<PAGE>
As filed with the Securities and Exchange
Commission on March 31, 1998
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. 3
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 4
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.
<PAGE>
Title of Securities Being Registered: Prime Portfolio,
Government Portfolio, General Municipal Portfolio, New Jersey
Municipal Portfolio, New York Municipal Portfolio, California
Municipal Portfolio and Connecticut Portfolio.
<PAGE>
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
<PAGE>
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
<PAGE>
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 1, 1998
________________________________________________________________
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 1, 1998 which provides a further discussion of certain
areas in this Prospectus and other matters which may be of
<PAGE>
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 in this Prospectus.
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.
_______________________________________________________________
2
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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-.11% and Total Operating
3
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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.
____________
* These Portfolios have not commenced operations.
4
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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.
<TABLE>
GENERAL
MUNICIPAL PORTFOLIO PRIME PORTFOLIO GOVERNMENT PORTFOLIO
<CAPTION>
December 13 December 29, December 29,
1995(a) 1995(a) 1995(a)
to to to
Year Ended November 30, Year Ended November 30, Year Ended November 30,
November 30, 1996 November 30, 1996 November 30, 1996
1997 1997 1997
<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) 0.29 0.27 0.46 .041 0.45 .041
5
<PAGE>
Less:
Distributions
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
reimburse-
ments(b) 1.00% 1.00%(d) 1.00% 1.00%(d) 1.00% 1.00%(d)
Expenses,
before
waivers and
reimburse-
ments(b) 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)
<FN>
____________
(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 the period.
(d) Annualized.
</TABLE>
6
<PAGE>
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, 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, 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
7
<PAGE>
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 Portfolio's Statement of Additional Information. To the
extent that each Portfolio's limitations are more permissive than
Rule 2a-7, the Fund 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 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 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 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
8
<PAGE>
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; or (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
9
<PAGE>
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 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; or (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.
10
<PAGE>
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
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,
11
<PAGE>
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
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. Bonds subject to the
AMT 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
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<PAGE>
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.
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 Municipal
Portfolios will comply with Rule 2a-7 with respect to its
investments in variable rate obligations supported by letters of
credit.
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
13
<PAGE>
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 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.
As a matter of operating policy, effective July 1, 1998,
pursuant to Rule 2a-7, the Municipal Portfolios may invest no
more than 5% of their 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
Portfolios the ability to invest, with respect to 25% of their
assets, more than 5% of their 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
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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.
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.
15
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_______________________________________________________________
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
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
16
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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
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 to the extent the dividends
are 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
17
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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 generally 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.
18
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_______________________________________________________________
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.
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 $85
billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
plans, public employee retirement plans, insurance companies,
banks, foundations and endowment funds. The 58 registered
investment companies managed by the Adviser comprising 122
separate investment portfolios currently have over two million
shareholders. As of December 31, 1997, the Adviser was retained
as an investment manager of employee benefit fund assets for 31
of the Fortune 500 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 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, 1997, the Prime, Government and General Municipal
Portfolios paid the Adviser an advisory fee equal to $14,448,704,
$306,154 and $443,791, respectively, net of any voluntary expense
reimbursements for expenses exceeding 1% of the average daily
value of the net assets of each Portfolio.
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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 AFD 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, 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 each Portfolio. 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., a wholly-owned subsidiary of
Automatic Data Processing, Inc., serves as administrator of the
Fund, on behalf of the Portfolios. The Administrator performs or
arranges for the performance of certain services, mainly remote
processing services through its propriety shareholder accounting
system. ADP is entitled to receive from each Portfolio a fee
computed daily and paid monthly at a maximum annual rate equal to
.05% of such Portfolio's average daily net assets. ADP may, from
time to time, voluntarily waive all or a portion of its fees
payable to it under the Administration Agreement. ADP shall not
have any responsibility or authority for any Portfolio's
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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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(LOGO) ALLIANCE MONEY MARKET FUND
_______________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1998
_______________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated April 1, 1998. 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 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 its "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
Connecticut Portfolio assumes a temporary defensive position, not
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<PAGE>
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 UNDER THE 1940 ACT. The Fund will comply with
Rule 2a-7 under the 1940 Act, as amended from time to time,
including the diversification, quality and maturity limitations
imposed by the Rule. Currently, pursuant to Rule 2a-7, a
Portfolio may invest only in 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").
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. Securities in which the Portfolios
invest may be subject to liquidity or credit enhancements. These
securities are generally considered to be Eligible Securities if
the enhancement or the issuer of the enhancement has received the
appropriate rating from NRSRO.
Under Rule 2a-7 the Prime Portfolio, the Municipal
Portfolios (effective July 1, 1998) and the Government Portfolio
may not invest more than five percent of their respective assets
in the first tier securities of any one issuer other than the
United States Government, its agencies and instrumentalities.
Generally, a first tier security is an Eligible Security that has
received a short-term rating from the requisite NRSROs in the
highest short-term rating category for debt obligations, or is an
unrated security deemed to be of comparable quality. Government
securities are also considered to be first tier securities. In
4
<PAGE>
addition, the Prime Portfolio and the Government Portfolio may
not invest in a security that has received, or is deemed
comparable in quality to a security that has received, the second
highest rating by the requisite number of NRSROs (a "second tier
security") if immediately after the acquisition thereof either
the Prime Portfolio or the Government Portfolio would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities (the "second tier security
restriction"). Effective July 1, 1998, the second tier security
restriction applies to the Municipal Portfolios with respect to
their investment in the "conduit" securities of second tier
issuers. A conduit security for purposes of Rule 2a-7 is a
security nominally issued by a municipality, but dependent for
principal and interest payments on a non-municipal issuer's
revenues from a non-municipal project.
ILLIQUID SECURITIES. A Portfolio will not maintain more
than 10% of its 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
5
<PAGE>
Section 4(2) of the Securities Act ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the
Federal securities laws in that any resale must also be made in
an exempt transaction. Section 4(2) paper is normally resold to
other institutional investors through or with the assistance of
investment dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders. In recognition of
this fact, the Staff of the Securities and Exchange Commission
has stated that Section 4(2) paper may be determined to be liquid
by the Trustees, so long as certain conditions, which are
described below, are met.
In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Securities
and Exchange Commission (the "Commission") adopted Rule 144A
under the Securities Act to establish a safe harbor from the
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:
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(i) the frequency of trades and quotations for the
security;
(ii) the number of dealers making quotations to
purchase or sell the security;
(iii) the number of other potential purchasers of the
security;
(iv) the number of dealers undertaking to make a
market in the security;
(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time
needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer);
and
(vi) any applicable Commission interpretation or
position with respect to such types of
securities.
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. No
Portfolio may invest 25% or more of its total assets in
instruments issued by foreign branches of foreign banks.
The Prime Portfolio may make investments in dollar-
denominated certificates of deposit and bankers' acceptances
7
<PAGE>
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 the Prime Portfolio makes such investments,
consideration is given to their domestic marketability, the lower
reserve requirements generally mandated for overseas banking
operations, the possible impact of interruptions in the flow of
international currency transactions, potential political and
social instability or expropriation, imposition of foreign taxes,
the lower level of government supervision of issuers, the
difficulty in enforcing contractual obligations and the lack of
uniform accounting and financial reporting standards. There can
be no assurance, as is true with all investment companies, that a
Portfolio's objective will be achieved.
FUNDAMENTAL POLICIES. Each Portfolio's investment
objective may not be changed without the affirmative vote of a
majority of the Portfolio's outstanding shares as defined below.
Except as otherwise provided, each Portfolio's investment
policies are not designated "fundamental policies" within the
meaning of the 1940 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
8
<PAGE>
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;
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.
9
<PAGE>
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
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
10
<PAGE>
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 may include those
described below:
1. marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities; or
2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation; or
3. commercial paper of prime quality rated A-1 or
higher by S&P or Prime-1 by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AA or higher
by S&P, or Aa or higher by Moody's. (See Appendix B for a
description of these ratings.)
MUNICIPAL SECURITIES GENERALLY. Municipal securities
historically have not been subject to registration with the
Commission. Obligations of issuers of municipal securities are
subject to the provisions of bankruptcy, insolvency, and other
laws affecting the rights and remedies of creditors, such as the
Bankruptcy Code. In addition, the obligations of such issuers
may become subject to laws enacted in the future by Congress,
state legislatures, or referenda extending the time for payment
of principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon the ability of
municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the ability
of any issuer to pay, when due, the principal of, and interest
on, its municipal securities may be materially affected.
OTHER INVESTMENT PRACTICES
ASSET-BACKED SECURITIES. Each Portfolio may invest in
rated, as required by Rule 2a-7 effective July 1, 1998, asset-
backed securities that meet its existing diversification, quality
and maturity criteria. The Portfolios may invest in unrated
asset backed securities whose assets consist of obligations of
one or more municipal issuers. 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
11
<PAGE>
special purpose trust, limited partnership interest, or
commercial paper or other debt securities issued by a special
purpose entity. 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. Generally, the special purpose entity is
deemed to be the issuer of the asset-backed security, however,
the Fund is required to treat any person whose obligations
constitute ten percent or more of the assets of the asset-backed
security as the issuer of the portion of the asset-backed
security that such obligations represent.
VARIABLE RATE OBLIGATIONS. The interest rate payable on
certain securities in which a Portfolio may invest, called
"variable rate" obligations, is not fixed and may fluctuate based
upon changes in market rates. The interest rate payable on a
variable rate security is adjusted either at pre-designated
periodic intervals or whenever there is a change in the market
rate to which the security's interest rate is tied. Other
features may include the right of a Portfolio to demand
prepayment of the principal amount and the accrued interest of
the obligation prior to its stated maturity and the right of the
issuer to prepay the principal amount and accrued interest prior
to maturity. Variable rate demand obligations are obligations
ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal and
accrued interest at any time, or at specified intervals not
exceeding 13 months, in each case upon not more than 30 days'
notice. Investments may also be made in variable amount master
demand notes (which may have demand features in excess of 30
days) which are obligations that permit a fund to invest
fluctuating amounts, at varying rates of interest, pursuant to
direct arrangements between a fund, as lender, and the borrower.
Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is not
established secondary market for these obligations, although they
are redeemable at face value, plus accrued interest.
Accordingly, when these obligations are not secured by letter of
credit or other credit support arrangements, the fund's right to
redeem is dependent on the ability of the borrower to pay
principal and interest on demand. 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.
12
<PAGE>
Such guarantees may 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 generally 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. The
Portfolios follow Rule 2a-7 with respect to their investments in
variable rate instruments supported by letters of credit and
participation interests. 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.
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
13
<PAGE>
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
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
14
<PAGE>
increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. There can
be no assurance, as is true with all investment companies, that a
Portfolio's objectives will be achieved. The achievement of a
Portfolio's investment objectives is dependent in part on the
continuing ability of the issuers of securities in which a
Portfolio invests to meet their obligations for the payment of
principal and interest when due. Each Portfolio generally will
hold securities to maturity rather than follow a practice of
trading. However, a Portfolio may seek to improve portfolio
income by selling certain portfolio securities prior to maturity
in order to take advantage of yield disparities that occur in
securities markets.)
REPURCHASE AGREEMENTS. Each Portfolio may also enter
into repurchase agreements pertaining to the types of securities
in which it may invest. A repurchase agreement arises when a
buyer purchases a security and simultaneously agrees to resell it
to the vendor at an agreed-upon future date, normally one day or
a few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Each Portfolio requires continuous
maintenance of collateral in an amount equal to, or in excess of,
the market value of the securities which are the subject of the
agreement. In the event that a vendor defaulted on its
repurchase obligation, a Portfolio might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. If the vendor became bankrupt,
the Portfolio might be delayed in selling the collateral.
Repurchase agreements may be entered into with member banks of
the Federal Reserve System (including the Fund's Custodian) or
"primary dealers" (as designated by the Federal Reserve Bank of
New York) in U.S. Government securities. It is each Portfolio's
current practice to enter into repurchase agreements only with
such primary dealers and its Custodian, and the Fund has adopted
procedures for monitoring the creditworthiness of such
organizations. Pursuant to Rule 2a-7, a repurchase agreement is
deemed to be an acquisition of the underlying securities,
provided that the obligation of the seller to repurchase the
securities from the money market fund is (i) collateralized
fully; (ii) the collateral (as defined in such Rule) consists
entirely of cash, U.S. Governmental securities and other first
tier securities; and (iii) the repurchase agreement would qualify
for an exclusion from any automatic stay of creditors' rights
under applicable insolvency law. Accordingly, the vendor of a
fully collateralized repurchase agreement is deemed to be the
issuer of the underlying securities.
15
<PAGE>
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
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
16
<PAGE>
Portfolio and the California Municipal Portfolio), (i) the
General Municipal Portfolio may invest not more than 10% of its
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;
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;
_________________________
* As a matter of operating policy, pursuant to Rule 2a-7 the
Municipal Portfolios will, effective July 1, 1998, investment
no more than 5% of their assets in First Tier securities of
any one issuer.
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<PAGE>
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.
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<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,*** 59, President, is Senior Vice
President of Alliance Capital Management Corporation ("ACMC")****
and President of Alliance Cash Management Services with which he
has been associated since 1993.
JOHN D. CARIFA,*** 53, Chairman of the Board, is the
President, Chief Operating Officer and a Director of ACMC with
which he has been associated since prior to 1993.
PETER QUICK,*** 42, 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.
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 1993. 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, 51, is a member of the law firm of Baer
Marks & Upham with which he has been associated since prior to
1993. He is a Director of Rigel Communications, Inc. (cable
systems) and an Adjunct Professor of Law at New York University
_________________________
*** 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.
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<PAGE>
School of Law. His address is 805 Third Avenue, New York, New
York 10022.
RICHARD J. DALY, 44, is Group Co-President of ADP
Financial Information Services, Inc. and Corporate Vice President
of Automatic Data Processing, Inc. since January 1989. His
address is 51 Mercedes Way, Edgewood, New York, 11717.
WILLIAM H. FOULK, JR., 65, 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 1993. His address is
2 Greenwich Plaza, Greenwich, CT 06830.
ARTHUR S. KRANSELER, 63, 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 1993. His address is 3407 South
Ocean Boulevard, Suite 5-C, Highland Beach, Florida 33487.
ROBERT A. LEWIS, 44, is a member of the law firm
McCutchen, Doyle, Brown & Enersen with which he has been
associated since prior to 1993. His address is Three Embarcadero
Center, Suite 2800, San Francisco, California 94111.
CLIFFORD L. MICHEL, 58, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1993. He is President and Chief Executive Officer of
Wenonah Development Company (investment holding company) and a
Director of Placer Dome Inc. (mining). His address is St.
Bernard's Road, Gladstone, New Jersey 07934.
WILLIAM L. RHOADS III, 69, 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, 39, is Vice President of Automatic
Data Processing/Financial Information Services Division with
which he has been associated since prior to 1993. His address is
2 Journal Square Plaza, Jersey City, NJ 07306.
20
<PAGE>
OFFICERS
JOHN R. BONCZEK, 38, Senior Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1993.
KATHLEEN A. CORBET, 38, Senior Vice President, is an
Executive Vice President of ACMC since July 1993. Prior thereto,
she was employed by Equitable Capital since prior to 1993.
ROBERT I. KURZWEIL, 47, 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 1993.
PATRICIA NETTER, 47, Senior Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1993.
RAYMOND J. PAPERA, 42, Senior Vice President, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1993.
KENNETH T. CARTY, 37, Vice President, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.
JOHN F. CHIODI, 31, Vice President, is a Vice President
of ACMC with which he has been associated since prior to 1993.
DORIS T. CILIBERTI, 34, Vice President, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1993.
LINDA D. NEIL, 37, 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 1993.
EDMUND P. BERGAN, Jr., 47, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1993.
MARK D. GERSTEN, 47, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc. with which he has been associated since prior to 1993.
VINCENT S. NOTO, 32, Controller, is an Assistant Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1993.
21
<PAGE>
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 Funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies (and separate investment portfolios within
those companies) 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.
Total Number
of Investment Total Number of
Portfolios Funds in The
Within the Alliance Fund
Funds, Complex,
Total Including the Including The
Compensation Fund, as to Fund, as to
Aggregate From the which the which the
Compensation Alliance Trustee is a Trustee is a
Name of Trustee from the Fund Director or Director or
of the Fund Fund Complex Trustee Trustee
John D. Carifa $0 $0 54 118
Richard S. Borisoff $3,000 $2,500 1 3
Jeffrey M. Cole $3,000 $3,000 1 3
Richard J. Daly $0 $0 1 3
William H. Foulk, Jr. $3,039 $176,250 48 113
Arthur S. Kranseler $3,000 $3,000 1 3
Robert A. Lewis $3,000 $3,000 1 3
Clifford L. Michel $3,015 $194,500 41 92
Peter Quick $0 $0 1 3
William L. Rhoads III $3,500 $3,500 1 3
Richard R. Stumm $0 $0 1 3
Ronald M. Whitehill $0 $0 1 3
As of March 16, 1998, the Trustees and officers of the
Fund as a group owned less than 1% of the shares of the Fund.
22
<PAGE>
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, 1997 of more than $218 billion (of which more than
$85 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,
1997, 31 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employ approximately 1,500 employees
who operate out of domestic offices and the offices of
subsidiaries in Bahrain, Bangalore, Chennai, Istanbul, London,
Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto and affiliate
offices in Vienna, Warsaw, Hong Kong, Sao Paulo and Moscow. The
58 registered investment companies comprising 122 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"). ECI is a holding company
controlled by AXA-UAP a French insurance holding company which at
September 30, 1997, beneficially owned approximately 59% of the
outstanding voting shares of ECI. As of June 30, 1997, 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.
AXA-UAP is a holding company for an international group
of insurance and related financial services companies. AXA-UAP's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically, with activities
principally in Western Europe, North America and the Asia/Pacific
area. AXA-UAP is also engaged in asset management, investment
23
<PAGE>
banking, securities trading, brokerage, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA-UAP, as of
September 30, 1997, more than 25% of the voting power of AXA-UAP
was controlled directly and indirectly by FINAXA, a French
holding company. As of September 30, 1997 more than 25% of the
voting power of FINAXA was controlled directly and indirectly by
four French mutual insurance companies (the "Mutuelles AXA"), one
of which, AXA Assurances I.A.R.D. Mutuelle, itself controlled
directly and indirectly more than 25% of the voting power of
FINAXA. Acting as a group, the Mutuelles AXA control AXA-UAP and
FINAXA.
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 year ended November 30, 1997,
the Adviser received from the Prime, Government and General
Municipal Portfolios, advisory fees of $14,448,704, $306,154 and
$443,791, respectively. 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 net 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. The Adviser has voluntarily agreed to reimburse
each Portfolio 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 Trustee prior thereto. For the year ended November 30,
1997, the Adviser reimbursed the Prime, Government and General
Municipal Portfolios $923,957, $255,475 and $247,578,
respectively. For the period ended November 30, 1996, the
Adviser reimbursed the Prime, Government and General Municipal
Portfolios $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,
24
<PAGE>
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,
1999 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 21, 1998. 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
25
<PAGE>
any responsibility or authority for the management of the
Portfolios, the determination of investment policy, or for any
matter pertaining to the distribution of the Fund's shares.
Under the Administration Agreement, ADP may render
similar administrative services to others. The Administration
Agreement is terminable without penalty by the Fund on behalf of
each Portfolio on 60 days' written notice to ADP (which notice
may be waived by ADP) or by ADP on 60 days' written notice to the
Fund (which notice may be waived by the Fund). The
Administration Agreement also provides that ADP shall not be
liable for any error of judgment or mistake of law, except for
willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of
its duties under the Administration Agreement.
In addition, the Administration Agreement provides that,
in the event the operating expenses of any Fund or Portfolio,
including all investment advisory and administration fees, but
excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses such as litigation, for any fiscal year
exceed the most restrictive expense limitation applicable to a
Portfolio imposed by the securities laws or regulations
thereunder of any 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. For the fiscal year ended November 30,
1997, ADP received from the Prime, Government and General
Municipal Portfolios, net administration fees of $693,127,
$25,324 and $31,551, respectively. For such period, ADP waived
its fee in the amount of $844,140, $30,838 and $37,587,
respectively, for the Prime, Government and General Municipal
Portfolios. ADP pays the fees and expenses of the Trustees who
are affiliated with ADP.
26
<PAGE>
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 Distributor 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 and its Pershing Division, affiliates of the Adviser,
for distribution assistance and to banks and other depository
institutions for administrative and accounting services, and
(ii) otherwise promoting the sale of shares of the Fund such as
by paying for the preparation, printing and distribution of
prospectuses and other promotional materials sent to existing and
prospective shareholders and by directly or indirectly purchasing
radio, television, newspaper and other advertising. In approving
the Agreement, the Trustees determined that there was a
reasonable likelihood that the Agreement would benefit each
Portfolio and its shareholders. For the year ended November 30,
1997, the Prime Portfolio made payments to the Adviser for
expenditures under the Agreement in amounts aggregating
$13,835,395 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
$5,617,592. Of the $19,452,986 paid by the Adviser and the
Portfolio under the Agreement, $797,000 was paid for advertising,
printing and mailing of prospectuses to persons other than
current shareholders; and $18,655,987 was paid to broker-dealers
and other financial intermediaries for distribution assistance.
For the year ended November 30, 1997, the Government Portfolio
made payments to the Adviser for expenditures under the Agreement
in amounts aggregating $505,465 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 $205,002. Of the $710,467 paid by the Adviser and
the Portfolio under the Agreement, $29,000 was paid for
advertising, printing and mailing of prospectuses to persons
other than current shareholders; and $681,467 was paid to broker-
27
<PAGE>
dealers and other financial intermediaries for distribution
assistance. For the year ended November 30, 1997, the General
Municipal Portfolio made payments to the Adviser for expenditures
under the Agreement in amounts aggregating $622,231 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 $233,861. Of the
$856,092 paid by the Adviser and the Portfolio under the
Agreement, $61,000 was paid for advertising, printing and mailing
of prospectuses to persons other than current shareholders; and
$795,092 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
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, 1999 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 21,
1998.
28
<PAGE>
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
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
29
<PAGE>
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
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 and Martin Luther King
Jr. Day; 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
30
<PAGE>
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.
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
31
<PAGE>
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.
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.
32
<PAGE>
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the dividends-
received deduction available to corporations. Long-term capital
gains, if any, distributed by the Fund to a shareholder are
taxable to the shareholder as long-term capital gain,
irrespective of the length of time he may have held his shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year near calendar year-end, although
such distributions may be made more frequently if necessary in
order to maintain the Fund's net asset value at $1.00 per share.
Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Fund is not deductible for
Federal income tax purposes. Under rules of the Internal Revenue
Service for determining when borrowed funds are used for
purchasing or carrying particular assets, shares may be
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 Section 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 withholding.
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
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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
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.
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_______________________________________________________________
GENERAL INFORMATION
_______________________________________________________________
PORTFOLIO TRANSACTIONS. Subject to the general
supervision of the Trustees of the Fund, the Adviser is
responsible for the investment decisions and the placing of the
orders for securities transactions for each Portfolio. Because
the Portfolios invest in securities with short maturities, there
is a relatively high portfolio turnover rate. However, the
turnover rate does not have an adverse effect upon the net yield
and net asset value of the Portfolio's shares since the
Portfolio's transactions occur primarily with issuers,
underwriters or major dealers in money market instruments acting
as principals. Such transactions are normally on a net basis
which do not involve payment of brokerage commissions. The cost
of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriters; transactions
with dealers normally reflect the spread between bid and asked
prices.
The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with each Portfolio. The supplemental information
received from a dealer is in addition to the services required to
be performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. Portfolio securities
will not be purchased from or sold to the Adviser's affiliate,
Donaldson, Lufkin & Jenrette, Inc., or any subsidiary or
affiliate of the parent. For the year ended November 30, 1997,
the Prime, Government and General Municipal Portfolios paid $-0-,
$-0- and $-0-, respectively, 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
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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 16, 1998, there were 4,020,381,338.46 shares
of beneficial interest of the Fund outstanding. Of this amount
3,721,882,870.37 were for the Prime Portfolio; 137,599,571.35
were for the Government Portfolio and 160,898,896.74 were for the
General Municipal Portfolio. To the knowledge of the Fund the
following persons owned of record and no person owned
beneficially, 5% or more of the outstanding shares of the
Portfolio as of March 16, 1998.
% 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%
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f/b/o Customers
Omnibus Acct.
300 South Wacker Drive
Chicago, IL 60606
SHAREHOLDER LIABILITY. Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of each Portfolio.
However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Fund and
requires that the Trustees use their best efforts to ensure that
notice of such disclaimer be given in each note, bond, contract,
instrument, certificate or undertaking made or issued by the
trustees or officers of the Fund. The Agreement and Declaration
of Trust provides for indemnification out of the property of the
Portfolios for all loss and expense of any shareholder of a
Portfolio held personally liable for the obligations of the
Portfolio. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to
circumstances in which a Portfolio would be unable to meet its
obligations. In the review of the Adviser, such risk is not
material.
LEGAL MATTERS. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, New York, New
York, counsel for the Fund. Seward & Kissel has relied upon the
opinion of Sullivan & Worcester, Boston, Massachusetts, for
matters relating to Massachusetts law.
ACCOUNTANTS. An opinion relating to each Portfolio's
financial statements is given herein by McGladrey & Pullen LLP,
New York, New York, independent auditors for the Fund.
YIELD QUOTATIONS AND PERFORMANCE INFORMATION.
