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As filed with the Securities and Exchange
Commission on January 27, 1999
File No. 33-85850
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 3
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 4
ALLIANCE MONEY MARKET FUND
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:(800) 221-5672
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Copies of communications to:
Thomas G. MacDonald
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
It is proposed that this filing will become effective (Check
appropriate line)
_____immediately upon filing pursuant to paragraph (b)
_____on (date) pursuant to paragraph (b)
_____60 days after filing pursuant to paragraph (a)(1)
__X__on March 31, 1999 pursuant to paragraph (a)(1)
_____75 days after filing pursuant to paragraph (a)(2)
_____on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
_______ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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ALLIANCE MONEY MARKET FUND
PROSPECTUS
MARCH , 1999
PRIME PORTFOLIO
GOVERNMENT PORTFOLIO
GENERAL MUNICIPAL PORTFOLIO
The Alliance Money Market Fund seeks to provide maximum
current income to the extent consistent with safety
of principal and liquidity.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the
adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
Page
RISK/RETURN SUMMARY....................................
Performance and Bar Chart Information.............
FEES AND EXPENSES OF THE PORTFOLIOS....................
OTHER INFORMATION ABOUT THE PORTFOLIOS' OBJECTIVES,
STRATEGIES, AND RISKS................................
Investment Objectives and Strategies..............
Prime Portfolio...................................
Government Portfolio..............................
General Municipal Portfolio.......................
Risk Considerations...............................
MANAGEMENT OF THE PORTFOLIOS...........................
PURCHASE AND SALE OF SHARES............................
How The Portfolios Values Their Shares............
How To Buy Shares.................................
How To Sell Shares................................
DIVIDENDS, DISTRIBUTIONS AND TAXES.....................
DISTRIBUTION ARRANGEMENTS..............................
FINANCIAL HIGHLIGHTS...................................
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This prospectus describes three Portfolios of the Alliance Money
Market Fund. The Portfolios' investment adviser is Alliance
Capital Management L.P., a global investment manager providing
diversified services to institutions and individuals through a
broad line of investments including more than 100 mutual funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the
Portfolios. You will find additional information about the
Portfolios, including a detailed description of the risks of an
investment in each Portfolio, after this summary. This
prospectus has additional descriptions of the Portfolios'
investments in the discussion under "Other Information About the
Portfolios' Objectives, Strategies, and Risks." That section
also includes more information about the Portfolios, its
investments, and related risks.
OBJECTIVES: The investment objectives of each Portfolio are - in
the following order of priority - safety of principal, excellent
liquidity, and to the extent consistent with these objectives,
maximum current income (exempt from income taxes to the extent
described below in the case of the General Municipal Portfolio).
PRINCIPAL INVESTMENT STRATEGY: The Portfolios are "money market
funds" that seek to maintain a stable net asset value of $1.00
per share. Each Portfolio pursues its objectives by maintaining
a portfolio of high-quality money market securities.
PRINCIPAL RISKS: The principal risks of investing in the
Portfolios are:
-- INTEREST RATE RISK This is the risk that changes in
interest rates will affect the yield or value of the
Portfolios' investments in debt securities.
-- CREDIT RISK This is the risk that the issuer or
guarantor of a debt security, or the counterparty to a
derivatives contract, will be unable or unwilling to
make timely interest or principal payments, or to
otherwise honor its obligations. The degree of risk for
a particular security may by reflected in its credit
rating. Credit risk includes the possibility that any
of the Portfolios' investments will have its credit
ratings downgraded.
Another important thing for you to note:
An investment in the Portfolios is not a deposit in a
bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government
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agency. Although the Portfolios seek to preserve the
value of your investment at $1.00 per share, it is
possible to lose money by investing in the Portfolios.
PERFORMANCE AND BAR CHART INFORMATION
For each Portfolio, the Risk/Return Summary includes a table
showing the Portfolio's average annual returns and a bar chart
showing the Portfolio's annual returns. The table and the bar
chart provide an indication of the historical risk of an
investment in each Portfolio by showing:
-- the Portfolio's average annual returns for one year and
the life of the Portfolio; and
-- changes in the Portfolio's performance from year to year
over the life of the Portfolio.
A Portfolio's past performance does not necessarily indicate how
it will perform in the future.
You may obtain current yield information for any Portfolio by
calling 1-800-221-9513.
PRIME PORTFOLIO
PERFORMANCE TABLE
[Insert Table]
BAR CHART
[Insert Chart]
During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
GOVERNMENT PORTFOLIO
PERFORMANCE TABLE
[Insert Table]
BAR CHART
[Insert Chart]
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During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
GENERAL MUNICIPAL PORTFOLIO
PERFORMANCE TABLE
[Insert Table]
BAR CHART
[Insert Chart]
During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
FEES AND EXPENSES OF THE PORTFOLIOS
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Portfolios.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
The Portfolios have no sales load on purchases or reinvested
dividends, deferred sales loads, or redemption or exchange fees.
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ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM PORTFOLIO ASSETS) AND EXAMPLE
ANNUAL PORTFOLIO OPERATING EXPENSES
PRIME GOVERNMENT GENERAL MUNICIPAL
Management Fees
12b-1 Fees
Other Expenses
Total Portfolio
Operating Expenses
Waiver and/or Expense
Reimbursement*
Net Expenses
_______________
* Reflects Alliance's contractual waiver of a portion of its advisory fee
and/or reimbursement of a portion of the Portfolio's operating expenses.
EXAMPLE
This example is to help you compare the cost of investing in a
Portfolio with the cost of investing in other funds. It assumes
that you invest $10,000 in the Portfolio for the time periods
indicated and then redeem all of your shares at the end of those
periods. It also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses stay the
same. Your actual costs may be higher or lower.
PRIME GOVERNMENT GENERAL MUNICIPAL
1 Year
3 Years
5 Years
10 Years
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OTHER INFORMATION ABOUT THE PORTFOLIOS' OBJECTIVES, STRATEGIES,
AND RISKS
This section of the prospectus provides a more complete
description of the principal investment objectives, strategies,
and risks of the Portfolios.
Please note:
-- Additional descriptions of each Portfolio's strategies
and investments, as well as other strategies and
investments not described below, may be found in the
Portfolio's Statement of Additional Information or SAI.
-- There can be no assurance that any Portfolio will
achieve its investment objectives.
INVESTMENT OBJECTIVES AND STRATEGIES
The Portfolios' investment objectives are safety of principal and
liquidity, and to the extent consistent with these objectives,
maximum current income (exempt from Federal income taxes to the
extent described below in the case of the General Municipal
Portfolio). As money market funds, the Portfolios must meet the
requirements of SEC Rule 2a-7. The Rule imposes strict
requirements on the investment quality, maturity, and
diversification of the Portfolios' investments. Under Rule 2a-7,
the Portfolios' investments must each have a remaining maturity
of no more than 397 days and the Portfolios must maintain an
average weighted maturity that does not exceed 90 days.
PRIME PORTFOLIO
The Portfolio pursues its objectives by investing in high-quality
money market securities. The Portfolio may invest in:
-- marketable obligations issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities;
-- certificates of deposit, bankers' acceptances, and
interest-bearing savings deposits issued or guaranteed
by banks or savings and loans associations (including
foreign branches of U.S. banks or U.S. or foreign
branches of foreign banks) having total assets of more
than $1 billion;
-- high-quality commercial paper issued by U.S. or foreign
companies (rated or determined by the Adviser to be of
comparable quality) and participation interests in loans
extended to such companies;
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-- adjustable rate obligations;
-- restricted securities (i.e., securities subject to legal
or contractual restrictions on resale);
-- asset-backed securities; and
-- repurchase agreements that are fully collateralized.
The Portfolio may invest up to 25% of its total assets in money
market instruments issued by foreign branches of foreign banks.
To the extent the Portfolio makes such investments, consideration
will be given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations,
the possible impact of interruptions in the flow of international
currency transactions, potential political and social instability
or expropriation, imposition of foreign taxes, the lower level of
government supervision of issuers, the difficulty in enforcing
contractual obligations, and the lack of uniform accounting and
financial reporting standards.
The Portfolio does not invest more than 25% of its assets in
securities of issuers in any one industry except for U.S.
Government securities or certificates of deposit and bankers'
acceptances issued or guaranteed by, or interest bearing savings
deposits maintained at, banks and savings institutions and loan
associations (including foreign branches of U.S. banks and U.S.
branches of foreign banks).
GOVERNMENT PORTFOLIO
The Portfolio pursues its objectives by investing in high-quality
money market securities. The Government Portfolio may invest in:
-- marketable obligations issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities;
-- adjustable rate obligations;
-- repurchase agreements that are fully collateralized; and
-- restricted securities (i.e., securities subject to legal
and contractual restrictions on resale).
The Government Portfolio may commit up to 15% of its net assets
to the purchase of when-issued U.S. Government securities.
