ALLIANCE HEALTH CARE FUND INC, N-1A, 1999-05-06

ALLIANCE HEALTH CARE FUND INC
N-1A, 1999-05-06

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<PAGE>

As filed with the Securities and Exchange
Commission on May 6, 1999
File Nos.
333-
811-

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.

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No.

_______________________________

ALLIANCE HEALTH CARE FUND, INC.
(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:(212) 969-1000

_____________________________

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 LLP
One Battery Park Plaza
New York, New York 10004

<PAGE>

It is proposed that this filing will become effective (check
appropriate box)

immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

The Registrant hereby amends this Registrant Statement under
the Securities Act of 1933 on such date or dates as may be
necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.

<PAGE>

Alliance Health Care Fund

Alliance Health Care Fund, Inc. is an open-end management
investment company that offers investors the opportunity to seek
capital appreciation through investment in health care and health
sciences industries.

PROSPECTUS AND APPLICATION
___________, 1999

The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy or
accuracy of this Prospectus. Any representation to the contrary
is a criminal offense.

ALLIANCE CAPITAL [LOGO] TABLE OF CONTENTS

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Page
RISK/RETURN SUMMARY

FEES AND EXPENSES OF THE FUND
GLOSSARY
DESCRIPTION OF THE FUND
Investment Objective, Policies and Risk Considerations
Description of Investment Practices
Additional Risk Considerations
MANAGEMENT OF THE FUND
PURCHASE AND SALE OF SHARES
How The Fund Values Its Shares
How To Buy Shares
How To Exchange Shares
How To Sell Shares
DIVIDENDS, DISTRIBUTIONS AND TAXES
DISTRIBUTION ARRANGEMENTS
GENERAL INFORMATION

<PAGE>

The Funds 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
Alliance Health Care Fund, Inc. This Summary describes the Funds
objective, principal investment strategies, principal risks and
fees. This Summary includes a short discussion of some of the
principal risks of investing in the Fund.
A more detailed description of the Fund, including the risks
associated with investing in the Fund, can be found further back
in this Prospectus. Please be sure to read this additional
information BEFORE you invest. The Fund may at times use certain
types of investment derivatives such as futures and forwards. The
use of these techniques involve special risks that are discussed
in this Prospectus.

The value of an investment in the Fund changes with the values of
the Funds investments. Many factors can affect those values. In
this Summary, we describe the principal risks that may affect the
Funds portfolio as a whole. The Fund could be subject to
additional principal risks because the types of investments made
by the Fund can change over time. This Prospectus has additional
descriptions of investments that appear in bold type in the
discussions under Description of the Fund. That section also
includes more information about the Fund, its investments, and
related risks.

Other important things for you to note:

- - You may lose money by investing in the Fund.

- - An investment in the Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

<PAGE>

OBJECTIVE:

The Funds investment objective is capital appreciation and,
secondarily, current income.

PRINCIPAL INVESTMENT STRATEGIES:

The Fund invests primarily in equity securities of companies
principally engaged in the health care and health science
industries (e.g., companies involved in the discovery, devel-
opment, production or distribution of products and services which
relate to the diagnosis, treatment and prevention of diseases or
of medical disorders). The Fund expects under normal
circumstances to invest primarily in the equity securities of
U.S. companies. The Fund may invest up to 40% of its total
assets in securities of non-U.S. companies (i.e., foreign
securities). The Fund may invest in both new, smaller or less-
seasoned companies as well as in larger, established companies in
the Health Care Industries.

PRINCIPAL RISKS:

Among the principal risks of investing in the Fund are market
risk and sector risk. Unlike many other equity funds, the Fund
invests in the securities of a single industry. As a result,
certain economic conditions and market changes that affect the
Health Care Industries may have a more significant effect, either
negative or positive, on the Funds net asset value than on the
value of a more broadly diversified fund. The Funds investments
in foreign securities have foreign risk and currency risk. The
Fund may invest in small- to mid-capitalization companies and
such investments have capitalization risk. The Fund is not a
complete investment program and investors should invest only a
portion of their assets in the Fund.

There is no bar chart or performance table for the Fund because
it has not completed a full calendar year of operations.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your
investment)

<PAGE>

CLASS A CLASS B CLASS C
SHARES SHARES SHARES

Maximum Sales Charge (Load) Imposed
on Purchases
(as a percentage of offering price) 4.25% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original
purchase price or redemption
proceeds, whichever is lower) None 4.0% 1.0%
during
the 1st during the
year, 1st year
decreasing 0%
1.0% annually thereafter
to 0% after
the 4th year*

Exchange Fee None None None

* Class B Shares automatically convert to Class A Shares after 8 years.

<PAGE>

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets) and EXAMPLES

The Examples are to help you compare the cost of investing in the
Fund with the cost of investing in other funds. They assume that
you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. They
also assume that your investment has a 5% return each year, that
the Funds operating expenses stay the same and that all dividends
and distributions are reinvested. Your actual costs may be higher
or lower.

<TABLE>
<CAPTION>
OPERATING EXPENSES EXAMPLES

CLASS
CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ C++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees [ ]% [ ]% [ ]% After 1 Yr. $ $ $ $ $
Rule 12b-1 fees .30% 1.00% 1.00% After
3 Yrs. $ $ $ $ $
Other expenses [ ]% [ ]% [ ]%
Total Fund
operating
expenses [ ]% [ ]% [ ]%
Waiver and/or
expense
reimbursement (a) [ ]% [ ]% [ ]%
Net expenses [ ]% [ ]% [ ]%

+ Assumes redemption at the end of period.

++ Assumes no redemption at end of period.
(a) Reflects Alliances contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the
Funds operating expenses. With respect to waivers and reimbursements through August 31, 2000, the Fund may reimburse
Alliance, but no reimbursement of Alliance will occur after November 30, 2002. In addition, no reimbursement payment
will be made if it would cause the Funds total annualized operating expenses to exceed the amounts shown in the table
or cause the total of the payments to exceed the Funds total initial organizational and offering expenses.
</TABLE>

<PAGE>

GLOSSARY

This Prospectus uses the following terms.

TYPES OF SECURITIES

Convertible securities are fixed-income securities that are
convertible into common stock.

Debt securities are bonds, debentures, notes, bills, loans, other
direct debt instruments, and other fixed, floating and variable
rate debt obligations, but do not include convertible securities.

Equity securities are (i) common stocks, partnership interests,
business trust shares, and other equity ownership interests in
business enterprises, and (ii) securities convertible into, and
rights and warrants to subscribe for the purchase of, such
stocks, shares, and interests.

Fixed-income securities are debt securities and dividend-paying
preferred stocks, including floating rate and variable rate
instruments.

Health Care Industries are those industries principally engaged
in the discovery, development, provision, production or
distribution of products and services which relate to the
diagnosis, treatment and prevention of diseases or other medical
disorders. Companies in these fields include, but are not
limited to, pharmaceutical firms; companies that design,
manufacture or sell medical supplies, equipment and support
services; companies that operate hospitals and other health care
facilities; and companies engaged in medical, diagnostic,
biochemical, and biotechnological research and development.

Non-U.S. companies are entities (i) that are organized under the
laws of a country other than the United States and have their
principal office in a country other than the United States, or
(ii) the equity securities of which are traded principally in
securities markets outside the United States.

Rule 144A securities are securities that may be resold pursuant
to Rule 144A under the Securities Act.

U.S. Government securities are securities issued or guaranteed by
the United States Government, its agencies or instrumentalities.

RATING AGENCIES

Moodys is Moodys Investors Service, Inc.

S&P is Standard & Poors Rating Services.

<PAGE>

OTHER

1940 Act is the Investment Company Act of 1940, as amended.

Code is the Internal Revenue Code of 1986, as amended.

Commission is the Securities and Exchange Commission.

Exchange is the New York Stock Exchange.

Securities Act is the Securities Act of 1933, as amended.

DESCRIPTION OF THE FUND

This section of the Prospectus provides a more complete
description of the Funds investment objective, principal
strategies and principal risks. Of course, there can be no
assurance that the Fund will achieve its investment objective.

Please note:

- - Additional discussion of the Funds investments, including the
risks of the investments that appear in bold type can be
found in the discussion under Description of Investment
Practices following this section.

- - The description of the Funds risks may include risks
discussed in the Risk/Return Summary above. Additional
information about risks of investing in the Fund can be found
in the discussions under Additional Risk Considerations.