Advertisements containing yield quotations for one or more
Portfolios for the Fund may from time to time be sent to
investors or placed in newspapers, magazines or other media on
behalf of the Fund. These advertisements may quote performance
rankings, ratings or data from independent organizations or
financial publications such as Lipper Analytical Services, Inc.,
Morningstar, Inc., IBC's Money Fund Report, IBC's Money Market
Insight or Bank Rate Monitor or compare the Fund's performance to
bank money market deposit accounts, certificates of deposit or
various indices. Yield quotations are calculated in accordance
with the standardized method referred to in Rule 482 under the
Securities Act of 1933.
Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
of the capital changes, in the value of a hypothetical pre-
existing account having a balance of one share of such Portfolio
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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, 1997 was 4.74% which is the equivalent of a
4.85% compounded effective yield. Absent expense reimbursement,
the annualized yield for this period would have been 4.68%,
equivalent to an effective yield of 4.79%. The Government
Portfolio's yield for the seven-day period ended November 30,
1997 was 4.67% which is the equivalent of a 4.78% compounded
effective yield. Absent expense reimbursement, the annualized
yield for this period would have been 4.42%, equivalent to an
effective yield of 4.53%. The General Municipal Portfolio's
yield for the seven-day period ended November 30, 1997 was 3.06%
which is the equivalent of a 3.11% compounded effective yield.
Absent expense reimbursement, the annualized yield for this
period would have been 2.85%,equivalent to an effective yield of
2.90%.
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 1997 Federal (39.6%) and New
Jersey (____%) personal income tax brackets would be equivalent
to a taxable yield of ____%. A 5% tax-exempt yield of the New
York Portfolio for an investor in the top 1997 Federal, New York
state (____%), and New York City (____%) personal income tax
brackets would be equivalent to a taxable yield of ____%. A 5%
tax-exempt yield of the Connecticut Portfolio for an investor in
the top 1997 Federal and Connecticut (____%) personal income tax
brackets would be equivalent to a taxable yield of ____%. A 5%
tax-exempt yield of the California Portfolio for an investor in
the top 1997 Federal and California (____%) personal income tax
brackets would be equivalent to a taxable yield of ____%. A 5%
tax-exempt yield of the General Portfolio received by an investor
subject to the top 1997 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
is not subject to state and local income taxes and that the
investor is not subject to federal alternative minimum tax.
Taxable equivalent yield is computed by dividing that portion of
the yield of a Municipal Portfolio that is tax exempt (assumed
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for purposes of these examples to be the entire yield of 5%) by
one minus the applicable marginal income tax rate (39.6%; 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
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
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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.
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
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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
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
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<PAGE>
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
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.
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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
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
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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
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
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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
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
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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,
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.
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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
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
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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
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
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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
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
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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.
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
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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
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.
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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
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.
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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
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.
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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
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.
_________________________
*****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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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.
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
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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
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").
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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
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
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"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
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.
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<PAGE>
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
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.
59
<PAGE>
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.
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
60
<PAGE>
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
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.
61
00250132.AK8
<PAGE>
ALLIANCE MONEY MARKET FUND
- -GENERAL MUNICIPAL PORTFOLIO
- -PRIME PORTFOLIO
- -GOVERNMENT PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1997
STATEMENT OF NET ASSETS
NOVEMBER 30, 1997
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MUNICIPAL BONDS-85.3%
ALABAMA-0.4%
ABBEVILLE IDR
(Greenbush Woods Project)
AMT VRDN (a)
$ 575 4/01/04 4.20% $ 575,000
ALASKA-1.1%
ALASKA IDA
(Fairbanks Gold Mining Inc.)
AMT VRDN (a)
500 5/01/09 3.95 500,000
ALASKA STUDENT LOAN CORP. AMBAC
Student Loan Revenue Series A AMT
1,000 7/01/98 4.10 1,005,628
-----------
1,505,628
ARIZONA-1.5%
PHOENIX IDA
(America West Airlines)
AMT VRDN (a)
1,000 8/01/16 4.25 1,000,000
PHOENIX IDA
(V.A.W. of America, Inc.)
AMT VRDN (a)
1,000 2/01/12 4.25 1,000,000
-----------
2,000,000
CALIFORNIA-0.7%
CALIFORNIA HIGHER EDUCATION
Student Loan Revenue
Series B PPB (a)
1,000 7/01/02 4.00 1,000,000
DELAWARE-0.3%
DELAWARE ECONOMIC DEVELOPMENT
AUTHORITY
(Orient Chemical Company)
AMT VRDN (a)
400 11/01/99 4.22 400,000
DISTRICT OF COLUMBIA-6.5%
DISTRICT OF COLUMBIA HFA MFHR
(McLean Apts.) Series '85A VRDN (a)
1,390 12/01/05 4.30 1,390,000
DISTRICT OF COLUMBIA HFA MFHR
(Tyler Housing Trust) AMT VRDN (a)
4,200 8/01/25 4.20% $4,200,000
DISTRICT OF COLUMBIA HFA SFMR
Series B AMT PPB (a)
1,000 12/01/29 3.75 1,000,000
DISTRICT OF COLUMBIA HFA SFMR
Series C AMT PPB (a)
1,500 9/01/98 4.05 1,500,000
805 12/01/29 3.90 805,000
-----------
8,895,000
FLORIDA-2.5%
BROWARD COUNTY HFA SFMR
Series '97B AMT PPB (a)
1,000 10/01/30 4.05 1,000,000
PINELLAS COUNTY HFA SFMR
Multi-County Program
Series D AMT PPB (a)
1,475 9/01/26 4.00 1,475,000
ST. LUCIE PCR
(Florida Light & Power
Co. Project) Series '93
AMT VRDN (a)
1,000 1/01/27 4.10 1,000,000
-----------
3,475,000
GEORGIA-5.5%
BURKE COUNTY DEVELOPMENT
AUTHORITY PCR
AMBAC
(Oglethorpe Power Corp.) Series B
3,000 5/28/98 3.80 3,000,000
CARTERSVILLE ECONOMIC
DEVELOPMENT AUTHORITY
(Sekisui Jushi Project)
Series ' 92 VRDN (a)
300 6/01/12 4.40 300,000
1
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
SUMMERSVILLE IDA
(Image Industries, Inc.)
Series '97 AMT VRDN (a)
$ 1,000 9/01/17 4.20% $1,000,000
THOMASTON-UPSON COUNTY IDR
(De Ster Production Corp.)
Series A AMT VRDN (a)
3,300 10/01/09 4.30 3,300,000
-----------
7,600,000
HAWAII-0.9%
HAWAII AIRPORT SYSTEMS REVENUE AMBAC
Third Series AMT
1,250 7/01/98 4.75 1,255,622
ILLINOIS-5.4%
AURORA KANE & DU PAGE COUNTIES IDR
(A & B Holdings LLC Project)
Series '97A AMT VRDN (a)
1,300 10/01/27 4.10 1,300,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(U.G.N. Inc. Project)
Series '86 AMT VRDN (a)
3,000 9/15/11 4.40 3,000,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(U.G.N. Inc. Project)
Series '87 AMT VRDN (a)
790 4/01/99 4.40 790,000
ILLINOIS HOUSING
DEVELOPMENT AUTHORITY
Homeowner Mortgage
Series '96F-2
AMT PPB (a)
1,500 8/01/28 3.70 1,500,000
WOOD DALE CITY IDR
(Nippon Express USA, Inc.)
Series '85 VRDN (a)
800 6/01/00 4.30 800,000
-----------
7,390,000
INDIANA-2.4%
ALLEN COUNTY ECONOMIC
DEVELOPMENT AUTHORITY
(Mattel Power Wheels, Inc.)
AMT VRDN (a)
800 12/01/18 4.15 800,000
AUBURN ECONOMIC
DEVELOPMENT AUTHORITY
(R.J. Tower Corp. Project)
Series '88 AMT VRDN (a)
725 9/01/00 4.25 725,000
SEYMOUR ECONOMIC
DEVELOPMENT AUTHORITY
(Kobelco Metal Powder Co. Project)
Series '87 AMT VRDN (a)
1,775 12/15/97 4.40 1,775,000
-----------
3,300,000
KANSAS-1.6%
FREDONIA IDR
(Systech Environmental Corp.)
AMT VRDN (a)
1,000 2/01/07 4.20 1,000,000
SPRING HILL IDR
(Abrasive Engineering
and Manufacturing Project)
Series '96 VRDN (a)
1,200 9/01/16 4.15 1,200,000
-----------
2,200,000
KENTUCKY-6.5%
HOPKINSVILLE IDR
(American Precision Machinery)
AMT VRDN (a)
3,600 5/01/00 4.10 3,600,000
LOUISVILLE & JEFFERSON
COUNTY REGIONAL AIRPORT
AUTHORITY BAN
Series AA-1 AMT VRDN (a)
1,000 6/30/02 4.05 1,000,000
RUSSELLVILLE IDB
(JS Technos Corp. Project)
Series '89 AMT VRDN (a)
3,000 12/01/09 4.40 3,000,000
2
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
SCOTT COUNTY IDR
(Interstate Transformer Inc.)
Series '90 AMT VRDN (a)
$ 1,300 9/01/05 4.10% $ 1,300,000
------------
8,900,000
LOUISIANA-1.5%
NEW ORLEANS HOME
MORTGAGE AUTHORITY SFMR
Series 97C-2 PPB (a)
2,000 12/01/18 3.92 2,000,000
MAINE-8.2%
BIDDEFORD IDR
(DK Associates & Volk Packaging)
Series '97 AMT VRDN (a)
5,525 7/01/17 4.20 5,525,000
MAINE FINANCE AUTHORITY
Economic Development
Revenue Series '88A-D
AMT VRDN (a)
135 12/01/03 4.20 135,000
MAINE FINANCE AUTHORITY
Economic Development
Revenue (Barber Foods, Inc.)
Series '90B AMT VRDN (a)
105 12/01/06 4.20 105,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(Cornwall, McCann, Thurston)
Series '88D-F AMT VRDN (a)
875 6/01/04 4.20 875,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(DC & F, Inc.) Series '89F
AMT VRDN (a)
410 12/01/05 4.20 410,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(Forster Mfg Co., Inc.)
Series '89H AMT VRDN (a)
455 6/01/01 4.20 455,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(JS McCarthy & Co., Inc.)
Series '96B AMT VRDN (a)
300 6/01/99 4.20 300,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(Stratton Lumber, Inc.)
Series '88C AMT VRDN (a)
250 12/01/04 4.20 250,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(Stratton Lumber, Inc.)
Series '89K AMT VRDN (a)
20 12/01/97 4.20 20,000
MAINE FINANCE AUTHORITY
Economic Development Revenue
(Volco Realty Co., Inc.)
Series '89L AMT VRDN (a)
170 6/01/05 4.20 170,000
MAINE FINANCE AUTHORITY
(William Arthur, Inc.)
Series '97 AMT VRDN (a)
1,500 10/01/12 3.80 1,500,000
ORRINGTON RESOURCE RECOVERY
(Penobscot Energy Project B)
AMT VRDN (a)
1,540 5/01/03 4.10 1,540,000
------------
11,285,000
MICHIGAN-1.5%
MICHIGAN STRATEGIC FUND
(Donnelly Corp. Project)
Series A AMT VRDN (a)
2,000 3/01/10 4.00 2,000,000
MISSOURI-4.1%
MISSOURI ECONOMIC
DEVELOPMENT AUTHORITY
Export & Infrastructure
Series D AMT VRDN (a)
2,270 9/01/10 4.15 2,270,000
3
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MISSOURI ECONOMIC
DEVELOPMENT AUTHORITY
(Plastic Enterprises)
Series '90A AMT VRDN (a)
$ 250 9/01/05 4.25% $ 250,000
MISSOURI ECONOMIC
DEVELOPMENT AUTHORITY
(Variform Inc.)
Series '90C AMT VRDN (a)
1,340 9/01/05 4.15 1,340,000
MISSOURI IDA
(Kawasaki Motor Corp.)
Series '89 AMT VRDN (a)
395 4/01/99 4.30 395,000
MISSOURI IDA
(Tradco Inc.) Series H
AMT VRDN (a)
740 10/01/03 4.15 740,000
MISSOURI IDA
(Wainwright Industries Inc.)
Series F AMT VRDN (a)
690 10/01/03 3.90 690,000
------------
5,685,000
NEBRASKA-0.7%
NEBRASKA FINANCE AUTHORITY SFMR
Series '97C AMT PPB (a)
1,000 9/01/29 3.90 1,000,000
NEW HAMPSHIRE-0.7%
NEW HAMPSHIRE IDA
(SCI Manufacturing Inc.)
Series '89 AMT VRDN (a)
1,000 6/01/14 4.20 1,000,000
NEW JERSEY-0.4%
JERSEY CITY GO BAN
600 2/05/98 3.85 600,041
NEW MEXICO-0.1%
NEW MEXICO MORTGAGE
FINANCE AUTHORITY SFMR
Series '97D-2
AMT PPB (a)
170 7/01/30 3.95 170,000
NORTH DAKOTA-1.2%
NORTH DAKOTA HFA
Series '97C AMT PPB (a)
1,600 8/04/98 4.00 1,600,000
OHIO-1.2%
OHIO AIR QUALITY
DEVELOPMENT AUTHORITY PCR
(Ohio Edison Company)
Series B AMT PPB (a)
700 5/01/18 4.10 700,000
OHIO HFA
Series '97A-2 AMT PPB (a)
1,000 3/01/28 3.65 1,000,000
------------
1,700,000
OKLAHOMA-1.4%
BROKEN ARROW
(Paragon Films Project)
AMT VRDN (a)
1,970 8/01/04 4.22 1,970,000
OREGON-1.8%
OREGON HOUSING & COMMUNITY SERVICES
DEPARTMENT SFMR
Series '96K AMT PPB (a)
690 12/11/97 3.65 690,000
PORTLAND HFA MFHR
(Union Station Project)
Phase B Series '96
AMT VRDN (a)
1,750 10/01/31 4.05 1,750,000
------------
2,440,000
PENNSYLVANIA-5.1%
DELAWARE IDA COP
(Cliff House Assisted)
Series '97A AMT VRDN (a)
2,000 8/01/12 4.20 2,000,000
PENNSYLVANIA ECONOMIC
DEVELOPMENT AUTHORITY
(National Gypsum Co.
Project) Series '97A
AMT VRDN (a)
2,000 11/01/32 4.10 2,000,000
4
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PENNSYLVANIA ECONOMIC
DEVELOPMENT AUTHORITY IDR
(Ram Forest Products Inc.)
Series '88A-3 AMT VRDN (a)
$ 435 12/01/99 4.50% $ 435,000
PHILADELPHIA GO TRAN
Series '97A
2,500 6/30/98 4.00 2,506,946
------------
6,941,946
SOUTH DAKOTA-0.9%
SOUTH DAKOTA HOUSING
DEVELOPMENT AUTHORITY SFMR
Series '97G
1,300 8/13/98 3.95 1,300,000
TENNESSEE-3.8%
FAYETTEVILLE & LINCOLN IDR
(V.A.W. of America, Inc.)
AMT VRDN (a)
2,800 10/01/12 4.25 2,800,000
MONTGOMERY COUNTY
PUBLIC BUILDING AUTHORITY
Pooled Funding Revenue
Series '97 VRDN (a)
2,000 11/01/27 4.05 2,000,000
TENNESSEE HOUSING
DEVELOPMENT AGENCY
Series '97-1 AMT PPB (a)
400 1/01/28 3.75 400,000
------------
5,200,000
TEXAS-2.3%
GREATER EAST TEXAS HIGHER EDUCATION
Student Loan Revenue
Series '95A AMT PPB (a)
600 5/01/11 4.10 600,000
GREATER TEXAS STUDENT LOAN CORP.
Student Loan Revenue
Series '96A AMT PPB (a)
2,000 4/01/05 3.70 2,000,000
SAN ANTONIO IDA
(Gruma Corporation Project)
AMT VRDN (a)
500 11/01/09 4.05 500,000
------------
3,100,000
UTAH-2.9%
PROVO HOUSING AUTHORITY MFHR
(Branbury Project)
Series B AMT VRDN (a)
1,000 12/15/10 4.15 1,000,000
UTAH BOARD OF REGENTS AMBAC
Student Loan Revenue Series O
2,000 5/01/98 4.70 2,006,001
WEST JORDAN IDR
(Vesper Corp. Project)
Series '94A AMT VRDN (a)
1,000 4/01/14 4.10 1,000,000
------------
4,006,001
WASHINGTON-9.3%
PIERCE COUNTY ECONOMIC
DEVELOPMENT CORP.
(Truss Company Project)
AMT VRDN (a)
500 1/01/20 4.35 500,000
PORT OF PORT ANGELES IDR
(Daishowa America Project)
AMT VRDN (a)
700 8/01/07 4.40 700,000
PORT OF VANCOUVER IDR
(United Grain Corp.)
Series '84A VRDN (a)
1,000 12/01/09 4.30 1,000,000
PORT OF VANCOUVER IDR
(United Grain Corp.)
Series '92 AMT VRDN (a)
500 12/01/10 4.40 500,000
WASHINGTON HOUSING
FINANCE COMMISSION MFHR
(Evergreen Ridge Apts. Project)
AMT VRDN (a)
2,500 12/01/24 4.10 2,500,000
5
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
WASHINGTON HOUSING
FINANCE COMMISSION MFHR
(Pacific Inn Apts. Project)
Series A AMT VRDN (a)
$ 2,575 5/01/28 4.10% $ 2,575,000
WASHINGTON HOUSING
FINANCE COMMISSION MFHR
(Sherwood Springs Apts. Project)
Series '97A AMT VRDN (a)
2,000 9/01/27 4.10 2,000,000
WASHINGTON HOUSING
FINANCE COMMISSION MFHR
(Summerglen Apts. Project)
AMT VRDN (a)
1,250 11/01/25 4.10 1,250,000
WASHINGTON HOUSING
FINANCE COMMISSION SFMR
Series 1A AMT PPB (a)
290 6/01/30 4.00 290,000
YAKIMA COUNTY IDR
(Can-Am Millwork Ltd.)
AMT VRDN (a)
1,415 12/01/14 4.15 1,415,000
------------
12,730,000
WEST VIRGINIA-2.9%
MARION COUNTY SWR
(Grant Town Project)
Series '92A AMT VRDN (a)
1,500 10/01/17 4.05 1,500,000
WEST VIRGINIA PUBLIC
ENERGY AUTHORITY
(Morgantown Energy Assoc. Project)
Series A AMT PPB (a)
2,500 7/01/08 5.50 2,503,226
------------
4,003,226
Total Municipal Bonds
(amortized cost $117,227,464) 117,227,464
COMMERCIAL PAPER-14.0%
COLORADO-4.4%
DENVER AIRPORT REVENUE
Series A AMT
4,000 12/17/97 3.85 4,000,000
2,000 12/12/97 3.90 2,000,000
------------
6,000,000
FLORIDA-0.7%
ORANGE COUNTY GO
Series A
1,000 12/10/97 3.80 1,000,000
HAWAII-1.5%
HAWAII BUDGET & FINANCE
(Citizens Utility Company)
Series '88A AMT
2,000 2/12/98 3.90 2,000,000
INDIANA-1.1%
INDIANA DEVELOPMENT
FINANCE AUTHORITY
(Pure Air Lake) Series '90A AMT
1,500 12/11/97 3.85 1,500,000
NEBRASKA-1.5%
NEBRASKA PUBLIC POWER DISTRICT
Series B
2,000 12/19/97 3.80 2,000,000
PENNSYLVANIA-2.0%
BEAVER COUNTY PCR
(Dusquesne Light Co.)
Series '93A AMT
800 12/11/97 3.85 800,000
VENANGO IDA
(Scrubgrass Project)
Series '90A AMT
2,000 12/11/97 3.85 2,000,000
------------
2,800,000
PUERTO RICO-2.2%
PUERTO RICO GOVERNMENT
DEVELOPMENT BANK
Series '96
3,000 2/12/98 3.75 3,000,000
6
ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
TEXAS-0.6%
CITY OF AUSTIN GO
Series A
$ 850 12/08/97 3.80% $ 850,000
Total Commercial Paper
(amortized cost $19,150,000) 19,150,000
TOTAL INVESTMENTS-99.3%
(amortized cost $136,377,464) $136,377,464
Other assets less liabilities-0.7% 980,922
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 137,357,786 shares
outstanding) $137,358,386
See Footnotes and Glossary of Terms on page 14.
See notes to financial statements.
7
STATEMENT OF NET ASSETS
NOVEMBER 30, 1997
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-56.5%
APEX FUNDING CORP.
$ 50,000 12/30/97 (b) 5.62% $ 49,773,639
ASSET BACKED CAPITAL FINANCE
2,700 12/22/97 (b) 5.58 2,691,212
26,700 2/17/98 (b) 5.60 26,376,040
51,700 4/15/98 (b) 5.61 50,612,361
22,700 12/08/97 (b) 5.70 22,674,863
ASSOCIATES CORP.
162,000 12/01/97 5.75 162,000,000
BHF FINANCE (DE) INC.
26,000 12/01/97 5.53 26,000,000
15,000 12/09/97 5.64 14,981,200
CENTAURI CORP.
25,000 3/03/98 (b) 5.62 24,640,944
CERTAIN FUNDING CORP.
17,800 12/23/97 (b) 5.55 17,739,628
11,850 12/01/97 (b) 5.56 11,850,000
15,300 12/10/97 (b) 5.56 15,278,733
CITICORP
7,000 12/05/97 5.58 6,995,660
CXC, INC.
50,000 12/04/97 (b) 5.56 49,976,833
25,000 2/03/98 (b) 5.64 24,749,333
DAKOTA FUNDING INC.
50,000 12/16/97 (b) 5.54 49,884,583
EDISON ASSET SECURITIZATION
35,000 2/04/98 (b) 5.73 34,637,896
FALCON ASSET SECURITIZATION
31,800 12/02/97 (b) 5.58 31,795,071
GENERAL ELECTRIC CAPITAL CORP.
26,000 3/03/98 5.60 25,627,911
GOTHAM FUNDING CORP.
20,000 12/02/97 (b) 5.60 19,996,889
GREENWICH ASSET FUNDING INC.
15,000 1/13/98 (b) 5.54 14,900,742
17,000 4/01/98 (b) 5.55 16,682,879
HOUSEHOLD FINANCIAL CORP. LTD.
32,000 12/01/97 5.75 32,000,000
INTERNATIONALE NEDERLANDEN
26,700 12/18/97 (b) 5.52 26,630,402
J. P. MORGAN & CO., INC.
28,513 12/08/97 5.51 28,482,452
85,000 12/29/97 5.57 84,631,761
MARKET STREET FUNDING CORP.
15,522 12/15/97 (b) 5.62 15,488,076
MERRILL LYNCH & CO., INC.
42,521 12/01/97 5.75 42,521,000
44,000 12/15/97 5.77 43,901,269
PARK AVENUE INC.
20,597 2/13/98 (b) 5.70 20,355,672
18,111 2/11/98 (b) 5.72 17,903,810
16,419 2/12/98 (b) 5.72 16,228,558
PREFERRED RECEIVABLES
FUNDING CORP.
8,070 12/08/97 (b) 5.58 8,061,244
PREMIUM FUNDING INC.
10,119 12/16/97 (b) 5.55 10,095,600
21,239 12/17/97 (b) 5.62 21,185,950
PRIME ASSET VEHICLE
LTD.
15,000 12/01/97 5.52 15,000,000
RANGER FUNDING CORP.
20,000 2/04/98 (b) 5.64 19,796,333
20,000 2/11/98 (b) 5.65 19,774,000
15,000 2/19/98 (b) 5.72 14,809,333
RECEIVABLES CAPITAL CORP.
28,000 12/15/97 (b) 5.56 27,939,022
37,758 12/12/97 (b) 5.64 37,692,930
23,440 12/19/97 (b) 5.64 23,373,899
REPUBLIC FUNDING CORP.
11,000 12/17/97 5.62 10,972,524
SIGMA FINANCE CORP.
3,561 12/03/97 (b) 5.57 3,559,898
35,000 3/23/98 (b) 5.57 34,393,489
100,000 3/05/98 (b) 5.62 98,532,556
SOUTHERN CO.
10,000 12/01/97 5.60 10,000,000
SPECIAL PURPOSE ACCOUNTS
RECEIVABLE COOPERATIVE CORP.
39,000 12/11/97 (b) 5.59 38,939,442
8
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
STRATEGIC ASSET FUNDING CORP.
$ 46,800 12/30/97 (b) 5.60% $ 46,588,880
15,171 12/01/97 (b) 5.62 15,171,000
15,166 12/04/97 (b) 5.62 15,158,897
10,717 12/26/97 (b) 5.62 10,675,174
SUMITOMO CAPITAL MARKETS
25,000 12/12/97 5.58 24,957,375
SUNTRUST BANKS, INC.
27,000 12/17/97 5.57 26,933,160
THREE RIVERS FUNDING CORP.
68,000 12/16/97 (b) 5.64 67,840,200
TRIPLE ASSET FUNDING CORP.
108,000 12/30/97 (b) 5.62 107,511,060
WESTWAYS FUNDING I LTD.
25,573 12/10/97 (b) 5.59 25,537,402
WINDMILL FUNDING CORP.
29,000 12/18/97 (b) 5.53 28,924,270
2,100 12/03/97 (b) 5.55 2,099,353
WOOD STREET FUNDING CORP.
70,761 12/01/97 (b) 5.77 70,761,000
Total Commercial Paper
(amortized cost $1,864,293,408) 1,864,293,408
CORPORATE OBLIGATIONS-15.2%
ASSET BACKED CAPITAL FINANCE
25,000 5.82%, 8/24/98 FRN (b) 5.82 25,000,000
BETA FINANCE CORP.