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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. The
Portfolio's income may be subject to state or local income taxes.
The Portfolio may invest without limit in tax-exempt municipal
securities that are subject to the Federal alternative minimum
tax (the "AMT").
MUNICIPAL SECURITIES. The General Municipal Portfolio's
investments in municipal securities include municipal notes and
short-term municipal bonds. Municipal notes are generally used
to provide for short-term capital needs and generally have
maturities of 397 days or less. Examples include tax
anticipation and revenue anticipation notes, which are generally
issued in anticipation of various seasonal revenues, bond
anticipation notes, and tax-exempt commercial paper. Short-term
municipal bonds may include general obligation bonds, which are
secured by the issuer's pledge of its faith, credit, and taxing
power for payment of principal and interest, and revenue bonds,
which are generally paid from the revenues of a particular
facility or a specific excise or other source.
The General Municipal Portfolio may invest in variable rate
obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a change in
the market rate to which the security's interest rate is tied.
These adjustments tend to minimize changes in the market value of
the obligation and, accordingly, enhance the ability of the
Portfolio to maintain a stable net asset value. Variable rate
securities purchased may include participation interests in
industrial development bonds backed by letters of credit of
Federal Deposit Insurance Corporation member banks having total
assets of more than $1 billion.
The General Municipal Portfolio may invest in restricted
securities (i.e., securities subject to legal or contractual
restrictions on resale).
The General Municipal Portfolio's municipal securities at the
time of purchase are rated within the two highest quality ratings
of Moody's or Standard & Poor's or judged by the Adviser to be of
comparable quality. Securities also must meet credit standards
applied by the Adviser.
The quality and liquidity of the General Municipal Portfolio's
investments in municipal securities are supported by credit and
liquidity enhancements, such as letters of credit, from third
party financial institutions. The Portfolio continuously
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monitors the credit quality of third parties; however, changes in
the credit quality of these financial institution could cause the
Portfolio's investments backed by that institution to lose value
and affect the Portfolio's share price.
The General Municipal Portfolio also may invest in stand-by
commitments, which may involve certain expenses and risks, but
stand-by commitments are not expected to comprise more than 5% of
the Portfolio's net assets. The Portfolio may commit up to 15%
of its net assets to the purchase of when-issued securities. The
Portfolio's Custodian will maintain liquid assets having value
equal to, or greater than, these commitments. The price of when-
issued securities, which is generally expressed in yield terms,
is fixed at the time the commitment to purchase is made, but
delivery and payment for these securities takes place at a later
time. Normally the settlement date occurs from within ten days
to one month after the purchase of the issue.
TAXABLE INVESTMENTS. The General Municipal Portfolio may invest
in taxable investments including obligations of the U.S.
Government and its agencies, high-quality certificates of deposit
and bankers' acceptances, prime commercial paper, and repurchase
agreements.
RISK CONSIDERATIONS
The Portfolios' primary risks are interest rate risk and credit
risk. Because the Portfolios invest in short-term securities, a
decline in interest rates will affect the Portfolios' yields as
these securities mature or are sold and the Portfolios purchase
new short-term securities with lower yields. Generally, an
increase in interest rates causes the value of a debt instrument
to decrease. The change in value for shorter-term securities is
usually smaller than for securities with longer maturities.
Because the Portfolios invest in securities with short maturities
and seek to maintain a stable net asset value of $1.00 per share,
it is possible, though unlikely, that an increase in interest
rates would change the value of your investment.
Credit risk is the possibility that a security's credit rating
will be downgraded or that the issuer of the security will
default (fail to make scheduled interest and principal payments).
The Portfolios invest in highly-rated securities to minimize
credit risk. Under Rule 2a-7, 95% of a money market fund's
holdings, must be rated in the highest credit category (e.g., A-1
or A-1+) and the remaining 5% must be rated no lower than the
second highest credit category.
The Portfolios may invest up to 10% of their net assets in
illiquid securities. Investments in illiquid securities may be
subject to liquidity risk, which is the risk that, under certain
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circumstances, particular investments may be difficult to sell at
an advantageous price. Illiquid restricted securities also are
subject to the risk that the Portfolio may be unable to sell the
security due to legal or contractual restrictions on resale.
The Portfolios' investments in U.S. dollar-denominated
obligations (or credit and liquidity enhancements) of foreign
banks, foreign branches of U.S. banks, U.S. branches of foreign
banks, and commercial paper of foreign companies may be subject
to foreign risk. Foreign securities issuers are usually not
subject to the same degree of regulation as U.S. issuers.
Reporting, accounting, and auditing standards of foreign
countries differ, in some cases, significantly from U.S.
standards. Foreign risk includes nationalization, expropriation
or confiscatory taxation, political changes or diplomatic
developments that could adversely affect a Portfolio's
investments.
The Portfolios also are subject to management risk because they
are actively managed portfolios. Alliance will apply its
investment techniques and risk analyses in making investment
decisions for the Portfolios, but there is no guarantee that its
techniques will produce the intended result.
The General Municipal Portfolio faces municipal market risk.
This is the risk that special factors may adversely affect the
value of municipal securities and have a significant effect on
the value of the Portfolio's investments. These factors include
political or legislative changes, uncertainties related to the
tax status of municipal securities, or the rights of investors in
these securities. The Portfolio's investments in certain
municipal securities with principal and interest payments that
are made from the revenues of a specific project or facility, and
not general tax revenues, may have increased risks. Factors
affecting the project or facility, such as local business or
economic conditions, could have a significant effect on the
project's ability to make payments of principal and interest on
these securities.
YEAR 2000: Many computer systems and applications in use today
process transactions using two-digit date fields for the year of
the transaction, rather than the full four digits. If these
systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900", which could result
in processing inaccuracies and computer system failures. This is
commonly known as the Year 2000 problem. The failure of any of
the computer systems employed by the Portfolios' major service
providers to process Year 2000 related information properly could
have a significant negative impact on the Portfolios' operations
and the services that are provided to the Portfolios'
shareholders. In addition, to the extent that the operations of
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issuers of securities held by the Portfolios are impaired by the
Year 2000 problem, or prices of securities held by the Portfolios
decline as a result of real or perceived problems relating to the
Year 2000, the value of the Portfolios' shares may be materially
affected.
With respect to the Year 2000 problem, the Portfolios have been
advised that Alliance, each Portfolio's investment adviser,
Alliance Fund Distributors, Inc, ("AFD"), each Portfolio's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"),
each Portfolio's registrar, transfer agent and dividend
disbursing agent (collectively, "Alliance"), began to address the
Year 2000 issue several years ago in connection with the
replacement or upgrading of certain computer systems and
applications. During 1997, Alliance began a formal Year 2000
initiative, which established a structured and coordinated
process to deal with the Year 2000 issue. Alliance reports that
it has completed its assessment of the Year 2000 issues on its
domestic and international computer systems and applications.
Currently, management of Alliance expects that the required
modifications for the majority of its significant systems and
applications that will be in use on January 1, 2000, will be
completed and tested by early 1999. Full integration testing of
these systems and testing of interfaces with third-party
suppliers will continue through 1999. At this time, management
of Alliance believes that the costs associated with resolving
this issue will not have a material adverse effect on its
operations or on its ability to provide the level of services it
currently provides to the Portfolios.
The Portfolios and Alliance have been advised by the Portfolios'
Custodian and Administrator that they are each in the process of
reviewing their systems with the same goals. As of the date of
this prospectus, the Portfolios and Alliance have no reason to
believe that the Custodian or Administrator will be unable to
achieve these goals.
MANAGEMENT OF THE PORTFOLIOS
The Portfolios' Adviser is Alliance Capital Management, L.P.,
1345 Avenue of the Americas, New York, NY 10105. Alliance is a
leading international investment adviser supervising client
accounts with assets as of December 31, 1998 totaling more than
$___ billion (of which approximately $___ billion represented
assets of investment companies). Alliance's clients are
primarily major corporate employee benefit plans, public employee
retirement systems, investment companies, foundations, and
endowment funds. The __ registered investment companies, with
more than ___ separate portfolios, managed by Alliance currently
have over two million shareholders. As of December 31, 1998,
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Alliance was retained as investment manager for over __ of the
FORTUNE 100 companies.
Under its Advisory Agreement with the Portfolios, Alliance
provides investment advisory services and order placement
facilities for the Portfolios. For these advisory services, each
Portfolio paid Alliance, for the fiscal year ended November 30,
1998, as a percentage of average daily net assets:
FEE AS A PERCENTAGE OF
PORTFOLIO AVERAGE DAILY NET ASSETS*
Prime Portfolio
Government Portfolio
General Municipal Portfolio
_______________
* Fees are stated net of waivers and/or reimbursements. See
the "Fee Table" at the beginning of the prospectus for more
information about fee waivers.
