This is filed pursuant to Rule 497(e). File Nos.: 33-85850 and
811-08838.
[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.............................................
FINANCIAL STATEMENTS............................................
APPENDIX A -- DESCRIPTION OF MUNICIPAL SECURITIES...............
APPENDIX B -- DESCRIPTION OF SECURITIES RATINGS.................
__________________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.
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INVESTMENT OBJECTIVES AND POLICIES
_______________________________________________________________
The Alliance Money Market Fund (the "Fund") is an open-end
management investment company. The Fund consists of seven
distinct portfolios, the Prime Portfolio, the Government
Portfolio, the New Jersey Municipal Portfolio, the New York
Municipal Portfolio, the Connecticut Municipal Portfolio, the
California Municipal Portfolio and the General Municipal
Portfolio. Three of the portfolios, the Prime Portfolio,
Government Portfolio and General Municipal Portfolio (hereinafter
sometimes referred to as a "Portfolio" or the "Portfolios"), are
presently being offered by the Fund.
The investment objectives of each Portfolio are - in the
following order of priority - safety of principal, excellent
liquidity, and, to the extent consistent with the first two
objectives, maximum current income (exempt from income taxes to
the extent described below in the case of the General Municipal
Portfolio). As a matter of fundamental policy, each Portfolio
pursues its objectives by maintaining a portfolio of high-quality
money market securities. The General Municipal Portfolio, except
when assuming a temporary defensive position, must maintain at
least 80% of its total assets in high-quality municipal
securities (as opposed to taxable investments described below).
While no Portfolio may change this policy or 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 the General Municipal
Portfolio's income will be tax-exempt as described below. There
can be no assurance that any Portfolio's objectives will be
achieved.
Each Portfolio will comply with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"), as amended from
time to time, including the diversification, quality and maturity
limitations imposed by the Rule. Accordingly, each Portfolio
will invest in securities which, at the time of investment, have
remaining maturities not exceeding 397 days and the average
maturity of each Portfolio's investment portfolio will not exceed
90 days. A more detailed description of Rule 2a-7 is set forth
on page 3.
PRIME AND GOVERNMENT PORTFOLIOS. The investment objectives
of each of the Prime Portfolio and the Government Portfolio
are - in the following order of priority - safety of principal,
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excellent liquidity, and maximum current income to the extent
consistent with the first two objectives.
GENERAL MUNICIPAL PORTFOLIO. The General Municipal Portfolio
seeks maximum current income that is exempt from Federal income
taxes by investing principally in a diversified portfolio of
high-quality municipal securities. Such income may be subject to
state or local income taxes.
POLICIES APPLICABLE TO EACH PORTFOLIO
RULE 2A-7 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"). 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.
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 an NRSRO.
Under Rule 2a-7 the Prime Portfolio, the General Municipal
Portfolio (effective July 1, 1998) and the Government Portfolio
may not invest more than five percent of their respective assets
in the securities of any one issuer other than the United States
Government, its agencies and instrumentalities. In addition,
the Prime Portfolio and the Government Portfolio may not invest
in a security that has received, or is deemed comparable in
quality to a security that has received, the second highest
rating by the requisite number of NRSROs (a "second tier
security") if immediately after the acquisition thereof either
the Prime Portfolio or the Government Portfolio would have
4
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 General Municipal Portfolio with
respect to its 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
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
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
5
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:
(i) the frequency of trades and quotations for the
security;
(ii) the number of dealers making quotations to purchase
or sell the security;
6
(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 FOREIGN 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 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,
7
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 GENERAL MUNICIPAL PORTFOLIO
MUNICIPAL SECURITIES. The term "municipal securities," as
used in reference to the General Municipal Portfolio in the
Prospectus and this Statement of Additional Information, means
obligations issued by or on behalf of states, territories, and
possessions of the United States or their political subdivisions,
agencies and instrumentalities, the interest from which is exempt
(subject to the alternative minimum tax) from Federal income
taxes. The municipal securities in which the General Municipal
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.)
8
The General Municipal Portfolio will not invest 25% or more
of its total assets in the securities of non-governmental issuers
conducting their principal business activities in any one
industry.
