This is filed pursuant to Rule 497(e).
File Nos.: 033-85850 and 811-08838
Alliance Money Market Fund (the "Fund") is an open-end management investment
company comprised of seven portfolios (the "Portfolios"), three of which are
offered by this Prospectus. The Fund is a money market fund with investment
objectives of safety, liquidity and maximum current income (in the case of the
General Municipal Portfolio, exempt from Federal income taxes), to the extent
consistent with the first two objectives. The Prime, Government and General
Municipal Portfolios are diversified. This Prospectus sets forth the
information about each Portfolio that a prospective investor should know before
investing. Please retain it for future reference. You will receive semi-annual
and annual reports of your particular Portfolio.
AN INVESTMENT IN A PORTFOLIO IS (I) NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT; (II) NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK; AND (III) NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO
ASSURANCE THAT A PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
A "Statement of Additional Information" for the Fund dated April 1, 1998, which
provides a further discussion of certain areas in this Prospectus and other
matters which may be of interest to some investors, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, contact Discover Brokerage Direct.
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.
A MORGAN STANLEY DEAN WITTER COMPANY
FEATURING...
ALLIANCE MONEY MARKET FUND
- - PRIME PORTFOLIO
- - GOVERNMENT PORTFOLIO
- - GENERAL MUNICIPAL PORTFOLIO
PROSPECTUS
APRIL 1, 1998
333 MARKET STREET, 25TH FLOOR
SAN FRANCISCO, CA94105
WWW.DISCOVERBROKERAGE.COM
MEMBER NASD/SIPC
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
The Portfolios have no sales load on purchases or reinvested dividends,
deferred sales load, redemption fee or exchange fee.
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets, after voluntary expense reimbursement)
GENERAL
PRIME GOVERNMENT MUNICIPAL
---------- ---------- ----------
Management Fees .50% .50% .50%
12b-1 Fees .45% .45% .45%
Other Expenses .05% .05% .05%
Total Portfolio Operating Expenses 1.00% 1.00% 1.00%
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (cumulatively through the end of each time period):
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime $10 $32 $55 $122
Government 10 32 55 122
General Municipal 10 32 55 122
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Portfolio will bear
directly or indirectly. The expenses listed in the table for the Prime,
Government and General Municipal Portfolios are net of voluntary expense
reimbursements. The expenses of such Portfolios before expense reimbursements
would be: Prime Portfolio: Management Fees-.50%, 12b-1 fees-.45%, Other
Expenses-.11% and Total Operating Expenses-1.06%; Government Portfolio:
Management Fees-.50%, 12b-1 fees-.45%, Other Expenses-.30% and Total Operating
Expenses-1.25%; General Municipal Portfolio: Management Fees-.50%, 12b-1
fees-.45%, Other Expenses-.26% and Total Operating Expenses-1.21%. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (AUDITED)
The following table has been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
GENERAL MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ ------------------------ ------------------------
DEC. 13, DEC. 29, DEC.29,
1995(A) 1995(A) 1995(A)
YEAR ENDED TO YEAR ENDED TO YEAR ENDED TO
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .029 .027 .046 .041 .045 .041
LESS: DIVIDENDS
Dividends from net investment income (.029) (.027) (.046) (.041) (.045) (.041)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on:
net asset value (c) 2.92% 2.80%(d) 4.75% 4.58%(d) 4.64% 4.52%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $137 $123 $3,298 $2,772 $124 $100
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.00% 1.00%(d) 1.00% 1.00%(d) 1.00% 1.00%(d)
Expenses, before waivers and reimbursements 1.21% 1.39%(d) 1.06% 1.23%(d) 1.25% 1.42%(d)
Net investment income (b) 2.87% 2.76%(d) 4.65% 4.50%(d) 4.54% 4.45%(d)
</TABLE>
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
From time to time each Portfolio advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid
2
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, 1997, amounted to an
annualized yield of 4.74%, equivalent to an effective yield of 4.85%. Absent
expense reimbursement, the annualized yield for this period would have been
4.68%, equivalent to an effective yield of 4.79%. Dividends for the Government
Portfolio for the seven days ended November 30, 1997, amounted to an annualized
yield of 4.67%, equivalent to an effective yield of 4.78%. Absent expense
reimbursement, the annualized yield for this period would have been 4.42%,
equivalent to an effective yield of 4.53%. Dividends for the General Municipal
Portfolio for the seven days ended November 30, 1997, amounted to an annualized
yield of 3.06%, equivalent to an effective yield of 3.11%. Absent expense
reimbursement, the annualized yield for this period would have been 2.85%,
equivalent to an effective yield of 2.90%.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of each Portfolio are--in the following order of
priority--safety of principal, excellent liquidity and, to the extent
consistent with the first two objectives, maximum current income (exempt from
income taxes to the extent described below in the case of the General Municipal
Portfolio). As a matter of fundamental policy, each Portfolio pursues its
objectives by maintaining a portfolio of high-quality money market securities.