ADMINISTRATOR
ADP Financial Information Services, Inc., a wholly-owned
subsidiary of Automatic Data Processing, Inc., serves as
administrator of the Fund, on behalf of the Portfolios. The
Administrator performs or arranges for the performance of certain
services, mainly remote processing services through its propriety
shareholder accounting system. ADP is entitled to receive from
each Portfolio a fee computed daily and paid monthly at a maximum
annual rate equal to .05% of such Portfolio's average daily net
assets. ADP may, from time to time, voluntarily waive all or a
portion of its fees payable to it under the Administration
Agreement. ADP shall not have any responsibility or authority
for any Portfolio's investments, the determination of investment
policy, or for any matter pertaining to the distribution of
Portfolio shares.
PURCHASE AND SALE OF SHARES
HOW THE PORTFOLIOS VALUES THEIR SHARES
Each of the Portfolios' net asset value or NAV is expected to
be constant at $1.00 per share, although this value is not
guaranteed. The NAV is calculated at 4:00 p.m. Eastern time each
day the New York Stock Exchange (NYSE) is open for business. To
calculate NAV, a Portfolio's assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets,
is divided by the number of shares outstanding. Each Portfolio
values its securities at their amortized cost. This method
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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 investment.
HOW TO BUY SHARES
-- Initial Investment
You may purchase a Portfolio's shares through your broker by
instructing your broker to use one or more of Alliance Money
Market Fund's Portfolios - Prime, Government, or the General
Municipal Portfolio in connection with your brokerage account.
There is no minimum for initial investment or subsequent
investments.
Subsequent Investments
BY CHECK:
-- Mail or deliver your check or negotiable draft, payable
to your broker, who will deposit it into the
Portfolio(s). Please designate the appropriate
Portfolio and indicate your brokerage account number on
the check or draft.
BY SWEEP:
-- Your brokerage firm may offer an automatic "sweep" for
the Portfolio in the operation of brokerage cash
accounts for its customers. Contact your broker to
determine if a sweep is available and what the sweep
parameters are.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares to the
Portfolio) on any day the NYSE is open, either directly or
through your financial intermediary. Your sales price will be
the next-determined NAV after the Portfolio receives your sales
request in proper form. Normally, proceeds will be sent to you
within 7 days. If you recently purchased your shares by check or
electronic funds transfer, you cannot redeem any portion of it
until the Portfolio is reasonably satisfied that the check or
electronic funds transfer has been collected (which may take up
to 15 days). If you are in doubt about what procedures or
documents are required to sell your shares, you should contact
your broker.
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-- By Contacting Your Broker
Instruct your broker to order a withdrawal from your
Portfolio account.
-- By Sweep
If your brokerage firm offers an automatic sweep
arrangement, the sweep will automatically transfer from your
Portfolio account sufficient amounts to cover security purchases
in your brokerage account.
-- By Checkwriting
With this service, you may write checks made payable to
any payee. First, you must fill out the signature card which you
can obtain from your broker. The checkwriting service enables
you to receive the daily dividends declared on the shares to be
redeemed until the day that your check is presented for payment.
You can not write checks for more than the principal balance (not
including any accrued dividends) in your account.
OTHER
The Portfolios have two transaction times each business
day, 12:00 Noon and 4:00 p.m. (Eastern time). New investments
represented by Federal funds or bank wire monies received by The
Bank of New York at any time during a day prior to 4:00 p.m. are
entitled to the full dividend to be paid to shareholders for that
day. Shares do not earn dividends on the day you redeem shares
regardless of whether the redemption order is received before or
after 12:00 Noon. Normally, redemption proceeds will be wired or
mailed to you either the same or the next business day, but
generally no later than seven days.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each of the Portfolios' net income is paid daily to
shareholders and automatically invested in additional shares in
your account. The Portfolios expect that their distributions
will primarily consist of net income or, if any, short-term
capital gains as opposed to long-term capital gains.
PRIME PORTFOLIO AND GOVERNMENT PORTFOLIO
For Federal income tax purposes, the Prime and
Government Portfolios' dividend distributions of net income (or
short-term taxable gains) will be taxable to you as ordinary
income. Any capital gains distributions may be taxable to you as
capital gains. The Portfolios' distributions also may be subject
to certain state and local taxes.
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GENERAL MUNICIPAL PORTFOLIO
Distributions of tax-exempt interest income from this
Portfolio are not subject to Federal income tax (other than the
AMT), but may be subject to state or local income taxes. Any
exempt-interest dividends derived from interest on municipal
securities subject to the AMT will be a specific preference item
for purposes of the Federal individual and corporate AMT.
Distributions out of taxable interest income, other investment
income and short-term capital gains, are taxable to you as
ordinary income and distributions of long-term capital gains, if
any, are taxable as long-term taxable gains irrespective of the
length of time you may have held your shares.
Consult your tax adviser as to the tax consequences of
an investment in the Portfolios, including the possible
applicability of the AMT to a portion of the distributions.
Each year shortly after December 31, the Portfolio will
send you tax information stating the amount and type of all its
distributions for the year.
The sale of Portfolio shares is a taxable transaction
for Federal income tax purposes.
DISTRIBUTION ARRANGEMENTS
The Portfolios have adopted a plan under SEC Rule 12b-1
that allows the Portfolios to pay asset-based sales charges or
distribution and service fees for the distribution and sale of
their shares. The Portfolios pay these fees in the amount of
0.45% as a percent of aggregate average daily net assets.
Because these fees are paid out of the Portfolios' assets on an
on-going basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of
sales fees.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you
understand a Portfolio's financial performance for the period of
the Portfolio's operations. Certain information reflects
financial information for a single Portfolio share. The total
return in the table represents the rate that an investor would
have earned (or lost) on an investment in the Portfolio (assuming
investment of all dividends and distributions). The information
has been audited by McGladrey & Pullen LLP, the Portfolios'
independent auditors, whose report, along with the Portfolios'
financial statements, appears in the Statement of Additional
Information, which is available upon request.
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GENERAL
PRIME GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
Net asset value,
beginning of period
Income from investment
operations net investment
income
Less: distribution dividends
from net investment income
Net asset value, end of period
Total Return: total investment
return based on net asset
value (a)
Ratios/Supplemental Data: net
assets, end of period
(in millions)
Ratio to average net assets of
expenses net of waivers and
reimbursements (b)
Expenses before waivers and
reimbursements (b)
Net investment income (b)
_______________
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of
all dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) Annualized.
For more information about the Portfolios, the following
documents are available upon request:
- -- ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Portfolios' annual and semi-annual reports to shareholders
contain additional information on the Portfolios' investments.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected
a Portfolio's performance during its last fiscal year.
17
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- -- STATEMENT OF ADDITIONAL INFORMATION (SAI)
Each Portfolio has an SAI, which contains more detailed
information about the Portfolio, including its operations and
investment policies. The Portfolios' SAI's are incorporated by
reference into (and are legally part of) this prospectus.
You may request a free copy of a current annual/semi-annual
report or a SAI, by contacting your broker or other financial
intermediary, or by contacting Alliance:
BY MAIL: C/O ALLIANCE FUND SERVICES, INC.
P.O. BOX 1520, SECAUCUS, NJ 07096
BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the SEC:
IN PERSON: at the SEC's Public Reference Room in
Washington, D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET: www.sec.gov
You also may find more information about Alliance and the
Portfolios on the Internet at: www.alliancecapital.com.
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[LOGO] ALLIANCE MONEY MARKET FUND
_______________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
March __, 1999
_______________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated March , 1999. 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.
<PAGE>
_______________________________________________________________
INVESTMENT OBJECTIVES AND POLICIES
_______________________________________________________________
The Alliance Money Market Fund (the "Fund") is an open-end
management investment company. The Fund consists of seven
distinct portfolios, the Prime Portfolio, the Government
Portfolio, the New Jersey Municipal Portfolio, the New York
Municipal Portfolio, the Connecticut Municipal Portfolio, the
California Municipal Portfolio and the General Municipal
Portfolio. Three of the portfolios, the Prime Portfolio,
Government Portfolio and General Municipal Portfolio (hereinafter
sometimes referred to as a "Portfolio" or the "Portfolios"), 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 is true with all investment companies, there can
be no assurance that the Fund's objective will be achieved. 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 -
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in the following order of priority - safety of principal,
excellent liquidity, and maximum current income to the extent
consistent with the first two objectives.
GENERAL MUNICIPAL PORTFOLIO. The General Municipal Portfolio
seeks maximum current income that is exempt from Federal income
taxes by investing principally in a diversified portfolio of
high-quality municipal securities. Such income may be subject to
state or local income taxes.
POLICIES APPLICABLE TO EACH PORTFOLIO
RULE 2A-7 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 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
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Portfolio would have invested more than (A) the greater of one
percent of its total assets or one million dollars in securities
issued by that issuer which are second tier securities, or
(B) five percent of its total assets in second tier securities
(the "second tier security restriction"). 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. As to illiquid securities, the Portfolio is subject
to a risk that should the Portfolio desire to sell them when a
buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's net
assets could be adversely affected.