- - Additional descriptions of the Funds strategies and
investments, as well as other strategies and investments not
described below, may be found in the Funds Statement of
Additional Information or SAI.

- - The Funds investment objective is fundamental and cannot be
changed without a shareholder vote and, except as noted, the
Funds investment policies are not fundamental and thus can be
changed without a shareholder vote.

INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS

The Funds investment objective is capital appreciation and,
secondarily, current income.

How the Fund Pursues Its Objective

In seeking to achieve its investment objective, the Fund
emphasizes investments in securities of companies principally
engaged in Health Care Industries.

<PAGE>

The Fund seeks investments in both new, smaller and less seasoned
companies and well-known, larger and established companies.
Whenever possible, investments in new, smaller or less seasoned
companies will be made with a view to benefiting from the
development and growth of new products and markets in Health Care
Industries. Investments in these companies may offer more reward
but may also entail more risk than is generally true of larger,
established companies.

While the Fund anticipates that a substantial portion of its
portfolio will be invested in the securities of U.S. companies,
the Fund is not limited to investing in such securities. Many
companies in the forefront of world medical technology are
located outside the United States, primarily in Japan and Europe.
Accordingly, the Fund may invest up to 40% of the value of its
net assets in foreign securities, including up to 25% in issuers
located in any one foreign country. However no more than 5% of
the value of the Funds total net assets may be invested in
securities of issuers located in emerging market countries.

The Fund seeks to take advantage of capital appreciation
opportunities identified by the Funds investment adviser in
emerging technologies and services in Health Care Industries by
investing in companies which are expected to profit from the
development of new products and services for these industries.
Examples of such emerging technologies and services include:

- - New methods for administering drugs to a patient, such as
surgical implants and skin patches which enhance the
effectiveness of the drugs and may reduce patient side
effects by delivering the drugs in precise quantities over a
prolonged time period or by evading natural body defense
mechanisms which delay the effect of the drugs;

- - Developments in medical imaging such as the application of
computer technology to the output of conventional x-ray
systems which allow for cross-sectional images of soft tissue
and organs (CT scanning) and continuous imaging (digital
radiography) as well as more advanced nuclear medicine,
ultrasound and magnetic resonance imaging (MRI);

- - Advances in minimally invasive surgical techniques, such as
angioplasty and related technologies for diseased blood
vessels and laser beams for the eye, general and
cardiovascular surgery, which provide greater effectiveness,
lower cost and improved patient safety than more traditional
surgical techniques;

- - New therapeutic pharmaceutical compounds that control or
alleviate disease, including prescription and
non-prescription drugs and treatment regimes for conditions

<PAGE>

not controlled, alleviated or treatable by existing
medications or treatments and chemical or biological
pharmaceuticals for use in diagnostic testing;

- - Advances in molecular biology such as signal transduction,
cell adhesion and cell to cell communication which have
facilitated a rapid increase in new classes of drugs. These
have included monoclonal antibodies, bio-engineered proteins
and small molecules from novel synthesis and screening
techniques;

- - Genomics, which allows scientists to better understand the
causes of human diseases, and in some cases has led to the
manufacture of proteins for use as therapeutic drugs;

- - Gene chips and equipment which provide for the screening,
diagnosis and treatment of diseases;

- - Introduction of large scale business efficiencies to the
management of nursing homes, acute and specialty hospitals as
well as fire-standing outpatient facilities, surgical centers
and rehabilitation centers;

- - Adaptations of microprocessors for use by pharmaceutical
manufacturers, hospitals, doctors and others in the Health
Care Industries to increase distribution efficiency; and

- - Health care delivery organizations which combine cost
effectiveness with high quality medical care and help address
the rising cost of health care.

The Funds portfolio may also include companies that provide
traditional products and services currently in use in Health Care
Industries and that are likely to benefit from any increases in
the general demand for such products and services. The following
are examples of the products and services that may be offered by
companies in Health Care Industries:

- - Drugs or Pharmaceuticals, including both ethical and
proprietary drugs, drug administration products and
pharmaceutical components used in diagnostic testing;

- - Medical Equipment and Supplies, including equipment and
supplies used by health service companies and individual
practitioners, such as electronic equipment used for
diagnosis and treatment, surgical and medical instruments and
other products designed especially for the Health Care
Industries;

- - Health Care Services, including the services of clinical
testing laboratories, hospitals, nursing homes, clinics,

<PAGE>

centers for convalescence and rehabilitation, and products
and services for home health care; and

- - Medical Research, including scientific research to develop
drugs, processes or technologies with possible commercial
application in Health Care Industries.

The Fund also may:

- - invest up to [ ]% of its total assets in rights or warrants;

- - make secured loans of securities of up to 20% of its total
assets; and

- - enter into repurchase agreements.

- - purchase and sell stock index futures contracts;

- - purchase or sell forward foreign currency exchange contracts;

- - enter into forward commitments for the purchase or sale of
securities;

- - Risk Considerations. Among the principal risks of investing
in the Fund are:

- - Market Risk This is the risk that the value of the Funds
investments will fluctuate as the stock or bond markets
fluctuate and that prices overall will decline over short or
longer-term periods.

- - Sector Risk This is the risk of investments in a particular
industry sector. Market or economic factors affecting the
Health Care Industries sector could have a major effect,
either negative or positive, on the value of the Funds
investments.

- - Foreign Risk This is the risk of investments in issuers
located in foreign countries. Investments in foreign
securities may experience more rapid and extreme changes in
value than investments in securities of U.S. companies. This
is because the securities markets of many foreign countries
are relatively small, with a limited number of companies
representing a small number of industries. Additionally,
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.
Also, nationalization, expropriation or confiscatory
taxation, currency blockage, or political changes or
diplomatic developments could adversely affect the Funds

<PAGE>

investments in a foreign country. In the event of
nationalization, expropriation, or other confiscation, the
Fund could lose its entire investment.

- - Currency Risk This is the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies
may negatively affect the value of the Funds investments.

- - Capitalization Risk This is the risk of investments in small-
to mid-capitalization companies. Investments in small- to
mid-cap companies may be more volatile than large-cap
companies. In addition, the Funds investments in smaller
capitalization stocks may have additional risks because these
companies often have limited product lines, markets, or
financial resources.

- - Management Risk The Fund is subject to management risk
because it is an actively managed investment Fund. Alliance
will apply its investment techniques and risk analyses in
making investment decisions for the Fund, but there is no
guarantee that its techniques will produce the intended
result.

<PAGE>

DESCRIPTION OF INVESTMENT PRACTICES

This section describes the investment practices of the Fund and
risks associated with these practices. Unless otherwise noted,
the Funds use of any of these practices was specified in the
previous section.

Forward Commitments. Forward commitments for the purchase or sale
of securities may include purchases on a when-issued basis or
purchases or sales on a delayed delivery basis. In some cases, a
forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a when, as
and if issued trade).

When forward commitment transactions are negotiated, the price is
fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. Normally,
the settlement date occurs within two months after the
transaction, but the Fund may negotiate settlements beyond two
months. Securities purchased or sold under a forward commitment
are subject to market fluctuation, and no interest or dividends
accrue to the purchaser prior to the settlement date.

When-issued securities and forward commitments may be sold prior
to the settlement date, but the Fund enters into when-issued and
forward commitments only with the intention of actually receiving
securities or delivering them, as the case may be. If the Fund
chose to dispose of the right to acquire a when-issued security
prior to its acquisition or dispose of its right to deliver or
receive against a forward commitment, it may realize a gain or
incur a loss. Any significant commitment of Fund assets to the
purchase of securities on a when, as and if issued basis may
increase the volatility of the Funds net asset value. No forward
commitments will be entered into if, as a result, the Funds
aggregate commitments under the transactions would be more than
30% of its total assets. In the event the other party to a
forward commitment transaction were to default, the Fund might
lose the opportunity to invest money at favorable rates or to
dispose of securities at favorable prices.

Forward Foreign Currency Exchange Contracts. The Fund may
purchase or sell forward foreign currency exchange contracts to
minimize the risk of adverse changes in the relationship between
the U.S. Dollar and other currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date, and is individually negotiated and
privately traded.