25,000 5.97%, 3/18/98 (b) 5.97 25,000,000
CENTAURI CORP.
25,000 5.73%, 2/06/98 FRN (b) 5.73 24,999,778
10,000 5.75%, 2/13/98 (b) 5.75 9,997,007
5,000 5.88%, 10/27/98 FRN (b) 5.88 4,999,548
15,000 5.89%, 10/27/98 FRN (b) 5.89 15,000,000
GOLDMAN SACHS GROUP LP
80,000 5.72%, 1/05/98 5.72 80,000,000
70,000 5.75%, 4/13/98 FRN 5.75 70,000,000
MERRILL LYNCH & CO., INC.
25,000 5.65%, 12/24/97 FRN 5.65 24,999,694
50,000 5.69%, 7/27/98 FRN 5.69 50,000,000
25,000 5.73%, 1/27/98 FRN 5.73 24,999,019
SHORT TERM CARD
ACCOUNT TRUST 1996-1
125,000 5.69%, 1/15/98 FRN 5.69 125,000,000
SMM TRUST 1997-1
20,000 5.66%, 5/29/98 FRN (b) 5.66 20,000,000
Total Corporate Obligations
(amortized cost $499,995,046) 499,995,046
CERTIFICATES OF DEPOSIT-14.2%
BAYERISCHE LANDESBANK
10,000 5.86%, 7/17/98 5.88 9,999,104
BETA FINANCE CORP.
20,000 6.00%, 10/29/98 (b) 6.00 20,000,000
CANADIAN IMPERIAL
BANK OF COMMERCE
85,000 5.63%, 12/30/97 5.57 85,004,320
CENTAURI CORP.
12,000 5.75%, 2/13/98 (b) 5.67 11,996,585
10,000 6.36%, 5/01/98 (b) 5.68 10,000,000
COMMERZBANK NEW YORK
1,400 5.78%, 2/27/98 5.88 1,399,669
CREDIT AGRICOLE NEW YORK
25,000 5.98%, 6/16/98 5.94 25,004,606
J. P. MORGAN & CO., INC.
10,000 5.92%, 3/19/98 5.95 9,999,151
LANDESBANK HESSEN-THURINGEN
25,000 5.90%, 3/17/98 5.93 24,997,917
25,000 6.13%, 4/07/98 6.25 24,990,047
NORINCHUKIN BANK, LTD.
75,000 5.70%, 12/08/97 5.69 75,000,144
RABO BANK N.Y.
25,000 5.98%, 3/20/98 6.00 24,993,451
SIGMA FINANCE CORP.
25,000 6.00%, 10/26/98 (b) 6.00 25,000,000
SUMITOMO BANK, LTD.
25,000 5.62%, 12/17/97 5.62 25,000,000
95,000 5.70%, 12/29/97 5.70 95,000,000
Total Certificates of Deposit
(amortized cost $468,384,994) 468,384,994
9
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
BANK OBLIGATIONS-12.7%
BANK OF MONTREAL CHICAGO
$ 125,000 5.79%, 10/01/98 FRN 5.79% $ 125,000,000
BANKERS TRUST NEW YORK CORP.
20,000 5.91%, 2/17/98 FRN 5.91 20,000,000
140,000 5.91%, 2/23/98 FRN 5.91 140,000,000
BAYERISCHE VEREINSBANK
75,000 5.56%, 6/30/98 FRN 5.56 74,974,762
DEUTSCHE BANK N.Y.
25,000 5.61%, 7/01/98 FRN 5.61 24,985,908
MORGAN GUARANTY TRUST CO.
10,000 5.97%, 6/22/98 5.97 9,998,140
ROYAL BANK OF CANADA
25,000 5.86%, 9/30/98 FRN 5.86 25,000,000
Total Bank Obligations
(amortized cost $419,958,810) 419,958,810
U.S. GOVERNMENT AND AGENCIES-1.0%
FEDERAL FARM CREDIT BANK
$ 32,000 5.35%, 8/03/98 FRN
(amortized cost $31,989,919) 5.35% 31,989,919
TOTAL INVESTMENTS-99.6%
(amortized cost $3,284,622,177) 3,284,622,177
Other assets less liabilities-0.4% 13,278,555
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 3,297,874,004
shares outstanding) $3,297,900,732
See Footnotes and Glossary of Terms on page 14.
See notes to financial statements.
10
STATEMENT OF NET ASSETS
NOVEMBER 30, 1997
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES-34.7%
FEDERAL HOME LOAN MORTGAGE
CORP.-13.4%
$ 2,500 12/16/97 5.47% $ 2,494,375
3,500 12/05/97 5.50 3,497,875
2,600 12/11/97 5.57 2,596,042
5,000 12/01/97 5.63 5,000,000
2,000 5.715%, 3/17/98 5.87 1,999,164
1,000 5.84%, 4/08/98 6.04 999,358
------------
16,586,814
FEDERAL NATIONAL MORTGAGE
ASSOCIATION-12.9%
1,000 12/08/97 5.43 998,944
392 12/09/97 5.47 391,530
1,000 12/15/97 5.47 997,900
656 12/17/97 5.47 654,426
1,000 12/23/97 5.50 996,685
1,000 12/29/97 5.50 995,780
1,000 12/30/97 5.50 995,630
1,000 5.59%, 12/18/97 5.63 999,927
1,000 6.41%, 7/17/98 5.74 1,003,944
2,000 5.748%,10/20/98 FRN 5.79 1,999,230
5,000 5.798%,11/04/98 FRN 5.88 4,997,309
1,000 6.02%, 4/15/98 6.15 999,576
------------
16,030,881
FEDERAL HOME LOAN BANK-6.1%
1,500 12/10/97 5.45 1,497,956
599 12/12/97 5.48 598,010
3,000 5.529%, 12/04/97 FRN 5.58 2,997,534
1,500 5.87%, 1/30/98 5.87 1,500,000
1,000 6.11%, 4/17/98 6.14 999,892
------------
7,593,392
STUDENT LOAN MARKETING
ASSOCIATION-1.6%
2,000 5.44%, 12/19/97 5.94 1,999,510
FEDERAL FARM CREDIT BANK-0.7%
815 12/08/97 5.47 814,144
Total U.S. Government and Agencies
(amortized cost $43,024,741) 43,024,741
REPURCHASE AGREEMENTS-66.3%
BARCLAYS DEZOETE
WEDD SECURITIES, INC.
6,100 5.75%, dated 11/28/97, due 12/01/97
in the amount of $6,102,923
(cost $6,100,000; collateralized by
$6,179,000 Federal Farm Credit
Bank, 5.60%, 10/01/98,
value $6,224,195) (c) 5.75 6,100,000
CHASE SECURITIES INC.
3,600 5.53%, dated 10/16/97,
due 12/19/97
in the amount of $3,635,392
(cost $3,600,000;
collateralized by $3,950,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 3/01/04,
value $3,811,441) (c) 5.53 3,600,000
CHASE SECURITIES INC.
2,500 5.56%, dated 11/13/97,
due 12/15/97
in the amount of $2,512,356
(cost $2,500,000;
collateralized by $2,900,000
Federal National Mortgage Assn.,
6.50%, 12/01/23,
value $2,591,751) (c) 5.56 2,500,000
CS FIRST BOSTON CORP.
3,100 5.52%, dated 10/06/97,
due 12/08/97
in the amount of $3,129,946
(cost $3,100,000;
collateralized by $4,589,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 10/01/09,
value $3,145,958) (c) 5.52 3,100,000
11
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CS FIRST BOSTON CORP.
$ 3,000 5.56%, dated 11/24/97,
due 12/08/97
in the amount of $3,006,487
(cost $3,000,000;
collateralized by $3,958,000
Federal Home Loan
Mortgage Corp - Gold.,
6.50%, 12/01/13,
value $3,150,581;
collateralized by $140,000
by Federal National
Mortgage Assn., 7.00%, 2/01/14
value $104,842) (c) 5.56% $3,000,000
FUJI SECURITIES INC.
6,000 5.50%, dated 11/24/97,
due 12/01/97
in the amount of $6,006,417
(cost $6,000,000;
collateralized by $5,920,000
Federal Home Loan
Mortgage Corp., 5.79%, 2/01/99,
value $6,132,039) (c) 5.50 6,000,000
GOLDMAN SACHS & CO.
3,100 5.52%, dated 10/16/97,
due 12/17/97
in the amount of $3,129,471
(cost $3,100,000;
collateralized by $3,185,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 8/01/27,
value $3,186,847) (c) 5.52 3,100,000
GOLDMAN SACHS & CO.
3,000 5.55%, dated 11/24/97,
due 12/02/97
in the amount of $3,003,700
(cost $3,000,000;
collateralized by $4,316,000
Federal National Mortgage Assn.,
6.00%, 2/01/09,
value $3,085,404) (c) 5.55 3,000,000
LEHMAN BROTHERS INC.
3,200 5.54%, dated 10/21/97,
due 12/24/97
in the amount of $3,231,516
(cost $3,200,000;
collateralized by $4,045,963
Federal Home Loan
Mortgage Corp - Gold.,
8.00%, 4/01/08,
value $3,252,569) (c) 5.54 3,200,000
MERRILL LYNCH & CO., INC.
6,000 5.60%, dated 11/24/97,
due 12/04/07
in the amount of $6,009,333
(cost $6,000,000;
collateralized by $6,186,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 12/01/27,
value $6,241,674) 5.60 6,000,000
MORGAN STANLEY DEAN WITTER
3,200 5.53%, dated 10/21/97,
due 12/22/97
in the amount of $3,230,476
(cost $3,200,000;
collateralized by $4,760,000
Federal National Mortgage Corp.,
7.50%, 5/01/09,
value $3,210,235;
collateralized by $110,000
U.S. Treasury Bond,
7.50%, 11/15/16,
value $130,425) (c) 5.53 3,200,000
MORGAN STANLEY DEAN WITTER
3,000 5.55%, dated 10/27/97,
due 12/29/97
in the amount of $3,029,138
(cost $3,000,000;
collateralized by $14,847,000
Federal Home Loan Mortgage Corp.,
6.114%, 1/01/30,
value $3,075,510) (c) 5.55 3,000,000
12
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NIKKO SECURITIES CO.
$ 3,000 5.52%, dated 10/28/97,
due 12/01/97
in the amount of $3,015,640
(cost $3,000,000;
collateralized by $3,142,000
Government National
Mortgage Assn., 8.00%, 8/15/26,
value $3,031,015) (c) 5.52% $3,000,000
NIKKO SECURITIES CO.
3,000 5.77%, dated 11/28/97,
due 12/01/97
in the amount of $3,001,443
(cost $3,000,000;
collateralized by $3,220,000
Government National
Mortgage Assn., 7.50%, 1/15/27,
value $3,079,000) (c) 5.77 3,000,000
PAINEWEBBER, INC.
3,400 5.53%, dated 10/17/97,
due 12/12/97
in the amount of $3,429,248
(cost $3,400,000;
collateralized by $3,882,000
Federal National Mortgage Assn.,
6.50%, 8/01/25,
value $3,497,660) (c) 5.53 3,400,000
PAINEWEBBER, INC.
2,800 5.58%, dated 11/25/97,
due 12/03/97
in the amount of $2,803,472
(cost $2,800,000;
collateralized by $2,866,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 9/01/27,
value $2,872,292) (c) 5.58 2,800,000
PRUDENTIAL SECURITIES, INC.
6,000 5.53%, dated 11/24/97,
due 12/01/97
in the amount of $6,006,452
(cost $6,000,000;
collateralized by $6,255,000
Federal National Mortgage Assn.,
6.50%, 9/01/12,
value $6,148,492) (c) 5.53 6,000,000
SBC WARBURG, INC.
2,700 5.54%, dated 11/07/97,
due 12/11/97
in the amount of $2,714,127
(cost $2,700,000;
collateralized by $4,494,000
Federal National Mortgage Assn.,
6.50%, 9/01/08,
value $2,780,480) (c) 5.54 2,700,000
SBC WARBURG, INC.
3,400 5.58%, dated 11/24/97,
due 12/03/97
in the amount of $3,404,743
(cost $3,400,000;
collateralized by $3,628,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 11/01/26,
value $3,485,343) (c) 5.58 3,400,000
SMITH BARNEY, INC.
1,800 5.55%, dated 11/03/97,
due 12/04/97
in the amount of $1,808,603
(cost $1,800,000;
collateralized by $1,950,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 12/01/26,
value $1,875,546) (c) 5.55 1,800,000
SMITH BARNEY, INC.
4,200 5.56%, dated 10/24/97,
due 12/23/97
in the amount of $4,238,920
(cost $4,200,000;
collateralized by $4,475,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 12/01/26,
value $4,304,137) (c) 5.56 4,200,000
UBS SECURITIES, INC.
2,000 5.52% dated 11/24/97,
due 12/01/97
in the amount of $2,002,147
(cost $2,000,000;
collateralized by $2,087,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 8/01/27,
value $2,088,210) (c) 5.52 2,000,000
13
STATEMENT OF NET ASSETS (CONTINUED)
ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
UBS SECURITIES, INC.
$ 4,000 5.55%, dated 10/27/97, due 12/26/97
in the amount of $4,037,000
(cost $4,000,000;
collateralized by $4,173,000
Federal Home Loan
Mortgage Corp - Gold.,
7.00%, 9/01/27,
value $4,183,770) (c) 5.55% $ 4,000,000
Total Repurchase Agreements
(amortized cost $82,100,000) 82,100,000
TOTAL INVESTMENTS-101.0%
(amortized cost $125,124,741) $125,124,741
Other assets less liabilities-(1.0%) (1,258,167)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
123,866,387 shares outstanding) $123,866,574
# All securities either mature or their interest rate changes in 397 days or
less.
(a) 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.
(b) Securities issued in reliance on section (4) 2 or Rule 144A of the
Securities Act of 1933. Rule 144A Securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. These
securities have been determined by the Adviser to be liquid pursuant to
procedures adopted by the Trustees. At November 30, 1997, these securities
amounted to $1,501,282,014 representing 45.5% of net assets on the Prime
Portfolio.
(c) Repurchase agreements which are terminable within 7 days.
Glossary of Terms:
AMBAC American Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
COP Certificate of Participation
FRN Floating Rate Note
GO General Obligation
HFA Housing Finance Agency/Authority
IDA Industrial Development Agency/Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
SWR Solid Waste Revenue
TRAN Tax & Revenue Anticipation Note
See notes to financial statements.
14
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997 ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- -----------
INVESTMENT INCOME
Interest $5,346,650 $173,672,798 $6,226,273
EXPENSES
Advisory fee (Note B) 691,369 15,372,661 561,629
Distribution assistance fee (Note C) 622,230 13,835,394 505,467
Registration fees 117,391 943,700 110,753
Custodian fees 106,491 328,453 109,479
Administrative fee (Note C) 69,138 1,537,267 56,162
Printing 17,151 393,737 12,706
Organization 14,600 14,965 14,600
Audit and legal fees 13,535 40,240 22,783
Trustees' fees 7,182 7,182 7,182
Miscellaneous 8,815 39,820 8,806
Total expenses 1,667,902 32,513,419 1,409,567
Less: fee waiver and reimbursement (285,165) (1,768,097) (286,313)
Net expenses 1,382,737 30,745,322 1,123,254
Net investment income 3,963,913 142,927,476 5,103,019
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investment transactions (15) 25,953 10
NET INCREASE IN NET ASSETS FROM
OPERATIONS $3,963,898 $142,953,429 $5,103,029
See notes to financial statements.
15
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- -------------------------------- ----------------------------
DECEMBER 13, DECEMBER 29, DECEMBER 29,
1995(A) 1995(A) 1995(A)
YEAR ENDED TO YEAR ENDED TO YEAR ENDED TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996 1997 1996
------------- ------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 3,963,913 $ 2,760,398 $ 142,927,476 $ 93,805,221 $ 5,103,019 $ 3,671,687
Net realized gain (loss) on
investment transactions (15) 615 25,953 775 10 177
Net increase in net assets
from operations 3,963,898 2,761,013 142,953,429 93,805,996 5,103,029 3,671,864
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,963,913) (2,760,398) (142,927,476) (93,805,221) (5,103,019) (3,671,687)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST (Note E)
Net increase 13,871,990 123,452,463 526,103,101 2,771,737,569 23,558,311 100,274,743
Total increase 13,871,975 123,453,078 526,129,054 2,771,738,344 23,558,321 100,274,920
NET ASSETS
Beginning of period 123,486,411 33,333 2,771,771,678 33,334 100,308,253 33,333
End of period $137,358,386 $123,486,411 $3,297,900,732 $2,771,771,678 $123,866,574 $100,308,253
</TABLE>
(a) Commencement of operations.
See notes of financial statements.
16
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 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 financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. 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 straight-line 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 year ended November 30, 1997 from the
General Municipal Portfolio are exempt from federal income taxes. However,
certain shareholders may be subject to the alternative minimum tax (AMT).
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from investment
transactions is recorded on the identified cost basis.
6. REPURCHASE AGREEMENTS
It is the Fund's policy to take possession of securities as collateral under
repurchase agreements and to determine on a daily basis that the value of such
securities are sufficient to cover the value of the repurchase agreements.
NOTE B: ADVISORY FEE AND 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 each Portfolio 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 year ended
November 30, 1997 for General Municipal Portfolio, Prime Portfolio and
Government Portfolio, the Adviser reimbursed $247,578, $923,957 and $255,475,
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 or for out of pocket expenses.
17
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 year ended November 30, 1997 for General Municipal Portfolio, Prime
Portfolio and Government Portfolio, the Portfolios paid fees of $622,230,
$13,835,394 and $505,467, 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
year ended November 30, 1997, the General Municipal Portfolio incurred fees of
$69,138 of which $37,587 was waived, the Prime Portfolio incurred fees of
$1,537,267 of which $844,140 was waived and the Government Portfolio incurred
fees of $56,162 of which $30,838 was waived.
NOTE D: INVESTMENT TRANSACTIONS
At November 30, 1997, the cost of portfolio securities for federal income tax
purposes was the same as the cost for financial reporting purposes.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At November 30,
1997, capital paid-in aggregated $137,357,786, $3,297,874,004 and $123,866,387
for the General Municipal Portfolio, Prime Portfolio and Government Portfolio,
respectively. Transactions, all at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- --------------------------------- ----------------------------
DECEMBER 13, DECEMBER 29, DECEMBER 29,
1995(A) 1995(A) 1995(A)
YEAR ENDED TO YEAR ENDED TO YEAR ENDED TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996 1997 1996
------------- ------------- ---------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 536,421,356 494,868,947 15,146,343,094 11,085,409,424 485,426,533 372,258,638
Shares issued on
reinvestments of
dividends 3,963,913 2,760,398 142,927,476 93,805,221 5,103,019 3,671,687
Shares redeemed (526,513,279) (374,176,882) (14,763,167,469) (8,407,477,076) (466,971,241) (275,655,582)
Net increase 13,871,990 123,452,463 526,103,101 2,771,737,569 23,558,311 100,274,743
</TABLE>
(a) Commencement of operations.
18
FINANCIAL HIGHLIGHTS ALLIANCE MONEY MARKET FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GENERAL
MUNICIPAL PRIME GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
DECEMBER 13, DECEMBER 29, DECEMBER 29,
1995(A) 1995(A) 1995(A)
YEAR ENDED TO YEAR ENDED TO YEAR ENDED TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 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.
19
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, 1997
and the related statements of operations, changes in net assets, and financial
highlights for the periods indicated in the accompanying financial statements.
These financial statements and financial highlights are the responsibility of
the 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, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Money Market Fund - General, Prime, and Government Portfolios as of
November 30, 1997, 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
December 18, 1997
20
<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.AK8
<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.AK8
<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 as of
November 30, 1997
Statement of Operations for year ended
November 30, 1997
Statement of Changes in Net Assets for period
December 13, 1995****** to November 30, 1996 for
General Municipal Portfolio and for year ended
November 30, 1997,
December 29, 1995******* to November 30, 1996 for
Prime and Government Portfolios and for year ended
November 30, 1997
Notes to Financial Statements - November 30, 1997
Included in Part C of the Registration Statement
All other schedules are omitted as the required
information is inapplicable
(b) Exhibits
( 1) Restated and Amended Declaration of Trust of
the Registrant dated February 22, 1995 -
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) 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.
( 3) Not applicable.
_________________________
****** Commencement of operations.
*******Commencement of operations.
C-1
<PAGE>
( 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) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Filed
herewith.
( 6) Amended Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Filed herewith.
( 7) Not applicable.
( 8) Custodian Contract between the Registrant and
The Bank of New York - Filed herewith.
( 9)(a) Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc. -
Filed herewith.
(b) Administration Agreement between the Registrant
and ADP Financial Information Services, Inc. -
Filed herewith.
(c) Fund Accounting Agreement between the
Registrant and The Bank of New York -. Filed
herewith.
(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
C-2
<PAGE>
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 - Filed herewith.
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 - Incorporated by reference to Other
Exhibits to Post-Effective Amendment No. 2 of the
Registrant's Form N-1A, filed March 28, 1997.
Powers of Attorney of Richard S. Borisoff, John D.
Carifa, Jeffrey M. Cole, Richard J. Daly, William H.
Foulk, Jr., Arthur S. Kranseler, Robert A. Lewis,
Clifford L. Michel, Peter Quick, William Rhoads III,
Richard R. Stumm and Ronald M. Whitehill - Filed
herewith.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of March 16, 1998, 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.
C-3
<PAGE>
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
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
C-4
<PAGE>
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
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.
C-5
<PAGE>
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 Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance International Fund
Alliance International Premier Growth Fund,
Inc.
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.
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.
C-6
<PAGE>
Positions and Offices Positions and Offices
Name With Underwriter With Registrant
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary
Karen J. Bullot Senior Vice President
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart 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
Mark J. Dunbar Senior Vice President
Bradley F. Hanson Senior Vice President
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial Officer
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Robert E. Powers Senior Vice President
Richard K. Sacculo Senior Vice President
Gregory K. Shannahan Senior Vice President
C-7
<PAGE>
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
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Michael E. Brannan Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
John C. Endahl Vice President
Sohaila S. Farsheed Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President
& Controller
Andrew L. Gangolf Vice President
and Assistant
General Counsel
Mark D. Gersten Vice President Treasurer and
Chief Financial
Officer
Joseph W. Gibson Vice President
C-8
<PAGE>
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Scott F. Heyer Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Shawn P. McClain Vice President
Thomas F. Monnerat Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
James J. Posch Vice President
Domenick Pugliese Vice President Assistant
and Assistant Secretary
General Counsel
Bruce W. Reitz Vice President
C-9
<PAGE>
Karen C. Satterberg Vice President
Robert C. Schultz Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Teris A. Sinclair Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
William C. White Vice President
Emilie D. Wrapp Vice President Assistant
and Special Counsel Secretary
Michael W. Alexander Assistant Vice
President
Richard J. Appaluccio Assistant Vice
President
Charles M. Barrett Assistant Vice
President
Robert F. Brendli Assistant Vice
President
Maria L. Carreras Assistant Vice
President
John P. Chase Assistant Vice
President
Russell R. Corby Assistant Vice
President
John W. Cronin Assistant Vice
President
C-10
<PAGE>
Terri J. Daly Assistant Vice
President
Joseph A. DiMeglio Assistant Vice
President
Faith C. Dunn Assistant Vice
President
John E. English Assistant Vice
President
Duff C. Ferguson Assistant Vice
President
John Grambone Assistant Vice
President
Brian S. Hanigan Assistant Vice
President
James J. Hill Assistant Vice
President
Edward W. Kelly Assistant Vice
President
Michael Laino Assistant Vice
President
Nicholas J. Lapi Assistant Vice
President
Kristine J. Luisi Assistant Vice
President
Patrick Look Assistant Vice President
& Assistant Treasurer
Richard F. Meier Assistant Vice
President
Richard J. Olszewski Assistant Vice
President
Catherine N. Peterson Assistant Vice
President
C-11
<PAGE>
Carol H. Rappa Assistant Vice
President
Clara Sierra Assistant Vice
President
Gayle S. Stamer Assistant Vice
President
Vincent T. Strangio Assistant Vice
President
Wesley S. Williams Assistant Vice
President
Christopher J. Zingaro 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 furnish each person to whom a
prospectus is delivered with a copy of Registrant's
latest report to shareholders, upon request and without
charge.
C-12
<PAGE>
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-13
<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 30th day of March 1998.
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 30, 1998
______________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/Mark D. Gersten Treasurer and Chief March 30, 1998
______________________ Financial Officer
Mark D. Gersten
C-14
<PAGE>
3) All of the Trustees
Richard S. Borisoff Robert A. Lewis
John D. Carifa Clifford L. Michel
Jeffrey M. Cole Peter Quick
Richard J. Daly William L. Rhoads III
William H. Foulk, Jr. Richard R. Stumm
Arthur S. Kranseler Ronald M. Whitehill
by /s/Edmund P. Bergan, Jr. March 30, 1998
___________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-15
<PAGE>
Index to Exhibits
Page
(5) Advisory Agreement
(6) Amended Distribution Agreement
(8) Custodian Agreement
(9)a Transfer Agency Agreement
(9)b Administration Agreement
(9)c Fund Accounting Agreement
(11) Consent of Independent Auditors
(16) Schedule of Computation of Performance Quotation
(27) Financial Data Schedule
Other Exhibits
Power of Attorney
Richard S. Borisoff
John D. Carifa
Jeffrey M. Cole
Richard J. Daly
William H. Foulk, Jr.