ALTERNATIVE MINIMUM TAX. The General Municipal Portfolio may
invest without limitation in tax-exempt municipal securities
subject to the alternative minimum tax (the "AMT"). 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 the Portfolio invests, such securities
frequently are supported by credit and liquidity enhancements,
such as letters of credit, from third party financial
institutions. The General Municipal Portfolio continuously
monitors the credit quality of such third parties; however,
changes in the credit quality of such a financial institution
9
could cause the Portfolio's investments backed by that
institution to lose value and affect the Portfolio's share price.
TAXABLE SECURITIES. Although the General Municipal Portfolio
is, and expects to be, largely invested in municipal securities,
the Portfolio may elect to invest up to 20% of its total assets
in taxable money market securities when such action is deemed to
be in the best interests of shareholders. Such taxable money
market securities also are limited to remaining maturities not
exceeding 397 days at the time of the Portfolio's investment, and
the Portfolio's municipal and taxable securities are maintained
at a dollar-weighted average of 90 days or less. Taxable money
market securities purchased by the Portfolio may include to those
described below:
1. marketable obligations of, or guaranteed by, the United
States Government, its agencies or instrumentalities; or
2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation; or
3. commercial paper of prime quality rated A-1 or higher by
S&P or Prime-1 by Moody's or, if not rated, issued by companies
which have an outstanding debt issue rated AA or higher by S&P,
or Aa or higher by Moody's. (See Appendix B for a description of
these ratings.)
MUNICIPAL SECURITIES GENERALLY. Municipal securities
historically have not been subject to registration with the
Commission. Obligations of issuers of municipal securities are
subject to the provisions of bankruptcy, insolvency, and other
laws affecting the rights and remedies of creditors, such as the
Bankruptcy Code. In addition, the obligations of such issuers
may become subject to laws enacted in the future by Congress,
state legislatures, or referenda extending the time for payment
of principal and/or interest, or imposing other constraints upon
enforcement of such obligations or upon the ability of
municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the ability
of any issuer to pay, when due, the principal of, and interest
on, its municipal securities may be materially affected.
OTHER INVESTMENT PRACTICES
ASSET-BACKED SECURITIES. 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
10
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 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, as
required by Rule 2a-7, the special purpose entity is deemed to be
the issuer of the asset-backed security, however each Portfolio
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 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 the borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market or 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
11
equal to the full principal amount. The payment of principal and
interest by issuers of certain securities purchased by a
Portfolio may be guaranteed by letters of credit or other credit
facilities offered by banks or other financial institutions. Such
guarantees 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 its 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
12
exercise its rights thereunder for trading purposes. Since the
value of a standby commitment is dependent on the ability of the
standby commitment writer to meet its obligation to repurchase,
each Portfolio's policy is to enter into standby commitment
transactions only with securities dealers which are determined to
present minimal credit risks.
The acquisition of a standby commitment does not affect the
valuation or maturity of the underlying securities which continue
to be valued in accordance with the amortized cost method.
Standby commitments acquired by a Portfolio are valued at zero
in determining net asset value. Where a Portfolio pays directly
or indirectly for a standby commitment, its cost is reflected as
unrealized depreciation for the period during which the
commitment is held. Standby commitments do not affect the
average weighted maturity of a Portfolio's portfolio of
securities. Stand-by commitments are not expected to comprise
more than 5% of any Portfolio's net assets.
WHEN-ISSUED SECURITIES. Securities are frequently offered on
a "when-issued" basis. When so offered, the price, which is
generally expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the
settlement date occurs within one month after the purchase of
bonds and notes. During the period between purchase and
settlement, no payment is made by a Portfolio to the issuer and,
thus, no interest accrues to such Portfolio from the transaction.