The Fund may enter into a forward contract, for example, when it
enters into a contract for the purchase or sale of a security

<PAGE>

denominated in a foreign currency in order to lock in the U.S.
Dollar price of the security (transaction hedge). The Fund may
not engage in transaction hedges with respect to the currency of
a particular country to an extent greater than the aggregate
amount of the Funds transactions in that currency. When the Fund
believes that a foreign currency may suffer a substantial decline
against the U.S. Dollar, it may enter into a forward sale
contract to sell an amount of that foreign currency approximating
the value of some or all of the Funds portfolio securities
denominated in such foreign currency; or when the Fund believes
that the U.S. Dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract
to buy that foreign currency for a fixed dollar amount (position
hedge). The Fund will not position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency.
Instead of entering into a position hedge, the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. Dollar amount where the Fund
believes that the U.S. Dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. Dollar value of the currency in which
portfolio securities of the Fund are denominated (cross-hedge).
Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it does not enter into
forward contracts.

Illiquid Securities. The Fund will limit its investment in
illiquid securities to no more than 15% of its net assets.
Illiquid securities generally include (i) direct placements or
other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available
market (e.g., when trading in the security is suspended or, in
the case of unlisted securities, when market makers do not exist
or will not entertain bids or offers), including many
individually negotiated currency swaps and any assets used to
cover currency swaps, (ii) over-the-counter options and assets
used to cover over-the-counter options, and (iii) repurchase
agreements not terminable within seven days.

<PAGE>

Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize the price at
which they are carried on the Funds books upon sale. Alliance
will monitor the illiquidity of the Funds investments in such
securities. Rule 144A securities will not be treated as illiquid
for purposes of this limit on investments.

The Fund may not be able to readily sell securities for which
there is no ready market. To the extent that these securities are
foreign securities, there is no law in many of the countries in
which the Fund may invest similar to the Securities Act requiring
an issuer to register the sale of securities with a governmental
agency or imposing legal restrictions on resales of securities,
either as to length of time the securities may be held or manner
of resale. There may, however, be contractual restrictions on
resale of securities.

Loans of Portfolio Securities. The Fund may make secured loans of
its portfolio securities to entities with which it can enter into
repurchase agreements, provided that cash and/or liquid high
grade debt securities equal to at least 100% of the market value
of the securities loaned are deposited and maintained by the
borrower with the Fund. The Fund may lend not more than half of
the securities representing each holding of the portfolio and for
a period not exceeding 30 days. The value of the securities
loaned will not exceed 20% of the value of the Funds total net
assets at the time a loan is made. The risk in lending portfolio
securities, as with other extensions of credit, consists of the
possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities to a
particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the
borrower. While securities are on loan, the borrower will pay the
Fund any income from the securities. The Fund may invest any cash
collateral in portfolio securities and earn additional income, or
receive an agreed-upon amount of income from a borrower who has
delivered equivalent collateral. The Fund will have the right to
regain record ownership of loaned securities to exercise
beneficial rights such as voting rights, subscription rights, and
rights to dividends, interest or distributions. The Fund may pay
reasonable finders, administrative, and custodial fees in
connection with a loan.

Repurchase Agreements. 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 a day or a few
days later. The resale price is greater than the purchase price,
reflecting an agreed-upon interest rate for the period the buyers
money is invested in the security. Such agreements permit the
Fund to keep all of its assets at work while retaining overnight
flexibility in pursuit of investments of a longer-term nature. If

<PAGE>

a vendor defaults on its repurchase obligation, the Fund would
suffer a loss to the extent that the proceeds from the sale of
the collateral were less than the repurchase price. If a vendor
goes bankrupt, the Fund might be delayed in, or be prevented
from, selling the collateral for its benefit.

Rights and Warrants. The Fund will invest in rights or warrants
only if the underlying equity securities themselves are deemed
appropriate by Alliance for inclusion in the Funds portfolio.
Rights and warrants entitle the holder to buy equity securities
at a specific price for a specific period of time. Rights are
similar to warrants except that they have a substantially shorter
duration. Rights and warrants may be considered more speculative
than certain other types of investments in that they do not
entitle a holder to dividends or voting rights with respect to
the underlying securities nor do they represent any rights in the
assets of the issuing company. The value of a right or warrant
does not necessarily change with the value of the underlying
securities, although the value of a right or warrant may decline
because of a decrease in the value of the underlying stock, the
passage of time, or a change in perception as to the potential of
the underlying stock, or any combination of these factors.

If the market price of the underlying security is below the
exercise price of the warrant on the expiration date, the warrant
will expire worthless. Moreover, a right or warrant ceases to
have value if it is not exercised prior to the expiration date.

Stock Index Futures. The Fund may purchase and sell stock index
futures as a hedge against movements in the equity markets. There
are several risks in connection with the use of stock index
futures by the Fund as a hedging device. One risk arises because
of the imperfect correlation between movements in the price of a
stock index future and movements in the price of the securities
that are the subject of the hedge. The price of a stock index
future may move more than or less than the price of the
securities being hedged. If the price of a stock index future
moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the securities being hedged
has moved in a favorable direction, this advantage will be
partially offset by the loss on the index futures contract. If
the price of the index future moves more than the price of the
stock, the Fund will experience either a loss or gain on the
futures contract which will not be completely offset by movements
in the price of the securities that are subject to the hedge.

To compensate for the imperfect correlation of movements in the
price of securities being hedged and movements in the price of a

<PAGE>

stock index future, the Fund may buy or sell stock index futures
contracts in a greater dollar amount than the dollar amount of
securities being hedged if the volatility over a particular time
period of the prices of such securities has been greater than the
volatility over such time period of the stock index, or if
otherwise deemed to be appropriate by Alliance. Conversely, the
Fund may buy or sell fewer stock index futures contracts if the
volatility over a particular time period of the prices of the
securities being hedged is less than the volatility over such
time period of the stock index, or it is otherwise deemed to be
appropriate by Alliance. It also possible that, where the Fund
has sold futures to hedge its portfolio against a decline in the
market, the market may advance and the value of securities held
in the Fund may decline. If this occurred, the Fund would lose
money on the futures and also experience a decline in value in
its portfolio securities. However, over time the value of a
diversified portfolio should tend to move in the same direction
as the market indices upon which the index futures are based,
although there may be deviations arising from differences between
the composition of the Fund and the stocks comprising the index.

Where a stock index futures contract is purchased to hedge
against a possible increase in the price of stock before the Fund
is able to invest its cash (or cash equivalents) in stocks (or
options) in an orderly fashion, it is possible that the market
may decline instead. If the Fund then concludes not to invest in
stock or options at that time because of concern as to possible
further market decline or for other reasons, the Fund will
realize a loss on the futures contract that is not offset by a
reduction in the price of securities purchased.

In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in stock
index futures and the portion of the portfolio being hedged, the
price of stock index futures may not correlate perfectly with
movement in the stock index due to certain market distortions.
Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting
transactions, which could distort the normal relationship between
the index and futures markets. From the point of view of
speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market
Therefore, increased participation by speculators in the futures
market may also cause temporary price distortions. Due to the
possibility of price distortion in the futures market, and
because of the imperfect correlation between the movements in a
stock index and movements in the price of stock index futures, a
correct forecast of general market trends by the investment
adviser may still not result in a successful hedging transaction
over a short time frame.

<PAGE>

Positions in stock index futures may be closed out only on an
exchange or board of trade, which provides a secondary market for
such futures. Although the Fund intends to purchase or sell
futures only on exchanges or boards of trade where there appear
to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will
exist for any particular futures contract or at any particular
time. In such event, it may not be possible to close a futures
investment position, and in the event of adverse price movements,
the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event that futures
contracts have been used to hedge portfolio securities, such
securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses
on the futures contract. As described above, however, there is no
guarantee that the price of the securities will in fact correlate
with the price movements in the futures contract and thus provide
an offset on a futures contract.

Future Developments. The Fund may, following written notice to
its shareholders, take advantage of other investment practices
that are not currently contemplated for use by the Fund or are
not available but may yet be developed, to the extent such
investment practices are consistent with the Funds investment
objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those
involved in the activities described above.

General. The successful use of the investment practices described
above draws upon Alliances special skills and experience and
usually depends on Alliances ability to forecast price movements
or currency exchange rate movements correctly. Should prices or
exchange rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the transactions or may realize losses
and thus be in a worse position than if such strategies had not
been used.
The Funds ability to dispose of its positions in futures
contracts and forward contracts depends on the availability of
liquid markets in such instruments. Markets in futures with
respect to a number of types of securities and currencies are
relatively new and still developing, and there is no public
market for forward contracts. It is impossible to predict the
amount of trading interest that may exist in various types of
futures contracts and forward contracts. The lack of a secondary
market may reduce the Funds ability to obtain the maximum value
from the use of futures contracts and forward contracts.
Therefore, no assurance can be given that the Fund will be able
to utilize these instruments effectively.

