provided,
however, that any such indemnification (unless ordered
by a court) shall be made by the Registrant only as
authorized in the specific case upon a determination
that indemnification of such persons is proper in the
circumstances. Such determination shall be made (i) by
the Trustees, by a majority vote of a quorum which
consists of Trustees who are neither in Section 2(a)
(19) of the Investment Company Act of 1940, nor parties
to the proceeding, or (ii) if the required quorum is not
obtainable or, if a quorum of such Trustees so directs,
by independent legal counsel in a written opinion. No
indemnification will be provided by the Registrant to
any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Insofar as the conditional advancing of indemnification
monies for actions based upon the Investment Company Act
C-4
<PAGE>
of 1940 may be concerned, such payments will be made
only on the following conditions: (i) the advances must
be limited to amounts used, or to be used, for the
preparation or presentation of a defense to the action,
including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt
of a written promise by, or on behalf of, the recipient
to repay that amount of the advance which exceeds that
amount to which it is ultimately determined that he is
entitled to receive from the Registrant by reason of
indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable insurance or an
equivalent from of security which assures that any
repayments may be obtained by the Registrant without
delay or litigation, which bond, insurance or other form
of security must be provided by the recipient of the
advance, or (b) a majority of a quorum of the
Registrant's disinterested, non-party Trustees, or an
independent legal counsel in a written opinion, shall
determine, based upon a review of readily available
facts, that the recipient of the advance ultimately will
be found entitled to indemnification.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid
by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities
being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such
issue.
ITEM 28. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P.
under the caption "The Adviser" in the Prospectus and
"Management of the Fund" in the Prospectus and in the
Statement of Additional Information constituting Parts A
C-5
<PAGE>
and B, respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
ITEM 29. Principal Underwriters.
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as Principal
Underwriter for the following registered investment
companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund,
Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund , Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
C-6
<PAGE>
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
Positions and Positions and
Offices With Offices With
Name Underwriter Registrant
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dar Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Anne S. Drennan Senior Vice President
and Treasurer
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial Officer
Richard E. Khaleel Senior Vice President
Barbara J. Krumseik Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Dusty W. Paschall Senior Vice President
C-7
<PAGE>
Antonios G. Poleonadkis Senior Vice President
Richard K. Sacculo Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Beth Cahill Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Leon M. Fern Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President
& Controller
C-8
<PAGE>
Andrew L. Gangolf Vice President
and Assistant
General Counsel
Mark D. Gersten Vice President Treasurer and
Chief Financial
Officer
Joseph W. Gibson Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J.
MacDonald Vice President
Michael F. Mahoney Vice President
Lori E. Master Vice President
Shawn P. McClain Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Jeanette M. Nardella Vice President
C-9
<PAGE>
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President
and Assistant
General Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Joseph T. Tocyloski Vice President
Emilie D. Wrapp Vice President
and Special Counsel
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
Faith C. Dunn Assistant Vice President
John C. Endahl Assistant Vice President
Duff C. Ferguson Assistant Vice President
Brian S. Hanigan Assistant Vice President
James J. Hill Assistant Vice President
Edward W. Kelly Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Thomas F. Monnerat Assistant Vice President
C-10
<PAGE>
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Clara Sierra Assistant Vice President
Martha Volcker Assistant Vice President
Wesley S. Williams Assistant Vice President
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers, securities
records and other original records are maintained
principally at the offices of Alliance Fund Services,
Inc. 500 Plaza Drive, Secaucus, New Jersey 07094-1520
and at the offices of The Bank of New York, 48 Wall
Street, New York, New York 10286. All other records so
required to be maintained are maintained at the offices
of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
Registrant undertakes to file a Post-Effective
Amendment, using financial statements which need not be
certified, within four to six months from the effective
date of its Securities Act of 1933 Registration
Statement.
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's
latest report to shareholders, upon request and without
charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
any Trustee of the Fund in accordance with Section 16 of
the Investment Company Act of 1940.
C-11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of the Amendment to its
Registration pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of
New York on the 28 day of March 1997.
ALLIANCE MONEY MARKET FUND
by /s/ Ronald M. Whitehill
Ronald M. Whitehill
President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the dates indicated:
Signature Title Date
1) Principal
Executive Officer
/s/Ronald M. Whitehill President March 28, 1997
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/Mark D. Gersten Treasurer March 28, 1997
Mark D. Gersten and Chief
Financial
Officer
C-12
<PAGE>
3) A Majority of the Trustees
Richard S. Borisoff Clifford L. Michel
John D. Carifa Peter Quick
Jeffrey M. Cole William L. Rhoads III
William H. Foulk, Jr. Richard R. Stumm
Arthur S. Kranseler Ronald M. Whitehill
Robert A. Lewis
by /s/Edmund P. Bergan, Jr. March 28, 1997
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-13
<PAGE>
Index to Exhibits
Page
(11) Consent of Independent Auditors
(27) Financial Data Schedule
Other Exhibits
Power of Attorney for:
Peter Quick
Richard R. Stumm
Ronald M. Whitehill
C-14
00250132.AI7
<PAGE>
Exhibit 11
__________
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated
January 3, 1997, on the financial statements of the Prime
Portfolio, Government Portfolio and General Municipal Portfolio
of Alliance Money Market Fund referred to therein in Post-
Effective Amendment No. 2 to the Registration Statement on Form
N-1A, File No. 33-85850, as filed with the Securities and
Exchange Commission.
We also consent to the reference to our firm in the
Prospectus under the caption "Financial Highlights" and in the
Statement of Additional Information under the captions
"Accountants".
/s/ McGladrey & Pullen, LLP
New York, New York
March 26, 1997
00250132.AJ1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of the Alliance Money
Market Fund and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
\s\Ronald M. Whitehill
Ronald M. Whitehill
Dated: August 29, 1996
00250132.AI8
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of the Alliance Money
Market Fund and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
\s\Richard Stumm
Richard Stumm
Dated: January 16, 1997
00250132.AI8
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of the Alliance Money
Market Fund and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
\s\Peter Quick
Peter Quick
Dated: January 3, 1996
00250132.AI8
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<PAGE>
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<NAME> ALLIANCE MONEY MARKET FUND
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<S> <C>
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<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 2,806,561,284
<INVESTMENTS-AT-VALUE> 2,806,561,284
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,806,561,284
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,789
<TOTAL-LIABILITIES> 34,789
<SENIOR-EQUITY> 2,771,771
<PAID-IN-CAPITAL-COMMON> 2,768,999,132
<SHARES-COMMON-STOCK> 2,771,770,903
<SHARES-COMMON-PRIOR> 33,334
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 775
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,771,771,678
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 114,660,456
<OTHER-INCOME> 0
<EXPENSES-NET> 20,855,235
<NET-INVESTMENT-INCOME> 93,805,221
<REALIZED-GAINS-CURRENT> 775
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 93,805,996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (93,805,221)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,085,409,424
<NUMBER-OF-SHARES-REDEEMED> (8,407,477,076)
<SHARES-REINVESTED> 93,805,221
<NET-CHANGE-IN-ASSETS> 2,771,738,344
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<PAGE>
<GROSS-ADVISORY-FEES> 10,427,618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,700,036
<AVERAGE-NET-ASSETS> 2,258,287,699
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.00
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<AVG-DEBT-PER-SHARE> 0
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<PAGE>
<ARTICLE> 6
<CIK> 0000932256
<NAME> ALLIANCE MONEY MARKET FUND
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
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