While no Portfolio may change this policy or the other fundamental investment
policies (described below) without shareholder approval, it may, upon notice to
shareholders, but without such approval, change non-fundamental investment
policies or create additional series or classes of shares in order to establish
portfolios which may have different investment objectives. There can be no
assurance that any Portfolio's objectives will be achieved.
The Portfolios will comply with Rule 2a-7 under the Investment Company Act of
1940 (the "1940 Act"), as amended from time to time, including the
diversification, quality and maturity limitations imposed by the Rule.
Accordingly, each Portfolio will invest in securities which, at the time of
investment, have remaining maturities not exceeding 397 days, and the average
maturity of each Portfolio's investment portfolio will not exceed 90 days. A
more detailed description of Rule 2a-7 is set forth in the Fund's Statement of
Additional Information. To the extent that each Portfolio's limitations are
more permissive than Rule 2a-7, the Portfolio will comply with the more
restrictive provisions of the Rule.
PRIME PORTFOLIO
The money market securities in which the Prime Portfolio invests include: (1)
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities (collectively, the "U.S. Government"); (2)
certificates of deposit, bankers' acceptances and interest-bearing savings
deposits issued or guaranteed by banks or savings and loan associations having
total assets of more than $1 billion and which are members of the Federal
Deposit Insurance Corporation and certificates of deposit and bankers'
acceptances denominated in U.S. dollars and issued by U.S. branches of foreign
banks having total assets of at least $1 billion that are believed by Alliance
Capital Management L.P. (the "Adviser") to be of quality equivalent to that of
other such instruments in which the Portfolio may invest; (3) commercial paper,
including variable amount master demand notes, 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 fully as that term is defined in Rule 2a-7. These agreements are
entered into with "primary dealers" (as designated by the Federal Reserve Bank
of New York) in U.S. Government securities or The Bank of New York, the Fund's
Custodian, and would create a loss to the Prime Portfolio if, in the event of a
dealer default, the proceeds from the sale of the collateral were less than the
repurchase price. The Prime Portfolio may also invest in certificates of
deposits issued by, and time deposits maintained at, foreign branches of
domestic banks or U.S. or foreign branches of foreign banks described in (2)
above and prime quality dollar-denominated commercial paper issued by foreign
companies meeting the criteria
3
specified in (3) above. The money market securities in which the Prime
Portfolio invests may have variable or floating rates of interest ("variable
rate obligations") as permitted by Rule 2a-7 under the 1940 Act. Variable rate
obligations have interest rates which are adjusted either at predesignated
periodic intervals or whenever there is a change in the market rate to which
the interest rate of the variable rate obligation is tied. Some variable rate
obligations allow the holder to demand payment of principal and accrued
interest at anytime, or at specified intervals. The Prime Portfolio follows
Rule 2a-7 with respect to the diversification, quality and maturity of variable
rate obligations.
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.
The Prime Portfolio may invest up to 25% of its total assets in U.S.
dollar-denominated money market instruments issued by foreign branches of
foreign banks. To the extent that the Prime Portfolio makes such investments,
consideration will be given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations, the possible
impact of interruptions in the flow of international currency transactions,
potential political and social instability or expropriation, imposition of
foreign taxes, the lower level of government supervision of issuers, the
difficulty in enforcing contractual obligations and the lack of uniform
accounting and financial reporting standards.
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 25% of its total assets it may invest without regard
to such limitation; (3) purchase more than 10% of any class of the voting
securities of any one issuer (except the U.S. Government); (4) borrow money
except from banks on a temporary basis or by entering into reverse repurchase
agreements for emergency or extraordinary purposes in aggregate amounts not
exceeding 15% of its assets; (5) mortgage, pledge or hypothecate its assets
except to secure such borrowings; or (6) enter into repurchase agreements, if
as a result thereof, more than 10% of the Prime Portfolio's assets would be
subject to repurchase agreements not terminable within seven days.