<PAGE>

Portfolio Turnover. The Fund is actively managed and, in some
cases in response to market conditions, the Funds portfolio
turnover may exceed [ ]%. A higher rate of portfolio turnover
increases brokerage and other expenses, which must be borne by
the Fund and its shareholders. High portfolio turnover also may
result in the realization of substantial net short-term capital
gains, which, when distributed, are taxable to shareholders.

Temporary Defensive Position. For temporary defensive purposes,
the Fund may invest in certain types of short-term, liquid, high-
grade or high-quality debt securities. These securities may
include U.S. Government securities, qualifying bank deposits,
money market instruments, prime commercial paper and other types
of short-term debt securities, including notes and bonds. Such
securities may also include short-term, foreign-currency
denominated securities of the type mentioned above issued by
foreign governmental entities, companies and supranational
organizations. While the Fund is investing for temporary
defensive purposes, it may not meet its investment objective.

ADDITIONAL RISK CONSIDERATIONS

Effects of Borrowing. The Fund may, when Alliance believes that
market conditions are appropriate, borrow in order to take full
advantage of available investment opportunities. The Fund may,
although it has no present intention of doing so, borrow money
from a bank in a privately arranged transaction to increase the
money available to the Fund to invest in securities when the Fund
believes that the return from the securities financed will be
greater than the interest expense paid on the borrowing.
Borrowings may involve additional risk to the Fund because the
interest expense may be greater than the income from or
appreciation of the securities carried by the borrowings and the
value of the securities carried may decline below the amount
borrowed.

Any investment gains made with the proceeds obtained from
borrowings in excess of interest paid on the borrowings will
cause the net income per share and the net asset value per share
of the Funds common stock to be greater than would otherwise be
the case. On the other hand, if the investment performance of the
additional securities purchased fails to cover their cost
(including any interest paid on the money borrowed) to the Fund,
then the net income per share and net asset value per share of
the Funds common stock will be less than would otherwise be the
case. This is the speculative factor known as leverage.

Borrowings by the Fund result in leveraging of the Funds shares
of common stock. Utilization of leverage, which is usually
considered speculative, involves certain risks to the Funds
shareholders. These include a higher volatility of the net asset

<PAGE>

value of the Funds shares of common stock and the relatively
greater effect on the net asset value of the shares. So long as
the Fund is able to realize a net return on its investment
portfolio that is higher than the interest expense paid on
borrowings, the effect of leverage will be to cause the Funds
shareholders to realize a higher current net investment income
than if the Fund were not leveraged. On the other hand, interest
rates on U.S. Dollar-denominated and foreign currency-denominated
obligations change from time to time as does their relationship
to each other, depending upon such factors as supply and demand
forces, monetary and tax policies within each country and
investor expectations. Changes in such factors could cause the
relationship between such rates to change so that rates on U.S.
Dollar-denominated obligations may substantially increase
relative to the foreign currency-denominated obligations in which
the Fund may be invested. To the extent that the interest expense
on borrowings approaches the net return on the Funds investment
portfolio, the benefit of leverage to the Funds shareholders will
be reduced, and if the interest expense on borrowings were to
exceed the net return to shareholders, the Funds use of leverage
would result in a lower rate of return than if the Fund were not
leveraged. Similarly, the effect of leverage in a declining
market could be a greater decrease in net asset value per share
than if the Fund were not leveraged. In an extreme case, if the
Funds current investment income were not sufficient to meet the
interest expense on borrowings, it could be necessary for the
Fund to liquidate certain of its investments, thereby reducing
the net asset value of the Funds shares.

Foreign Securities. The securities markets of many foreign
countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited
number of companies representing a small number of industries.
Consequently, the Fund, whose investment portfolio includes
foreign securities, may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in
equity securities of U.S. companies. These markets may be subject
to greater influence by adverse events generally affecting the
market, and by large investors trading significant blocks of
securities, than is usual in the United States. Securities
registration, custody and settlements may in some instances be
subject to delays and legal and administrative uncertainties.

Certain foreign countries require governmental approval prior to
investments by foreign persons or limit investment by foreign
persons to only a specified percentage of an issuers outstanding
securities or a specific class of securities which may have less
advantageous terms (including price) than securities of the
company available for purchase by nationals. These restrictions
or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of the Fund.

<PAGE>

In addition, the repatriation of investment income, capital or
the proceeds of sales of securities from certain countries is
controlled under regulations, including in some cases the need
for certain advance government notification or authority, and if
a deterioration occurs in a countrys balance of payments, the
country could impose temporary restrictions on foreign capital
remittances.

The Fund also could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for
repatriation, as well as by the application of other restrictions
on investment. Investing in local markets may require the Fund to
adopt special procedures that may involve additional costs to the
Fund. These factors may affect the liquidity of the Funds
investments in any country and Alliance will monitor the effect
of any such factor or factors on the Funds investments.
Furthermore, transaction costs including brokerage commissions
for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the United States.

Issuers of securities in foreign jurisdictions are generally not
subject to the same degree of regulation as are U.S. issuers with
respect to such matters as insider trading rules, restrictions on
market manipulation, shareholder proxy requirements, and timely
disclosure of information. The reporting, accounting, and
auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less
information may be available to investors in foreign securities
than to investors in U.S. securities. Substantially less
information is publicly available about certain non-U.S. issuers
than is available about U.S. issuers.

The economies of individual foreign countries may differ
favorably or unfavorably from the U.S. economy in such respects
as growth of gross domestic product or gross national product,
rate of inflation, capital reinvestment, resource
self-sufficiency, and balance of payments position.
Nationalization, expropriation or confiscatory taxation, currency
blockage, political changes, government regulation, political or
social instability, or diplomatic developments could affect
adversely the economy of a foreign country and the Funds
investments. In the event of expropriation, nationalization or
other confiscation, the Fund could lose its entire investment in
the country involved. In addition, laws in foreign countries
governing business organizations, bankruptcy and insolvency may
provide less protection to security holders, such as the Fund,
than that provided by U.S. laws.

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

<PAGE>

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. Should any of the
computer systems employed by the Funds major service providers
fail to process Year 2000 related information properly, that
could have a significant negative impact on the Funds operations
and the services that are provided to the Funds shareholders. In
addition, to the extent that the operations of issuers of
securities held by the Fund are impaired by the Year 2000
problem, or prices of securities held by the Fund decline as a
result of real or perceived problems relating to the Year 2000,
the value of the Funds shares may be materially affected.

With respect to the Year 2000, the Fund has been advised that
Alliance, its investment adviser, Alliance Fund Distributors,
Inc. (AFD), its principal underwriter, and Alliance Fund
Services, Inc. (AFS), its 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 in 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 Fund.

The Fund and Alliance have been advised by the Funds custodian
that it is also in the process of reviewing its systems with the
same goals. As of the date of this prospectus, the Fund and
Alliance have no reason to believe that the custodian will be
unable to achieve these goals.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER AND FUND MANAGER

The Funds investment adviser is Alliance Capital Management L.P.,
1345 Avenue of the Americas, New York, New York 10105. Alliance
is a leading international investment adviser supervising client
accounts with assets as of March 31, 1999 totaling more than $301

<PAGE>

billion (of which approximately $127 billion represented the
assets of investment companies). Alliances clients are primarily
major corporate employee benefit funds, public employee
retirement systems, investment companies, foundations, and
endowment funds. The 54 registered investment companies managed
by Alliance, with more than 119 separate portfolios, currently
have over four million shareholder accounts. As of March 31,
1999, Alliance was retained as an investment manager for employee
benefit plan assets of 30 of the FORTUNE 100 companies.

The person primarily responsible for the day-to-day management of
the Fund is Norman Fidel. Mr. Fidel is a Senior Vice President of
Alliance Capital Management Corporation with which he has been
associated since prior to 1994.

Under the Advisory Agreement, Alliance receives a fee at an
annualized rate of [ ]% of the Funds average daily net assets.
The fee will be accrued daily and paid monthly.