When-issued securities may be sold prior to the settlement date,
but a Portfolio makes when-issued commitments only with the
intention of actually acquiring the securities. To facilitate
such acquisitions, the Fund's Custodian will maintain, in a
separate account of each Portfolio, cash, U.S. Government or
other liquid assets, having value equal to, or greater than, such
commitments. Similarly, a separate account will be maintained to
meet obligations in respect of reverse repurchase agreements. On
delivery dates for such transactions, a Portfolio will meet its
obligations from maturities or sales of the securities held in
the separate account and/or from the available cash flow. If a
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
13
size of a particular offering, the maturity of the obligation and
the rating of the issue. Securities with longer maturities tend
to produce higher yields and are generally subject to greater
price movements than obligations with shorter maturities. An
increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. There can
be no assurance, as is true with all investment companies, that a
Portfolio's objectives will be achieved. The achievement of a
Portfolio's investment objectives is dependent in part on the
continuing ability of the issuers of securities in which a
Portfolio invests to meet their obligations for the payment of
principal and interest when due. Each Portfolio generally will
hold securities to maturity rather than follow a practice of
trading. However, a Portfolio may seek to improve portfolio
income by selling certain portfolio securities prior to maturity
in order to take advantage of yield disparities that occur in
securities markets.
REPURCHASE AGREEMENTS. Each Portfolio may also enter into
repurchase agreements pertaining to the types of securities in
which it may invest. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees to resell it to
the vendor at an agreed-upon future date, normally one day or a
few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Each Portfolio requires continuous
maintenance of collateral in an amount equal to, or in excess of,
the market value of the securities which are the subject of the
agreement. In the event that a vendor defaulted on its
repurchase obligation, a Portfolio might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. If the vendor became bankrupt,
the Portfolio might be delayed in selling the collateral.
Repurchase agreements may be entered into with member banks of
the Federal Reserve System (including the Fund's Custodian) or
"primary dealers" (as designated by the Federal Reserve Bank of
New York) in U.S. Government securities. It is each Portfolio's
current practice to enter into repurchase agreements only with
such primary dealers and its Custodian, and the Fund has adopted
procedures for monitoring the creditworthiness of such
organizations. Pursuant to Rule 2a-7, a repurchase agreement is
deemed to be an acquisition of the underlying securities,
provided that the obligation of the seller to repurchase the
securities from the money market fund is (i) collateralized
fully; (ii) the collateral (as defined in such Rule) consists
entirely of cash, U.S. Government securities and other first tier
securities; and (iii) the repurchase agreement would qualify for
an exclusion from any automatic stay of creditors' rights under
14
applicable insolvency law. Accordingly, the vendor of a fully
collateralized repurchase agreement is deemed to be the issuer of
the underlying securities.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio may enter into
reverse repurchase agreements, which involve the sale of
securities held by such Portfolio with an agreement to repurchase
the securities at an agreed upon price, date and interest
payment, although no Portfolio currently intends to enter into
such agreements.
_______________________________________________________________
INVESTMENT RESTRICTIONS
_______________________________________________________________
Unless specified to the contrary, the following restrictions
apply to each Portfolio and are fundamental policies which may
not be changed with respect to each Portfolio without the
affirmative vote of the holders of a majority of such Portfolio's
outstanding voting securities, which means with respect to any
Portfolio (1) 67% or more of the shares represented at a meeting
at which more than 50% of the outstanding shares are present in
person or by proxy or (2) more than 50% of the outstanding
shares, whichever is less. If a percentage restriction is
adhered to at the time of an investment, a later increase or
decrease in percentage resulting from a change in values of
portfolio securities or in the amount of a Portfolio's assets
will not constitute a violation of that restriction.