Arthur S. Kranseler
Robert A. Lewis
Clifford L. Michel
Peter Quick
William Rhoads III
Richard R. Stumm
Ronald M. Whitehill
C-16
00250132.AK8
<PAGE>
ADVISORY AGREEMENT
ALLIANCE MONEY MARKET FUND
1345 Avenue of the Americas
New York, New York 10105
March 16, 1995
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We are an open-end, diversified management
investment company registered under the Investment Company Act of
1940 (the "Act"). We are currently authorized to issue one class
of shares and our Trustees are authorized to reclassify and issue
any unissued shares to any number of additional classes or series
(Portfolios) each having its own investment objective, policies
and restrictions, all as more fully described in the Prospectus
and Statement of Additional Information constituting a part of
the Registration Statement filed on our behalf under the
Securities Act of 1933 and the Act. We are engaged in the
business of investing and reinvesting our assets in securities of
the type and in accordance with the limitations specified in our
Declaration of Trust, By-Laws, Registration Statements filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and the Act, and any representations made in our
Prospectus and Statement of Additional Information, all in such
manner and to such extent as may from time to time be authorized
by our Trustees. We enclose copies of the documents listed above
and will from time to time furnish you with any amendments
thereof.
2. (a) We hereby employ you to manage the investment
and reinvestment of the assets in each of our Portfolios as above
specified, and, without limiting the generality of the foregoing,
to provide management and other services specified below.
(b) You will make decisions with respect to all
purchases and sales of securities in each of our Portfolios. To
carry out such decisions, you are hereby authorized, as our agent
and attorney in fact, for our account and at our risk and in our
<PAGE>
name, to place orders for the investment and reinvestment of our
assets. In all purchases, sales and other transactions in
securities in each of our Portfolios you are authorized to
exercise full discretion and act for us in the same manner and
with the same force and effect as we might or could do with
respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to
the furtherance or conduct of such purchases, sales or other
transactions.
(c) You will report to our Trustees at each meeting
thereof all changes in each Portfolio since the prior report, and
will also keep us in touch with important developments affecting
any Portfolio and on your own initiative will furnish us from
time to time with such information as you may believe appropriate
for this purpose, whether concerning the individual banks or
other companies whose securities are included in our Portfolios,
the banking or other industries in which they engage, or the
conditions prevailing in the money market or the economy
generally. You will also furnish us with such statistical and
analytical information with respect to securities in each of our
Portfolios as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of securities in
each of our Portfolios, you will bear in mind the policies set
from time to time by our Trustees as well as the limitations
imposed by our Declaration of Trust and in our Registration
Statements under the Act and the Securities Act of 1933, the
limitations in the Act and of the Internal Revenue Code in
respect of regulated investment companies and the investment
objective, policies and restrictions for each of our Portfolios.
(d) It is understood that you will from time to
time employ or associate with yourselves such persons as you
believe to be particularly fitted to assist you in the execution
of your duties hereunder, the cost of performance of such duties
to be borne and paid by you. No obligation may be incurred on
our behalf in any such respect. During the continuance of this
agreement at our request you will provide to us persons
satisfactory to our Trustees to serve as our officers. You or
your affiliates will also provide persons, who may be our
officers, to render such clerical, accounting, administrative and
other services to us as we may from time to time request of you.
Such personnel may be employees of you or your affiliates. We
may, if so requested by you, pay to you or your affiliates the
cost of such personnel for rendering such services to us at such
rates as shall from time to time be agreed upon between us,
provided that all time devoted to the investment or reinvestment
of securities in each of our Portfolios or to the promotion of
the sale of our shares shall be for your account. Nothing
contained herein shall be construed to restrict our right to hire
our own employees or to contract for services to be performed by
2
<PAGE>
third parties. Furthermore, you or your affiliates (other than
us) shall furnish us without charge with such administrative and
management supervision and assistance and such office facilities
as you may believe appropriate or as we may reasonably request
subject to the requirements of any regulatory authority to which
you may be subject. You or your affiliates (other than us) shall
also be responsible for the payment of any expenses incurred in
promoting the sale of our shares (other than the portion of the
promotional expenses to be borne by us in accordance with an
effective plan pursuant to Rule 12b-1 under the Act and the costs
of printing our prospectuses and other reports to shareholders
and fees related to registration with the Securities and Exchange
Commission and with state regulatory authorities).
3. We hereby confirm that, subject to the foregoing,
we shall be responsible and hereby assume the obligation for
payment of all our other expenses, including: (a) payment of the
fee payable to you under paragraph 5 hereof; (b) custody,
transfer, and dividend disbursing expenses; (c) fees of trustees
who are not your affiliated persons; (d) legal and auditing
expenses; (e) clerical, accounting, administrative, and other
office costs; (f) the cost of personnel providing services to us,
as provided in subparagraph (d) of paragraph 2 above, as
applicable; (g) costs of printing our prospectuses and
shareholder reports; (h) expenses and fees related to
registration and filing with the Securities and Exchange
Commission and with state regulatory authorities; and (i) such
promotional expenses as may be contemplated by an effective plan
pursuant to Rule 12b-1 under the Act; provided, however, that our
payment of such promotional expenses shall be in the amounts, and
in accordance with the procedures, set forth in such plan.
4. We shall expect of you, and you will give us the
benefit of, your best judgment and efforts in rendering these
services to us, and we agree as an inducement to your undertaking
these services that you shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack
of good faith, provided that nothing herein shall be deemed to
protect, or purport to protect, you against any liability to us
or to our security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
5. In consideration of the foregoing we will pay you a
fee for each Portfolio at the annual rate of .50 of 1% of that
Portfolio's average daily net assets. Such fee shall be accrued
by us daily and shall be payable in arrears on the last day of
each calendar month for services performed hereunder during such
month. Your reimbursement, if any, of our expenses, as provided
3
<PAGE>
in paragraph 3 hereof, shall be estimated and paid to us monthly
in arrears, at the same time as our payment to you for such
month.
6. This agreement shall become effective on the date
hereof and shall remain in effect until February 28, 1997 and
thereafter for successive twelve-month periods (computed from
each March 1), with respect to each Portfolio provided that such
continuance is specifically approved at least annually by our
Trustees or by majority vote of the holders of the outstanding
voting securities (as defined in the Act) of such Portfolio, and,
in either case, by a majority of our trustees who are not parties
to this agreement or interested persons, as defined in the Act,
of any such party (other than as trustees of our Trust) provided
further, however, that if the continuation of this agreement is
not approved as to a Portfolio, you may continue to render to
such Portfolio the services described herein in the manner and to
the extent permitted by the Act and the rules and regulations
thereunder. Upon the effectiveness of this agreement, it shall
supersede all previous agreements between us covering the subject
matter hereof. This agreement may be terminated with respect to
any Portfolio at any time, without the payment of any penalty, by
vote of a majority of the outstanding voting securities (as so
defined) of such Portfolio, or by a vote of a majority of our
Trustees on sixty days' written notice to you, or by you with
respect to any Portfolio on sixty days' written notice to us.
7. This agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge by you. The
terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing
law and any interpretation thereof contained in rules or
regulations promulgated by the Securities and Exchange Commission
thereunder.
8. (a) Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your employees,
officers, or any of the Directors of Alliance Capital Management
Corporation, general partner, or employees who may also be a
trustee, officer or employee of ours, or persons otherwise
affiliated with us (within the meaning of the Act) to engage in
any other business or to devote time and attention to the
management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind
to any other trust, corporation, firm, individual or association.
(b) You will notify us of any change in the general
partners of your partnership within a reasonable time after such
change.
4
<PAGE>
9. Notice is hereby given that this agreement is
entered into on our behalf by an officer of our Trust in his
capacity as an officer and not individually and that the
obligations of or arising out of this agreement are not binding
upon any of our Trustees, officers, shareholders, employees or
agents individually but are binding only upon the assets and
property of our Trust.
10. If you cease to act as our investment adviser, or,
in any event, if you so request in writing, we agree to take all
necessary action to change our name to a name not including the
term "Alliance." You may from time to time make available
without charge to us for our use such marks or symbols owned by
you, including marks or symbols containing the term "Alliance" or
any variation thereof, as you may consider appropriate. Any such
marks or symbols so made available will remain your property and
you shall have the right, upon notice in writing, to require us
to cease the use of such mark or symbol at any time.
If the foregoing is in accordance with your
understanding, you will kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE MONEY MARKET FUND
By /s/ Ronald M. Whitehill
__________________________
Ronald M. Whitehill
President
Accepted: As of March 16, 1995
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT CORPORATION,
general partner
By /s/ John D. Carifa
____________________
John D. Carifa
President &
Chief Operating Officer
5
00250217.AK1
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
ALLIANCE MONEY MARKET FUND
1345 Avenue of the Americas
New York, New York 10105
March 16, 1995
as amended
November 5, 1997
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, on the terms and conditions set
forth herein, we have agreed that you shall be, for the period of
this Distribution Services Agreement (the "Agreement"), a
distributor, as our agent, for the unsold portion of such number
of shares of beneficial interest of our Trust (without par value)
(the "Trust Shares") as may from time to time be effectively
registered under the Securities Act of 1933, as amended (the
"Act").
1. We hereby agree to offer through you as our agent,
and to solicit, through you as our agent, offers to subscribe to,
the unsold balance of the Trust Shares as shall then be
effectively registered under the Act, and you are appointed our
agent for such purpose. All subscriptions for Trust Shares
obtained by you shall be directed to us for acceptance and shall
not be binding on us until accepted by us. You shall have no
authority to make binding subscriptions on our behalf. We
reserve the right to sell Trust Shares through other distributors
or directly to investors through subscriptions received by us at
our principal office in New York, New York. The right given to
you under this agreement shall not apply to Trust Shares issued
in connection with (a) the merger or consolidation of any other
investment company with us, (b) our acquisition by purchase or
otherwise of all or substantially all of the assets or stock of
any other investment company or (c) the reinvestment in Trust
Shares by our shareholders of dividends or other distributions or
any other offering of shares to our shareholders.
2. You will use your best efforts to obtain
subscriptions to Trust Shares upon the terms and conditions
contained herein and in the then current Prospectus and Statement
of Additional Information, including the offering price. You
will send to us promptly all subscriptions placed with you. We
<PAGE>
shall advise you of the approximate net asset value per share or
net asset value per share (as used in the Prospectus and
Statement of Additional Information) on any date requested by you
and at such other times as it shall have been determined by us.
We shall furnish you from time to time, for use in connection
with the offering of Trust Shares, such other information with
respect to us and the Trust Shares as you may reasonably request.
We shall supply you with such copies of our current Prospectus
and Statement of Additional Information in effect from time to
time as you may request. You are not authorized to give any
information or to make any representations, other than those
contained in the Registration Statement, Prospectus and Statement
of Additional Information, as then in effect, filed under the Act
covering Trust Shares or which we may authorize in writing. You
may use employees and agents at your cost and expense to assist
you in carrying out your obligations hereunder but no such
employee or agent shall be deemed to be our agent or have any
rights under this agreement.
3. We reserve the right to suspend the offering of
Trust Shares at any time, in the absolute discretion of our Board
of Trustees, and upon notice of such suspension you shall cease
to offer Trust Shares hereunder.
4. Both of us will cooperate with each other in taking
such action as may be necessary to qualify Trust Shares for sale
under the securities laws of such states as we may designate.
Pursuant to our Advisory Agreement dated March 16, 1995 with
Alliance Capital Management L.P. (the "Adviser"), we will pay all
fees and expenses of registering Trust Shares under the Act and
of qualification of Trust Shares and our qualification under
applicable state securities laws. You shall pay all expenses
relating to your broker-dealer qualification.
5. It is understood that paragraphs 5, 10 and 13
hereof constitute a plan of distribution (the "Plan") within the
meaning of Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "1940
Act") and is a part of this Agreement. The material aspects of
the Plan are as follows:
(a) The Trust will pay to the you each month a
distribution services fee with respect to each Portfolio of the
Trust ("Portfolio") which will not exceed, on an annualized
basis, .45 of 1% of the Trust's average daily net assets. You
will use the entire amount so received from the Trust (i) to make
payments to you to compensate broker-dealers or other persons for
providing distribution assistance, (ii) to make payments to
compensate banks and other institutions for providing
administrative and accounting services with respect to Trust
shareholders and (iii) to otherwise promote the sale of shares of
2
<PAGE>
the Trust, including paying for the preparation, printing and
distribution of prospectuses and sales literature or other
promotional activities.
(b) The Adviser will as long as the Plan is in effect
make similar payments to you for distribution services performed
by you and for distribution assistance provided by broker-dealers
or other persons as described above and to banks or other
institutions for administrative and accounting services. These
payments will be made by the Adviser from its own resources,
which may include the management fee it receives from the Trust.
The Adviser may in its sole discretion increase or decrease the
amount of distribution assistance payments.
(c) Payments for distribution assistance or
administrative and accounting services are subject to the terms
and conditions of the written agreements between each broker-
dealer or other person and you. Such agreements will be in a
form satisfactory to the Trustees of the Trust.
(d) The Treasurer of the Trust will prepare and furnish
to the Trustees of the Trust at least quarterly a written report
complying with the requirements of Rule 12b-1 setting forth all
amounts expended under the Plan and the purposes for which such
expenditures were made.
(e) The Trust is not obligated to pay any distribution
expense in excess of the distribution services fee described in
subparagraph (a) hereof and any expenses of distribution of the
Trust's shares accrued by the Adviser or you in one fiscal year
of the Trust may not be paid from distribution services fees
received from the Trust in subsequent fiscal years of the Trust.
Distribution services fees received from the Trust also will not
be used to pay any interest expense, carrying charges or other
financing costs, or allocation of overhead.
(f) All agreements with any persons relating to the
implementation of the Plan will be subject to termination,
without penalty, upon not more than sixty days' written notice,
pursuant to the provisions of paragraph 10 hereof.
(g) Neither the Adviser nor you are not obligated by
the Plan to execute agreements with qualifying banks, broker-
dealers or other persons and any termination of an agreement with
a particular financial intermediary under the Plan will have no
effect on similar agreements between the Adviser or you and other
participating banks, broker-dealers or other persons pursuant to
the Plan.
6. We represent to you that our Registration
Statement, Prospectus and Statement of Additional Information (as
3
<PAGE>
in effect from time to time) under the Act have been or will be,
as the case may be, carefully prepared in conformity with the
requirements of the Act and the rules and regulations of the
Securities and Exchange Commission thereunder. We represent and
warrant to you that our Registration Statement, Prospectus and
Statement of Additional Information contain or will contain all
statements required to be stated therein in accordance with the
Act and the rules and regulations of said Commission, and that
all statements of fact contained or to be contained therein are
or will be true and correct at the time indicated or the
effective date as the case may be; that none of our Registration
Statement, our Prospectus or our Statement of Additional
Information, when it shall become effective or be authorized for
use, will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a
purchaser of Trust Shares. We will from time to time file such
amendment or amendments to our Registration Statement, Prospectus
and Statement of Additional Information as, in the light of
future developments, shall, in the opinion of our counsel, be
necessary in order to have our Registration Statement, Prospectus
and Statement of Additional Information at all times contain all
material facts required to be stated therein or necessary to make
any statements therein not misleading to a purchaser of Trust
Shares, but, if we shall not file such amendment or amendments
within fifteen days after receipt by us of a written request from
you to do so, you may, at your option, terminate this Agreement
immediately. We shall not file any amendment to our Registration
Statement, Prospectus or Statement of Additional Information
without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement contained shall
in any way limit our right to file at any such time such
amendments to our Registration Statement, Prospectus or Statement
of Additional Information, of whatever character, as we may deem
advisable, such right being in all respects absolute and
unconditional. We represent and warrant to you that any
amendment to our Registration Statement, Prospectus or Statement
of Additional Information hereafter filed by us will, when it
becomes effective, contain all statements required to be stated
therein in accordance with the Act and the rules and regulations
of said Commission, that all statements of fact contained therein
will, when the same shall become effective, be true and correct
and that no such amendment, when it becomes effective, will
include an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of
Trust Shares.
7. We agree to indemnify, defend and hold you, and any
person who controls you within the meaning of Section 15 of the
Act, free and harmless from and against any and all claims,
4
<PAGE>
demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith)
which you or any such controlling person may incur, under the
Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in
our Registration Statement, Prospectus or Statement of Additional
Information in effect from time to time under the Act or arising
out of or based upon any alleged omission to state a material
fact required to be stated in either thereof or necessary to make
the statements in either thereof not misleading; provided,
however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence, in
the performance of your duties, or by reason of your reckless
disregard of your obligations and duties under this agreement.
Our agreement to indemnify you and any such controlling person as
aforesaid is expressly conditioned upon our being notified of any
action brought against you or any such controlling person, such
notification to be given by letter or by telegram addressed to us
at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days
after the summons or other first legal process shall have been
served. The failure to so notify us of any such action shall not
relieve us from any liability which we may have to the person
against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of our
indemnity agreement contained in this paragraph 7. We will be
entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the
defense of any suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of
them; but in case we do not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by us,
we will reimburse you or the controlling person or persons named
as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. Our
indemnification agreement contained in this paragraph 7 and our
representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of you or any controlling
person and shall survive the sale of any of Trust Shares made
pursuant to subscriptions obtained by you. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your successors and assigns, and to the benefit of any
controlling persons and their successors and assigns. We agree
promptly to notify you of the commencement of any litigation or
5
<PAGE>
processing against us in connection with the issue and sale of
any Trust Shares.
8. You agree to indemnify, defend and hold us, our
several officers and trustees, and any person who controls us
within the meaning of Section 15 of the Act, free and harmless
from and against any and all claims, demands, liabilities, and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or
trustees, or any such controlling person may incur under the Act
or under common law or otherwise, but only to the extent that
such liability, or expense incurred by us, our officers or
trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished
in writing by you to us for use in our Registration Statement or
Prospectus in effect from time to time under the Act, or shall
arise out of or be based upon any alleged omission to state a
material fact in connection with such information required to be
stated in the Registration Statement or Prospectus or necessary
to make such information not misleading. Your agreement to
indemnify us, our officers and trustees, and any such controlling
person as aforesaid is expressly conditioned upon you being
notified of any action brought against us, our officers or
trustees or any such controlling person, such notification to be
given by letter or telegram addressed to you at your principal
office in New York, New York, and sent to you by the person
against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. You
shall have a right to control the defense of such action, with
counsel of your own choosing, satisfactory to us, if such action
is based solely upon such alleged misstatement or omission on
your part, and in any other event you and we, our officers or
trustees or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any
such action. The failure to so notify you of any such action
shall not relieve you from any liability which you may have to
us, to our officers or trustees, or to such controlling person by
reason of any such untrue statement or omission on your part
otherwise than on account of your indemnity agreement contained
in this paragraph 8.
9. We agree to advise you immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to our Registration Statement or
Prospectus or for additional information,
(b) In the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
6
<PAGE>
effectiveness of our Registration Statement or Prospectus or the
initiation of any proceedings for that purpose,
(c) of the happening of any material event which makes
untrue any statement made in our Registration Statement or
Prospectus or which requires the making of a change in either
thereof in order to make the statements therein not misleading,
and
(d) of all action of the Securities and Exchange
Commission with respect to any amendments to our Registration
Statement or Prospectus which may from time to time be filed with
the Securities and Exchange Commission under the Act.
10. (a) This agreement shall become effective in
respect of each Portfolio of the Trust on the date hereof, shall
remain in effect until February 28, 19986, and shall continue in
effect thereafter for successive twelve-month periods (computed
from each March 1); provided, however, that such continuance is
specifically approved at least annually by the Trustees of the
Trust or by majority vote of the holders of the outstanding
voting securities (as defined in the 1940 Act) of the relevant
Portfolio of the Trust, and, in either case, by a majority of the
Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party
(other than as Trustees of the Trust) and who have no direct or
indirect financial interest in the operation of the Plan or any
agreement related thereto. Upon the effectiveness of this
Agreement, it shall supersede all previous agreements between the
parties hereto covering the subject matter hereof. This
Agreement may be terminated in respect of a Portfolio of the
Trust (i) by the Trust at any time, without the payment of any
penalty, by the vote of a majority of the outstanding voting
securities (as so defined) of such Portfolio, or by a vote of a
majority of the Trustees of the Trust who are not interested
persons (as defined in the 1940 Act) of the Trust and have no
direct or indirect financial interest in the operation of the
Plan or any agreement related thereto, in either event on sixty
days written notice to you; provided, however, that no such
notice shall be required if such termination is stated by the
Trust to relate only to paragraphs 5 and 13 hereof (in which
event paragraphs 5 and 13 shall be deemed to have been severed
rherefrom and all other provisions of this Agreement shall
continue in full force and effect), or (ii) by you on sixty days
written notice to the Trust.
(b) This Agreement may be amended at any time with the
approval of the Trustees of the Trust; provided, however, that
(i) any material amendments of the terms hereof will become
effective with respect to a Portfolio only upon approval as
provided in the first proviso of paragraph 10(a) hereof, and
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<PAGE>
(ii) any amendment to increase materially the amount to be
expended by a Portfolio for distribution assistance,
administrative and accounting services and other activities
designed to promote the sale of shares of such Portfolio
hereunder will be effective with respect to a Portfolio only upon
the additional approval by a vote of a majority of the
outstanding voting securities of such Portfolio as defined in the
1940 Act.
11. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
Agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission thereunder.
12. Except to the extent necessary to perform your
obligation hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your officers,
directors or employees who may also be a trustee, officer or
employee of ours, to engage in any other business or to devote
time and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm,
individual or association.
13. While the Plan is in effect, the selection and
nomination of the trustees who are not "interested persons" of
the Trust (as defined in the 1940 Act) will be committed to the
discretion of such disinterested trustees.
14. Notice is hereby given that this Agreement is
entered into on our behalf by an officer of our Trust in his
capacity as an officer and not individually and that the
obligations of or arising out of this Agreement are not binding
upon any of our Trustees, officers, shareholders, employees or
agents individually but are binding only upon the assets and
property of our Trust.
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If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
Alliance Money Market Fund
By /s/Ronald M. Whitehill
_______________________
Ronald M. Whitehill
President
Accepted: March 16, 1995, as amended
November 5, 1997
Alliance Fund Distributors, Inc.
By /s/ Edmund P. Bergan, Jr.
__________________________
Edmund P. Bergan, Jr.
Senior Vice President
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
general partner
By /s/ John D. Carifa
_______________________
John D. Carifa
President &
Chief Operating Officer
9
00250217.AK0
<PAGE>
CUSTODY AGREEMENT
Agreement made as of this 16th day of March, 1995,
between ALLIANCE MONEY MARKET FUND, a Massachusetts business
trust organized and existing under the laws of the Commonwealth
of Massachusetts, having its principal office and place of
business at 1345 Avenue of the Americas, New York, New York 10105
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New
York corporation authorized to do a banking business, having its
principal office and place of business at 48 Wall Street, New
York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and federal
agency securities, its successor or successors and its nominee or
nominees.
2. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the
specified underlying Securities.
3. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually received
by the Custodian and signed on behalf of the Fund by any two
Officers, and the term Certificate shall also include
instructions by the Fund to the Custodian communicated by a
Terminal Link.
4. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of O.C.C. and a
member of a national securities exchange qualified to act as a
<PAGE>
custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.
5. "Collateral Account" shall mean a segregated
account so denominated which is specifically allocated to a
Series and pledged to the Custodian as security for, and in
consideration of, the Custodian's issuance of (a) any Put Option
guarantee letter or similar document described in paragraph 8 of
Article V herein, or (b) any receipt described in Article V or
VIII herein.
6. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the
writer thereof the specified underlying Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
7. "Depository" shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities
and Exchange Commission, its successor or successors and its
nominee or nominees. The term "Depository" shall further mean
and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identified
in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the
Custodian.
8. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.
9. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
10. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
11. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant, or a
Clearing Member, or in the name of the Fund for the benefit of a
broker, dealer, futures commission merchant, or Clearing Member,
or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant
or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
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<PAGE>
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may
from time to time determine. Securities held in the Book-Entry
System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
12. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements, debt
obligations issued or guaranteed as to interest and principal by
the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers'
acceptances, repurchase agreements with respect to the same and
bank time deposits, where the purchase and sale of such
securities normally requires settlement in federal funds on the
same day as such purchase or sale.
13. "O.C.C." shall mean the Options Clearing
Corporation, a clearing agency registered under Section 17A of
the Securities Exchange Act of 1934, its successor or successors,
and its nominee or nominees.
14. "Officers" shall be deemed to include the
President, any Vice President, the Secretary, the Clerk, the
Treasurer, the Controller, any Assistant Secretary, any Assistant
Clerk, any Assistant Treasurer, and any other person or persons,
whether or not any such other person is an officer of the Fund,
duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on
behalf of the Fund and listed in the Certificate annexed hereto
as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
15. "Option" shall mean a Call Option, Covered Call
Option, Stock Index Option and/or a Put Option.
16. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Officer or from a
person reasonably believed by the Custodian to be an Officer.
17. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.
18. "Reverse Repurchase Agreement" shall mean an
agreement pursuant to which the Fund sells Securities and agrees
3
<PAGE>
to repurchase such Securities at a described or specified date
and price.
19. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stocks and other securities having characteristics similar to
common stocks, preferred stocks, debt obligations issued by state
or municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds,
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe for
the same, or evidencing or representing any other rights or
interest therein, or any property or assets.
20. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the terms
of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities
and/or other assets of the Fund specifically allocated to such
Series shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to
time determine.
21. "Series" shall mean the various portfolios, if any,
of the Fund as described from time to time in the current and
effective prospectus for the Fund and listed on Appendix B hereto
as amended from time to time.