Performance of a Similarly Managed Fund. Alliance is the
investment adviser of an investment company organized and
operated under the laws of the Grand Duchy of Luxembourg, ACM
International Health Care Fund (ACM Fund), that has substantially
the same investment objective and policies as those of the Fund.
ACM Fund has been managed in accordance with substantially the
same investment strategies and techniques as are intended to be
employed with respect to the Fund. As reflected below, [the Class
AX shares of] ACM Fund [have][has] performed favorably when
compared with the performance of a recognized performance
average.

Norman Fidel, the portfolio manager of the Fund, is also the
person who has been primarily responsible for the day-to-day
management of ACM Fund since its inception in 1986.

ACM Fund is not subject to certain limitations, diversification
requirements and other restrictions imposed under the 1940 Act
and the Code to which the Fund, as a registered investment
company, is subject and which, if applicable to ACM Fund, may
have adversely affected the performance results of ACM Fund.

Set forth below are performance data provided by Alliance
relating to [the Class AX shares of] ACM Fund for the one, five
and ten calendar year periods ended December 31, 1998 during
which Mr. Fidel has managed ACM Fund as an employee of Alliance.
As of December 31, 1998, the assets in ACM Fund totaled
approximately [$ ] million.

The performance data have not been adjusted to reflect any fees
that will be payable by the Fund, which are higher than the fees
imposed on ACM Fund and will result in a higher expense ratio and

<PAGE>

lower returns for the Fund. Expenses associated with the
distribution of Class A, Class B and Class C shares of the Fund
in accordance with the plan adopted by the Funds Board of
Directors pursuant to Rule 12b-1 under the 1940 Act (distribution
fees) are also excluded. See Fees and Expenses of the Fund. The
performance data have also not been adjusted for corporate or
individual taxes, if any, payable by ACM Fund shareholders.

As reflected below, ACM Fund has over time performed favorably
when compared with the performance of a recognized performance
benchmark. The Lipper Health/Biotechnology Funds Average is a
survey of the performance of a number of mutual funds that invest
at least 65% of their equity portfolios in shares of companies
engaged in healthcare, medicine and biotechnology. The investment
policies pursued by mutual funds in the survey may differ from
those of the Fund and ACM Fund. This survey is published by
Lipper Analytical Services, Inc. (Lipper), a firm recognized for
its reporting of performance of actively managed funds. According
to Lipper, performance data are presented net of investment
management fees, operating expenses and, for funds with Rule 12b-
1 plans, asset-based sales charges.

The following performance data is provided solely to illustrate
Mr. Fidels performance in managing the ACM Fund as measured
against the composite performance of other open-end health and
biotechnology sector mutual funds. Investors should not rely on
the following performance data of the ACM Fund as an indication
of future performance of the Fund. The composite investment
performance for the periods presented may not be indicative of
future rates of return. Other methods of computing investment
performance may produce different results, and the results for
different periods may vary.

AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998___

ACM INTERNATIONAL HEALTH CARE FUND/BENCHMARK

1 Year 5 years 10 years
ACM International
Health Care Fund 24.29% 21.12% 22.79%
Lipper Analytical
H ealth/Biotechnology
Funds Average 18.96% 19.16% 22.79%

Source: Lipper Analytical Services, Inc.

<PAGE>

PURCHASE AND SALE OF SHARES

How The Fund Values Its Shares
The Funds net asset value or NAV is calculated at 4:00 p.m.
Eastern time each day the Exchange is open for business. To
calculate NAV, the Funds assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets,
is divided by the number of shares outstanding. The Fund values
its securities at their current market value determined on the
basis of market quotations, or, if such quotations are not
readily available, such other methods as the Funds directors
believe accurately reflect fair market value.

Your order for purchase, sale, or exchange of shares is priced at
the next NAV calculated after your order is accepted by the Fund.
Your purchase of Fund shares may be subject to an initial sales
charge. Sales of Fund shares may be subject to a contingent
deferred sales charge or CDSC. See the Distribution Arrangements
section of this Prospectus for details.

How to Buy Shares

You may purchase the Funds shares through broker-dealers, banks,
or other financial intermediaries. You also may purchase shares
directly from the Funds principal underwriter, Alliance Fund
Distributors, Inc., or AFD.

Minimum investment amounts are:

- Initial: $250
- Subsequent: $ 50
- Automatic Investment
Program: $ 25

If you are an existing Fund shareholder, you may purchase shares
by electronic funds transfer in amounts not exceeding $500,000 if
you have completed the appropriate section of the Shareholder
Application. Call 800-221-5672 to arrange a transfer from your
bank account.

The Fund is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders
who have not provided the Fund with their certified taxpayer
identification number. To avoid this, you must provide your
correct Tax Identification Number (Social Security Number for
most investors) on your account application.

The Fund may refuse any order to purchase shares. In this
regard, the Fund reserves the right to restrict purchases of
shares (including through exchanges) when they appear to evidence

<PAGE>

a pattern of frequent purchases and sales made in response to
short-term considerations.

Initial Offering

It is expected that shares of the Fund will be offered during an
initial offering period which is currently scheduled to end on
August 24, 1999. The Fund will begin its continuous offering of
shares on August 25, 1999. During the Funds initial offering
period, Class A shares will be offered to the public at their net
asset value of $10.00 per share plus a sales charge which will
vary with the size of the purchase as shown in the foregoing
table and as described in the Statement of Additional
Information. The maximum offering price of the Class A shares
during the initial offering period is $10.00 per share. During
the initial offering, AFD will reallow to dealers the entire
amount of the initial sales charge on Class A shares. Class B
and Class C shares will be offered to the public during the
initial offering period at their net asset value of $10.00 per
share.

During the initial offering period, the Fund will not accept
subscriptions for Fund shares other than through authorized
dealers and agent, and any subscription monies sent directly to
the Fund will be promptly returned. In addition, under
Commission regulations (e.g., Rule 15c-4 under the Securities
Exchange Act of 1934), authorized dealers and agents will not be
permitted to accept subscription monies from their customers in
advance of the purchase date unless appropriate arrangements are
made for the temporary investment or deposit of such monies.
Shares subscribed for during the Funds initial offering period
will be sold to subscribers on the purchase date, which is
expected to occur not later than August 27, 1999.

How to Exchange Shares

You may exchange your Fund shares for shares of the same class of
other Alliance Mutual Funds (including AFD Exchange Reserves, a
money market fund managed by Alliance). Exchanges shares are
made at the next-determined NAV, without sales or service
charges. You may request an exchange by mail or telephone. You
must call by 4:00 p.m. Eastern time to receive that days NAV.
The Fund may change, suspend, or terminate the exchange service
on 60 days written notice.

How to Sell Shares

You may redeem your shares (i.e., sell your shares to the Fund)
on any day the NYSE is open, either directly or through your
financial intermediary. Your sales price will be the next-
determined NAV, less any applicable CDSC, after the Fund receives

<PAGE>

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 Fund is reasonably satisfied that the
check or electronic funds transfer has been collected (which may
take up to 15 days).

Selling Shares Through Your Broker

Your broker must receive your sales request by 4:00 p.m., Eastern
time, and submit it to the Fund by 5:00 p.m., Eastern time, for
you to receive that days NAV, less any applicable CDSC. Your
broker is responsible for submitting all necessary documentation
to the Fund and may charge you for this service.

Selling Shares Directly to the Fund

By Mail:

- Send a signed letter of instruction or stock power,
along with certificates, to:

Alliance Fund Services
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672

- For your protection, a bank, a member firm of a national
stock exchange, or other eligible guarantor institution,
must guarantee signatures. Stock power forms are
available from your financial intermediary, AFS, and
many commercial banks. Additional documentation is
required for the sale of shares by corporations,
intermediaries, fiduciaries, and surviving joint owners.
If you have any questions about these procedures,
contact AFS.

By Telephone:

- You may redeem your shares for which no stock
certificates have been issued by telephone request.
Call AFS at 800-221-5672 with instructions on how you
wish to receive your sale proceeds.

- A telephone redemption request must be received by
4:00 p.m. Eastern time for you to receive that days NAV,
less any applicable CDSC.

-- If you have selected electronic funds transfer in your
Shareholder Application, the redemption proceeds may be

<PAGE>

sent directly to your bank. Otherwise, the proceeds
will be mailed to you.

-- Redemption requests by electronic funds transfer may not
exceed $100,000 per day and redemption requests by check
cannot exceed $50,000 per day.