As a matter of operating policy, the Prime Portfolio may invest no more than 5%
of its assets in the first tier (as defined in Rule 2a-7) securities of any one
issuer (as determined pursuant to such Rule). 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. The money market securities in which
the Government Portfolio invests may have variable or floating rates of
interest ("variable rate obligations") as permitted by Rule 2a-7 under the 1940
Act. Variable rate obligations have interest
4
rates which are adjusted either at predesignated periodic intervals or whenever
there is a change in the market rate to which the interest rate of the variable
rate obligation is tied. Some variable rate obligations allow the holder to
demand payment of principal and accrued interest at anytime, or at specified
intervals. The Government Portfolio follows Rule 2a-7 with respect to the
diversification, quality and maturity of variable rate obligations.
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; (2) pledge, hypothecate or in any manner transfer,
as security for indebtedness, its assets except to secure such borrowings; or
(3) enter into repurchase agreements, if as a result thereof, more than 10% of
the Government Portfolio's assets would be subject to repurchase agreements not
terminable within seven days.
GENERAL MUNICIPAL PORTFOLIO
As a matter of fundamental policy, the General Municipal Portfolio, except when
assuming a temporary defensive position, must maintain at least 80% of its
total assets in high-quality municipal securities (as opposed to the taxable
investments described below). Normally, substantially all of the General
Municipal Portfolio's income will be tax-exempt as described below. The General
Municipal Portfolio seeks maximum current income that is exempt from Federal
income taxes by investing principally in a diversified portfolio of
high-quality municipal securities. Such income may be subject to state or local
income taxes.
ALTERNATIVE MINIMUM TAX. The General Municipal Portfolio may invest without
limitation in tax-exempt municipal securities subject to the Federal
alternative minimum tax (the "AMT").
Under current Federal income tax law, (1) interest on tax-exempt municipal
securities issued after August 7, 1986 which are "specified private activity
bonds," and the proportionate share of any exempt-interest dividends paid by a
regulated investment company which receives interest from such specified
private activity bonds, will be treated as an item of tax preference for
purposes of the AMT imposed on individuals and corporations, though for regular
Federal income tax purposes such interest will remain fully tax-exempt, and (2)
interest on all tax-exempt obligations will be included in "adjusted current
earnings" of corporations for AMT purposes. Such bonds have provided, and may
continue to provide, somewhat higher yields than other comparable municipal
securities. See below, "Daily Dividends and Other Distributions" and "Taxes."
MUNICIPAL SECURITIES. The municipal securities in which the General Municipal
Portfolio invests include municipal notes and short-term municipal bonds.
Municipal notes are generally used to provide for short-term capital needs and
generally have maturities of one year or less. Examples include tax
anticipation and revenue anticipation notes which are generally issued in
anticipation of various seasonal revenues, bond anticipation notes, and
tax-exempt commercial paper. Short-term municipal bonds may include general
obligation bonds, which are secured by the issuer's pledge of its faith, credit
and taxing power for payment of principal and interest, and revenue bonds,
which are generally paid from the revenues of a particular facility or a
specific excise or other source.
The General Municipal Portfolio may invest in variable rate obligations whose
interest rates are adjusted either at predesignated periodic intervals or
whenever there is a change in the market rate to which the security's interest
rate is tied. Such adjustments tend to minimize changes in the market value of
the obligation and, accordingly, enhance the ability of the Portfolio to
maintain a stable net asset value. Variable rate securities purchased may
include participation interests in industrial development bonds backed by
letters of credit of Federal Deposit Insurance Corporation member banks having
total assets of more than $1 billion. The Portfolio will comply with Rule 2a-7
with respect to its investments in variable rate obligations supported by
letters of credit.
Each of the General Municipal Portfolio's municipal securities at the time of
purchase is 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.
5
To further enhance the quality and liquidity of the securities in which the
General Municipal Portfolio invests, such securities frequently are supported
by credit and liquidity enhancements, such as letters of credit, from third
party financial institutions. The Portfolio continuously monitors the credit
quality of such third parties; however, changes in the credit quality of such
a financial institution could cause the Portfolio's investments backed by that
institution to lose value and affect the Portfolio's share price.