RESTRICTED SECURITIES. A Portfolio may also 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.
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.
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.
Each Portfolio may invest up to 25% of its total assets in
instruments issued by foreign branches of foreign banks. The
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<PAGE>
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,
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.
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
5
<PAGE>
quality as determined by the Adviser and ultimately reviewed by
the Trustees; or
4. are other types of municipal securities, provided that
such obligations are rated Prime-1 by Moody's, A-1 or higher by
S&P or, if not rated, are of equivalent investment quality as
determined by the Adviser and ultimately reviewed by the
Trustees. (See Appendix A for a description of municipal
securities and Appendix B for a description of these ratings.)
The General Municipal Portfolio will not invest 25% or more
of its total assets in the securities of non-governmental issuers
conducting their principal business activities in any one
industry.
ALTERNATIVE MINIMUM TAX. The General Municipal Portfolio may
invest without limitation in tax-exempt municipal securities
subject to the alternative minimum tax (the "AMT"). 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
6
<PAGE>
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
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 those
described below:
1. marketable obligations of, or obligations 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;
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); or
4. repurchase agreements.
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
7
<PAGE>
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,
if required by Rule 2a-7, asset-backed securities that meet its
existing diversification, quality and maturity criteria. The
Portfolios may invest in unrated asset-backed securities whose
assets consist of obligations of one or more municipal issuers.
Asset-backed securities are securities issued by special purpose
entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may be in the form of a
beneficial interest in a 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 obligor 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 397 days, but
which permit the holder to demand payment of principal and
accrued interest at any time, or at specified intervals not
exceeding 397 days, in each case upon not more than 30 days'
notice. Investments may also be made in variable amount master
demand notes (which may have put 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
8
<PAGE>
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
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.
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STANDBY COMMITMENTS. A Portfolio may purchase securities
together with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to
their maturity dates. Such a right to resell is commonly known
as a "standby commitment," and the aggregate price which such
Portfolio pays for securities with a standby commitment may be
higher than the price which otherwise would be paid. The primary
purpose of this practice is to permit a Portfolio to be as fully
invested as practicable in securities while preserving the
necessary flexibility and liquidity to meet unanticipated
redemptions. In this regard, a Portfolio acquires standby
commitments solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. Since the
value of a standby commitment is dependent on the ability of the
standby commitment writer to meet its obligation to repurchase,
each Portfolio's policy is to enter into standby commitment
transactions only with securities dealers which are determined to
present minimal credit risks.
The acquisition of a standby commitment does not affect the
valuation or maturity of the underlying securities which continue
to be valued in accordance with the amortized cost method.
Standby commitments acquired by a Portfolio are valued at zero in
determining net asset value. Where a Portfolio pays directly or
indirectly for a standby commitment, its cost is reflected as
unrealized depreciation for the period during which the
commitment is held. Standby commitments do not affect the
average weighted maturity of a Portfolio's portfolio of
securities. Stand-by commitments are not expected to comprise
more than 5% of any Portfolio's net assets.
WHEN-ISSUED SECURITIES. Securities are frequently offered on
a "when-issued" basis. When so offered, the price, which is
generally expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the
settlement date occurs within one month after the purchase of
bonds and notes. During the period between purchase and
settlement, no payment is made by a Portfolio to the issuer and,
thus, no interest accrues to such Portfolio from the transaction.
When-issued securities may be sold prior to the settlement date,
but a Portfolio makes when-issued commitments only with the
intention of actually acquiring the securities. To facilitate
such acquisitions, the Fund's Custodian will maintain, in a
separate account of each Portfolio, cash, U.S. Government or
other liquid assets, having value equal to, or greater than, such
commitments. Similarly, a separate account will be maintained to
meet obligations in respect of reverse repurchase agreements. On
delivery dates for such transactions, a Portfolio will meet its
obligations from maturities or sales of the securities held in
the separate account and/or from the available cash flow. If a
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Portfolio, however, chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it can incur a
gain or loss. At the time a Portfolio makes the commitment to
purchase a security on a when-issued basis, it records the
transaction and reflects the value of the security in determining
its net asset value. No when-issued commitments will be made if,
as a result, more than 15% of a Portfolio's net assets would be
so committed.
GENERAL. Yields on debt securities are dependent on a
variety of factors, including the general condition of the money
market and of the municipal bond and municipal note market, the
size of a particular offering, the maturity of the obligation and
the rating of the issue. Securities with longer maturities tend
to produce higher yields and are generally subject to greater
price movements than obligations with shorter maturities. An
increase in interest rates will generally reduce the market value
of portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. There can
be no assurance, as is true with all investment companies, that a
Portfolio's objectives will be achieved. The achievement of a
Portfolio's investment objectives is dependent in part on the
continuing ability of the issuers of securities in which a
Portfolio invests to meet their obligations for the payment of
principal and interest when due. Each Portfolio generally will
hold securities to maturity rather than follow a practice of
trading. However, a Portfolio may seek to improve portfolio
income by selling certain portfolio securities prior to maturity
in order to take advantage of yield disparities that occur in
securities markets.
REPURCHASE AGREEMENTS. Each Portfolio may also enter into
repurchase agreements pertaining to the types of securities in
which it may invest. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees to resell it to
the vendor at an agreed-upon future date, normally one day or a
few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Each Portfolio requires continuous
maintenance of collateral in an amount equal to, or in excess of,
the market value of the securities which are the subject of the
agreement. In the event that a vendor defaulted on its
repurchase obligation, a Portfolio might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. If the vendor became bankrupt,
the Portfolio might be delayed in selling the collateral.
Repurchase agreements may be entered into with member banks of
the Federal Reserve System (including the Fund's Custodian) or
"primary dealers" (as designated by the Federal Reserve Bank of
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<PAGE>
New York) in U.S. Government securities. It is each Portfolio's
current practice to enter into repurchase agreements only with
such primary dealers and its Custodian, and the Fund has adopted
procedures for monitoring the creditworthiness of such
organizations. Pursuant to Rule 2a-7, a repurchase agreement is
deemed to be an acquisition of the underlying securities, if the
obligation of the seller to repurchase the securities from the
money market fund is collateralized fully. 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
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set forth in restrictions 2 and 3 below, a Portfolio will regard
the entity which has the primary responsibility for the payment
of interest and principal as the issuer;
2. May not invest more than 5% of its total assets in the
securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities) except that with respect to 25% of their total
assets the Prime Portfolio may invest without regard to such
limitation and 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
____________________
* As a matter of operating policy, pursuant to Rule 2a-7
each of the Prime Portfolio and General Municipal
Portfolio will invest no more than 5% of its assets in the
first tier (as defined in Rule 2a-7) securities of any one
issuer, except that under Rule 2a-7, a Fund may invest up
to 25% of its total assets in the first tier securities of
a single issuer for a period of up to three business days.
Fundamental policy number (2) would give a Portfolio the
ability to invest, with respect to 25% of its assets, more
than 5% of its assets in any one issuer only in the event
Rule 2a-7 is amended in the future.
13
<PAGE>
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
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,
such as securities eligible for resale under Rule 144A under the
Securities Act and commercial paper issued in reliance upon the
exemption from registration in Section 4(2) of the Securities
Act; (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
____________________
** Pursuant to Rule 2a-7, the seller of a fully
collateralized repurchase agreement is deemed to be the
issuer of the underlying securities.
14
<PAGE>
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.
_______________________________________________________________
MANAGEMENT OF THE FUND
_______________________________________________________________
ORGANIZATION
Each of the Portfolios is a series of Alliance Money Market
Fund, an open-end management investment company registered under
the 1940 Act and organized as a Massachusetts business trust on
October 26, 1994. Each Portfolio's activities are supervised by
the Trustees of the Fund. The Adviser provides investment advice
and, in general, conducts the management and investment program
of the Fund, subject to the general supervision and control of
the Trustees of the Fund.
Normally, shares of each series are entitled to one vote per
share, and vote as a single series, on matters that affect each
series in substantially the same manner. Massachusetts law does
not require annual meetings of shareholders and it is anticipated
that shareholder meetings will be held only when required by
federal law. Shareholders have available certain procedures for
the removal of Trustees.
TRUSTEES AND OFFICERS
The Trustees and principal officers of the Fund, their ages
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,*** 60, President, is a Senior Vice
President of ACMC**** and President of Alliance Cash Management
Services with which he has been associated since prior to 1994.
____________________
*** 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,
(footnote continued)
15
<PAGE>
JOHN D. CARIFA,*** 54, Chairman of the Board, is the
President, Chief Operating Officer and a Director of ACMC with
which he has been associated since prior to 1994.
RICHARD S. BORISOFF,*** 53, is a member of the law firm of
Paul, Weiss, Rifkind, Wharton & Garrison with which he has been
associated with since prior to 1994. He is a Director of Stanley
and Elsie Roth Foundation (charitable foundation) and BAR
Assurance and Reinsurance Limited (insurance company). His
address is 1285 Avenue of the Americas, New York, NY 10019.