-- Telephone redemption is not available for shares held in
nominee or street name accounts, retirement plan
accounts, or shares held by a shareholder who has
changed his or her address of record within the previous
30 calendar days.

Dividends, Distributions and Taxes

Dividends and Distributions

The Funds income dividend and capital gains distribution, if any,
declared by the Fund on its outstanding shares will, at the
election of each shareholder, be paid in cash or in additional
shares of the same class of shares of the Fund. If paid in
additional shares, the shares will have an aggregate net asset
value as of the close of business on the day following the
declaration date of the dividend or distribution equal to the
cash amount of the dividend or distribution. You may make an
election to receive dividends and distributions in cash or in
shares at the time you purchase shares. Your election can be
changed at any time prior to a record date for a dividend. There
is no sales or other charge in connection with the reinvestment
of dividends or capital gains distributions. Cash dividends may
be paid in check, or at your election, electronically via the ACH
network. There is no sales or other charge on the reinvestment
of Fund distributions.

If you receive an income dividend or capital gains distribution
in cash you may, within 120 days following the date of its
payment, reinvest the dividend or distribution in additional
shares of the Fund without charge by returning to Alliance, with
appropriate instructions, the check representing the dividend or
distribution. Thereafter, unless you otherwise specify, you will
be deemed to have elected to reinvest all subsequent dividends
and distributions in shares of the Fund.

The Fund expects that distributions will consist either of net
income or long-term capital gains. For federal income tax
purposes, the Funds 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 Funds distributions also may be subject to
certain state and local taxes.

<PAGE>

While it is the intention of the Fund to distribute to its
shareholders substantially all of each fiscal years net income
and net realized capital gains, if any, the amount and time of
any dividend or distribution will depend on the realization by
the Fund of income and capital gains from investments. There is
no fixed dividend rate and there can be no assurance that the
Fund will pay any dividends or realize any capital gains. The
final determination of the amount of the Funds return of capital
distributions for the period will be made after the end of each
calendar year.

Investment income received by the Fund from sources within
foreign countries may be subject to foreign income taxes withheld
at the source. To the extent that the Fund is liable for foreign
income taxes withheld at the source, the Fund intends, if
possible, to operate so as to meet the requirements of the Code
to pass through to the Funds shareholders credits for foreign
income taxes paid (or to permit shareholders to claim a deduction
for such foreign taxes), but there can be no assurance that the
Fund will be able to do so. Furthermore, a shareholders ability
to claim a foreign tax credit or deduction in respect of foreign
taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not
be permitted to claim a full credit or deduction for the amount
of such taxes.

Under certain circumstances, if the Fund realizes losses (e.g.,
from fluctuations in currency exchange rates) after paying a
dividend, all or a portion of the dividend may subsequently be
characterized as a return of capital. Returns of capital are
generally nontaxable, but will reduce a shareholders basis in
shares of the Fund. If that basis is reduced to zero (which
could happen if the shareholder does not reinvest distributions
and returns of capital are significant), any further returns of
capital will be taxable as capital gain. See the Funds SAI for a
further explanation of these tax issues.

If you buy shares just before the Fund deducts a distribution
from its net asset value, you will pay the full price for the
shares and then receive a portion of the price back as a taxable
distribution.

The sale or exchange of Fund shares is a taxable transaction for
Federal income tax purposes.

Each year shortly after December 31, the Fund will send you tax
information stating the amount and type of all its distributions
for the year. Consult your tax adviser about the federal, state,
and local tax consequences in your particular circumstances.

<PAGE>

DISTRIBUTION ARRANGEMENTS

Share Classes. The Fund offers three classes of shares.

Class A Shares--Initial Sales Charge Alternative

You can purchase Class A shares at NAV with an initial sales
charge as follows.

Initial Sales Charge

COMMISSION
TO DEALER/
AGENT AS
AS % OF AS % OF % OF
NET AMOUNT OFFERING OFFERING
AMOUNT PURCHASED INVESTED PRICE PRICE

Up to $100,000 4.44% 4.25% 4.00%
$100,000 up to $250,000 3.36 3.25 3.00
$250,000 up to $500,000 2.30 2.25 2.00
$500,000 up to $1,000,000 1.78 1.75 1.50

You pay no initial sales charge on purchases of Class A Shares in
the amount of $1,000,000, but may pay a 1% CDSC if you redeem
your shares within 1 year. Alliance may pay the dealer or agent
a fee of up to 1% of the dollar amount purchased. Certain
purchases of Class A shares may qualify for reduced or eliminated
sales charges under the Funds Combined Purchase Privilege,
Cumulative Quantity Discount, Statement of Intention, Privilege
for Certain Retirement Plans, Reinstatement Privilege, and Sales
at Net Asset Value Programs. Consult the Subscription
Application and the Funds SAI for additional information about
these options.

Class B Shares--Deferred Sales Charge Alternative

You can purchase Class B Shares at NAV without an initial sales
charge. The Fund will thus receive the full amount of your
purchase. Your investment, however, will be subject to a CDSC if
you redeem shares within 4 years of purchase. The CDSC varies
depending of the number of years you hold the shares. The CDSC
amounts are:

Years Since Purchase CDSC

First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None

<PAGE>

If you exchange your shares for the Class B shares of another
Alliance Mutual Fund, the CDSC also will apply to those Class B
shares. The CDSC period begins with the date of your original
purchase, not the date of exchange for the other Class B shares.

The Funds Class B shares purchased for cash automatically convert
to Class A shares eight years after the end of the month of your
purchase. If you purchase shares by exchange for the Class B
shares of another Alliance Mutual Fund, the conversion period
runs from the date of your original purchase.

Class C Shares--Asset-Based Sales Charge Alternative

You can purchase shares at NAV without an initial sales charge.
The Fund will thus receive the full amount of your purchase.
Your investment, however, will be subject to a 1% CDSC if you
redeem your shares within 1 year. If you exchange your shares
for the Class C shares of another Alliance Mutual Fund, the 1%
CDSC also will apply to those Class C shares. The 1-year period
for the CDSC begins with the date of your original purchase, not
the date of the exchange for the other Class C shares.

Class C shares do not convert to any other class of shares of the
Fund.

Asset-based Sales Charge or Rule 12b-1 Fees. The Fund has
adopted a plan under SEC Rule 12b-1 that allows the Fund to pay
asset-based sales charges or distribution and service fees for
the distribution and sale of its shares. The amount of these
fees for each class of the Funds shares is:

RULE 12B-1 FEE (AS A PERCENTAGE OF
AGGREGATE AVERAGE DAILY NET ASSETS)

Class A .30%
Class B 1.00%
Class C 1.00%

Because these fees are paid out of the Funds 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. Class B and Class C shares are subject to higher
distribution fees than Class A shares (Class B shares are subject
to these higher fees for a period of eight years, after which
they convert to Class A shares). The higher fees mean a higher
expense ratio, so Class B and Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A
shares.

<PAGE>

Choosing a Class of Shares. The decision as to which class of
shares is more beneficial to you depends on the amount and
intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might
consider purchasing Class A shares. If you are making a smaller
investment, you might consider purchasing Class B shares because
100% of your purchase is invested immediately. If you are unsure
of the length of your investment, you might consider Class C
shares because there is no initial sales charge and no CDSC as
long as the shares are held for one year or more. Dealers and
agents may receive differing compensation for selling Class A,
Class B, or Class C shares. There is no size limit on purchases
of Class A shares. The maximum purchase of Class B shares is
$250,000. The maximum purchase of Class C shares is $1,000,000.

You should consult your financial agent to assist in choosing a
class of Fund shares.

Application of the CDSC. The CDSC is applied to the lesser of
the original cost of shares being redeemed or NAV at the time of
redemption (or, as to Fund shares acquired through an exchange,
the cost of the Alliance Mutual Fund shares originally purchased
for cash). Shares obtained from dividend or distribution
reinvestment are not subject to the CDSC. The Fund may waive the
CDSC on redemptions of shares following the death or disability
of a shareholder, to meet the requirements of certain qualified
retirement plans, or under a monthly, bimonthly, or quarterly
systematic withdrawal plan. See the Funds SAI for further
information about CDSC waivers.

Other. A transaction, service, administrative or other similar
fee may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to
the purchase, sale or exchange of Class A, Class B or Class C
shares made through such financial representative. Such financial
intermediaries may also impose requirements with respect to the
purchase, sale, or exchange of shares that are different from, or
in addition to, those imposed by the Fund, including requirements
as to the minimum initial and subsequent investment amounts.