22. "Shares" shall mean the shares of beneficial
interest of the Fund, each of which is, in the case of a Fund
having Series, allocated to a particular Series.
23. "Stock Index Futures Contract" shall mean a
bilateral agreement pursuant to which the parties agree to take
or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
stock index at the close of the last business day of the contract
and the price at which the futures contract is originally struck.
24. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference between
the exercise price and the value of the index on the date of
exercise.
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<PAGE>
25. "Terminal Link" shall mean an electronic data
transmission link between the Fund and the Custodian requiring in
connection with each use of the Terminal Link by or on behalf of
the Fund use of an authorization code provided by the
Custodian and at least two access codes established by the Fund.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of the Securities and moneys at any time
owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter
set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to be
delivered to the Custodian all Securities and all moneys owned by
it, at any time during the period of this Agreement, and shall
specify with respect to such Securities and money the Series to
which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate
and apart. The Custodian will not be responsible for any
Securities and moneys not actually received by it. The Custodian
will be entitled to reverse any credits made on the Fund's behalf
where such credits have been previously made and moneys are not
finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving,
authorizing and instructing the Custodian on a continuous and on-
going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which
the same are specifically allocated and to utilize the Book-Entry
System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities collateral.
Prior to a deposit of Securities specifically allocated to a
Series in the Depository, the Fund shall deliver to the Custodian
a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository
5
<PAGE>
all Securities specifically allocated to such Series eligible for
deposit therein, and to utilize the Depository to the extent
possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities
collateral. Securities and moneys deposited in either the Book-
Entry System or the Depository will be represented in accounts
which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate
account for the applicable Series. Prior to the Custodian's
accepting, utilizing and acting with respect to Clearing Member
confirmations for Options and transactions in Options for a
Series as provided in this Agreement, the Custodian shall have
received a certified resolution of the Fund's Board of Trustees,
substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and on-
going basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and act in
accordance with such confirmations as provided in this Agreement
with respect to such Series.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the
name and address of the person to whom the payment is to be made,
the Series account from which payment is to be made and the
purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Fund with confirmations and a
summary, on a per Series basis, of all transfers to or from the
account of the Fund for a Series, either hereunder or with any
co-custodian or sub-custodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to
the account of the Fund for a Series, the Custodian shall also by
book-entry or otherwise identify as belonging to such Series a
quantity of Securities in a fungible bulk of Securities
6
<PAGE>
registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System
or the Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement, on a
per Series basis, of the Securities and moneys held by the
Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the Custodian
hereunder, which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System,
shall be held by the Custodian in that form; all other Securities
held hereunder may be registered in the name of the Fund, in the
name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository any Securities which it
may hold hereunder and which may from time to time be registered
in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held
in the Book-Entry System or in the Depository in a separate
account in the name of such Series physically segregated at all
times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System
or the Depository with respect to Securities held hereunder and
therein deposited, shall with respect to all Securities held for
the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount
payable upon such Securities which are called, but only if either
(i) the Custodian receives a written notice of such call, or (ii)
notice of such call appears in one or more of the publications
listed in Appendix C annexed hereto, which may be amended at any
time by the Custodian without the prior notification or consent
of the Fund;
(c) Present for payment and collect the amount
payable upon all Securities which mature;
(d) Surrender Securities in temporary form for
definitive Securities;
7
<PAGE>
(e) Execute, as custodian, any necessary
declarations or certificates of ownership under the Federal
Income Tax Laws or the laws or regulations of any other taxing
authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry
System or the Depository with respect to Securities therein
deposited, for the account of a Series, all rights and similar
securities issued with respect to any Securities held by the
Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations,
and any other instruments whereby the authority of the Fund as
owner of any Securities held by the Custodian hereunder for the
Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold
hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate to any
protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically
allocated to such Series such certificates of deposit, interim
receipts or other instruments or documents as may be issued to it
to evidence such delivery;
(d) Make such transfers or exchanges of the assets
of the Series specified in such Certificate, and take such other
steps as shall be stated in such Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph 5(b)
of this Article which may be called as specified in the
Certificate.
8
<PAGE>
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
of any instrument or certificate representing any Futures
Contract, any Option, or any Futures Contract Option until after
it shall have determined, or shall have received a Certificate
from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options, or Futures Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission
merchants with respect to such Futures Contracts, Options, or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the name
of the Custodian (or any nominee of the Custodian) as custodian
for the Fund, provided, however, that notwithstanding the
foregoing, payments to or deliveries from the Margin Account and
payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and
conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary,
make payment for any Futures Contract, Option, or Futures
Contract Option for which such instruments or such certificates
are available only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Futures Contract,
Option or Futures Contract Option for which such instruments or
such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or
certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract, or
a Futures Contract Option, the Fund shall deliver to the
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<PAGE>
Custodian (i) with respect to each purchase of Securities which
are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a
Certificate or Oral Instructions, specifying with respect to each
such purchase: (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of
purchase and settlement; (e) the purchase price per unit; (f) the
total amount payable upon such purchase; (g) the name of the
person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the
name of the broker to whom payment is to be made. The Custodian
shall, upon receipt of Securities purchased by or for the Fund,
pay to the broker specified in the Certificate out of the moneys
held for the account of such Series the total amount payable upon
such purchase, provided that the same conforms to the total
amount payable as set forth in such Certificate or Oral
Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate or Oral Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title
of the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e) the
sale price per unit; (f) the total amount payable to the Fund
upon such sale; (g) the name of the broker through whom or the
person to whom the sale was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the
Securities specifically allocated to such Series to the broker
specified in the Certificate against payment upon receipt of the
total amount payable to the Fund upon such sale, provided that
the same conforms to the total amount payable as set forth in
such Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the Series
to which such Option is specifically allocated; (b) the type of
Option (put or call); (c) the name of the issuer and the title
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and number of shares subject to such Option or, in the case of a
Stock Index Option, the stock index to which such Option relates
and the number of Stock Index Options purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the total amount payable by the Fund
in connection with such purchase; (h) the name of the Clearing
Member through whom such Option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall
pay, upon receipt of a Clearing Member's statement confirming the
purchase of such Option held by such Clearing Member for the
account of the Custodian (or any duly appointed and registered
nominee of the Custodian) as custodian for the Fund, out of
moneys held for the account of the Series to which such Option is
to be specifically allocated, the total amount payable upon such
purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount payable
as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to each
such sale: (a) the Series to which such Option was specifically
allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the
date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom
the sale was made. The Custodian shall consent to the delivery
of the Option sold by the Clearing Member which previously
supplied the confirmation described in preceding paragraph 1 of
this Article with respect to such Option against payment to the
Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in
such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Call Option: (a) the Series to which such Call
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Call Option; (c)
the expiration date; (d) the date of exercise and settlement; (e)
the exercise price per share; (f) the total amount to be paid by
the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Call Option was exercised. The
Custodian shall, upon receipt of the Securities underlying the
Call Option which was exercised, pay out of the moneys held for
the account of the Series to which such Call Option was
specifically allocated the total amount payable to the Clearing
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<PAGE>
Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in
such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which such Put
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid to the
Fund upon such exercise; and (g) the name of the Clearing Member
through whom such Put Option was exercised. The Custodian shall,
upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct the Depository to deliver the
Securities specifically allocated to such Series, provided the
same conforms to the amount payable to the Fund as set forth in
such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call); (c)
the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member
from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b) the
name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same;
(c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option
was written; and (g) the name of the Clearing Member through whom
the premium is to be received. The Custodian shall deliver or
cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct the Depository to impose,
upon the underlying Securities specified in the Certificate
specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the
Custodian has the right, upon prior written notification to the
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<PAGE>
Fund, at any time to refuse to issue any receipts for Securities
in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such Covered
Call Option and specifying: (a) the Series for which such Covered
Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the
Clearing Member to whom the underlying Securities are to be
delivered; and (d) the total amount payable to the Fund upon such
delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the
underlying Securities as specified in the Certificate against
payment of the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series for which such
Put Option was written; (b) the name of the issuer and the title
and number of shares for which the Put Option is written and
which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the Clearing
Member through whom the premium is to be received and to whom a
Put Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; and (i) the amount of
cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the
Certificate, issue a Put Option guarantee letter substantially in
the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall
be under no obligation to issue any Put Option guarantee letter
or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which such Put Option was written; (b) the name of
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<PAGE>
the issuer and title and number of shares subject to the Put
Option; (c) the Clearing Member from whom the underlying
Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of
Securities, specifically allocated to such Series, if any, to be
withdrawn from the Senior Security Account. Upon the return
and/or cancellation of any Put Option guarantee letter or similar
document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the
account of the Series to which such Put Option was specifically
allocated the total amount payable to the Clearing Member
specified in the Certificate as set forth in such Certificate
against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series for which such Stock Index Option was written; (b) whether
such Stock Index Option is a put or a call; (c) the number of
options written; (d) the stock index to which such Option
relates; (e) the expiration date; (f) the exercise price; (g) the
Clearing Member through whom such Option was written; (h) the
premium to be received by the Fund; (i) the amount of cash and/or
the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for
such Series; (j) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be
deposited in the Collateral Account for such Series; and (k) the
amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in a Margin
Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either
(1) deliver such receipts, if any, which the Custodian has
specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Stock Index Options
and make the deposits into the Collateral Account specified in
the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series for which such Stock Index Option was written; (b)
such information as may be necessary to identify the Stock Index
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<PAGE>
Option being exercised; (c) the Clearing Member through whom such
Stock Index Option is being exercised; (d) the total amount
payable upon such exercise, and whether such amount is to be paid
by or to the Fund; (e) the amount of cash and/or amount and kind
of Securities, if any, to be withdrawn from the Margin Account;
and (f) the amount of cash and/or amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account
for such Series. Upon the return and/or cancellation of the
receipt, if any, delivered pursuant to the preceding paragraph of
this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was
specifically allocated to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs, 6, 8 or 10
of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its position
as a writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to the Option
being purchased: (a) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the Option was written; (c)
the name of the issuer and the title and number of shares subject
to the Option, or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Options
held; (d) the exercise price; (e) the premium to be paid by the
Fund; (f) the expiration date; (g) the type of Option (put or
call); (h) the date of such purchase; (i) the name of the
Clearing Member to whom the premium is to be paid; and (j) the
amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account, a specified Margin
Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or
10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction, the Custodian shall
remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option purchased
or written by the Fund and described in this Article, the
Custodian shall delete such Option from the statements delivered
to the Fund pursuant to paragraph 3 Article III herein, and upon
the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral
Account, and the Margin Account and/or the Senior Security
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Account as may be specified in a Certificate received in
connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract, (or with
respect to any number of identical Futures Contract(s)): (a) the
Series for which the Futures Contract is being entered; (b) the
category of Futures Contract (the name of the underlying stock
index or financial instrument); (c) the number of identical
Futures Contracts entered into; (d) the delivery or settlement
date of the Futures Contract(s); (e) the date the Futures
Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short)
on such Futures Contract(s); (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the
broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount is to
be paid. The Custodian shall make the deposits, if any, to the
Margin Account in accordance with the terms and conditions of the
Margin Account Agreement. The Custodian shall make payment out
of the moneys specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and deposit in
the Senior Security Account for such Series the amount of cash
and/or the amount and kind of Securities specified in said
Certificate.
2. (a) Any variation margin payment or similar
payment required to be made by the Fund to a broker, dealer, or
futures commission merchant with respect to an outstanding
Futures Contract, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar
payment from a broker, dealer, or futures commission merchant to
the Fund with respect to an outstanding Futures Contract, shall
be received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement is
made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to a Stock
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Index Futures Contract, the total cash settlement amount to be
paid or received, and with respect to a Financial Futures
Contract, the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission merchant
to or from whom payment or delivery is to be made or received;
and (d) the amount of cash and/or Securities to be withdrawn from
the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and
delete such Futures Contract from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to offset a Futures Contract held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate
specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the
Futures Contract being offset. The Custodian shall make payment
out of the money specifically allocated to such Series of the fee
or commission, if any, specified in the Certificate and delete
the Futures Contract being offset from the statements delivered
to the Fund pursuant to paragraph 3 of Article III herein, and
make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals,
if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the Series to which such Option is
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the amount of premium to be paid by
the Fund upon such purchase; (h) the name of the broker or
futures commission merchant through whom such option was
purchased; and (i) the name of the broker, or futures commission
merchant, to whom payment is to be made. The Custodian shall pay
out of the moneys specifically allocated to such Series, the
total amount to be paid upon such purchase to the broker or
futures commissions merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such
Certificate.
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2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) Series to which
such Futures Contract Option was specifically allocated; (b) the
type of Future Contract Option (put or call); (c) the type of
Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract
Option; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon such
sale; and (h) the name of the broker of futures commission
merchant through whom the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures
Contract underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised;
(f) the net total amount, if any, payable by the Fund; (g) the
amount, if any, to be received by the Fund; and (h) the amount of
cash and/or the amount and kind of Securities to be deposited in
the Senior Security Account for such Series. The Custodian shall
make, out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the
Series for which such Futures Contract Option was written; (b)
the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the expiration date; (e) the exercise price;
(f) the premium to be received by the Fund; (g) the name of the
broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon
receipt of the premium specified in the Certificate, make out of
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the moneys and Securities specifically allocated to such Series
the deposits into the Senior Security Account, if any, as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Futures Contract Option was specifically allocated;
(b) the particular Futures Contract Option exercised; (c) the
type of Futures Contract underlying the Futures Contract Option;
(d) the name of the broker or futures commission merchant through
whom such Futures Contract Option was exercised; (e) the net
total amount, if any, payable to the Fund upon such exercise; (f)
the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount of cash and/or the amount and kind
of Securities to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon its receipt of the net
total amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any,
into the Senior Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which such Option was specifically allocated; (b)
the particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom
such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the
net total amount, if any, payable by the Fund upon such exercise;
and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in, the Senior Security Account for
such Series, if any. The Custodian shall, upon its receipt of
the net total amount payable to the Fund, if any, specified in
the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and
the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Option
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described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to
which such Option is specifically allocated; (b) that the
transaction is a closing transaction; (c) the type of Future
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by
the Fund; (f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be paid;
and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the
Certificate. The withdrawals, if any, to be made from the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract Option
written or purchased by the Fund and described in this Article,
the Custodian shall (a) delete such Futures Contract Option from
the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security
Account as may be specified in a Certificate. The deposits to
and/or withdrawals from the Margin Account, if any, shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the
Fund, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale
was made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and
accrued interest or dividends, if any; (d) the dates of the sale
and settlement; (e) the sale price per unit; (f) the total amount
credited to the Fund upon such sale, if any, (g) the amount of
cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such
Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be
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deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian
shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon
such sale, if any, as specified in the Certificate is held by
such broker for the account of the Custodian (or any nominee of
the Custodian) as custodian of the Fund, issue a receipt or make
the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing out:
(a) the Series for which such transaction is being made; (b) the
name of the issuer and the title of the Security; (c) the number
of shares or the principal amount, and accrued interest or
dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net
total amount payable to the broker upon such closing-out; (h) the
amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such closing-out.
The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out, and the return and/ or
cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net
total amount payable to the broker, and make the withdrawals from
the Margin Account and the Senior Security Account, as the same
are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement is
a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in
connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker or dealer
through or with whom the Reverse Repurchase Agreement is entered;
(d) the amount and kind of Securities to be delivered by the Fund
to such broker or dealer; (e) the date of such Reverse Repurchase
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Agreement; and (f) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series to
be deposited in a Senior Security Account for such Series in
connection with such Reverse Repurchase Agreement. The Custodian
shall, upon receipt of the total amount payable to the Fund
specified in the Certificate or Oral Instructions make the
delivery to the broker or dealer, and the deposits, if any, to
the Senior Security Account, specified in such Certificate or
Oral Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in preceding paragraph 1 of this Article, the
Fund shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions to the Custodian specifying: (a)
the Reverse Repurchase Agreement being terminated and the Series
for which same was entered; (b) the total amount payable by the
Fund in connection with such termination; (c) the amount and kind
of Securities to be received by the Fund and specifically
allocated to such Series in connection with such termination; (d)
the date of termination; (e) the name of the broker or dealer
with or through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind
of Securities to be withdrawn from the Senior Securities Account
for such Series. The Custodian shall, upon receipt of the amount
and kind of Securities to be received by the Fund specified in
the Certificate or Oral Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Senior
Security Account, specified in such Certificate or Oral
Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the Fund shall deliver or cause to be delivered to the
Custodian a Certificate specifying with respect to each such
loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title
of the Securities, (c) the number of shares or the principal
amount loaned, (d) the date of loan and delivery, (e) the total
amount to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the
premium, if any, separately identified, and (f) the name of the
broker, dealer, or financial institution to which the loan was
made. The Custodian shall deliver the Securities thus designated
to the broker, dealer or financial institution to which the loan
was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may
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accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of the
Fund or the Custodian drawn on New York Clearing House funds and
may deliver Securities in accordance with the customs prevailing
among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be
returned, (d) the date of termination, (e) the total amount to be
delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in said
Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned.
The Custodian shall receive all Securities returned from the
broker, dealer, or financial institution to which such Securities
were loaned and upon receipt thereof shall pay, out of the moneys
held for the account of the Fund, the total amount payable upon
such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Senior Security Account as
specified in a Certificate received by the Custodian. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to
be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in
a Certificate the Series, the name of the issuer, the title and
the number of shares or the principal amount of any particular
Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under
no obligation to make any such deposit or withdrawal and shall so
notify the Fund.
2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account
Agreement.
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3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law the Custodian may enforce its lien
and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter
or similar document or any receipt issued hereunder by the
Custodian. In the event the Custodian should realize on any such
property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the
Custodian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish
the Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the Margin
Account; (b) the amount and kind of Securities held therein; and
(c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures
commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each
business day in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall furnish
the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business
next succeeding the delivery to the Fund of such statement, the
Fund shall furnish to the Custodian a Certificate specifying the
then market value of the Securities described in such statement.
In the event such then market value is indicated to be less than
the Custodian's obligation with respect to any outstanding Put
Option guarantee letter or similar document, the Fund shall
promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to
eliminate such deficiency.
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ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Board of Trustees of the Fund, certified by
the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, either (i) setting forth with respect to the
Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount
payable to the Dividend Agent and any sub-dividend agent or co-
dividend agent of the Fund on the payment date, or (ii)
authorizing with respect to the Series specified therein the
declaration of dividends and distributions on a daily basis and
authorizing the Custodian to rely on Oral Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount
payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,
Oral Instructions or Certificate, as the case may be, the
Custodian shall pay out of the moneys held for the account of
each Series the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares and specifically allocated
to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate account in
the name of the Series for which such money was received.
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3. Upon issuance of any Shares of any Series described
in the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of such Series, all
original issue or other taxes required to be paid by the Fund in
connection with such issuance upon the receipt of a Certificate
specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
desires the Custodian to make payment out of the money held by
the Custodian hereunder in connection with a redemption of any
Shares, it shall furnish to the Custodian a Certificate
specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the
Certificate issued pursuant to the foregoing paragraph 4 of this
Article.
6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
pursuant to any check redemption privilege which may from time to
time be offered by the Fund, the Custodian, unless otherwise
instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is
in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such
check redemption privilege out of the moneys held in the separate
account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion
advance funds on behalf of any Series which results in an
overdraft because the moneys held by the Custodian in the
separate account for such Series shall be insufficient to pay the
total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral
Instructions, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund is
for any other reason indebted to the Custodian with respect to a
Series, including any indebtedness to The Bank of New York under
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the Fund's Cash Management and Related Services Agreement,
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article), such overdraft or indebtedness shall be deemed to be a
loan made by the Custodian to the Fund for such Series payable on
demand and shall bear interest from the date incurred at a rate
per annum (based on a 360-day year for the actual number of days
involved) equal to 1/2% over Custodian's prime commercial lending
rate in effect from time to time, such rate to be adjusted on the
effective date of any change in such prime commercial lending
rate but in no event to be less than 6% per annum. In addition,
the Fund hereby agrees that the Custodian shall have a continuing
lien and security interest in and to any property specifically
allocated to such Series at any time held by it for the benefit
of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or
control of any third party acting in the Custodian's behalf. The
Fund authorizes the Custodian, in its sole discretion, at any
time to charge any such overdraft or indebtedness together with
interest due thereon against any balance of account standing to
such Series' credit on the Custodian's books. In addition, the
Fund hereby covenants that on each Business Day on which either
it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds a
Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing,
it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify the
Series to which the same relates, and shall not incur any
indebtedness not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant to
a separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the
bank, (c) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement, (d) the time
and date, if known, on which the loan is to be entered into, (e)
the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market
value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of
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shares or the principal amount of any particular Securities, and
(h) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note
or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and
the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XV
TERMINAL LINK
1. At no time and under no circumstances shall the
Fund be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the Fund
in its sole and absolute discretion elects to utilize the
Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Fund
only for the purpose of the Fund providing Certificates to the
Custodian with respect to transactions involving Securities or
for the transfer of money to be applied to the payment of
dividends, distributions or redemptions of Fund Shares, and shall
be utilized by the Custodian only for the purpose of providing
notices to the Fund. Such use shall commence only after the Fund
shall have delivered to the Custodian a Certificate substantially
in the form of Exhibit D and shall have established access codes.
Each use of the Terminal Link by the Fund shall constitute a
representation and warranty that the Terminal Link is being used
only for the purposes permitted hereby, that at least two
Officers have each utilized an access code, that such safekeeping
procedures have been established by the Fund, and that such use
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does not contravene the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost
and expense all equipment and services, including, but not
limited to communications services, necessary for it to utilize
the Terminal Link, and the Custodian shall not be responsible for
the reliability or availability of any such equipment or
services.
4. The Fund acknowledges that any data bases made
available as part of, or through the Terminal Link and any
proprietary data, software, processes, information and
documentation (other than any such which are or become part of
the public domain or are legally required to be made available to
the public) (collectively, the "Information"), are the exclusive
and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep
the Information confidential by using the same care and
discretion it uses with respect to its own confidential property
and trade secrets, and shall neither make nor permit any
disclosure without the express prior written consent of the
Custodian.
5. Upon termination of this Agreement for any reason,
the Fund shall return to the Custodian any and all copies of the
Information which are in the Fund's possession or under its
control, or which the Fund distributed to third parties. The
provisions of this Article shall not affect the copyright status
of any of the Information which may be copyrighted and shall
apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the
Terminal Link from time to time without notice to the Fund except
that the Custodian shall give the Fund notice not less than 75
days in advance of any modification which would materially
adversely affect the Fund's operation, and the Fund agrees that
the Fund shall not modify or attempt to modify the Terminal Link
without the Custodian's prior written consent. The Fund
acknowledges that any software or procedures provided the Fund as
part of the Terminal Link are the property of the Custodian and,
accordingly, the Fund agrees that any modifications to the
Terminal Link, whether by the Fund, or by the Custodian and
whether with or without the Custodian's consent, shall become the
property of the Custodian.
7. Neither the Custodian nor any manufacturers and
suppliers it utilizes or the Fund utilizes in connection with the
Terminal Link makes any warranties or representations, express or
implied, in fact or in law, including but not limited to
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warranties of merchantability and fitness for a particular
purpose.
8. The Fund will cause its Officers and employees to
treat the authorization codes and the access codes applicable to
Terminal Link with extreme care, and irrevocably authorizes the
Custodian to act in accordance with and rely on Certificates
received by it through the Terminal Link. The Fund acknowledges
that it is its responsibility to assure that only its Officers
use the Terminal Link on its behalf, and that a Custodian shall
not be responsible nor liable for use of the Terminal Link on the
Fund's behalf by persons other than such persons or Officers, or
by only a single Officer, nor for any alteration, omission, or
failure to promptly forward.
9(a). Except as otherwise specifically provided in
Section 9(b) of this Article, the Custodian shall have no
liability for any losses, damages, injuries, claims, costs or
expenses arising out of or in connection with any failure,
malfunction or other problem relating to the Terminal Link except
for money damages suffered as the direct result of the negligence
of the Custodian in an amount not exceeding for any incident
$25,000 provided, however, that the Custodian shall have no
liability under this Section 9 if the Fund fails to comply with
the provisions of Section 11.
9(b). The Custodian's liability for its negligence in
executing or failing to execute in accordance with a Certificate
received through Terminal Link shall be only with respect to a
transfer of funds which is not made in accordance with such
Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the
Fund complying with the provisions of Section 12 of this Article,
and shall be limited to (i) restoration of the principal amount
mistransferred, if and to the extent that the Custodian would be
required to make such restoration under applicable law, and (ii)
the lesser of (A) a Fund's actual pecuniary loss incurred by
reason of its loss of use of the mistransferred funds or the
funds which were not transferred, as the case may be, or (B)
compensation for the loss of the use of the mistransferred funds
or the funds which were not transferred, as the case may be, at a
rate per annum equal to the average federal funds rate as
computed from the Federal Reserve Bank of New York's daily
determination of the effective rate for federal funds, for the
period during which a Fund has lost use of such funds. In no
event shall the Custodian have any liability for failing to
execute in accordance with a Certificate a transfer of funds
where the Certificate is received by the Custodian through
Terminal Link other than through the applicable transfer module
for the particular instructions contained in such Certificate.