Each Portfolio:
1. May not, in the case of the Prime Portfolio, invest more
than 25% of its total assets in the securities of issuers
conducting their principal business activities in any one
industry, provided that for purposes of this policy (a) there is
no limitation with respect to investments in municipal securities
(including industrial development bonds), securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, certificates of deposit, bankers' acceptances
and interest-bearing savings deposits, and (b) consumer finance
companies, industrial finance companies and gas, electric, water
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
15
instrumentalities) except that with respect to 25% of its total
assets the General Municipal Portfolio may invest not more than
10% of its total assets in the securities of any one issuer.*
For purposes of such 5% and 10% limitations, the issuer of the
letter of credit or other guarantee backing a participation
interest in a variable rate industrial development bond is deemed
to be the issuer of such participation interest;
3. May not purchase more than 10% of any class of the
voting securities of any one issuer except securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;
4. May not, in the cases of the Prime Portfolio and the
Government Portfolio, borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements for extraordinary or emergency purposes in an
aggregate amount not to exceed 15% (10% in the case of the
Government Portfolio) of the Portfolio's total assets. Such
borrowings may be used, for example, to facilitate the orderly
maturation and sale of portfolio securities during periods of
abnormally heavy redemption requests, if they should occur. Such
borrowings may not be used to purchase investments and such
Portfolio will not purchase any investment while any such
borrowings exist;
5. May not, in the cases of the Prime Portfolio and the
Government Portfolio, pledge, hypothecate, mortgage or otherwise
encumber its assets except to secure borrowings, including
reverse repurchase agreements, effected within the limitations
set forth in restriction 4. To meet the requirements of
regulations in certain states, a Portfolio, as a matter of
operating policy, will limit any such pledging, hypothecating or
mortgaging to 15% of its total assets, valued at market, so long
as shares of such Portfolio are being sold in those states;
6. May not make loans of money or securities except by the
purchase of debt obligations in which a Portfolio may invest
consistent with its investment objectives and policies and by
investment in repurchase agreements;
7. May not enter into repurchase agreements (i) not
terminable within seven days if, as a result thereof, more than
____________________
* As a matter of operating policy, pursuant to Rule 2a-7 the
General Municipal Portfolio will, effective July 1, 1998,
invest no more than 5% of its assets in the securities of
any one issuer. The issuer of a security is determined
pursuant to
Rule 2a-7.
16
10% of a Portfolio's total assets would be committed to such
repurchase agreements (whether or not illiquid) or other illiquid
investments, or (ii) with a particular issuer** if immediately
thereafter more than 5% of such Portfolio's assets would be
committed to repurchase agreements entered into with such issuer;
or
8. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization; (c) invest in real estate (other
than securities secured by real estate or interests therein or
securities issued by companies which invest in real estate or
interests therein), commodities or commodity contracts;
(d) purchase securities on margin, or maintain more than 10% of
its net assets in illiquid securities (which include "restricted
securities" subject to legal restrictions on resale arising from
an issuer's reliance upon certain exemptions from registration
under the Securities Act), however, a Portfolio may purchase
restricted securities determined by the Adviser to be liquid in
accordance with procedures adopted by the Trustees of the Fund;
(e) make short sales of securities or maintain a short position
or write, purchase or sell puts (except for standby commitments
as described in the Prospectus and above), calls, straddles,
spreads or combinations thereof; (f) purchase or retain
securities of any issuer if those officers and Trustees of the
Fund and officers and directors of the Adviser who own
individually more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of the securities of such
issuer; or (g) act as an underwriter of securities.
In addition, the General Municipal Portfolio may not invest
more than 25% of its total assets in municipal securities
(a) whose issuers are located in the same state, or (b) the
interest upon which is paid from revenues of similar-type
projects.
____________________
** Pursuant to Rule 2a-7, the seller of a fully
collateralized repurchase agreement is deemed to be the
issuer of the underlying securities.
17
_______________________________________________________________
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 a Senior Vice
President of 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.
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.
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.
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.
18
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, Suite 100, Greenwich, CT 06830.
ARTHUR S. KRANSELER, 63, is currently an independent
management consultant. He was formerly 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.
19
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.
RAYMOND J. PAPERA, 42, Senior Vice President, is a Senior
Vice President of ACMC with which he has 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.
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- Controller, 32 is an Assistant Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1992.
20
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
pension or retirement benefits to any of its directors or
trustees.
Total Number
Total Number of Investment
of Funds in Portfolios
the Alliance Within the
Fund Complex, Funds,
Compensation Including the Including
from the Fund, as to the Fund,
Aggregate Alliance Fund which the as to which
Compensation Complex, Trustee is a the Trustee
Name of Trustee from the Including the Director or is a Director
of the Fund Fund Fund Trustee or Trustee
________________ ____________ ______________ _____________ ________________
John D. Carifa $0 $0 54 118
Richard S. Borisoff $2,500 $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.