JEFFREY M. COLE, 52, is a member of the law firm of Baer
Marks & Upham with which he has been associated since prior to
1994. He is a Director of Rigel Communications, Inc. (cable
systems) and an Adjunct Professor of Law at New York University
School of Law. His address is 805 Third Avenue, New York, New
York 10022.
RICHARD J. DALY, 45, 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., 66, 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 1994. His address is
2 Greenwich Plaza, Suite 100, Greenwich, Connecticut 06830.
ARTHUR S. KRANSELER, 64, 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 1994. His address is 3407 South Ocean
Boulevard, Suite 5-C, Highland Beach, Florida 33487.
ROBERT A. LEWIS, 45, is a member of the law firm McCutchen,
Doyle, Brown & Enersen with which he has been associated since
prior to 1994. His address is Three Embarcadero Center, Suite
2800, San Francisco, California 94111.
CLIFFORD L. MICHEL, 59, is a member of the law firm of Cahill
Gordon & Reindel, with which he has been associated since prior
to 1994. He is President and Chief Executive Officer of Wenonah
Development Company (investments) and a Director of Placer Dome
____________________
(footnote continued)
the sole general partner of the Adviser, and to the
predecessor general partner of the Adviser of the same
name.
16
<PAGE>
Inc. (mining) and, since 1996, he is a Director, Vice Chairman
and Treasurer of Atlantic Health Systems Inc. and Atlantic
Hospital. His address is St. Bernard's Road, Gladstone, New
Jersey 07934.
WILLIAM L. RHOADS III, 70, 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, Inc. (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, 40, is Vice President of Automatic Data
Processing/Financial Information Services Division with which he
has been associated since prior to 1994. His address is 2
Journal Square Plaza, Jersey City, NJ 07306.
OFFICERS
JOHN R. BONCZEK, 39, Senior Vice President, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
KATHLEEN A. CORBET, 38, Senior Vice President, is an
Executive Vice President of ACMC since prior to 1994.
ROBERT I. KURZWEIL, 48, 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 1994.
RAYMOND J. PAPERA, 43, Senior Vice President, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1994.
PATRICIA NETTER, 47, Senior Vice President, is a Vice
President of ACMC with which she has been associated since prior
to 1994.
KENNETH T. CARTY, 38, Vice President, is an Assistant Vice
President of ACMC with which he has been associated since prior
to 1994.
JOHN F. CHIODI, 32, Vice President, is a Vice President of
ACMC with which he has been associated since prior to 1994.
17
<PAGE>
DORIS T. CILIBERTI, 35, Vice President, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1994.
LINDA D. NEIL, 38, 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 1994.
EDMUND P. BERGAN, Jr., 48, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") and Alliance Fund Services, Inc. ("AFS") with which he
has been associated since prior to 1993.
MARK D. GERSTEN, 48, Treasurer and Chief Financial Officer,
is a Senior Vice President of AFS with which he has been
associated since prior to 1994.
VINCENT S. NOTO, 34, Controller and Chief Accounting Officer,
is a Vice President of AFS with which he has been associated
since prior to 1994.
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, 1998
(estimating future payments based upon existing arrangements),
the aggregate compensation paid to each of the Trustees during
calendar year 1998 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.
18
<PAGE>
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
Richard S. Borisoff
Jeffrey M. Cole
Richard J. Daly
William H. Foulk, Jr.
Arthur S. Kranseler
Robert A. Lewis
Clifford L. Michel
William L. Rhoads III
Richard R. Stumm
Ronald M. Whitehill
As ofJanuary 8, 1999, the Trustees and officers of the Fund
as a group owned less than 1% of the shares of the Fund.
ADVISER
Alliance Capital Management L.P., a New York Stock Exchange
listed company with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Trustees.
The Adviser is a leading international investment manager
supervising client accounts with assets as of September 30, 1998
of more than $241 billion (of which more than $99 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. As of September 30, 1998,the
Adviser was retained as an investment manager for employee
benefit plan assets for 34 of the FORTUNE 100 companies. As of
July 31, 1998, the Adviser and its subsidiaries employ
approximately 2,000 employees who operate out of domestic offices
and the offices of subsidiaries in Bahrain, Bangalore, Cairo,
19
<PAGE>
Chennai, Hong Kong, Istanbul, Johannesburg, London, Luxembourg,
Madrid, Moscow, Mumbai, New Delhi, Paris, Pune, Sao Paolo, Seoul,
Singapore, Sydney, Tokyo and Toronto, Vienna and Warsaw. The 54
registered investment companies comprising 118 separate
investment portfolios managed by the Adviser currently have more
than 3.5 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 ("AXA"), a French insurance holding company
which at March 31, 1998, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1998, 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 is a holding company for an international group of
insurance and related financial services companies. AXA's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically, with activities
principally in Western Europe, North America and the Asia/Pacific
area. AXA 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, as of March 31, 1998,
more than 30% of the voting power of AXA was controlled directly
and indirectly by FINAXA, a French holding company. As of March
31, 1998, approximately 74% 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 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA 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.
20
<PAGE>
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 fiscal year ended November 30, 1998, the Adviser
received from the Prime, Government and General Municipal
Portfolios, net advisory fees of $15,715,615, $641,017 and
$662,701, respectively. 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. 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, 1998, the Adviser reimbursed the Prime, Government
and General and General Municipal Portfolios $1,942,793, $176,205
and $226,538, respectively. 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. In accordance with the Distribution Services
Agreement described below, each Portfolio of the Fund may pay a
portion of advertising and promotional expenses in connection
with the sale of shares of the Portfolio. Each Portfolio also
pays for printing of prospectuses and other reports to
shareholders and all expenses and fees related to registration
and filing with the Securities and Exchange Commission and with
state regulatory authorities. Each Portfolio pays all other
expenses incurred in its operations, including the Adviser's
fees; the Administration fees (as described below); custody,
transfer and dividend disbursing expenses; legal and auditing
costs; clerical, accounting and other office costs; fees and
expenses of Trustees who are not affiliated persons; and interest
charges, taxes, brokerage fees, and commissions. As to the
obtaining of clerical and accounting services not required to be
provided to each Portfolio by the Adviser under the Advisory
Agreement, each Portfolio may employ its own personnel. For such
services, it also may utilize personnel employed by the Adviser
or its affiliates; if so done the services may be provided to
each Portfolio at cost, as applicable, and the payments therefore
must be specifically approved in advance by the Fund's
Trustees.
THE 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
21
<PAGE>
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.
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, 1998, ADP
received from the Prime, Government and General Municipal
Portfolios, net administration fees of $1,571,562, $64,101 and
$66,269, respectively. For such period, ADP waived its fee in
the amount of $39,794, $38,562 and $39,794, 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
22
<PAGE>
.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.
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,
1998, the Prime Portfolio made payments to the Adviser for
expenditures under the Agreement in amounts aggregating
$14,144,055 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
$5,030,008. Of the $19,174,063 paid by the Adviser and the
Portfolio under the Agreement, $647,000was paid for advertising,
printing and mailing of prospectuses to persons other than
current shareholders; and $18,527,063 was paid to broker-dealers
and other financial intermediaries for distribution assistance.
For the year ended November 30, 1998, the Government Portfolio
made payments to the Adviser for expenditures under the Agreement
in amounts aggregating $576,914 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 $195,555. Of the $772,869 paid by the Adviser and
the Portfolio under the Agreement, $30,000 was paid for
advertising, printing and mailing of prospectuses to persons
other than current shareholders; and $742,869 was paid to broker-
dealers and other financial intermediaries for distribution
assistance. For the year ended November 30, 1998, the General
Municipal Portfolio made payments to the Adviser for expenditures
under the Agreement in amounts aggregating $596,432 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 $176,378. Of the
$772,810 paid by the Adviser and the Portfolio under the
Agreement, $41,000 was paid for advertising, printing and mailing
of prospectuses to persons other than current shareholders; and
$731,810 was paid to broker-dealers and other financial
intermediaries for distribution assistance.
23
<PAGE>
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 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.
TRANSFER AGENT AND DISTRIBUTOR
Alliance Fund Services, Inc. P.O. Box 1520, Secaucus, NJ
07096-1520 and Alliance Fund Distributors, Inc., 1345 Avenue of
the Americas, New York, NY 10105, are the Fund's Transfer Agent
and Distributor, respectively.
_______________________________________________________________
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.
24
<PAGE>
Shareholders maintaining Portfolio accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Portfolio itself so that the institutions may
properly process such orders prior to their transmittal to The
Bank of New York ("BONY"). Should an investor place a transaction
order with such an institution after its deadline, the
institution may not effect the order with the Portfolio until the
next business day. Accordingly, an investor should familiarize
himself or herself with the deadlines set by his or her
institution. For example, the Portfolio's distributor accepts
purchase orders from its customers up to 2:15 p.m. (New York
time) for issuance at the 4:00 p.m. transaction time and price.