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10. Without limiting the generality of the foregoing,
in no event shall the Custodian or any manufacturer or supplier
of its computer equipment, software or services relating to the
Terminal Link be responsible for any special, indirect,
incidental or consequential damages which the Fund may incur or
experience by reason of its use of the Terminal Link even if the
Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the
Terminal Link shall the Custodian or any such manufacturer or
supplier be liable for acts of God, or with respect to the
following to the extent beyond such person's reasonable control:
machine or computer breakdown or malfunction, interruption or
malfunction of communication facilities, labor difficulties or
any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of, the
Terminal Link as promptly as practicable, and in any event within
24 hours after the earliest of (i) discovery thereof, (ii) the
Business Day on which discovery should have occurred through the
exercise of reasonable care and (iii) in the case of any error,
the date of actual receipt of the earliest notice which reflects
such error, it being agreed that discovery and receipt of notice
may only occur on a business day. The Custodian shall promptly
advise the Fund whenever the Custodian learns of any errors,
omissions or interruption in, or delay or unavailability of, the
Terminal Link.
12. The Custodian shall verify to the Fund, by use of
the Terminal Link, receipt of each Certificate the Custodian
receives through the Terminal Link, and in the absence of such
verification the Custodian shall not be liable for any failure to
act in accordance with such Certificate and the Fund may not
claim that such Certificate was received by the Custodian. Such
verification, which may occur after the Custodian has acted upon
such Certificate, shall be accomplished on the same day on which
such Certificate is received.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1.1.1 The Custodian is authorized and instructed to
employ, as sub-custodian for each Series' Foreign Securities (as
such term is defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, as amended) and other assets, the
foreign banking institutions and foreign securities depositories
and clearing agencies designated on Schedule I hereto ("Foreign
Sub-Custodians") to carry out their respective responsibilities
in accordance with the terms of the sub-custodian agreement
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between each such Foreign Sub-Custodian and the Custodian, copies
of which have been previously delivered to the Fund and receipt
of which is hereby acknowledged (each such agreement, a "Foreign
Sub-Custodian Agreement"). Upon receipt of a Certificate,
together with a certified resolution substantially in the form
attached as Exhibit E of the Fund's Board of Trustees, the Fund
may designate any additional foreign sub-custodian with which the
Custodian has an agreement for such entity to act as the
Custodian's agent, as its sub-custodian and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon
receipt of a Certificate from the Fund, the Custodian shall cease
the employment of any one or more Foreign Sub-Custodians for
maintaining custody of the Fund's assets and such Foreign Sub-
Custodian shall be deemed deleted from Schedule I.
1.1.2 Each Foreign Sub-Custodian Agreement shall be
substantially in the form previously delivered to the Fund and
will not be amended in a way that materially adversely affects
the Fund without the Fund's prior written consent.
1.1.3 The Custodian shall identify on its books as
belonging to each Series of the Fund the Foreign Securities of
such Series held by each Foreign Sub-Custodian. At the election
of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claims by the Fund or any
Series against a Foreign Sub-Custodian as a consequence of any
loss, damage, cost, expense, liability or claim sustained or
incurred by the Fund or any Series if and to the extent that the
Fund or such Series has not been made whole for any such loss,
damage, cost, expense, liability or claim.
1.1.4 Upon request of the Fund, the Custodian will,
consistent with the terms of the applicable Foreign Sub-Custodian
Agreement, use reasonable efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and
records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian
under its agreement with the Custodian on behalf of the Fund.
1.1.5 The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of
the securities and other assets of each Series held by Foreign
Sub-Custodians, including but not limited to, an identification
of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers
of Foreign Securities to or from each custodial account
maintained by a Foreign Sub-Custodian for the Custodian on behalf
of the Series.
1.1.6 The Custodian shall furnish annually to the
Fund, as mutually agreed upon, information concerning the Foreign
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Sub-Custodians employed by the Custodian. Such information shall
be similar in kind and scope to that furnished to the Fund in
connection with the Fund's initial approval of such Foreign Sub-
Custodians and, in any event, shall include information
pertaining to (i) the Foreign Custodians' financial strength,
general reputation and standing in the countries in which they
are located and their ability to provide the custodial services
required, and (ii) whether the Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of
securities not materially different form those prevailing in the
United States. The Custodian shall monitor the general operating
performance of each Foreign Sub-Custodian, and at least annually
obtain and review the annual financial report published by such
Foreign Sub-Custodian to determine that it meets the financial
criteria of an "Eligible Foreign Custodian" under Rule 17f-
5(c)(2)(i) or (ii). The Custodian will promptly inform the Fund
in the event that the Custodian learns that a Foreign Sub-
Custodian no longer satisfies the financial criteria of an
"Eligible Foreign Custodian" under such Rule. The Custodian
agrees that it will use reasonable care in monitoring compliance
by each Foreign Sub-Custodian with the terms of the relevant
Foreign Sub-Custodian Agreement and that if it learns of any
breach of such Foreign Sub-Custodian Agreement believed by the
Custodian to have a material adverse effect on the Fund or any
Series it will promptly notify the Fund of such breach. The
Custodian also agrees to use reasonable and diligent efforts to
enforce its rights under the relevant Foreign Sub-Custodian
Agreement.
1.1.7 The Custodian shall transmit promptly to the
Fund all notices, reports or other written information received
pertaining to the Fund's Foreign Securities, including without
limitation, notices of corporate action, proxies and proxy
solicitation materials.
1.1.8 Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for securities
received for the account of any Series and delivery of securities
maintained for the account of such Series may be effected in
accordance with the customary or established securities trading
or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser
or dealer.
1.1.9 Notwithstanding any other provision in this
Agreement to the contrary, with respect to any losses or damages
arising out of or relating to any actions or omissions of any
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Foreign Sub-Custodian the sole responsibility and liability of
the Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or damage from the Foreign Sub-
Custodian. It is expressly understood and agreed that the
Custodian's sole responsibility and liability shall be limited to
amounts so recovered from the Foreign Sub-Custodian.
ARTICLE XVII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in
Article XVI neither the Custodian nor its nominee shall be liable
for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or
damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Fund or any
third party for special, indirect or consequential damages or
lost profits or loss of business, arising under or in connection
with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action.
The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting from
the use of the Book-Entry System or any Depository arising by
reason of any negligence or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;
(c) The legality of the declaration or payment of
any dividend by the Fund;
(d) The legality of any borrowing by the Fund
using Securities as collateral;
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(e) The legality of any loan of portfolio
Securities, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it
by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the
Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund
is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to
see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV
of this Agreement makes payment to it of any dividends or
interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such
loan, provided, however, that the Custodian shall promptly notify
the Fund in the event that such dividends or interest are not
paid and received when due; or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment to
the Fund of any variation margin payment or similar payment which
the Fund may be entitled to receive from such broker, dealer,
futures commission merchant or Clearing Member, to see that any
payment received by the Custodian from any broker, dealer,
futures commission merchant or Clearing Member is the amount the
Fund is entitled to receive, or to notify the Fund of the
Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
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<PAGE>
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in the
Depository which may mature or be redeemed, retired, called or
otherwise become payable. However, upon receipt of a Certificate
from the Fund of an overdue amount on Securities held in the
Depository the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian shall
not be under any obligation to appear in, prosecute or defend any
action suit or proceeding in respect to any Securities held by
the Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent of
the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless
and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.
7. The Custodian may in addition to the employment of
Foreign Sub-Custodians pursuant to Article XVI appoint one or
more banking institutions as Depository or Depositories, as Sub-
Custodian or Sub-Custodians, or as Co-Custodian or Co-Custodians
including, but not limited to, banking institutions located in
foreign countries, of Securities and moneys at any time owned by
the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the
Custodian, the Fund and the appointed institution.
8. The Custodian shall not be under any duty or
obligation (a) to ascertain whether any Securities at any time
delivered to, or held by it or by any Foreign Sub-Custodian, for
the account of the Fund and specifically allocated to a Series
are such as properly may be held by the Fund or such Series under
the provisions of its then current prospectus, or (b) to
ascertain whether any transactions by the Fund, whether or not
involving the Custodian, are such transactions as may properly be
engaged in by the Fund.
9. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all out-of-pocket expenses
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<PAGE>
and such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge
such compensation and any expenses with respect to a Series
incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money specifically
allocated to such Series. Unless and until the Fund instructs
the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner, the
Custodian shall also be entitled to charge against any money held
by it for the account of a Series such Series' pro rata share
(based on such Series net asset value at the time of the charge
to the aggregate net asset value of all Series at that time) of
the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement. The expenses for which
the Custodian shall be entitled to reimbursement hereunder shall
include, but are not limited to, the expenses of sub-custodians
and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and
sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions actually received by the Custodian hereinabove
provided for. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral
Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery,
telecopier or other similar device, or otherwise, by the close of
business of the same day that such Oral Instructions are given to
the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund.
The Fund agrees that the Custodian shall incur no liability to
the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Officer.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
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12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940, as
amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives,
shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable request
of the Fund, copies of any such books and records shall be
provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its
expenses of providing such copies. Upon reasonable request of
the Fund, the Custodian shall provide in hard copy or on micro-
film, whichever the Custodian elects, any records included in any
such delivery which are maintained by the Custodian on a computer
disc, or are similarly maintained, and the Fund shall reimburse
the Custodian for its expenses of providing such hard copy or
micro-film.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, the Depository or
O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.
14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,
howsoever arising or incurred because of or in connection with
this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of any
check redemption privilege program of the Fund, except for any
such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this
Agreement, including, without limitation, those contained in
Article XVI the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities. When the Custodian is instructed to
deliver Securities against payment, delivery of such Securities
and receipt of payment therefor may not be completed
simultaneously. The Fund assumes all responsibility and
liability for all credit risks involved in connection with the
Custodian's delivery of Securities pursuant to instructions of
the Fund, which responsibility and liability shall continue until
final payment in full has been received by the Custodian.
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<PAGE>
16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement,
and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XVIII
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than ninety (90) days after the date of giving of such notice.
In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees of
the Fund, certified by the Secretary, the Clerk, any Assistant
Secretary or any Assistant Clerk, electing to terminate this
Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company having not less
than $2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, the Clerk, any Assistant
Secretary or any Assistant Clerk, designating a successor
custodian or custodians. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian which
shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date
set forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the
successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian, after deducting all fees,
expenses and other amounts for the payment or reimbursement of
which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding paragraph,
the Fund shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder
in accordance with this Agreement.
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<PAGE>
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present
Officers. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event that any such present
Officer ceases to be an Officer or in the event that other or
additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Officers as set
forth in the last delivered Certificate.
2. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present
Officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the
event that other or additional Officers are elected or appointed.
Until such new Certificate shall be received, the Custodian shall
be fully protected in acting under the provisions of this
Agreement upon the signatures of the Officers as set forth in the
last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other
place as the Custodian may from time to time designate in
writing.
4. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund
shall be sufficiently given if addressed to the Fund and mailed
or delivered to it at its office at the address for the Fund
first above written, or at such other place as the Fund may from
time to time designate in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Trustees of the Fund.
6. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
40
<PAGE>
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of the Fund's Board
of Trustees.
7. This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby consents
to the jurisdiction of a state or federal court situated in New
York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
9. A copy of the Declaration of Trust of the Fund is
on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on
behalf of the Board of Trustees of the Fund as Trustees and not
individually and that the obligations of this instrument are not
binding upon any of the Trustees or shareholders individually but
are binding only upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund
provides that the assets of a particular Series of the Fund shall
under no circumstances be charged with liabilities attributable
to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a
particular Series of the Fund shall look only to the assets of
that particular Series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
ALLIANCE MONEY MARKET FUND
/s/ Ronald M. Whitehill
[SEAL] By:_______________________
Ronald M. Whitehill
President
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Attest:
/s/ Mary Ann Milley
_______________________
THE BANK OF NEW YORK
/s/ Jorge Ramos
[SEAL] By:_______________________
Name: Jorge Ramos
Title: Vice President
Attest:
/s/ Michael A. Cecero
_______________________
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APPENDIX A
I, Ronald M. Whitehill, President and I, Edmund P.
Bergan, Jr., Secretary of ALLIANCE MONEY MARKET FUND, a
Massachusetts business trust (the "Fund"), do hereby certify
that:
The following individuals serve in the following
positions with the Fund and each has been duly elected or
appointed by the Board of Trustees of the Fund to each such
position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth
opposite their respective names are their true and correct
signatures:
Name Position Signature
Mark D. Gersten Treasurer /s/ Mark D. Gersten
____________________ ___________________ _________________
Joseph J. Mantineo Controller /s/ Joseph J. Mantineo
____________________ ___________________ _________________
Patrick J. Farrell Assistant Controller /s/ Patrick J. Farrell
____________________ ___________________ _________________
Kimberly A. Condito Assistant Controller /s/Kimberly A. Condito
____________________ ___________________ _________________
43
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APPENDIX B
ALLIANCE MONEY MARKET FUND
PORTFOLIO EXHIBIT
Prime Portfolio
Government Portfolio
General Municipal Portfolio
New Jersey Municipal Portfolio
New York Municipal Portfolio
California Municipal Portfolio
Connecticut Municipal Portfolio
44
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APPENDIX C
I, Jorge Ramos, a Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
45
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EXHIBIT A
CERTIFICATION
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolution has not been modified or
rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 16, 1995, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis to deposit in the Book-
Entry System, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of
the Series to which the same are specifically allocated,
and to utilize the Book-Entry System to the extent
possible in connection with its performance thereunder,
including, without limitation, in connection with
settlements of purchases and sales of securities, loans
of securities, and deliveries and returns of securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ALLIANCE MONEY MARKET FUND, as of the 16th day of, 1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
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<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolution has not been modified or
rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 16, 1995, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the Depository,
as defined in the Custody Agreement, all securities
eligible for deposit therein, regardless of the Series
to which the same are specifically allocated, and to
utilize the Depository to the extent possible in
connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ALLIANCE MONEY MARKET FUND, as of the 16th day of March,
1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
47
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolution has not been modified or
rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 16, 1995, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the
Participants Trust Company as Depository, as defined in
the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the
same are specifically allocated, and to utilize the
Participants Trust Company to the extent possible in
connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ALLIANCE MONEY MARKET FUND, as of the 16th day of March,
1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
48
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolution has not been modified or
rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 16, 1995, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody
Agreement, to the contrary, to accept, utilize and act
with respect to Clearing Member confirmations for
Options and transaction in Options, regardless of the
Series to which the same are specifically allocated, as
such terms are defined in the Custody Agreement, as
provided in the Custody Agreement.
6 IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ALLIANCE MONEY MARKET FUND, as of the 16th day of March,
1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
49
<PAGE>
EXHIBIT D
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), further certifies that the following resolutions were
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolutions have not been modified or
rescinded and are in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to the Custody Agreement between The Bank of New York
and the Fund dated as of March 16, 1995 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing basis to
act in accordance with, and to rely on Certificates (as defined
in the Custody Agreement) given by the Fund to the Custodian by a
Terminal Link (as defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and
grant us of such access codes only to Officers of the fund as
defined in the Custody Agreement, shall establish internal
safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes, shall
limit its use of the Terminal Link to those purposes permitted by
the Custody Agreement, shall require at least two such Officers
to utilize their respective access codes in connection with each
such Certificate, and shall use the Terminal Link only in a
manner that does not contravene the Investment Company Act of
1940, as amended, or the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal safekeeping
procedures, advise the Custodian that the same have been
established by delivering a Certificate, as defined in the
Custody Agreement, and the Custodian shall be entitled to rely
upon such advice.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of ALLIANCE MONEY MARKET FUND, as of the 16th day of March,
1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
50
<PAGE>
EXHIBIT E
The undersigned, Edmund P. Bergan, Jr., hereby certifies
that he or she is the duly elected and acting Secretary of
ALLIANCE MONEY MARKET FUND, a Massachusetts business trust (the
"Fund"), further certifies that the following resolutions were
adopted by the Board of Trustees of the Fund at a meeting duly
held on March 16, 1995, at which a quorum was at all times
present and that such resolutions have not been modified or
rescinded and are in full force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in
each country listed in Schedule I hereto be, and hereby is,
approved by the Board of Trustees as consistent with the best
interests of the Fund and its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with
the foreign branches of The Bank of New York (the "Bank") listed
in Schedule I located in the countries specified therein, and
with the foreign subcustodians and despositories listed in
Schedule I located in the countries specified therein be, and
hereby is, approved by the Board of Trustees as consistent with
the best interest of the Fund and its shareholders; and further
RESOLVED, that the Subcustodian Agreements presented to
this meeting between the Bank and each of the foreign
subcustodians and depositories listed in Schedule I providing for
the maintenance of the Fund's assets with the applicable entity,
be and hereby are, approved by the Board of Trustees as
consistent with the best interests of the Fund and its
shareholders; and further
RESOLVED, that the appropriate officers of the Fund are
hereby authorized to place assets of the Fund with the
aforementioned foreign branches and foreign subcustodians and
depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or
any of them, are authorized to do any and all other acts, in the
name of the Fund and on its behalf, as they, or any of them, may
determine to be necessary or desirable and proper in connection
with or in furtherance of the foregoing resolutions.
51
<PAGE>
IN WITNESS WHEREOF, I hereunto set my hand and the seal
of ALLIANCE MONEY MARKET FUND, as of the 16th day of March, 1995.
/s/ Edmund P. Bergan, Jr.
[SEAL]
52
00250217.AE1
<PAGE>
ALLIANCE FUND SERVICES, INC.
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of March 16, 1995, between Alliance
Money Market Fund, a Massachusetts business trust and an open-end
investment company registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940
(the "Investment Company Act"), having its principal place of
business at 1345 Avenue of Americas, New York, New York 10105
(the "Fund"), and ALLIANCE FUND SERVICES, INC., a Delaware
corporation registered with the SEC as a transfer agent under the
Securities Exchange Act of 1934, having its principal place of
business at 500 Plaza Drive, Secaucus, New Jersey 07094 ("Fund
Services"), provides as follows:
WHEREAS, Fund Services has agreed to act as transfer
agent to the Fund for the purpose of recording the transfer,
issuance and redemption of shares of each series of the shares of
beneficial interest of the Fund ("Shares" or "Shares of a
Series"), transferring the Shares, disbursing dividends and other
distributions to shareholders of the Fund, and performing such
other services as may be agreed to pursuant hereto;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the parties do hereby
agree as follows:
SECTION 1. The Fund hereby appoints Fund Services as
its transfer agent, dividend disbursing agent and shareholder
<PAGE>
servicing agent for the Shares, and Fund Services agrees to act
in such capacities upon the terms set forth in this Agreement.
Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings assigned to them in SECTION 30.
SECTION 2.
(a) The Fund shall provide Fund Services with copies of
the following documents:
(1) Specimens of all forms of certificates for Shares;
(2) Specimens of all account application forms and
other documents relating to Shareholders' accounts;
(3) Copies of each Prospectus;
(4) Specimens of all documents relating to withdrawal
plans instituted by the Fund, as described in SECTION 16; and
(5) Specimens of all amendments to any of the foregoing
documents.
(b) The Fund shall furnish to Fund Services a supply of
blank Share Certificates for the Shares and, from time to time,
will renew such supply upon Fund Services' request. Blank Share
Certificates shall be signed manually or by facsimile signatures
of officers of the Fund authorized to sign by law or pursuant to
the by-laws of the Fund and, if required by Fund Services, shall
bear the Fund's seal or a facsimile thereof.
SECTION 3. Fund Services shall make original issues of
Shares in accordance with SECTIONS 13 and 14 and the Prospectus
upon receipt of (i) Written Instructions requesting the issuance,
2
<PAGE>
(ii) a certified copy of a resolution of the Fund's Trustees
authorizing the issuance, (iii) necessary funds for the payment
of any original issue tax applicable to such Shares, and (iv) an
opinion of the Fund's counsel as to the legality and validity of
the issuance, which opinion may provide that it is contingent
upon the filing by the Fund of an appropriate notice with the
SEC, as required by Rule 24f-2 of the Investment Company Act, as
amended from time to time.
SECTION 4. Transfers of Shares shall be registered and,
subject to the provisions of SECTION 10 in the case of Shares
evidenced by Share Certificates, new Share Certificates shall be
issued by Fund Services upon surrender of outstanding Share
Certificates in the form deemed by Fund Services to be properly
endorsed for transfer, which form shall include (i) all necessary
endorsers' signatures guaranteed by a member firm of a national
securities exchange or a domestic commercial bank or through
other procedures mutually agreed to between the Fund and Fund
Services, (ii) such assurances as Fund Services may deem
necessary to evidence the genuineness and effectiveness of each
endorsement and (iii) satisfactory evidence of compliance with
all applicable laws relating to the payment or collection of
taxes.
SECTION 5. Fund Services shall forward Share
Certificates in "non-negotiable" form by first-class or
registered mail, or by whatever means Fund Services deems equally
3
<PAGE>
reliable and expeditious. While in transit to the addressee, all
deliveries of Share Certificates shall be insured by Fund
Services as it deems appropriate. Fund Services shall not mail
Share Certificates in "negotiable" form, unless requested in
writing by the Fund and fully indemnified by the Fund to Fund
Services' satisfaction.
SECTION 6. In registering transfers of Shares, Fund
Services may rely upon the Uniform Commercial Code as in effect
from time to time in the State in which the Fund is incorporated
or organized or, if appropriate, in the State of New Jersey;
provided, that Fund Services may rely in addition or
alternatively on any other statutes in effect in the State of New
Jersey or in the state under the laws of which the Fund is
incorporated or organized that, in the opinion of Fund Services'
counsel, protect Fund Services and the Fund from liability
arising from (i) not requiring complete documentation in
connection with an issuance or transfer, (ii) registering a
transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of an adverse claim inquiry or (iv)
refusing registration in connection with an adverse claim.
SECTION 7. Fund Services may issue new Share
Certificates in place of those lost, destroyed or stolen, upon
receiving indemnity satisfactory to Fund Services; and may issue
new Share Certificates in exchange for, and upon surrender of,
mutilated Share Certificates as Fund Services deems appropriate.
4
<PAGE>
SECTION 8. Unless otherwise directed by the Fund, Fund
Services may issue or register Share Certificates reflecting the
signature, or facsimile thereof, of an officer who has died,
resigned or been removed by the Fund. The Fund shall file
promptly with Fund Services' approval, adoption or ratification
of such action as may be required by law or by Fund Services.
SECTION 9. Fund Services shall maintain customary stock
registry records for Shares of each Series noting the issuance,
transfer or redemption of Shares and the issuance and transfer of
Share Certificates. Fund Services may also maintain for Shares
of each Series an account entitled "Unissued Certificate
Account," in which Fund Services will record the Shares, and
fractions thereof, issued and outstanding from time to time for
which issuance of Share Certificates has not been requested.
Fund Services is authorized to keep records for Shares of each
Series containing the names and addresses of record of
Shareholders, and the number of Shares, and fractions thereof,
from time to time owned by them for which no Share Certificates
are outstanding. Each Shareholder will be assigned a single
account number for Shares of each Series, even though Shares for
which Certificates have been issued will be accounted for
separately.
SECTION 10. Fund Services shall issue Share
Certificates for Shares only upon receipt of a written request
from a Shareholder and as authorized by the Fund. If Shares are
5
<PAGE>
purchased or transferred without a request for the issuance of a
Share Certificate, Fund Services shall merely note on its stock
registry records the issuance or transfer of the Shares and
fractions thereof and credit or debit, as appropriate, the
Unissued Certificate Account and the respective Shareholders'
accounts with the Shares. Whenever Shares, and fractions
thereof, owned by Shareholders are surrendered for redemption,
Fund Services may process the transactions by making appropriate
entries in the stock transfer records, and debiting the Unissued
Certificate Account and the record of issued Shares outstanding;
it shall be unnecessary for Fund Services to reissue Share
Certificates in the name of the Fund.
SECTION 11. Fund Services shall also perform the usual
duties and function required of a stock transfer agent for a
corporation, including but not limited to (i) issuing Share
Certificates as treasury Shares, as directed by Written
Instructions, and (ii) transferring Share Certificates from one
Shareholder to another in the usual manner. Fund Services may
rely conclusively and act without further investigation upon any
list, instruction, certification, authorization, Share
Certificate or other instrument or paper reasonably believed by
it in good faith to be genuine and unaltered, and to have been
signed, countersigned or executed or authorized by a duly-
authorized person or persons, or by the Fund, or upon the advice
of counsel for the Fund or for Fund Services. Fund Services may
6
<PAGE>
record any transfer of Share Certificates which it reasonably
believes in good faith to have been duly authorized, or may
refuse to record any transfer of Share Certificates if, in good
faith, it reasonably deems such refusal necessary in order to
avoid any liability on the part of either the Fund or Fund
Services.
SECTION 12. Fund Services shall notify the Fund of any
request or demand for the inspection of the Fund's share records.
Fund Services shall abide by the Fund's instructions for granting
or denying the inspection; provided, however, Fund Services may
grant the inspection without such instructions if it is advised
by its counsel that failure to do so will result in liability to
Fund Services.
SECTION 13. Fund Services shall observe the following
procedures in handling funds received:
(a) Upon receipt at the office designated by the Fund
of any check or other order drawn or endorsed to the Fund or
otherwise identified as being for the account of the Fund, and,
in the case of a new account, accompanied by a new account
application or sufficient information to establish an account as
provided in the Prospectus, Fund Services shall stamp the
transmittal document accompanying such check or other order with
the name of the Fund and the time and date of receipt and shall
forthwith deposit the proceeds thereof in the custodial account
of the Fund.
7
<PAGE>
(b) In the event that any check or other order for the
purchase of Shares is returned unpaid for any reason, Fund
Services shall, in the absence of other instructions from the
Fund, advise the Fund of the returned check and prepare such
documents and information as may be necessary to cancel promptly
any Shares purchased on the basis of such returned check and any
accumulated income dividends and capital gains distributions paid
on such Shares.