In addition to the discount or commission paid to dealers or
agents, AFD from time to time pays additional cash or other
incentives to dealers or agents for the sale of shares of the
Fund. Such additional amounts may be utilized, in whole or in
part, in some cases together with other revenues of such dealers
or agents, to provide additional compensation to registered
representatives who sell shares of the Fund. On some occasions,
such cash or other incentives will be conditioned upon the sale
of a specified minimum dollar amount of the shares of the Fund
and/or other Alliance Mutual Funds during a specific period of
time. Such incentives may take the form of payment for

<PAGE>

attendance at seminars, meals, sporting events or theater
performances, or payment for travel, lodging and entertainment
incurred in connection with travel by persons associated with a
dealer or agent to urban or resort locations within or outside
the United States. Such dealer or agent may elect to receive
cash incentives of equivalent amount in lieu of such payments.

GENERAL INFORMATION

Under unusual circumstances, the Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by
federal securities law. The Fund reserves the right to close an
account that through redemption has remained below $200 for 90
days. Shareholders will receive 60 days written notice to
increase the account value before the account is closed.

During drastic economic or market developments, you might have
difficulty in reaching AFS by telephone, in which event you
should issue written instructions to AFS. AFS is not responsible
for the authenticity of telephone requests to purchase, sell, or
exchange shares. AFS will employ reasonable procedures to verify
that telephone requests are genuine, and could be liable for
losses resulting from unauthorized transactions if it failed to
do so. Dealers and agents may charge a commission for handling
telephone requests. The telephone service may be suspended or
terminated at any time without notice.

Shareholder Services. AFS offers a variety of shareholder
services. For more information about these services or your
account, call AFSs toll-free number, 800-221-5672. Some services
are described in the attached Subscription Application. You also
may request a shareholders manual explaining all available
services by calling 800-227-4618.

Employee Benefit Plans. Certain employee benefit plans,
including employer-sponsored tax-qualified 401(k) plans and other
defined contribution retirement plans (Employee Benefit Plans),
may establish requirements as to the purchase, sale or exchange
of shares, including maximum and minimum initial investment
requirements, that are different from those described in this
Prospectus. Employee Benefit Plans also may not offer all
classes of shares of the Fund. In order to enable participants
investing through Employee Benefit Plans to purchase shares of
the Fund, the maximum and minimum investment amounts may be
different for shares purchased through Employee Benefit Plans
from those described in this Prospectus. In addition, the
Class A, Class B, and Class C CDSC may be waived for investments
made through Employee Benefit Plans.

<PAGE>

For more information about the Fund, the following documents are
available upon request:

Statement of Additional Information (SAI)

The Fund has an SAI, which contains more detailed information
about the Fund, including its operations and investment policies.
The Funds SAI is incorporated by reference into (and is legally
part of) this Prospectus.

You may request a free copy of the 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 07096-1520
By Phone: For Information: (800) 221-5672
For Literature: (800) 227-4618

Or you may view or obtain these documents from the Commission:

In Person: at the Commissions 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 Fund on
the Internet at: www.Alliancecapital.com.

<PAGE>

(LOGO) ALLIANCE HEALTH CARE FUND, INC.

c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
____________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
[ ], 1999

____________________________________________________________

This Statement of Additional Information is not a
prospectus but supplements and should be read in conjunction with
the Prospectus dated [ ], 1999 for Alliance Health Care
Fund, Inc. (the "Fund") (the "Prospectus"). Copies of the
Prospectus may be obtained by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown above.

TABLE OF CONTENTS
Page
Description of the Fund................................
Management of the Fund.................................
Expenses of the Fund...................................
Purchase of Shares.....................................
Redemption and Repurchase of Shares....................
Shareholder Services...................................
Net Asset Value........................................
Dividends, Distributions and Taxes.....................
Portfolio Transactions.................................
General Information....................................
Financial Statement and Report of Independent
Accountants .........................................
Appendix A: Certain Employee Benefit Plans

(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

____________________________________________________________

DESCRIPTION OF THE FUND
____________________________________________________________

Alliance Health Care Fund, Inc. (the "Fund") is a
diversified open-end management investment company. The Fund was
incorporated under the laws of the State of Maryland on April 30,
1999. The Fund's investment objective is "fundamental" and
cannot be changed without a shareholder vote. Except as noted,
the Fund's investment policies are not fundamental and thus can
be changed without a shareholder vote. The Fund will not change
these policies without notifying its shareholders. There is no
guarantee that the Fund will achieve its investment objective.

Investment Policies and Practices

The Fund's principal investment policies, practices and
risks are set forth in the Prospectus. The information set forth
below concerning the Fund's investment practices and policies
supplements the information in the Prospectus. Except as
otherwise noted, the Fund's investment policies described below
are not designated "fundamental policies" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"),
and may be changed by the Directors of the Fund without
shareholder approval. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

The following information about the Fund's investment
policies and practices supplements the information set forth in
the Prospectus.

RIGHTS AND WARRANTS. The Fund will invest in rights or
warrants only if the underlying equity securities themselves are
deemed appropriate by Alliance Capital Management L.P., the
Fund's investment adviser (the "Adviser"), for inclusion in the
Fund's portfolio. Rights and warrants entitle the holder to buy
equity securities at a specific price for a specific period of
time. Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants may be
considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying securities, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying stock, the passage of time, or a change in

<PAGE>

perception as to the potential of the underlying stock, or any
combination of these factors.

If the market price of the underlying security is below
the exercise price of the warrant on the expiration date, the
warrant will expire worthless. Moreover, a right or warrant
ceases to have value if it is not exercised prior to the
expiration date.

STOCK INDEX FUTURES. The Fund may purchase and sell
stock index futures as a hedge against movements in the equity
markets. There are several risks in connection with the use of
stock index futures by the Fund as a hedging device. One risk
arises because of the imperfect correlation between movements in
the price of the stock index futures and movements in the price
of the securities which are the subject of the hedge. The price
of the stock index futures may move more than or less than the
price of the securities being hedged. If the price of the stock
index futures moves less than the price of the securities which
are the subject of the hedge, the hedge will not be fully
effective but, if the price of the securities being hedged has
moved in an unfavorable direction, the Fund would be in a better
position than if it had not hedged at all. If the price of the
securities being hedged has moved in a favorable direction, this
advantage will be partially offset by the loss on the index
future. If the price of the future moves more than the price of
the stock, the Fund will experience either a loss or gain on the
future which will not be completely offset by movements in the
price of the securities which are subject to the hedge. To
compensate for the imperfect correlation of movements in the
price of securities being hedged and movements in the price of
the stock index futures, the Fund may buy or sell stock index
futures contracts in a greater dollar amount than the dollar
amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been
greater than the volatility over such time period of the index,
or if otherwise deemed to be appropriate by the Adviser.
Conversely, the Fund may buy or sell fewer stock index futures
contracts if the volatility over a particular time period of the
prices of the securities being hedged is less than the volatility
over such time period of the stock index, or it is otherwise
deemed to be appropriate by the Adviser. It is also possible
that, where the Fund has sold futures to hedge its portfolio
against a decline in the market, the market may advance and the
value of securities held in the Fund may decline. If this
occurred, the Fund would lose money on the futures and also
experience a decline in value in its portfolio securities.
However, over time the value of a diversified portfolio should
tend to move in the same direction as the market indices upon
which the futures are based, although there may be deviations

<PAGE>

arising from differences between the composition of the Fund and
the stocks comprising the index.

Where futures are purchased to hedge against a possible
increase in the price of stock before the Fund is able to invest
its cash (or cash equivalents) in stocks (or options) in an
orderly fashion, it is possible that the market may decline
instead. If the Fund then concludes not to invest in stock or
options at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss
on the futures contract that is not offset by a reduction in the
price of securities purchased.

In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in the stock index futures and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with movement in the stock index due to
certain market distortions. Rather than meeting additional
margin deposit requirements, investors may close futures
contracts through offsetting transactions which could distort the
normal relationship between the index and futures markets.
Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortion in the futures market, and because of the imperfect
correlation between the movements in the stock index and
movements in the price of stock index futures, a correct forecast
of general market trends by the investment adviser may still not
result in a successful hedging transaction over a short time
frame.