A brokerage firm acting on behalf of a customer in connection
with transactions in Portfolio shares is subject to the same
legal obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.
Orders for the purchase of Portfolio shares become effective
at the next transaction time after Federal funds or bank wire
monies become available to BONY for a shareholder's investment.
Federal funds are a bank's deposits in a Federal Reserve Bank.
These funds can be transferred by Federal Reserve wire from the
account of one member bank to that of another member bank on the
same day and are considered to be immediately available funds;
similar immediate availability is accorded monies received at
BONY by bank wire. Money transmitted by a check drawn on a
member of the Federal Reserve System following receipt. Checks
drawn on banks which are not members of the 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,
25
<PAGE>
Jr. Day; if one of these holidays falls on a Saturday or Sunday,
purchases and redemptions will likewise not be processed on the
preceding Friday or the following Monday, respectively. The
right of redemption may be suspended or the date of a redemption
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), when trading on the New York Stock Exchange is
restricted, or an emergency (as determined by the Commission)
exists, or the Commission has ordered such a suspension for the
protection of shareholders. The value of a shareholder's
investment at the time of redemption may be more or less than his
or her cost, depending on the market value of the securities held
by each Portfolio at such time and the income earned.
_______________________________________________________________
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
_______________________________________________________________
All net income of each Portfolio is determined after the
close of each business day, currently 4:00 p.m. New York time
(and at such other times as the Trustees may determine) and is
paid immediately thereafter pro rata to shareholders of record of
that Portfolio via automatic investment in additional full and
fractional shares in each shareholder's account at the rate of
one share for each dollar distributed. As such additional shares
are entitled to dividends on following days, a compounding growth
of income occurs.
A Portfolio's net income consists of all accrued interest
income on Portfolio assets less expenses allocable to that
Portfolio (including accrued expenses and fees payable to the
Adviser) applicable to that dividend period. Realized gains and
losses are reflected in a Portfolio's net asset value and are not
included in net income. Net asset value per share of each
Portfolio is expected to remain constant at $1.00 since all net
income of each Portfolio is declared as a dividend each time net
income is determined and net realized gains and losses are
expected to be relatively small.
The valuation of each Portfolio's securities is based upon
their amortized cost which does not take into account unrealized
securities gains or losses as measured by market valuations. The
amortized cost method involves valuing an instrument at its cost
and thereafter applying a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. During
periods of declining interest rates, the daily yield on shares of
a Portfolio may be higher than that of a fund with identical
investments utilizing a method of valuation based upon market
26
<PAGE>
prices for its portfolio instruments; the converse would apply in
a period of rising interest rates.
The Fund maintains procedures designed to maintain its share
price 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. There can be no assurance,
however, that the Fund's net asset value per share will remain
constant at $1.00.
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
27
<PAGE>
gains, if any, distributed by the Fund to a shareholder are
taxable to the shareholder as long-term capital gain,
irrespective of the length of time he may have held his shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year near calendar year-end, although
such distributions may be made more frequently if necessary in
order to maintain the Fund's net asset value at $1.00 per share.
Interest on indebtedness incurred by shareholders to purchase
or carry shares of the Fund is not deductible for Federal income
tax purposes. Under rules of the Internal Revenue Service for
determining when borrowed funds are used for purchasing or
carrying particular assets, shares may be considered to have been
purchased or carried with borrowed funds even though those funds
are not directly linked to the shares. Further, persons who are
"substantial users" (or related persons) of facilities financed
by private activity bonds (within the meaning of 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.
28
<PAGE>
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.
_______________________________________________________________
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, 1998,
the Prime, Government and General Municipal Portfolios paid $-0-,
$-0- and $-0-, respectively, for brokerage commissions.
29
<PAGE>
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. Shares of each
Portfolio are normally entitled to one vote for all purposes.
Generally, shares of the Fund vote as a single series for the
election of Trustees and on any other matter affecting the Fund.
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 January 8, 1999, there were 798,313,768 shares of
beneficial interest of the Fund outstanding. Of this amount
710,499,082 were for the Prime Portfolio; 44,026,187 were for the
Government Portfolio and 43,788,499 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 January 8,
1999.
% of
Name and Address No. of Shares Portfolio
Prime Portfolio
Discover Brokerage
280 W. 10200 S
Sandy, UT 84070-4267 710,024,193 99.9%
Government Portfolio
Discover Brokerage
280 W. 10200 S
Sandy, UT 84070-4267 43,983,996 99.9%
General Municipal Portfolio
Discover Brokerage
280 W. 10200 S
Sandy, UT 84070-4267 29,969,120 68.4%
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
30
<PAGE>
obligations of the Fund and requires that the Trustees use their
best efforts to ensure that notice of such disclaimer be given in
each note, bond, contract, instrument, certificate or undertaking
made or issued by the trustees or officers of the Fund. The
Agreement and Declaration of Trust provides for indemnification
out of the property of the Portfolios for all loss and expense of
any shareholder of a Portfolio held personally liable for the
obligations of the Portfolio. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which a Portfolio would be unable to
meet its obligations. In the review of the Adviser, such risk is
not material.
LEGAL MATTERS. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, New York, New York, counsel
for the Fund. Seward & Kissel has relied upon the opinion of
Sullivan & Worcester, Boston, Massachusetts, for matters relating
to Massachusetts law.
ACCOUNTANTS. An opinion relating to each Portfolio's
financial statements is given herein by McGladrey & Pullen LLP,
New York, New York, independent auditors for the Fund.
YIELD QUOTATIONS AND PERFORMANCE INFORMATION. Advertisements
containing yield quotations for one or more Portfolios for the
Fund may from time to time be sent to investors or placed in
newspapers, magazines or other media on behalf of the Fund.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933.
Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
of the capital changes, in the value of a hypothetical pre-
existing account having a balance of one share of such Portfolio
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.
31
<PAGE>
The Prime Portfolio's yield for the seven-day period ended
November 30, 1998 was 4.14% which is the equivalent of a 4.23%
compounded effective yield. Absent expense reimbursement, the
annualized yield for this period would have been 4.08%,
equivalent to an effective yield of 4.17%. The Government
Portfolio's yield for the seven-day period ended November 30,
1998 was 4.25% which is the equivalent of a 4.34% compounded
effective yield. Absent expense reimbursement, the annualized
yield for this period would have been 4.11%, equivalent to an
effective yield of 4.20%. The General Municipal Portfolio's
yield for the seven-day period ended November 30, 1998 was 2.43%
which is the equivalent of a 2.46% compounded effective yield.
Absent expense reimbursement, the annualized yield for this
period would have been 2.26%, equivalent to an effective yield of
2.29%.
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 1998 Federal personal income tax rate, the 2.43% tax-
exempt yield of the General Municipal Portfolio for the seven-day
period ended November 30, 1998 was equivalent to a taxable yield
of 4.02% and the effective yield of 2.46% for such period was
equivalent to a taxable yield of 4.07%.
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
32
<PAGE>
Systematic Withdrawal Plan, shareholders may request checks in
any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, shareholders can
order, via signature-guaranteed letter to the Portfolio, such
periodic payments to be sent to another person.
REPORTS. You will receive semi-annual and annual reports of
the Portfolio(s) in which you are a shareholder as well as a
monthly summary of your account. You can arrange for a copy of
each of your account statements to be sent to other parties.
ADDITIONAL INFORMATION. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT FILED BY THE FUND WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933. COPIES OF
THE REGISTRATION STATEMENT MAY BE OBTAINED AT A REASONABLE CHARGE
FROM THE COMMISSION OR MAY BE EXAMINED, WITHOUT CHARGE, AT THE
COMMISSION's OFFICES IN WASHINGTON, D.C.
33
<PAGE>
______________________________________________________________
APPENDIX A
DESCRIPTION OF MUNICIPAL SECURITIES
_______________________________________________________________
MUNICIPAL NOTES generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. PROJECT NOTES, which carry a U.S. Government guarantee,
are issued by public bodies (called "local issuing agencies")
created under the laws of a state, territory, or U.S. possession.
They have maturities that range up to one year from the date of
issuance. Project Notes are backed by an agreement between the
local issuing agency and the Federal Department of Housing and
Urban Development. These Notes provide financing for a wide
range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income housing
programs and renewal programs).
2. TAX ANTICIPATION NOTES are issued to finance working
capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income,
sales, use and business taxes, and are payable from these
specific future taxes.
3. REVENUE ANTICIPATION NOTES are issued in expectation of
receipt of other types of revenues, such as Federal revenues
available under the Federal Revenue Sharing Programs.
4. BOND ANTICIPATION NOTES are issued to provide interim
financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the
repayment of the Notes.