(c) As soon as possible after 4:00 p.m., Eastern time
or at such other times as the Fund may specify in Written or Oral
Instructions for any Series (the "Valuation Time") on each
Business Day Fund Services shall obtain from the Fund's Adviser a
quotation (on which it may conclusively rely) of the net asset
value, determined as of the Valuation Time on that day. On each
Business Day Fund Services shall use the net asset value(s)
determined by the Fund's Adviser to compute the number of Shares
and fractional Shares to be purchased and the aggregate purchase
proceeds to be deposited with the Custodian. As necessary but no
more frequently than daily (unless a more frequent basis is
agreed to by Fund Services), Fund Services shall place a purchase
order with the Custodian for the proper number of Shares and
fractional Shares to be purchased and promptly thereafter shall
send written confirmation of such purchase to the Custodian and
the Fund.
8
<PAGE>
SECTION 14. Having made the calculations required by
SECTION 13, Fund Services shall thereupon pay the Custodian the
aggregate net asset value of the Shares purchased. The aggregate
number of Shares and fractional Shares purchased shall then be
issued daily and credited by Fund Services to the Unissued
Certificate Account. Fund Services shall also credit each
Shareholder's separate account with the number of Shares
purchased by such Shareholder. Fund Services shall mail written
confirmation of the purchase to each Shareholder or the
Shareholder's representative and to the Fund if requested. Each
confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are
outstanding (if any), the amount invested and the price paid for
the newly-purchased Shares.
SECTION 15. Prior to the Valuation Time on each
Business Day, as specified in accordance with SECTION 13, Fund
Services shall process all requests to redeem Shares and, with
respect to each Series, shall advise the Custodian of (i) the
total number of Shares available for redemption and (ii) the
number of Shares and fractional Shares requested to be redeemed.
Upon confirmation of the net asset value by the Fund's Adviser,
Fund Services shall notify the Fund and the Custodian of the
redemption, apply the redemption proceeds in accordance with
SECTION 16 and the Prospectus, record the redemption in the stock
registry books, and debit the redeemed Shares from the Unissued
9
<PAGE>
Certificates Account and the individual account of the
Shareholder.
In lieu of carrying out the redemption procedures
described in the preceding paragraph, Fund Services may, at the
request of the Fund, sell Shares to the Fund as repurchases from
Shareholders, provided that the sale price is not less than the
applicable redemption price. The redemption procedures shall
then be appropriately modified.
SECTION 16. Fund Services will carry out the following
procedures with respect to Share redemptions:
(a) As to each request received by the Fund from or on
behalf of a Shareholder for the redemption of Shares, and unless
the right of redemption has been suspended as contemplated by the
Prospectus, Fund Services shall, within seven days after receipt
of such redemption request, either (i) mail a check in the amount
of the proceeds of such redemption to the person designated by
the Shareholder or other person to receive such proceeds or, (ii)
in the event redemption proceeds are to be wired through the
Federal Reserve Wire System or by bank wire pursuant to
procedures described in the Prospectus, cause such proceeds to be
wired in Federal funds to the bank or trust company account
designated by the Shareholder to receive such proceeds. Funds
Services shall also prepare and send a confirmation of such
redemption to the Shareholder. Redemptions in kind shall be made
only in accordance with such Written Instructions as Fund
10
<PAGE>
Services may receive from the Fund. The requirements as to
instruments of transfer and other documentation, the
determination of the appropriate redemption price and the time of
payment shall be as provided in the Prospectus, subject to such
additional requirements consistent therewith as may be
established by mutual agreement between the Fund and Fund
Services. In the case of a request for redemption that does not
comply in all respects with the requirements for redemption, Fund
Services shall promptly so notify the Shareholder and shall
effect such redemption at the price in effect at the time of
receipt of documents complying with such requirements. Fund
Services shall notify the Fund's Custodian and the Fund on each
Business Day of the amount of cash required to meet payments made
pursuant to the provisions of this paragraph and thereupon the
Fund shall instruct the Custodian to make available to Fund
Services in timely fashion sufficient funds therefor.
(b) Procedures and standards for effecting and
accepting redemption orders from Shareholders by telephone or by
such check writing service as the Fund may institute may be
established by mutual agreement between Fund Services and the
Fund consistent with the Prospectus.
(c) For purposes of redemption of Shares that have been
purchased by check within fifteen (15) days prior to receipt of
the redemption request, the Fund shall provide Fund Services with
11
<PAGE>
Written Instructions concerning the time within which such
requests may be honored.
(d) Fund Services shall process withdrawal orders duly
executed by Shareholders in accordance with the terms of any
withdrawal plan instituted by the Fund and described in the
Prospectus. Payments upon such withdrawal orders and redemptions
of Shares held in withdrawal plan accounts in connection with
such payments shall be made at such times as the Fund may
determine in accordance with the Prospectus.
(e) The authority of Fund Services to perform its
responsibilities under SECTIONS 15 and 16 with respect to the
Shares of any Series shall be suspended if Fund Services receives
notice of the suspension of the determination of the net asset
value of the Series.
SECTION 17. Upon the declaration of each dividend and
each capital gains distribution by the Fund's Trustees, the Fund
shall notify Fund Services of the date of such declaration, the
amount payable per Share, the record date for determining the
Shareholders entitled to payment, the payment and the
reinvestment date price.
SECTION 18. Upon being advised by the Fund of the
declaration of any income dividend or capital gains distribution
on account of its Shares, Fund Services shall compute and prepare
for the Fund records crediting such distributions to
Shareholders. Fund Services shall, on or before the payment date
12
<PAGE>
of any dividend or distribution, notify the Fund and the
Custodian of the estimated amount required to pay any portion of
a dividend or distribution which is payable in cash, and
thereupon the Fund shall, on or before the payment date of such
dividend or distribution, instruct the Custodian to make
available to Fund Services sufficient funds for the payment of
such cash amount. Fund Services will, on the designated payment
date, reinvest all dividends in additional shares and promptly
mail to each Shareholder at his address of record a statement
showing the number of full and fractional Shares (rounded to
three decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if a
Shareholder elects to receive dividends in cash, Fund Services
shall prepare a check in the appropriate amount and mail it to
the Shareholder at his address of record within five (5) business
days after the designated payment date, or transmit the
appropriate amount in Federal funds in accordance with the
Shareholder's agreement with the Fund.
SECTION 19. Fund Services shall prepare and maintain
for the Fund records showing for each Shareholder's account the
following:
A. The name, address and tax identification number of
the Shareholder;
B. The number of Shares of each Series held by the
Shareholder;
13
<PAGE>
C. Historical information including dividends paid and
date and price for all transactions;
D. Any stop or restraining order placed against such
account;
E. Information with respect to the withholding of any
portion of income dividends or capital gains distributions as are
required to be withheld under applicable law;
F. Any dividend or distribution reinvestment election,
withdrawal plan application, and correspondence relating to the
current maintenance of the account;
G. The certificate numbers and denominations of any
Share Certificates issued to the Shareholder; and
H. Any additional information required by Fund
Services to perform the services contemplated by this Agreement.
Fund Services agrees to make available upon request by
the Fund or the Fund's Adviser and to preserve for the periods
prescribed in Rule 31a-2 of the Investment Company Act any
records related to services provided under this Agreement and
required to be maintained by Rule 31a-1 of that Act, including:
(i) Copies of the daily transaction register for each
Business Day of the Fund;
(ii) Copies of all dividend, distribution and
reinvestment blotters;
(iii) Schedules of the quantities of Shares of each
Series distributed in each state for purposes of any state's laws
14
<PAGE>
or regulations as specified in Oral or Written Instructions given
to Fund Services from time to time by the Fund or its agents; and
(iv) Such other information, including Shareholder
lists, and statistical information as may be agreed upon from
time to time by the Fund and Fund Services.
SECTION 20. Fund Services shall maintain those records
necessary to enable the Fund to file, in a timely manner, form N-
SAR (Semi-Annual Report) or any successor report required by the
Investment Company Act or rules and regulations thereunder.
SECTION 21. Fund Services shall cooperate with the
Fund's independent public accountants and shall take reasonable
action to make all necessary information available to such
accountants for the performance of their duties.
SECTION 22. In addition to the services described
above, Fund Services will perform other services for the Fund as
may be mutually agreed upon in writing from time to time, which
may include preparing and filing Federal tax forms with the
Internal Revenue Service, and, subject to supervisory oversight
by the Fund's Adviser, mailing Federal tax information to
Shareholders, mailing semi-annual Shareholder reports, preparing
the annual list of Shareholders, mailing notices of Shareholders'
meetings, proxies and proxy statements and tabulating proxies.
Fund Services shall answer the inquiries of certain Shareholders
related to their share accounts and other correspondence
requiring an answer from the Fund. Fund Services shall maintain
15
<PAGE>
dated copies of written communications from Shareholders, and
replies thereto.
SECTION 23. Nothing contained in this Agreement is
intended to or shall require Fund Services, in any capacity
hereunder, to perform any functions or duties on any day other
than a Business Day. Functions or duties normally scheduled to
be performed on any day which is not a Business Day shall be
performed on, and as of, the next Business Day, unless otherwise
required by law.
SECTION 24. For the services rendered by Fund Services
as described above, the Fund shall pay to Fund Services an
annualized fee at a rate to be mutually agreed upon from time to
time. Such fee shall be prorated for the months in which this
Agreement becomes effective or is terminated. In addition, the
Fund shall pay, or Fund Services shall be reimbursed for, all
out-of-pocket expenses incurred in the performance of this
Agreement, including but not limited to the cost of stationery,
forms, supplies, blank checks, stock certificates, proxies and
proxy solicitation and tabulation costs, all forms and statements
used by Fund Services in communicating with Shareholders of the
Fund or especially prepared for use in connection with its
services hereunder, specific software enhancements as requested
by the Fund, costs associated with maintaining withholding
accounts (including non-resident alien, Federal government and
state), postage, telephone, telegraph (or similar electronic
16
<PAGE>
media) used in communicating with Shareholders or their
representatives, outside mailing services, microfiche/microfilm,
freight charges and off-site record storage. It is agreed in
this regard that Fund Services, prior to ordering any form in
such supply as it estimates will be adequate for more than two
years' use, shall obtain the written consent of the Fund. All
forms for which Fund Services has received reimbursement from the
Fund shall be the property of the Fund.
SECTION 25. Fund Services shall not be liable for any
taxes, assessments or governmental charges that may be levied or
assessed on any basis whatsoever in connection with the Fund or
any Shareholder, excluding taxes assessed against Fund Services
for compensation received by it hereunder.
SECTION 26.
(a) Fund Services shall at all times act in good faith
and with reasonable care in performing the services to be
provided by it under this Agreement, but shall not be liable for
any loss or damage unless such loss or damage is caused by the
negligence, bad faith or willful misconduct of Fund Services or
its employees or agents.
(b) The Fund shall indemnify and hold Fund Services
harmless from all loss, cost, damage and expense, including
reasonable expenses for counsel, incurred by it resulting from
any claim, demand, action or suit in connection with the
performance of its duties hereunder, or as a result of acting
17
<PAGE>
upon any instruction reasonably believed by it to have been
properly given by a duly authorized officer of the Fund, or upon
any information, data, records or documents provided to Fund
Services or its agents by computer tape, telex, CRT data entry or
other similar means authorized by the Fund; provided that this
indemnification shall not apply to actions or omissions of Fund
Services in cases of its own bad faith, willful misconduct or
negligence, and provided further that if in any case the Fund may
be asked to indemnify or hold Fund Services harmless pursuant to
this Section, the Fund shall have been fully and promptly advised
by Fund Services of all material facts concerning the situation
in question. The Fund shall have the option to defend Fund
Services against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects it will
so notify Fund Services, and thereupon the Fund shall retain
competent counsel to undertake defense of the claim, and Fund
Services shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
paragraph. Fund Services shall in no case confess any claim or
make any compromise in any case in which the Fund may be asked to
indemnify Fund Services except with the Fund's prior written
consent.
Without limiting the foregoing:
(i) Fund Services may rely upon the advice of the Fund
or counsel to the Fund or Fund Services, and upon statements of
18
<PAGE>
accountants, brokers and other persons believed by Fund Services
in good faith to be expert in the matters upon which they are
consulted. Fund Services shall not be liable for any action
taken in good faith reliance upon such advice or statements;
(ii) Fund Services shall not be liable for any action
reasonably taken in good faith reliance upon any Written
Instructions or certified copy of any resolution of the Fund's
Trustees, including a Written Instruction authorizing Fund
Services to make payment upon redemption of Shares without a
signature guarantee; provided, however, that upon receipt of a
Written Instruction countermanding a prior Instruction that has
not been fully executed by Fund Services, Fund Services shall
verify the content of the second Instruction and honor it, to the
extent possible. Fund Services may rely upon the genuineness of
any such document, or copy thereof, reasonably believed by Fund
Services in good faith to have been validly executed;
(iii) Fund Services may rely, and shall be protected by
the Fund in acting, upon any signature, instruction, request,
letter of transmittal, certificate, opinion of counsel,
statement, instrument, report, notice, consent, order, or other
paper or document reasonably believed by it in good faith to be
genuine and to have been signed or presented by the purchaser,
the Fund or other proper party or parties; and
(d) Fund Services may, with the consent of the Fund,
subcontract the performance of any portion of any service to be
19
<PAGE>
provided hereunder, including with respect to any Shareholder or
group of Shareholders, to any agent of Fund Services and may
reimburse the agent for the services it performs at such rates as
Fund Services may determine; provided that no such reimbursement
will increase the amount payable by the Fund pursuant to this
Agreement; and provided further, that Fund Services shall remain
ultimately responsible as transfer agent to the Fund.
SECTION 27. The Fund shall deliver or cause
to be delivered over to Fund Services (i) an accurate list of
Shareholders, showing each Shareholder's address of record,
number of Shares of each Series owned and whether such Shares are
represented by outstanding Share Certificates or by non-
certificated Share accounts and (ii) all Shareholder records,
files, and other materials necessary or appropriate for proper
performance of the functions assumed by the under this Agreement
(collectively referred to as the "Materials"). The Fund shall
indemnify Fund Services and hold it harmless from any and all
expenses, damages, claims, suits, liabilities, actions, demands
and losses arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such Materials, or
out of the failure of the Fund to provide any portion of the
Materials or to provide any information in the Fund's possession
needed by Fund Services to knowledgeably perform its functions;
provided the Fund shall have no obligation to indemnify Fund
Services or hold it harmless with respect to any expenses,
20
<PAGE>
damages, claims, suits, liabilities, actions, demands or losses
caused directly or indirectly by acts or omissions of Fund
Services or the Fund's Adviser.
SECTION 28. This Agreement may be amended from time to
time by a written supplemental agreement executed by the Fund and
Fund Services and without notice to or approval of the
Shareholders; provided this Agreement may not be amended in any
manner which would substantially increase the Fund's obligations
hereunder unless the amendment is first approved by the Fund's
Trustees, including a majority of the Trustees who are not a
party to this Agreement or interested persons of any such party,
at a meeting called for such purpose, and thereafter is approved
by the Fund's Shareholders if such approval is required under the
Investment Company Act or the rules and regulations thereunder.
The parties hereto may adopt procedures as may be appropriate or
practical under the circumstances, and Fund Services may
conclusively rely on the determination of the Fund that any
procedure that has been approved by the Fund does not conflict
with or violate any requirement of its Articles of Incorporation
or Declaration of Trust, By-Laws or Prospectus, or any rule,
regulation or requirement of any regulatory body.
SECTION 29. The Fund shall file with Fund Services a
certified copy of each operative resolution of its Trustees
authorizing the execution of Written Instructions or the
transmittal of Oral Instructions and setting forth authentic
21
<PAGE>
signatures of all signatories authorized to sign on behalf of the
Fund and specifying the person or persons authorized to give Oral
Instructions on behalf of the Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or
persons designated therein to act and shall be considered in full
force and effect, with Fund Services fully protected in acting in
reliance therein, until Fund Services receives a certified copy
of a replacement resolution adding or deleting a person or
persons authorized to give Written or Oral Instructions. If the
officer certifying the resolution is authorized to give Oral
Instructions, the certification shall also be signed by a second
officer of the Fund.
SECTION 30. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or supplement
hereto, shall have the meanings specified below, insofar as the
context will allow.
(a) Business Day: Any day on which the Fund is open
for business as described in the Prospectus.
(b) Custodian: The term Custodian shall mean the
Fund's current custodian or any successor custodian acting as
such for the Fund.
(c) Fund's Adviser: The term Fund's Adviser shall mean
Alliance Capital Management L.P. or any successor thereto who
acts as the investment adviser or manager of the Fund.
22
<PAGE>
(d) Oral Instructions: The term Oral Instructions
shall mean an authorization, instruction, approval, item or set
of data, or information of any kind transmitted to Fund Services
in person or by telephone, vocal telegram or other electronic
means, by a person or persons reasonably believed in good faith
by Fund Services to be a person or persons authorized by a
resolution of the Trustees of the Fund to give Oral Instructions
on behalf of the Fund. Each Oral Instruction shall specify
whether it is applicable to the entire Fund or a specific Series
of the Fund.
(e) Prospectus: The term Prospectus shall mean a
prospectus and related statement of additional information
forming part of a currently effective registration statement
under the Investment Company Act and, as used with the respect to
Shares or Shares of a Series, shall mean the prospectuses and
related statements of additional information covering the Shares
or Shares of the Series.
(f) Securities: The term Securities shall mean bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
other securities and investments from time to time owned by the
Fund.
(g) Series: The term Series shall mean any series of
Shares of the common stock of the Fund that the Fund may
establish from time to time.
23
<PAGE>
(h) Share Certificates: The term Share Certificates
shall mean the stock certificates for the Shares.
(i) Shareholders: The term Shareholders shall mean the
registered owners from time to time of the Shares, as reflected
on the stock registry records of the Fund.
(j) Written Instructions: The term Written
Instructions shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to
Fund Services in original writing containing original signatures,
or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or
documentary means, at the request of a person or persons
reasonably believed in good faith by Fund Services to be a person
or persons authorized by a resolution of the Trustees of the Fund
to give Written Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the Fund.
SECTION 31. Fund Services shall not be liable for the
loss of all or part of any record maintained or preserved by it
pursuant to this Agreement or for any delays or errors occurring
by reason of circumstances beyond its control, including but not
limited to acts of civil or military authorities, national
emergencies, fire, flood or catastrophe, acts of God,
insurrection, war, riot, or failure of transportation,
communication or power supply, except to the extent that Fund
Services shall have failed to use its best efforts to minimize
24
<PAGE>
the likelihood of occurrence of such circumstances or to mitigate
any loss or damage to the Fund caused by such circumstances.
SECTION 32. The Fund may give Fund Services sixty (60)
days and Fund Services may give the Fund ninety (90) days written
notice of the termination of this Agreement, such termination to
take effect at the time specified in the notice. Upon notice of
termination, the Fund shall use its best efforts to obtain a
successor transfer agent. If a successor transfer agent is not
appointed within ninety (90) days after the date of the notice of
termination, the Trustees of the Fund shall, by resolution,
designate the Fund as its own transfer agent. Upon receipt of
written notice from the Fund of the appointment of the successor
transfer agent and upon receipt of Oral or Written Instructions
Fund Services shall, upon request of the Fund and the successor
transfer agent and upon payment of Fund Services reasonable
charges and disbursements, promptly transfer to the successor
transfer agent the original or copies of all books and records
maintained by Fund Services hereunder and cooperate with, and
provide reasonable assistance to, the successor transfer agent in
the establishment of the books and records necessary to carry out
its responsibilities hereunder.
SECTION 33. Any notice or other communication required
by or permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or sent by
first-class mail, postage prepaid, to the respective parties.
25
<PAGE>
Notice to the Fund shall be given as follows until
further notice:
Alliance Money Market Fund
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
Notice to Fund Services shall be given as follows until
further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 34. The Fund represents and warrants to Fund
Services that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly
authorized by resolution of the Fund's Trustees. Fund Services
represents and warrants to the Fund that the execution and
delivery of this Agreement by the undersigned officer of Fund
Services has also been duly and validly authorized.
SECTION 35. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original,
and shall become effective on the last date of signature below
unless otherwise agreed by the parties. Unless sooner terminated
pursuant to SECTION 32, this Agreement will continue until
February 28, 1996 and will continue in effect thereafter for
successive 12 month periods only if such continuance is
specifically approved at least annually by the Trustees or by a
vote of the shareholders of the Fund and in either case by a
majority of the Trustees who are not parties to this Agreement or
26
<PAGE>
interested persons of any such party, at a meeting called for the
purpose of voting on this Agreement.
SECTION 36. This Agreement shall extend to and shall
bind the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of Fund
Services or by Fund Services without the written consent of the
Fund, authorized or approved by a resolution of the Fund's
Trustees. Notwithstanding the foregoing, either party may assign
this Agreement without the consent of the other party so long as
the assignee is an affiliate, parent or subsidiary of the
assigning party and is qualified to act under the Investment
Company Act, as amended from time to time.
SECTION 37. This Agreement shall be governed by the
laws of the State of New Jersey.
WITNESS the following signatures:
ALLIANCE MONEY MARKET FUND
BY:/s/ Ronald M. Whitehill
_____________________
Ronald M. Whitehill
TITLE: President
ALLIANCE FUND SERVICES, INC.
BY:/s/ Valerie J. Hugo
_____________________
Valerie J. Hugo
TITLE: Senior Vice President
27
00250217.AJ9
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT made this 16th day of March, 1995, by and
between ALLIANCE MONEY MARKET FUND (the "Trust"), a Massachusetts
business trust and ADP FINANCIAL INFORMATION SERVICES, INC., a
Delaware corporation (the "Administrator").
W I T N E S S E T H :
In consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as
follows:
FIRST: The Trust on behalf of each of its series and
any new series to be created hereby authorizes the Administrator
to provide administrative services to the Trust in accordance
with the terms and conditions of this Agreement. The
Administrator's services shall be subject to the direction and
control of the Trustees of the Trust and shall be performed under
the direction of the appropriate Trust officers. The
Administrator's functions shall be entirely ministerial in
nature, and it shall not have any responsibility or authority for
the management of the Trust, the determination of its policies,
or for any matter pertaining to the distribution of securities
issued by the Trust.
SECOND: The Administrator shall provide certain
administration services including:
<PAGE>
(A) providing a direct interface between the
Trust's Transfer Agent and the Administrator's proprietary
shareholder accounting system (referred to herein as "SHAC")
thereby permitting the creation of omnibus accounting on the
Trust's Transfer Agent's books with individual shareholder
records being maintained on SHAC.
(B) arranging for, or assisting counsel and
auditors in the preparation of, all required Trust tax returns,
proxy statements, semi-annual reports to the Trust's
shareholders, semi-annual reports to be filed with the Securities
and Exchange Commission, and updates to the Trust's Registration
Statement under the Investment Company Act of 1940 (the "Act"),
and arranging for the signature of such documents by the
appropriate Trust officer;
(C) arranging for the coordination of the printing
and mailing (at the Trust's expense) of proxy statements and
other reports or other materials provided to the Trust's
shareholders;
(D) arranging for, or overseeing of, the
computation of performance data including net asset value and
yield;
(E) arranging for, or overseeing, the publication
of current price information in newspapers and publications;
(F) responding to all inquiries or other
communications from shareholders of the Trust and other parties
2
<PAGE>
or, if the inquiry is more properly responded to by the Trust's
transfer agent or distributor, referring the individual making
the inquiry to the appropriate person;
(G) coordinating all relationships between the
Trust and its contractors, including coordinating the negotiation
of agreements, the review of performance of agreements, and the
exchange of information, provided that coordination with the
Trust's distributor shall be limited to the exchange of
information necessary for the administration of the Trust and the
reporting of that information to the Trustees and Trust officers;
and
(H) provide accounting and bookkeeping services
(including the maintenance of such accounts, books and records of
the Trust as may be required by Section 31(a) of the Act and the
rules and regulations thereunder).
THIRD: Any activities performed by the Administrator
under this Agreement shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the provisions
of the Act and of any rules or regulations in force thereunder;
(2) any other applicable provision of law; (3) the provisions of
the Agreement and Declaration of Trust and By-Laws of the Trust
as amended from time to time; (4) any policies and determinations
of the Trustees of the Trust; and (5) the fundamental policies of
each series of the Trust, as reflected in the then current
Registration Statement of the Trust. As used in this Agreement,
3
<PAGE>
the term "Registration Statement" shall mean the Registration
Statement most recently filed by the Trust with the Securities
and Exchange Commission and effective under the Securities Act of
1933, as amended, as such Registration Statement is amended at
such time, and the term "Prospectus" and "Statement of Additional
Information" shall mean for the purposes of this Agreement the
form of the then current prospectus and statement of additional
information for each series of the Trust.
FOURTH: Nothing in this Agreement shall prevent the
Administrator or any officer thereof from acting as administrator
for any other person, firm or corporation and shall not in any
way limit or restrict the Administrator or any of its directors,
officers, employees or affiliates from buying, selling or trading
any securities for its own or their own accounts or for the
accounts of others for whom it or they may be acting, provided,
however, that the Administrator expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Trust under this
Agreement.
FIFTH: The Administrator shall, at its own expense,
provide office space and facilities, equipment and personnel for
the performance of its functions hereunder. The Administrator
will pay the fees and expenses of Trustees who are affiliated
with the Administrator.