The General Municipal Portfolio also may invest in stand-by commitments, which
may involve certain expenses and risks, but such commitments are not expected
to comprise more than 5% of the Portfolio's net assets. The General Municipal
Portfolio may commit up to 15% of its net assets to the purchase of when-issued
securities. The Fund's Custodian will maintain, in a separate account of the
General Municipal Portfolio, liquid high-grade debt securities having value
equal to, or greater than, such commitments. The price of when-issued
securities, which is generally expressed in yield terms, is fixed at the time
the commitment to purchase is made, but delivery and payment for such
securities takes place at a later time. Normally the settlement date occurs
from within ten days to one month after the purchase of the issue. The value of
when-issued securities may fluctuate prior to their settlement, thereby
creating an unrealized gain or loss to the General Municipal Portfolio.
TAXABLE INVESTMENTS. The taxable investments in which the General Municipal
Portfolio may invest include obligations of the U.S. Government and its
agencies, high-quality certificates of deposit and bankers' acceptances, prime
commercial paper and repurchase agreements.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES. To reduce investment risk, the General
Municipal Portfolio may not invest more than 25% of its total assets in
municipal securities whose issuers are located in the same state and may not:
(1) invest more than 25% of its total assets in municipal securities the
interest upon which is paid from revenues of similar-type projects; (2) invest
more than 5% of its total assets in the securities of any one issuer except the
U.S. Government, although with respect to 25% of its total assets the General
Municipal Portfolio may invest up to 10% per issuer; or (3) purchase more than
10% of any class of the voting securities of any one issuer except those of the
U.S. Government.
As a matter of operating policy, effective July 1, 1998, pursuant to Rule 2a-7,
the General Municipal Portfolio may invest no more than 5% of its assets in the
securities of any one issuer (as determined pursuant to such Rule). Fundamental
policy number (2) would give the 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 further amended in the future.
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
Contact Discover Brokerage Direct to open a Fund account. Balances will appear
on your monthly brokerage statement.
SUBSEQUENT INVESTMENTS
A. BY CHECK THROUGH DISCOVER BROKERAGE DIRECT
Mail or deliver your check, payable to "Discover Brokerage Direct" which will
deposit it into the Portfolio(s). Please designate the appropriate Portfolio(s)
and indicate your brokerage account number on the check.
6
B. BY SWEEP
Discover Brokerage Direct has available an automatic "sweep" for customers in
the Prime Portfolio, Government Portfolio or General Municipal Portfolio. If
you request the sweep arrangement, all cash balances of $1.00 or more are moved
into one of the Portfolios on a daily basis. Sales proceeds from trades will be
swept into the designated Portfolio on settlement date.
REDEMPTIONS
A. BY CONTACTING DISCOVER BROKERAGE DIRECT
Instruct Discover Brokerage Direct to order a withdrawal from your Fund account
and issue a check payable to you.
B. BY SWEEP
Discover Brokerage Direct's automatic "sweep" moves money from your money
market account automatically to cover securities purchases in your brokerage
account.
C. BY CHECKWRITING
With this service, you may write checks made payable to any payee. Checks
cannot be written for more than the principal balance (not including any
accrued dividends) in your Fund account. First you must fill out the Signature
Card which you can obtain from Discover Brokerage Direct. THE CHECKWRITING
SERVICE ENABLES YOU TO RECEIVE THE DAILY DIVIDENDS DECLARED ON THE SHARES TO BE
REDEEMED UNTIL THE DAY THAT YOUR CHECK IS PRESENTED FOR PAYMENT.
ADDITIONAL INFORMATION
SHARE PRICE
Shares are sold and redeemed on a continuous basis without sales or redemption
charges at their net asset value which is expected to be constant at $1.00 per
share, although this price is not guaranteed. The net asset value of each
Portfolio's shares is determined each business day (i.e., any weekday exclusive
of days on which the New York Stock Exchange or The Bank of New York is closed)
at 12:00 Noon and 4:00 p.m. (New York time). The net asset value per share of a
Portfolio is calculated by taking the sum of the value of that Portfolio's
investments (amortized cost value is used for this purpose) and any cash or
other assets, subtracting liabilities, and dividing by the total number of
shares of that Portfolio outstanding. All expenses, including the fees payable
to the Adviser, are accrued daily.
TIMING OF INVESTMENTS AND REDEMPTIONS
The Portfolios have two transaction times each business day, 12:00 Noon and
4:00 p.m. (New York time). New investments represented by Federal funds or bank
wire monies received by The Bank of New York at any time during a day prior to
4:00 p.m. are entitled to the full dividend to be paid to shareholders for that
day. Shares do not earn dividends on the day a redemption is effected
regardless of whether the redemption order is received before or after 12:00
Noon.
Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days, unless redemptions have
been suspended or postponed due to the determination of an "emergency" by the
Securities and Exchange Commission or to certain other unusual conditions.
DAILY DIVIDENDS AND OTHER DISTRIBUTIONS
All net income of each Portfolio is determined each business day at 4:00 p.m.
and is paid immediately thereafter pro rata to shareholders of record of that
Portfolio via automatic investment in additional full and fractional shares of
that Portfolio in each shareholder's account. As such additional shares are
entitled to dividends on following days, a compounding growth of income occurs.
Net income consists of all accrued interest income on a Portfolio's assets less
the Portfolio's expenses applicable to that dividend period. Realized gains and
losses of each Portfolio are reflected in its net asset value and are not
included in its net income.
7
TAXES
A prospective investor should review the more detailed discussion of Federal
income tax considerations relevant to each Portfolio that is contained in the
Statement of Additional Information. In addition, each prospective investor
should consult with his/her own tax advisers as to the tax consequences of an
investment in the Portfolios, including the status of distributions from a
Portfolio in his/her own state and locality and the possible applicability of
the AMT to a portion of the distributions of the General Municipal Portfolio.
The Fund intends to qualify each Portfolio each year as a separate "regulated
investment company" and as such, each Portfolio will not be subject to Federal
income and excise taxes on the investment company taxable income and net
capital gains, if any, distributed to shareholders.
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO. Shareholders of the Prime Portfolio
and Government Portfolio (other than tax-exempt shareholders) will be subject
to Federal income tax on the ordinary income dividends and any capital gains
dividends from these Portfolios and may also be subject to state and local
taxes. The laws of some states and localities, however, may exempt from some
taxes dividends paid on shares of the Prime Portfolio and Government Portfolio,
which are dividends attributable to interest from obligations of the U.S.
Government and certain of its agencies and instrumentalities.
DISTRIBUTIONS FROM THE GENERAL MUNICIPAL PORTFOLIO. Distributions to you out of
tax-exempt interest income earned by the General Municipal Portfolio are not
subject to Federal income tax (other than the AMT), but may be subject to state
or local income taxes. Any exempt-interest dividends derived from interest on
municipal securities subject to the AMT will be a specific preference item for
purposes of the Federal individual and corporate AMT. Distributions from the
General Municipal Portfolio to a corporate shareholder are not exempt from the
corporate taxes imposed by the respective jurisdictions. Distributions out of
taxable interest income, other investment income and short-term capital gains
are taxable to you as ordinary income and distributions of long-term capital
gains, if any, are taxable as long-term taxable gains irrespective of the
length of time you may have held your shares. Distributions of short and
long-term capital gains, if any, are normally made near year-end. Each year
shortly after December 31, the Fund will send to you tax information stating
the amount and type of all its distributions for the year just ended.
GENERAL. Distributions to shareholders will be treated in the same manner for
Federal income tax purposes whether received in cash or reinvested in
additional shares of a Portfolio. In general, distributions by a Portfolio are
taken into account by shareholders in the year in which they are made. However,
certain distributions made during January will be treated as having been paid
by a Portfolio and received by the shareholders on December 31 of the preceding
year. A statement setting forth the Federal income tax status of all
distributions made (or deemed made) during the calendar year, including any
portions which constitute ordinary income dividends, capital gains dividends
and exempt-interest dividends and U.S. Government interest dividends will be
sent to each shareholder of a Portfolio promptly after the end of each calendar
year.
YEAR 2000. Many computer software systems in use today cannot properly process
date-related information from and after January 1, 2000. Should any of the
computer systems employed by the Fund's major service providers fail to process
this type of information properly, that could have a negative impact on the
Fund's operations and the services that are provided to the Fund's
shareholders. The Fund's Adviser, Alliance Fund Distributors, Inc. ("AFD"), the
Fund's distributor, and Alliance Fund Services, Inc. ("AFS"), the Fund's
transfer agent have advised the Fund that they are reviewing all of their
computer systems with the goal of modifying or replacing such systems prior to
January 1, 2000 to the extent necessary to foreclose any such negative impact.