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
21
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 affilate
offies of 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
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
22
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, the Adviser provides investment
advisory services and order placement facilities for each
Portfolio of the Fund and pays all compensation of Trustees of
the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnish the Fund, without charge, with
management supervision and assistance and office facilities.
Under the Advisory Agreement, each of the Portfolios pays an
advisory fee at the annual rate of .50 of 1% of the average daily
net assets of each Portfolio. The fee is accrued daily and paid
monthly. For the year ended November 30, 1997, the Adviser
received from the Prime, Government and General Municipal
Portfolios, net 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 Trustees prior thereto. For the year ended November 30,
1997, the Adviser reimbursed the Prime, Government and General
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,
23
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. ADP does not have any
responsibility or authority for the management of the Portfolios,
the determination of investment policy, or for any matter
pertaining to the distribution of the Fund's shares.
Under the Administration Agreement, ADP may render similar
administrative services to others. The Administration Agreement
is terminable without penalty by the Fund on behalf of each
Portfolio on 60 days' written notice to ADP (which notice may be
24
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.
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
25
.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-
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
26
$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.
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
27
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 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.
28
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
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
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
29
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
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
30
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 the General Municipal Portfolio of the Fund. See,
however, "Alternative Minimum Tax" above.
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the dividends-
received deduction available to corporations. Long-term capital
gains, if any, distributed by the Fund to a shareholder are
taxable to the shareholder as long-term capital gain,
irrespective of the length of time he may have held his shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year near calendar year-end, although
such distributions may be made more frequently if necessary in
order to maintain the Fund's net asset value at $1.00 per share.
31
Interest on indebtedness incurred by shareholders to purchase
or carry shares of the Fund is not deductible for Federal income
tax purposes. Under rules of the Internal Revenue Service for
determining when borrowed funds are used for purchasing or
carrying particular assets, shares may be considered to have been
purchased or carried with borrowed funds even though those funds
are not directly linked to the shares. Further, persons who are
"substantial users" (or related persons) of facilities financed
by private activity bonds (within the meaning of Sections 147(a)
of the Code) should consult their tax advisers before purchasing
shares of the General Municipal Portfolio.
Substantially all of the dividends paid by the General
Municipal Portfolio are anticipated to be exempt from Federal
income taxes. Shortly after the close of each calendar year, a
notice is sent to each shareholder advising him of the total
dividends paid into his account for the year and the portion of
such total that is exempt from Federal income taxes. This
portion is determined by the ratio of the tax-exempt income to
total income for the entire year and, thus, is an annual average
rather than a day-by-day determination for each shareholder.
Each Portfolio generally will be required to withhold tax at
the rate of 31% with respect to dividends of net ordinary income
and net realized capital gains payable to a noncorporate
shareholder unless the shareholder certifies on his subscription
application that the social security or taxpayer identification
number provided is correct and that the shareholder has not been
notified by the Internal Revenue Service that he is subject to
backup withholdings.
STATE INCOME TAX CONSIDERATIONS
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO. Shareholders of
the Prime Portfolio and the Government Portfolio may be subject
to state and local taxes on distributions from the Prime
Portfolio and Government Portfolio. The laws of some states may
exempt from some taxes dividends from the Prime Portfolio or the
Government Portfolio to the extent such dividends are
attributable to interest from obligations of the U.S. Government
and certain of its agencies and instrumentalities.
GENERAL MUNICIPAL PORTFOLIO. Shareholders of the General
Municipal Portfolio may be subject to state and local taxes on
distributions from the General Municipal Portfolio, including
distributions which are exempt from Federal income taxes. Each
investor should consult his own tax adviser to determine the tax
status of distributions from the General Municipal Portfolio in
his particular state and locality.
32
_______________________________________________________________
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 of
shares of another class would be governed by the 1940 Act and the
33
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.