5. CONSTRUCTION LOAN NOTES are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration under the Federal National Mortgage Association or
the Government National Mortgage Association.
6. TAX-EXEMPT COMMERCIAL PAPER is a short-term obligation
with a stated maturity of 365 days or less. It is issued by
agencies of state and local governments to finance seasonal
working capital needs or as short-term financing in anticipation
of longer term financing.
A-1
<PAGE>
MUNICIPAL BONDS, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. GENERAL OBLIGATION BONDS are issued by such entities as
states, counties, cities, towns, and regional districts. The
proceeds of these obligations are used to fund a wide range of
public projects, including construction or improvement of
schools, highways and roads, and water and sewer systems. The
basic security behind General Obligation Bonds is the issuer's
pledge of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can be levied
for the payment of debt service may be limited or unlimited as to
the rate or amount of special assessments.
2. REVENUE BONDS generally are secured by the net revenues
derived from a particular facility, group of facilities, or, in
some cases, the proceeds of a special excise or other specific
revenue source. Revenue Bonds are issued to finance a wide
variety of capital projects including electric, gas, water and
sewer systems; highways, bridges, and tunnels; port and airport
facilities; colleges and universities; and hospitals. Many of
these Bonds provide additional security in the form of a debt
service reserve fund to be used to make principal and interest
payments. Housing authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized
and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. Some authorities provide
further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve
fund.
3. INDUSTRIAL DEVELOPMENT BONDS are considered municipal
bonds if the interest paid thereon is exempt from Federal income
tax and are issued by or on behalf of public authorities to raise
money to finance various privately operated facilities for
business and manufacturing, housing, sports, and pollution
control. These Bonds are also used to finance public facilities
such as airports, mass transit systems, ports, and parking. The
payment of the principal and interest on such Bonds is dependent
solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and
personal property as security for such payment.
A-2
<PAGE>
_______________________________________________________________
APPENDIX B
DESCRIPTION OF SECURITIES RATINGS
_______________________________________________________________
Municipal and Corporate
BONDS AND MUNICIPAL LOANS
The two highest ratings of Moody's Investors Service, Inc.
("Moody's") for municipal and corporate bonds are Aaa and Aa.
Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally
known as high-grade bonds. Moody's states that Aa bonds are
rated lower than the best bonds because margins of protection or
other elements make long-term risks appear somewhat larger than
Aaa securities. The generic rating Aa may be modified by the
addition of the numerals 1, 2 or 3. The modifier 1 indicates
that the security ranks in the higher end of the Aa rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
such rating category.
The two highest ratings of Standard & Poor's Corporation
("Standard & Poor's") for municipal and corporate bonds are AAA
and AA. Bonds rated AAA have the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is extremely strong. Bonds rated AA have a
very strong capacity to pay interest and repay principal and
differ from the highest rated issues only in a small degree. The
AA rating may be modified by the addition of a plus (+) or minus
(-) sign to show relative standing within that rating category.
SHORT-TERM MUNICIPAL LOANS
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG1/VMIG-1 group.
Standard & Poor's highest rating for short-term municipal
loans is SP-1. Standard & Poor's states that short- term
municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming
B-1
<PAGE>
safety characteristics will be given a plus (+) designation.
Issues rated SP-2 have satisfactory capacity to pay principal and
interest.
OTHER MUNICIPAL SECURITIES AND COMMERCIAL PAPER
"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+"
and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured, current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available.
While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Commercial paper issuers rated "A" by Standard & Poor's have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward
trend. Typically, the issuer is a strong company in a well-
established industry and has superior management.
B-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
(a) Restated and Amended Declaration of Trust of the
Registrant dated February 22, 1995 - Incorporated by
reference to Exhibit No. 1 to Pre-Effective
Amendment No. 1 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-85850 and 811-
08838) filed with the Securities Exchange Commission
on March 17, 1995.
(b) By-Laws of the Registrant - Incorporated by
reference to Exhibit No. 2 to Pre-Effective
Amendment No. 1 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-85850 and 811-
08838) filed with the Securities Exchange Commission
on March 17, 1995.
(c) Not applicable.
(d) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Incorporated by
reference to Exhibit No. 5 to Post-Effective
Amendment No. 3 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-85850 and 811-
08838) filed with the Securities Exchange Commission
on March 31, 1998.
(e) Amended Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Incorporated by reference to Exhibit No. 6 to Pre-
Effective Amendment No. 3 of the Registrant's
Registration Statement on Form N-1A (File Nos. 33-
85850 and 811-08838) filed with the Securities
Exchange Commission on March 31, 1998.
(f) Not applicable.
(g) Custodian Contract between the Registrant and The
Bank of New York - Incorporated by reference to
Exhibit No. 8 to Post-Effective Amendment No. 1 of
the Registrant's Registration Statement on Form N-1A
(File Nos. 33-85850 and 811-08838) filed with the
Securities Exchange Commission on March 31, 1998.
(h) (1) Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc. -
Incorporated by reference to Exhibit No. 9(a)
to Post-Effective Amendment No. 3 of the
C-1
<PAGE>
Registrant's Registration Statement on Form N-
1A (File Nos. 33-85850 and 811-08838) filed
with the Securities Exchange Commission on
filed March 31, 1998.
(2) Administration Agreement between the Registrant
and ADP Financial Information Services, Inc. -
Incorporated by reference to Exhibit No. 9(b)
to Post-Effective Amendment No. 3 of the
Registrant's Registration Statement on Form N-
1A (File Nos. 33-85850 and 811-08838) filed
with the Securities Exchange Commission on
March 31, 1998.
(3) Fund Accounting Agreement between the
Registrant and The Bank of New York -
Incorporated by reference to Exhibit No. 9(c)
to Post-Effective Amendment No. 3 of the
Registrant's Registration Statement on Form N-
1A (File Nos. 33-85850 and 811-08838) filed
with the Securities Exchange Commission on
March 31, 1998.
(4) Form of Expense Limitation Undertaking by
Alliance Capital Management L.P. - Filed
herewith.
(i) (1) Opinion and Consent of Seward & Kissel -
Incorporated by reference to Exhibit No. 10(a)
to Pre-Effective Amendment No. 1 of the
Registrant's Registration Statement on Form N-
1A (File Nos. 33-85850 and 811-08838) filed
with the Securities Exchange Commission on
March 17, 1995.
(2) Opinion and Consent of Sullivan & Worcester -
Incorporated by reference to Exhibit No. 10(b)
to Pre-Effective Amendment No. 1 of the
Registrant's Registration Statement on Form N-
1A (File Nos. 33-85850 and 811-08838) filed
with the Securities Exchange Commission on
March 17, 1995.
(j) Consent of Independent Auditors - Filed herewith.
(k) Not applicable.
(l) Investment Representation Letter of Alliance Capital
Management L.P. - Incorporated by reference to
Exhibit No. 13 to Pre-Effective Amendment No. 1 of
the Registrant's Registration Statement on Form N-1A
C-2
<PAGE>
(File Nos. 33-85850 and 811-08838) filed with the
Securities Exchange Commission on March 17, 1995.
(m) Rule 12b-1 Plan - See Exhibit (e)(1) hereto.
(n) Financial Data Schedule - Filed herewith.
Other Exhibits: Powers of Attorney of Richard S.
Borisoff, John D. Carifa, Jeffrey M. Cole, Richard J.
Daly, William H. Foulk, Jr., Arthur S. Kranseler, Robert
A. Lewis, Clifford L. Michel, Peter Quick, William Rhoads
III, Richard R. Stumm and Ronald M. Whitehill -
Incorporated by reference to Other Exhibits to Post-
Effective Amendment No. 3 of the Registrant's
Registration Statement on Form N-1A (File Nos. 33-85850
and 811-08838) filed with the Securities Exchange
Commission on March 31, 1998.
ITEM 24. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 25. Indemnification
Reference is hereby made to Article V of the Registrant's
Declaration of Trust.
The Trustees and officers of the Registrant and the
personnel of the Registrant's investment adviser,
administrator and distributor are insured under an errors
and omissions liability insurance policy. The Registrant
and its officers are also insured under the fidelity bond
required by Rule 17g-1 under the Investment Company Act
of 1940.