4
<PAGE>
SIXTH: The Trust shall pay the Administrator, as full
compensation for all services rendered hereunder, an annual fee
of a maximum of .05 of 1% on behalf of each series payable
monthly and computed on the average daily net assets of the
series at the end of each business day.
SEVENTH: In the event the operating expenses of any
series of the Trust, including all investment advisory and
administration fees, but excluding brokerage commissions and
fees, distribution fees (to the extent allowable under applicable
state law), taxes, interest and extraordinary expenses such as
litigation, for any fiscal year ending on a date on which this
Agreement is in effect exceed the most restrictive expense
limitation applicable to that series imposed by the securities
laws or regulations thereunder of any state in which the shares
of the series are qualified for sale, as such limitations may be
raised or lowered from time to time, the Administrator shall
reduce its administration fee to the extent of its share of such
excess expenses. The amount of any such reduction to be borne by
the Administrator shall be deducted from the monthly
administration fee otherwise payable to the Administrator during
such fiscal year; and if such amounts should exceed the monthly
fee, the Administrator shall pay to such series its share of such
excess expenses no later than the last day of the first month of
the next succeeding fiscal year. For the purposes of this
paragraph, the term "fiscal year" shall exclude the portion of
5
<PAGE>
the current fiscal year which shall have elapsed prior to the
date hereof and shall include the portion of the then current
fiscal year which shall have elapsed at the date of termination
of this Agreement.
EIGHTH:
(A) This Agreement shall go into effect at the
close of business on the date hereof.
(B) This Agreement may be terminated by the
Administrator at any time without penalty upon giving the Trust
sixty (60) days' written notice (which notice may be waived by
the Trust) and may be terminated by the Trust at any time without
penalty upon giving the Administrator sixty (60) days' written
notice (which notice may be waived by the Administrator).
NINTH: The Administrator will not be liable for any
error of judgment or mistake of law or any loss suffered by the
Trust or its shareholders in connection with the performance of
its duties under this Agreement, except a loss resulting from
wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of
its duties under this Agreement.
TENTH: A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as Trustees and
not individually, and that the obligations of this instrument are
6
<PAGE>
not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Trust.
ELEVENTH: Any notice under this Agreement shall be in
writing, addressed and delivered, or mailed, postage paid, to the
other party at such address as such other party may designate for
the receipt of such notices. Until further notice to the other
party, it is agreed that the address of the Trust shall be 1345
Avenue of the Americas, New York, New York 10105, and the address
of the Administrator shall be 2 Journal Square Plaza, Jersey
City, New Jersey 07306.
IN WITNESS WHEREOF, the parties hereto have caused the
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
ALLIANCE MONEY MARKET FUND
/s/ John D. Carifa
By:
John D. Carifa
Chairman of the Trustees
ATTEST:
/s/ Emilie D. Wrapp
ADP FINANCIAL INFORMATION
SERVICES, INC.
/s/ Robert J. Casale
By:
/s/ Robert J. Casale
ATTEST:
/s/ Adam D. Amsterdam
7
00250217.AD8
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of this 16th day of March, 1995, by
and between ALLIANCE MONEY MARKET FUND, a Massachusetts business
trust having its principal place of business at 1345 Avenue of
the Americas, New York, New York 10105 (hereinafter called the
"Fund") and The Bank of New York, a New York corporation
authorized to do a banking business, having its principal place
of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Bank").
W I T N E S S E T H:
In consideration of the mutual agreements herein
contained, the Fund and the Bank hereby agree as follows:
1. The Fund hereby appoints the Bank to perform the
duties hereinafter set forth.
2. The Bank hereby accepts appointment and agrees to
perform the duties hereinafter set forth.
3. Subject to the provisions of paragraphs 5 and 6
below, the Bank shall compute the net asset value per share of
the Fund and shall value the securities held by the Fund (the
"Securities") at such times and dates and in the manner specified
in the then currently effective Prospectus of the Fund. In the
event Schedule 1 hereto, as amended from time to time upon the
agreement of the Fund and the Bank, specifies series of a Fund
and/or classes of shares of the Fund or of a series, all
computations described with respect to the Fund or shares of the
Fund shall be made with respect to each series so specified and
the shares of each such series or such class.
4. Subject to the provisions of paragraphs 5 and 6
below, the Bank shall also compute the net income of the Fund for
dividend purposes and the net income per share at such times and
dates and in the manner specified in the then currently effective
Prospectus of the Fund.
5. To the extent valuation of Securities or
computation of a net asset value, net income for dividend
purposes, or net income per share as specified in the Fund's then
currently effective Prospectus is at any time inconsistent with
any applicable laws or regulations, the Fund shall immediately so
notify the Bank in writing and thereafter shall either furnish
the Bank at all appropriate times with the values of such
Securities, net asset value, net income for dividend purposes or
net income per share, as the case may be, or subject to the prior
<PAGE>
approval of the Bank, instruct the Bank in writing to value
Securities and compute net asset value, net income for dividend
purposes, and net income per share in a manner which the Fund
then represents in writing to be consistent with all applicable
laws and regulations. The Fund may also from time to time,
subject to the prior approval of the Bank, instruct the Bank in
writing to compute the value of the Securities, the Fund's net
asset value, net income for dividend purposes, or net income per
share in a manner other than as specified in paragraphs 3 and 4
of this Agreement. The Fund shall have sole responsibility for
determining the method of valuation of Securities and the method
of computing net asset value, net income for dividend purposes
and net income per share.
6. The Fund shall furnish the Bank with any and all
instructions, explanations, information, specifications and
documentation deemed necessary by the Bank in the performance of
its duties hereunder, including, without limitation, the amounts
or written formula for calculating the amounts and times of
accrual of Fund liabilities and expenses. The Fund shall also
furnish the Bank with bid, offer, or market values of Securities
if the Bank notifies the Fund that same are not available to the
Bank from a security pricing or similar service utilized, or
subscribed to, by the Bank which the Bank in its judgment deems
reliable at the time such information is required for
calculations hereunder. At any time and from time to time, the
Fund also may furnish the Bank with bid, offer, or market values
of Securities and instruct the Bank to use such information in
its calculations hereunder. The Bank shall at no time be
required or obligated to commence or maintain any utilization of,
or subscriptions to, any securities pricing or similar service.
7. The Bank shall advise the Fund and the Fund's
transfer agent of the net asset value, net income for dividend
purposes, and net income per share upon completion of the
computations required to be made by the Bank pursuant to this
Agreement.
8. The Bank shall, as agent for the Fund, maintain
and keep current the books, accounts and other documents (the
"Records") the Fund is required to maintain and preserve by the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder (the "Rules") with respect to the
computations by the Bank under this Agreement. Such Records
shall be preserved in accordance with the Rules and shall be made
available upon reasonable request for inspection by officers,
employees and auditors of the Fund during the Bank's normal
business hours.
9. Records maintained and preserved by the Bank
pursuant to this Agreement shall be and remain the property of
2
<PAGE>
the Fund and shall be surrendered to the Fund promptly upon
request in the form in which such Records have been maintained
and preserved. Upon reasonable request of the Fund, the Bank
shall provide in hard copy or on micro-film, whichever the Bank
shall elect, any Records included in any such delivery which are
maintained by the Bank on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Bank for its
expenses of providing such hard copy or micro-film.
10. The Bank, in performing the services required of it
under the terms of this Agreement, shall be entitled to rely
fully on the accuracy and validity of any and all instructions,
explanations, information, specifications and documentation
furnished to it by the Fund and shall have no duty or obligation
to review the accuracy, validity or propriety of such
instructions, explanations, information, specifications or
documentation, including, without limitation, evaluations of
Securities; the amounts or formula for calculating the amounts
and times of accrual of liabilities and expenses; the amounts
receivable and the amounts payable on the sale or purchase of
Securities; and amounts receivable or amounts payable for the
sale or redemption of Fund shares effected by or on behalf of the
Fund. In the event the Bank's computations hereunder rely, in
whole or in part, upon information, including, without
limitation, bid, offer or market values of Securities or other
assets, or accruals of interest or earnings thereon, from a
pricing or similar service utilized, or subscribed to, by the
Bank which the Bank in its judgment deems reliable, the Bank
shall not be responsible for, under any duty to inquire into, or
deemed to make any assurances with respect to, the accuracy or
completeness of such information.
11. The Bank shall not be required to inquire into any
valuation of Securities or other assets by the Fund or any third
party described in preceding paragraph 10 hereof, even though the
Bank in performing services similar to the services provided
pursuant to this Agreement for others may receive different
valuations of the same or different securities of the same
issuers.
12. The Bank, in performing the services required of it
under the terms of this Agreement, shall not be responsible for
determining whether any interest accruable to the Fund is or will
be actually paid, but will accrue such interest until otherwise
instructed by the Fund.
13. The Bank shall not be responsible for delays or
errors which occur by reason of circumstances beyond its control
in the performance of its duties under this Agreement, including,
without limitation, labor difficulties within or without the
Bank, mechanical breakdowns, flood or catastrophe, acts of God,
3
<PAGE>
failures of transportation, communication or power supply, or
other similar circumstances. Nor shall the Bank be responsible
for delays or failures to supply the information or services
specified in this Agreement where such delays or failures are
caused by the failure of any person(s) other than the Bank to
supply any instructions, explanations, information,
specifications or documentation deemed necessary by the Bank in
the performance of its duties under this Agreement.
14. No provision of this Agreement shall prevent the
Bank from offering services similar or identical to those covered
by this Agreement to any other corporations, associations or
entities of any kind. Any and all operational procedures,
techniques and devices developed by the Bank in connection with
the performance of its duties and obligations under this
Agreement, including those developed in conjunction with the
Fund, shall be and remain the property of the Bank, and the Bank
shall be free to employ such procedures, techniques and devices
in connection with the performance of any other contract with any
other person whether or not such contract is similar or identical
to this Agreement.
15. The Bank may, with respect to questions of law,
apply to and obtain the advice and opinion of counsel to the Fund
or its own counsel and shall be entitled to rely on the advice or
opinion of such counsel. The costs of any such advice or opinion
shall be borne by the Fund.
16. The Bank shall be entitled to rely upon any oral
instructions received by the Bank and reasonably believed by the
Bank to be given by or on behalf of the Fund, even if the Bank
subsequently receives written instructions contradicting such
oral instructions. The books and records of the Bank with
respect to the content of any oral instruction shall be binding
and conclusive.
17. The Bank shall not be liable for any loss, damage
or expense, including counsel fees and other costs and expenses
of a defense against any claim or liability, resulting from,
arising out of, or in connection with its performance hereunder,
including its actions or omissions, the incompleteness or
inaccuracy of any specifications or other information furnished
by the Fund, or for delays caused by circumstances beyond the
Bank's control, unless such loss, damage or expense arises out of
the bad faith, negligence, or willful misconduct of the Bank. In
no event shall the Bank be liable to the Fund or any third party
for special, indirect, or consequential damages, or for lost
profits or loss of business, arising under or in connection with
this Agreement, even if previously informed of the possibility of
such damages and regardless of the form of action.
4
<PAGE>
18. Without limiting the generality of the foregoing,
the Fund shall indemnify the Bank against and save the Bank
harmless from any loss, damage or expense, including counsel fees
and other costs and expenses of a defense against any claim or
liability, arising from any one or more of the following:
(a) Errors in records or instructions,
explanations, information, specifications or documentation of any
kind, as the case may be, supplied to the Bank by any third party
described in preceding paragraph 10 hereof or by or on behalf of
the Fund;
(b) Action or inaction taken or omitted to be
taken by the Bank pursuant to written or oral instructions of the
Fund or otherwise without bad faith, negligence or willful
misconduct;
(c) Any action taken or omitted to be taken by the
Bank in good faith in accordance with the advice or opinion of
counsel for the Fund or its own counsel;
(d) Any improper use by the Fund or its agents,
distributor or investment advisor of any valuations or
computations supplied by the Bank pursuant to this Agreement;
(e) The method of valuation of the Securities and
the method of computing net asset value, net income for dividend
purposes, and net income per share; or
(f) Any bid, offer, market value or other
valuations of Securities, net asset value, net income for
dividend purposes, or net income per share provided by the Fund.
19. In consideration for all of the services to be
performed by the Bank as set forth herein the Bank shall be
entitled to receive reimbursement for all out-of-pocket expenses
and such compensation as may be agreed upon in writing from time
to time between the Bank and the Fund.
20. Attached hereto as Appendix A is a list of persons
duly authorized by the Board of Trustees of the Fund to execute
this Agreement and give any written or oral instructions, or
written or oral specifications, by or on behalf of the Fund.
From time to time the Fund may deliver a new Appendix A to add or
delete any person and the Bank shall be entitled to rely on the
last Appendix A actually received by the Bank.
21. The Fund represents and warrants to the Bank that
it has all requisite power to execute and deliver this Agreement,
to give any written or oral instructions contemplated hereby, and
to perform the actions or obligations contemplated to be
5
<PAGE>
performed by it hereunder, and has taken all necessary action to
authorize such execution, delivery, and performance. By giving
any instruction described in this Agreement to the Bank, the Fund
shall be deemed to have represented that such instruction is
consistent with all applicable laws and regulations and the then
currently effective Prospectus of the Fund.
22. This Agreement shall not be assignable by the Fund
without the prior written consent of the Bank, or by the Bank
without the prior written consent of the Fund.
23. Either of the parties hereto may terminate this
Agreement by giving the other party a notice in writing
specifying the date of such termination, which shall not be less
than ninety (90) days after the date of giving of such notice.
Upon the date set forth in such notice, the Bank shall deliver to
the Fund all Records then the property of the Fund and, upon such
delivery, the Bank shall be relieved of all duties and
responsibilities under this Agreement.
24. This Agreement may not be amended or modified in
any manner except by written agreement executed on behalf of both
parties hereto.
25. This Agreement is executed in the State of New York
and all laws and rules of construction of the State of New York
(other than those relating to choice of laws) shall govern the
rights, duties and obligations of the parties hereto.
26. The performance and provisions of this Agreement
are intended to benefit only the Bank and the Fund, and no rights
shall be granted to any other person by virtue of this Agreement.
27. A copy of the Agreement and Declaration of Trust of
the Fund is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund;
provided, however, that the Declaration of Trust of the Fund
provides that the assets of a particular Series of the Fund shall
under no circumstances be charged with liabilities attributable
to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a
particular Series of the Fund shall look only to the assets of
that particular Series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first written above.
6
<PAGE>
/s/ Ronald M. Whitehill
By:_______________________
/s/ Ronald M. Whitehill
Attest:
/s/ Mary Ann Milley
_______________________
THE BANK OF NEW YORK
/s/ Jorge Ramos
By:_______________________
Name: Jorge Ramos
Title: Vice President
Attest:
/s/ Michael A. Cecero
_______________________
7
<PAGE>
SCHEDULE 1
Series and Classes
8
<PAGE>
APPENDIX A
I, Edmund P. Bergan, Jr., Secretary, of ALLIANCE MONEY
MARKET FUND, a Massachusetts business trust (the "Fund"), do
hereby certify that:
The following individuals serve in the following
positions with the Fund, and each has been duly elected or
appointed by the Board of Trustees of the Fund to each such
position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth
opposite their respective names are their true and correct
signatures. Each such person is authorized to give written or
oral instructions or written or oral specifications by or on
behalf of the Fund to the Bank.
Name Position Signature
Mark D. Gersten Treasurer /s/ Mark D. Gersten
_________________ ________________ ____________________
Joseph J. Mantineo Controller /s/ Joseph J. Mantineo
_________________ ________________ _______________________
Patrick J. Farrell Assistant Controller /s/ Patrick J. Farrell
_________________ ________________ _______________________
Kimberly A. Condito Assistant Controller /s/ Kimberly A. Condito
_________________ __________________ _______________________
9
00250217.AH3
<PAGE>
McGladrey & Pullen, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated
December 18, 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.3 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
Statements of Additional Information under the caption
"Accountants."
/s/ MCGLADREY & PULLEN, LLP
New York, New York
March 30, 1998
00250217.AK6
<PAGE>
ADP-Prime
YIELD COMPUTATION
1. ADD LAST SEVEN DAYS OF DIVIDENDS
24-Nov-97 0.000129605
25-Nov-97 0.000128875
26-Nov-97 0.000129666
27-Nov-97 0.000129666
28-Nov-97 0.000130279
29-Nov-97 0.000130279
30-Nov-97 0.000130279
0.000908649
2. DIVIDE TOTAL OF LAST 7 DAYS OF DIVIDEND BY 7 TO GET
AVERAGE DAILY DIVIDEND.
0.000908649 DIVIDED BY 7 = 0.000129807
3. TAKE AVERAGE DAILY AMOUNT AND MULTIPLY BY 365 TO GET 7
DAY YIELD.
0.000129807 MULTIPLIED BY = 4.74%
4. TAKE 7 DAY YIELD AND COMPOUND OVER A 365 DAY PERIOD TO
GET EFFECTIVE YIELD.
((4.74% DIVIDED BY 365)+1) COMPOUNDED BY 365= 4.85%
00250217.AK3
<PAGE>
ADP Government
YIELD COMPUTATION
1. ADD LAST SEVEN DAYS OF DIVIDENDS
24-Nov-97 0.000126484
25-Nov-97 0.000129181
26-Nov-97 0.000125760
27-Nov-97 0.000125760
28-Nov-97 0.000129433
29-Nov-97 0.000129433
30-Nov-97 0.000129433
0.000895484
2. DIVIDE TOTAL OF LAST 7 DAYS OF DIVIDEND BY 7 TO GET
AVERAGE DAILY DIVIDEND.
0.000895484 DIVIDED BY 7 = 0.000127926
3. TAKE AVERAGE DAILY AMOUNT AND MULTIPLY BY 365 TO GET 7
DAY YIELD.
0.00012926 MULTIPLIED BY = 365 4.67%
4. TAKE 7 DAY YIELD AND COMPOUND OVER A 365 DAY PERIOD TO
GET EFFECTIVE YIELD.
((4.67% DIVIDED BY 365)+1) COMPOUNDED BY 365= 4.78%
00250217.AK3
<PAGE>
ADP-General
YIELD COMPUTATION
1. ADD LAST SEVEN DAYS OF DIVIDENDS
24-Nov-97 0.000084251
25-Nov-97 0.000083763
26-Nov-97 0.000084041
27-Nov-97 0.000084041
28-Nov-97 0.000083507
29-Nov-97 0.000083507
30-Nov-97 0.000083507
0.000586637
2. DIVIDE TOTAL OF LAST 7 DAYS OF DIVIDEND BY 7 TO GET
AVERAGE DAILY DIVIDEND.
0.000586637 DIVIDED BY 7 = 0.000083805
3. TAKE AVERAGE DAILY AMOUNT AND MULTIPLY BY 365 TO GET 7
DAY YIELD.
0.000083805 MULTIPLIED BY 365 = 3.06%
4. TAKE 7 DAY YIELD AND COMPOUND OVER A 365 DAY PERIOD TO
GET EFFECTIVE YIELD.
((3.06% DIVIDED BY 365)+1) COMPOUNDED BY 365= 3.11%
00250217.AK3
<PAGE>
[ARTICLE] 6
[CIK] 0000932256
[NAME] ALLIANCE MONEY MARKET FUND - PRIME PORTFOLIO
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] NOV-30-1997
[PERIOD-END] NOV-30-1997
[INVESTMENTS-AT-COST] 3,284,622,177
[INVESTMENTS-AT-VALUE] 3,284,622,177
[RECEIVABLES] 15,218,253
[ASSETS-OTHER] 1,631,910
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 3,301,472,340
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,571,607
[TOTAL-LIABILITIES] 3,571,607
[SENIOR-EQUITY] 3,297,874
[PAID-IN-CAPITAL-COMMON] 137,357,786
[SHARES-COMMON-STOCK] 3,297,874,004
~SHARES-COMMON-PRIOR> 2,771,770,903
<ACCUMULATED-NIT-CURRENT> 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 26,728
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 3,297,900,732
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 173,672,798
[OTHER-INCOME] 0
[EXPENSES-NET] 30,745,322
[NET-INVESTMENT-INCOME] 142,927,476
[REALIZED-GAINS-CURRENT] 25,954
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 142,953,429
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (142,927,476)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 15,146,343,094
[NUMBER-OF-SHARES-REDEEMED] (14,763,167,469)
[SHARES-REINVESTED] 142,927,476
[NET-CHANGE-IN-ASSETS] 526,129,054
<ACCUMULATED-NIT-PRIOR> 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 15,372,611
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 32,513,419
<PAGE>
[AVERAGE-NET-ASSETS] 3,074,532,288
<PER-SHARE-NAY-BEGIN> 1.00
<PER-SHARE-NIT> 0.046
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] (0.046)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
<PER-SHARE-NAY-END> 1.00
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250132.AL0
<PAGE>
[ARTICLE] 6
[CIK] 0000932256
[NAME] ALLIANCE MONEY MARKET FUND - GOVERNMENT PORTFOLIO
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] NOV-30-1997
[PERIOD-END] NOV-30-1997
[INVESTMENTS-AT-COST] 125,124,741
[INVESTMENTS-AT-VALUE] 125,124,741
[RECEIVABLES] 573,624
[ASSETS-OTHER] 95,720
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 125,794,085
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,927,511
[TOTAL-LIABILITIES] 1,927,511
[SENIOR-EQUITY] 123,866
[PAID-IN-CAPITAL-COMMON] 123,742,521
[SHARES-COMMON-STOCK] 123,866,387
[SHARES-COMMON-PRIOR] 100,308,076
<ACCUMULATED-NIT-CURRENT> 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 187
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 123,866,574
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 6,266,273
[OTHER-INCOME] 0
[EXPENSES-NET] 1,382,737
[NET-INVESTMENT-INCOME] 3,963,913
[REALIZED-GAINS-CURRENT] 10
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 23,558,321
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (5,103,019)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 485,426,533
[NUMBER-OF-SHARES-REDEEMED] (466,971,241)
[SHARES-REINVESTED] 5,103,019
[NET-CHANGE-IN-ASSETS] 23,588,311
<ACCUMULATED-NIT-PRIOR> 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 561,629
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,409,567
<PAGE>
[AVERAGE-NET-ASSETS] 112,325,637
<PER-SHARE-NAY-BEGIN> 1.00
<PER-SHARE-NIT> 0.045
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] (0.045)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
<PER-SHARE-NAY-END> 1.00
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250132.AL1
<PAGE>
[ARTICLE] 6
[CIK] 0000932256
[NAME] ALLIANCE MONEY MARKET FUND - GENERAL MUNICIPAL PORTFOLIO
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] NOV-30-1997
[PERIOD-END] NOV-30-1997
[INVESTMENTS-AT-COST] 136,377,464
[INVESTMENTS-AT-VALUE] 136,377,464
[RECEIVABLES] 1,200,177
[ASSETS-OTHER] 82,807
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 137,660,448
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 302,062
[TOTAL-LIABILITIES] 302,062
[SENIOR-EQUITY] 137,358
[PAID-IN-CAPITAL-COMMON] 137,220,429
[SHARES-COMMON-STOCK] 137,357,786
[SHARES-COMMON-PRIOR] 123,485,796
<ACCUMULATED-NIT-CURRENT> 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 600
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 137,358,386
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 5,346,650
[OTHER-INCOME] 0
[EXPENSES-NET] 1,382,737
[NET-INVESTMENT-INCOME] 3,963,913
[REALIZED-GAINS-CURRENT] (15)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 13,871,975
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (3,963,913)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 536,421,356
[NUMBER-OF-SHARES-REDEEMED] (526,513,279)
[SHARES-REINVESTED] 3,963,913
[NET-CHANGE-IN-ASSETS] 13,871,990
<ACCUMULATED-NIT-PRIOR> 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 691,369
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,667,902
<PAGE>
[AVERAGE-NET-ASSETS] 138,273,664
<PER-SHARE-NAY-BEGIN> 1.00
<PER-SHARE-NIT> 0.029
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] (0.029)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
<PER-SHARE-NAY-END> 1.00
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250132.AL2
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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 S. Borisoff
________________________
Richard S. Borisoff
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia 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
Environment Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Global Strategic Income Trust, Inc., Alliance
Government Reserves, Alliance Greater China 97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, 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., Alliance World
Income Trust, Inc., Alliance Worldwide Privatization Fund,
Inc., Fiduciary Management Associates, The Alliance Fund,
Inc., The Alliance Portfolios, and The Hudson River Trust,
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/ John D. Carifa
___________________________
John D. Carifa
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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/ Jeffrey M. Cole
________________________
Jeffrey M. Cole
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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 J. Daly
________________________
Richard J. Daly
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Capital Reserves, Alliance Global
Dollar Government Fund, Inc., Alliance Global Small Cap
Fund, Inc., Alliance Global Strategic Income Trust, Inc.,
Alliance Government Reserves, Alliance Greater China 97
Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance
High Yield Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance Limited Maturity Government Fund, Inc., Alliance
Money Market Fund, 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 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.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates,
The Alliance Fund, Inc., The Alliance Portfolios and the
Hudson River Trust, 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/ William H. Foulk, Jr.
___________________________
William H. Foulk, Jr.
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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/ Arthur S. Kranseler
________________________
Arthur S. Kranseler
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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/ Robert A. Lewis
________________________
Robert A. Lewis
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Growth and Income
Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, 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
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance World Income Trust, Inc., Alliance
Worldwide Privatization Fund, Inc., Fiduciary Management
Associates, The Alliance Fund, Inc. and The Hudson River
Trust, 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/ Clifford L. Michel
___________________________
Clifford L. Michel
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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/ William L. Rhoads III
________________________
William L. Rhoads III
Dated: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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: September 9, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of 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: September 9, 1997