34
% of
Name and Address No. of Shares Portfolio
Prime Portfolio
U.S. Clearing 3,703,820,986 99%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
Government Portfolio
U.S. Clearing 136,987,658 99%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
General Municipal Portfolio
U.S. Clearing 147,101,667 91%
Omnibus Acct.
f/b/o Customers
26 Broadway, 12th Floor
New York, NY 10004-1801
Wayne Hummer 12,338,791 8%
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.
35
LEGAL MATTERS. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, New York, New York, counsel
for the Fund. Seward & Kissel has relied upon the opinion of
Sullivan & Worcester, Boston, Massachusetts, for matters relating
to Massachusetts law.
ACCOUNTANTS. An opinion relating to each Portfolio's
financial statements is given herein by McGladrey & Pullen LLP,
New York, New York, independent auditors for the Fund.
YIELD QUOTATIONS AND PERFORMANCE INFORMATION. Advertisements
containing yield quotations for one or more Portfolios for the
Fund may from time to time be sent to investors or placed in
newspapers, magazines or other media on behalf of the Fund.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933.
Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
of the capital changes, in the value of a hypothetical pre-
existing account having a balance of one share of such Portfolio
at the beginning of such period, (ii) dividing the net change in
account value by the value of the account at the beginning of the
base period to obtain the base period return, and
(iii) multiplying the base period return by (365/7) with the
resulting yield figure carried to the nearest hundredth of one
percent. A Portfolio's effective annual yield represents a
compounding of the annualized yield according to the formula:
effective yield = [(base period return + 1) 365/7] - 1.
The Prime Portfolio's yield for the seven-day period ended
November 30, 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
36
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
the General Municipal Portfolio than from comparable investments
whose income is taxable. For example, for an investor subject to
the top 1997 Federal personal income tax rate, the 3.06% tax-
exempt yield of the General Municipal Portfolio for the seven-day
period ended November 30, 1997 was equivalent to a taxable yield
of 5.07% and the effective yield of 3.11% for such period was
equivalent to a taxable yield of 5.15%.
In this example it is assumed that an investor can fully
deduct the state and local income taxes for Federal income tax
purposes and that the investor is not subject to federal or state
alternative minimum taxes. Taxable equivalent yield is computed
by dividing that portion of the yield of the Portfolio that is
tax exempt (assumed for purposes of the example to be the entire
yield of 5%) by one minus the applicable marginal income tax rate
(39.6% in the case of the General Municipal Portfolio) and adding
the quotient to that portion, if any, of the yield of the General
Municipal Portfolio that is not tax-exempt.
From time to time the General Municipal Portfolio may
advertise hypothetical tax equivalent yields in advertising.
These will be used for illustrative purposes only and not as
representative of the General Municipal Portfolio's past or
future performance.
PERIODIC DISTRIBUTION PLANS. Without affecting shareholders'
right of using any of the methods of redemption described above,
by checking the appropriate boxes on the Application Form
shareholders may elect to participate additionally in the
following plans without any separate charge. Under the Income
Distribution Plan shareholders receive monthly payments of all
the income earned in his or her Portfolio account, with payments
forwarded shortly after the close of the month. Under the
Systematic Withdrawal Plan, shareholders may request checks in
any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, shareholders can
order, via signature-guaranteed letter to the Portfolio, such
periodic payments to be sent to another person.
REPORTS. You will receive semi-annual and annual reports of
the Portfolio(s) in which you are a shareholder as well as a
monthly summary of your account. You can arrange for a copy of
each of your account statements to be sent to other parties.
ADDITIONAL INFORMATION. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
37
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.
38
_______________________________________________________________
FINANCIAL STATEMENTS
_______________________________________________________________
39
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
40
_______________________________________________________________
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.
MUNICIPAL BONDS, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
A-1
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
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APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
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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
safety characteristics will be given a plus (+) designation.
Issues rated SP-2 have satisfactory capacity to pay principal and
interest.
OTHER MUNICIPAL SECURITIES AND COMMERCIAL PAPER
"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+"
and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured, current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available.
While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Commercial paper issuers rated "A" by Standard & Poor's have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward
trend. Typically, the issuer is a strong company in a well-
established industry and has superior management.
B-2
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