Under the terms of the Registrant's Declaration of Trust,
the Registrant may indemnify any person who was or is a
Trustee, officer or employee of the Registrant to the
maximum extent permitted by law; provided, however, that
any such indemnification (unless ordered by a court)
shall be made by the Registrant only as authorized in the
specific case upon a determination that indemnification
of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a
majority vote of a quorum which consists of Trustees who
are neither in Section 2(a) (19) of the Investment
Company Act of 1940, nor parties to the proceeding, or
(ii) if the required quorum is not obtainable or, if a
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quorum of such Trustees so directs, by independent legal
counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of
the Registrant for any liability to the Registrant or
shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Insofar as the conditional advancing of indemnification
monies for actions based upon the Investment Company Act
of 1940 may be concerned, such payments will be made only
on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the
preparation or presentation of a defense to the action,
including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt
of a written promise by, or on behalf of, the recipient
to repay that amount of the advance which exceeds that
amount to which it is ultimately determined that he is
entitled to receive from the Registrant by reason of
indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable insurance or an
equivalent from of security which assures that any
repayments may be obtained by the Registrant without
delay or litigation, which bond, insurance or other form
of security must be provided by the recipient of the
advance, or (b) a majority of a quorum of the
Registrant's disinterested, non-party Trustees, or an
independent legal counsel in a written opinion, shall
determine, based upon a review of readily available
facts, that the recipient of the advance ultimately will
be found entitled to indemnification.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities
being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
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it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 26. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P.
under the caption "The Adviser" in the Prospectus and
"Management of the Fund" in the Prospectus and in the
Statement of Additional Information constituting Parts A
and B, respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
ITEM 27. Principal Underwriters.
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant. Alliance Fund Distributors,
Inc. also acts as Principal Underwriter or Distributor
for the following investment companies:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance Institutional Reserves, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
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Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of Alliance
Fund Distributors, Inc., the principal place of business
of which is 1345 Avenue of the Americas, New York, New
York, 10105.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
Michael J. Laughlin Director and Chairman
John D. Carifa Director President
Robert L. Errico Director and President
Geoffrey L. Hyde Director and Senior
Vice President
Dave H. Williams Director
David Conine Executive Vice President
Richard K. Saccullo Executive Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary
Richard A. Davies Senior Vice President
and Managing Director
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial Officer
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<PAGE>
Anne S. Drennan Senior Vice President
and Treasurer
Karen J. Bullot Senior Vice President
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Mark J. Dunbar Senior Vice President
Donald N. Fritts Senior Vice President
Bradley F. Hanson Senior Vice President
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Susan L. Matteson-King Senior Vice President
Daniel D. McGinley Senior Vice President
Antonios G. Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Kevin A. Rowell Senior Vice President
Raymond S. Sclafani Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
William C. White Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Gerard J. Friscia Vice President and
Controller
Ricardo Arreola Vice President
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<PAGE>
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Michael E. Brannan Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
John W. Cronin Vice President
Richard W. Dabney Vice President
Stephen J. Demetrovits Vice President
John F. Dolan Vice President
John C. Endahl Vice President
Sohaila S. Farsheed Vice President
Shawn C. Gage Vice President
Joseph C. Gallagher Vice President
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel
Alex G. Garcia Vice President
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
John Grambone Vice President
Charles M. Greenberg Vice President
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<PAGE>
Alan Halfenger Vice President
William B. Hanigan Vice President
Michael S. Hart Vice President
Scott F. Heyer Vice President
Timothy A. Hill Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Michael J. Hutten Vice President
Scott Hutton Vice President
Richard D. Keppler Vice President
Donna M. Lamback Vice President
P. Dean Lampe Vice President
Henry Michael Lesmeister Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Jerry W. Lynn Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Shawn P. McClain Vice President
Jeffrey P. Mellas Vice President
Thomas F. Monnerat Vice President
Timothy S. Mulloy Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
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<PAGE>
James J. Posch Vice President
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Karen C. Satterberg Vice President
John P. Schmidt Vice President
Robert C. Schultz Vice President
Richard J. Sidell Vice President
Clara Sierra Vice President
Teris A. Sinclair Vice President
Scott C. Sipple Vice President
Martine H. Stansbery, Jr. Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
David R. Turnbough Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
Mark E. Westmoreland Vice President
David E. Willis Vice President
Emilie D. Wrapp Vice President and Assistant
Assistant General Secretary
Counsel
Patrick Look Assistant Vice
President and
Assistant Treasurer
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<PAGE>
Michael W. Alexander Assistant Vice
President
Richard J. Appaluccio Assistant Vice
President
Charles M. Barrett Assistant Vice
President
Robert F. Brendli Assistant Vice
President
John M. Capeci Assistant Vice
President
Maria L. Carreras Assistant Vice
President
John P. Chase Assistant Vice
President
Jean A. Coomber Assistant Vice
President
Russell R. Corby Assistant Vice
President
Terri J. Daly Assistant Vice
President
Ralph A. DiMeglio Assistant Vice
President
Faith C. Deutsch Assistant Vice
President
John E. English Assistant Vice
President
Duff C. Ferguson Assistant Vice
President
Theresa Iosca Assistant Vice
President
Erik A. Jorgensen Assistant Vice
President
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<PAGE>
Eric G. Kalender Assistant Vice
President
Edward W. Kelly Assistant Vice
President
Victor Kopelakis Assistant Vice
President
Michael Laino Assistant Vice
President
Nicholas J. Lapi Assistant Vice
President
Kristine J. Luisi Assistant Vice
President
Kathryn Austin Masters Assistant Vice
President
Richard F. Meier Assistant Vice
President
Richard J. Olszewski Assistant Vice
President
Catherine N. Peterson Assistant Vice
President
Rizwan A. Raja Assistant Vice
President
Carol H. Rappa Assistant Vice
President
Mark V. Spina Assistant Vice
President
Gayle S. Stamer Assistant Vice
President
Eileen Stauber Assistant Vice
President
Vincent T. Strangio Assistant Vice
President
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<PAGE>
Margaret M. Tompkins Assistant Vice
President
Marie R. Vogel Assistant Vice
President
Wesley S. Williams Assistant Vice
President
Matthew Witschel Assistant Vice
President
Christopher J. Zingaro Assistant Vice
President
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers, securities
records and other original records are maintained
principally at the offices of Alliance Fund Services,
Inc. 500 Plaza Drive, Secaucus, New Jersey 07094-1520 and
at the offices of The Bank of New York, 48 Wall Street,
New York, New York 10286. All other records so required
to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
</R.
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's
latest report to shareholders, upon request and without
charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
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any Trustee of the Fund in accordance with Section 16 of
the Investment Company Act of 1940.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 27th day of January, 1999.
ALLIANCE MONEY MARKET FUND
by /s/ Ronald M. Whitehill
____________________________
Ronald M. Whitehill
President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement has
been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
1) Principal
Executive Officer
/s/Ronald M. Whitehill President January 27, 1999
______________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/Mark D. Gersten Treasurer and Chief January 27, 1999
______________________ Financial Officer
Mark D. Gersten
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<PAGE>
3) A Majority of the Trustees
Richard S. Borisoff Clifford L. Michel
John D. Carifa Peter Quick
Jeffrey M. Cole William L. Rhoads III
William H. Foulk, Jr. Richard R. Stumm
Arthur S. Kranseler Ronald M. Whitehill
Robert A. Lewis
by /s/Edmund P. Bergan, Jr. January 27, 1999
___________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
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<PAGE>
Index to Exhibits
Page
(h)(4) Form of Expense Limitation Undertaking
(j) Consent of Inependent Auditors
(n) Financial Data Schedule
17
00250217.AL0
<PAGE>
EXPENSE LIMITATION UNDERTAKING
ALLIANCE CAPITAL MANAGEMENT L.P.
1345 Avenue of the Americas
New York, New York 10105
February 1, 1999
[Name of Registrant]
1345 Avenue Of The Americas
New York, New York 10105
Dear Sirs:
Alliance Capital Management L.P. herewith undertakes
that for the Expense Limitation Period, as defined below, we
shall cause the aggregate operating expenses of every character
incurred by your [ ] portfolio (the "Portfolio") to be
limited to ___% of your aggregate average daily net assets (the
"Limitation"). To determine the amount of the Portfolio's
expenses in excess of the Limitation, the amount of allowable
fiscal-year-to-date expenses shall be computed daily by prorating
the Limitation based on the number of days elapsed within the
fiscal year of the Portfolio (the "Prorated Limitation"). The
Prorated Limitation shall be compared to the expenses of the
Portfolio recorded through the current day in order to produce
the allowable expenses to be recorded and accrued for the
Portfolio current day (the "Allowable Expenses"). If the
expenses of the Portfolio for the current day exceed the
Allowable Expenses, we shall be responsible for such excess and
<PAGE>
will for the current day (i) reduce our advisory fees and/or
(ii) reimburse the Fund accordingly.
For purposes of this Undertaking, the Expense Limitation
Period shall mean the period commencing on the date hereof and
terminating at the close of the Portfolio's fiscal year. The
Expense Limitation Period and the Undertaking given hereunder
will automatically be extended for additional one-year terms
unless we provide you with at least 60 days' notice prior to the
end of any Expense Limitation Period, of our determination not to
extend this Undertaking beyond its then current term.
We understand and intend that you will rely on this
Undertaking in preparing and filing a Registration Statement for
the Portfolio on Form N-1A with the Securities and Exchange
Commission, in accruing the Portfolio's expenses for purposes of
calculating its net asset value per share and for other purposes
and expressly permit you to do so.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its general
partner
By: ___________________________
2
00250157.BW2