In addition, the Adviser has been advised by the Fund's custodian that it is
also in the process of reviewing its systems with the same goal. As of the date
of this Prospectus, the Fund and the Adviser have no reason to believe that
these goals will not be achieved. Similarly, the values of certain of the
portfolio securities held by the Fund may be adversely affected by the
inability of the securities' issuers or of third parties to process this type
of information properly.
8
MANAGEMENT OF THE FUND
ADVISER
Alliance Capital Management L.P., which is a Delaware limited partnership 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 general 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, 1997 totaling more than $218 billion
(of which approximately $85 billion represented the assets of investment
companies). The Adviser's clients are primarily major corporate employee
benefit plans, public employee retirement systems, investment companies,
foundations and endowment funds. The 58 registered investment companies managed
by the Adviser comprising 122 separate investment portfolios currently have
over three million shareholder accounts. As of December 31, 1997, the Adviser
was retained as an investment manager for employee benefit plan assets of 31 of
the Fortune 100 companies.
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, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA-UAP, a French insurance
holding company. Certain information concerning the ownership and control of
Equitable by AXA-UAP 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
year ended November 30, 1997, the Prime, Government and General Municipal
Portfolios paid the Adviser an advisory fee at an annual rate of .47 of 1%, .27
of 1% and .32 of 1%, respectively, of the average daily value of the net assets
of each Portfolio net of voluntary expense reimbursements for expenses
exceeding 1% 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 may pay certain other costs, including (i) custody,
transfer and dividend disbursing expenses, (ii) fees of the Trustees who are
not affiliated persons, (iii) legal and auditing expenses, (iv) clerical,
accounting, administrative and other office costs, (v) costs of personnel
providing services to the Fund, as applicable, (vi) costs of printing
prospectuses and shareholder reports, (vii) expenses and fees related to
registration and filing with the Securities and Exchange Commission and with
state regulatory authorities and (viii) such promotional expenses as may be
contemplated by an effective plan pursuant to Rule 12b-1 under the 1940 Act.
Under a Distribution Services Agreement (the "Agreement"), each Portfolio pays
AFD at a maximum annual rate of .45 of 1% of the Fund's aggregate average daily
net assets. For the fiscal year ended November 30, 1997, the Prime, Government
and General Municipal Portfolios each paid a distribution fee at an annual rate
of .45% of the average daily value of the net assets of the Fund. Substantially
all such monies (together with significant amounts from the Adviser's own
resources) are paid by AFD 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 in distributing the Portfolios' shares. The Fund believes
that the administrative services provided by depository institutions are
permissible activities under present banking laws and regulations and will take
appropriate actions (which should not adversely affect the Portfolios or their
shareholders) in the future to maintain such legal conformity should any
changes in, or interpretations of, such laws or regulations occur.
ADMINISTRATOR
Pursuant to an Administration Agreement, ADP Financial Information Services,
Inc. ("ADP"), a wholly-
9
owned subsidiary of Automatic Data Processing, Inc., serves as administrator of
the Fund, on behalf of the Portfolios. The Administrator performs or arranges
for the performance of certain services, mainly remote processing services
through its propriety shareholder accounting system. ADP is entitled to receive
from each Portfolio a fee computed daily and paid monthly at a maximum annual
rate equal to .05% of such Portfolio's average daily net assets. ADP may, from
time to time, voluntarily waive all or a portion of its fees payable to it
under the Administration Agreement. ADP does not have any responsibility or
authority for any Portfolio's investments, the determination of investment
policy, or for any matter pertaining to the distribution of Portfolio shares.
TRANSFER AGENT AND DISTRIBUTOR
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and
Alliance Fund Distributors, Inc., 1345 Avenue of the Americas, New York, NY
10105, are the Fund's Transfer Agent and Distributor, respectively.
ORGANIZATION
Each of the Portfolios is a series of Alliance Money Market Fund, an open-end
management investment company registered under the 1940 Act and organized as a
Massachusetts business trust on October 26, 1994. The New Jersey, New York,
California and Connecticut Municipal Portfolios are non-diversified series of
the Fund and are not offered by this Prospectus. Each Portfolio's activities
are supervised by the Trustees of the Fund. Normally, shares of each series are
entitled to one vote per share, and vote as a single series, on matters that
affect each series in substantially the same manner. Massachusetts law does not
require annual meetings of shareholders and it is anticipated that shareholder
meetings will be held only when required by Federal law. Shareholders have
available certain procedures for the removal of Trustees.
10