Positions in stock index futures may be closed out only
on an exchange or board of trade which provides a secondary
market for such futures. Although the Fund intends to purchase
or sell futures only on exchanges or boards of trade where there
appear to be active secondary markets, there is no assurance that
a liquid secondary market on any exchange or board of trade will
exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment
position, and in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not
be sold until the futures contract can be terminated. In such
circumstances, an increase in the price of the securities, if
any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee
that the price of the securities will in fact correlate with the

<PAGE>

price movements in the futures contract and thus provide an
offset on a futures contract.

U.S. GOVERNMENT SECURITIES. The Fund is permitted to
invest 100% of its assets in U.S. Government securities. U.S.
Government securities may be backed by the full faith and credit
of the United States, or be supported only by the right of the
issuer to borrow from the U.S. Treasury or be backed only by the
credit of the issuing agency itself. These securities include:
(i) the following U.S. Treasury securities, which are backed by
the full faith and credit of the United States and differ only in
their interest rates, maturities and times of issuance: U.S.
Treasury bills (maturities of one year or less with no interest
paid and hence issued at a discount and repaid at full face value
upon maturity), U.S. Treasury notes (maturities of one to ten
years with interest payable every six months) and U.S. Treasury
bonds (generally maturities of greater than ten years with
interest payable every six months); (ii) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that
are supported by the full faith and credit of the U.S.
Government, such as securities issued by the Government National
Mortgage Association ("GNMA"), the Farmers Home Administration,
the Department of Housing and Urban Development, the
Export-Import Bank, the General Services Administration and the
Small Business Administration; and (iii) obligations issued or
guaranteed by U.S. government agencies and instrumentalities that
are not supported by the full faith and credit of the U.S.
Government, such as securities issued by the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"), and governmental collateralized mortgage
obligations ("CMOs"). The maturities of the U.S. Government
securities listed in paragraphs (i) and (ii) above usually range
from three months to 30 years. Such securities, except GNMA
certificates, normally provide for periodic payments of interest
in fixed amount with principal payments at maturity or specified
call dates.

U.S. Government securities also include zero coupon
securities (i.e., issued without coupons) and principal-only
securities and certain stripped mortgage-related securities
("SMRS"). In addition, other U.S. Government agencies and
instrumentalities have issued stripped securities that are
similar to SMRS. Such securities include those that are issued
with an interest-only ("IO") class and a principal-only ("PO")
class. Although these stripped securities are purchased and sold
by institutional investors through several investment banking
firms acting as brokers or dealers, these securities were only
recently developed. As a result, established trading markets
have not yet developed and, accordingly, these securities may be
illiquid.

<PAGE>

Guarantees of securities by the U.S. Government or its
agencies or instrumentalities guarantee only the payment of
principal and interest on the securities, and do not guarantee
the securities' yield or value or the yield or value of the
shares of the Fund.

U.S. Government securities are considered among the
safest of fixed-income investments. As a result, however, their
yields are generally lower than the yields available from other
fixed-income securities.

Securities issued by GNMA ("GNMA Certificates") differ
in certain respects from other U.S. Government securities, which
normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call
dates. GNMA Certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans. These
loans -- issued by lenders such as mortgage bankers, commercial
banks and savings and loan-associations -- are either insured by
the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool" or group of such mortgages is assembled
and, after being approved by GNMA, is offered to investors
through securities dealers. Once approved by GNMA, the timely
payment of interest and principal on each mortgage is guaranteed
by the full faith and credit of the United States. GNMA
Certificates also differ from other U.S. Government securities in
that principal is paid back monthly by the borrower over the term
of the loan rather than returned in a lump sum at maturity. GNMA
Certificates are called "pass-through" securities because both
interest and principal payments (including pre-payments) are
passed through to the holder of the Certificate.

In addition to GNMA Certificates, the Fund may invest in
mortgage-backed securities issued by FNMA and FHLMC. FNMA, a
federally chartered and privately-owned corporation, issues
mortgage-backed pass-through securities which are guaranteed as
to timely payment of principal and interest by FNMA. FHLMC, a
corporate instrumentality of the United States whose stock is
owned by the Federal Home Loan Banks, issues participation
certificates which represent an interest in mortgages from
FHLMC's portfolio. FHLMC guarantees the timely payment of
interest and the ultimate collection of principal. Securities
guaranteed by FNMA and FHLMC are not backed by the full faith and
credit of the United States. If other fixed or variable rate
pass-through mortgage-backed securities issued by the U.S.
Government or its agencies or instrumentalities are developed in
the future, the Fund reserves the right to invest in them.

The Adviser will, consistent with the Fund's investment
objectives, policies, and quality standards, consider making

<PAGE>

investments in new types of mortgage-related securities as such
securities are developed and offered to investors.

The Fund may invest in zero coupon Treasury securities,
which consist of Treasury bills or the principal components of
U.S. Treasury bonds or notes. The Fund may also invest in zero
coupon securities issued by U.S. Government agencies or
instrumentalities that are supported by the full faith and credit
of the United States, which consist of the principal components
of securities of U.S. Government agencies or instrumentalities.
A zero coupon security pays no interest to its holder during its
life. An investor acquires a zero coupon security at a price
which is generally an amount based upon its present value, and
which, depending upon the time remaining until maturity, may be
significantly less than its face value (sometimes referred to as
a "deep discount" price). Upon maturity of the zero coupon
security, the investor receives the face value of the security.

Currently, the only U.S. Treasury security issued
without coupons is the Treasury bill. The zero coupon securities
purchased by the Fund may consist of principal components held in
STRIPS form issued through the U.S. Treasury's STRIPS program,
which permits the beneficial ownership of the component to be
recorded directly in the Treasury book-entry system. In
addition, in the last few years a number of banks and brokerage
firms have separated ("stripped") the principal portions
("corpus") from the coupon portions of the U.S. Treasury bonds
and notes and sold them separately in the form of receipts or
certificates representing undivided interests in these
instruments (which instruments are generally held by a bank in a
custodial or trust account). The staff of the Securities and
Exchange Commission (the "Commission") has indicated that, in its
view, these receipts or certificates should be considered as
securities issued by the bank or brokerage firm involved and,
therefore, unlike those obligations issued under the U.S.
Treasury's STRIPS program, should not be included in the Fund's
categorization of U.S. Government securities. The Fund disagrees
with the staff's interpretation but has undertaken that it will
not invest in such securities until final resolution of the
issue. However, if such securities are deemed to be U.S.
Government securities, the Fund will not be subject to any
limitations on their purchase.

Zero coupon securities do not entitle the holder to any
periodic payments of interest prior to maturity. Accordingly,
such securities usually trade at a deep discount from their face
or par value and will be subject to greater fluctuations of
market value in response to changing interest rates than debt
obligations of comparable maturities which make periodic
distributions of interest.

<PAGE>

Current federal tax law requires that a holder (such as
the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year
even though the holder receives no interest payment in cash on
the security during the year. As a result, in order to make the
distributions necessary for the Fund not to be subject to federal
income or excise taxes, the Fund might be required to pay out as
an income distribution each year an amount, obtained by
liquidation of portfolio securities or borrowings if necessary,
greater than the total amount of cash that the Fund has actually
received as interest during the year. The Fund believes,
however, that it is highly unlikely that it would be necessary to
liquidate portfolio securities or borrow money in order to make
such required distributions or to meet its investment objective.

The Fund may invest in SMRS which are derivative
multi-class mortgage-related securities. The Fund will only
invest in SMRS that are issued by the U.S. Government, its
agencies or instrumentalities and supported by the full faith and
credit of the United States. SMRS in which the Fund may invest
are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool
of GNMA Certificates ("Mortgage Assets"). A common type of SMRS
will have one class receiving some of the interest and most of
the principal from the Mortgage Assets, while the other class
will receive most of the interest and the remainder of the
principal. In the most extreme case, one class will receive all
of the interest (the IO class), while the other class will
receive all of the principal (the PO class). The yield to
maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the related
underlying Mortgage Assets, and a rapid rate of principal
prepayments may have a material adverse effect on the yield to
maturity of the IO class. The rate of principal prepayment will
change as the general level of interest rates fluctuates. If the
underlying Mortgage Assets experience greater than anticipated
principal prepayments, the Fund may fail to fully recoup its
initial investment in these securities. Due to their structure
and underlying cash flows, SMRS, may be more volatile than
mortgage-related securities that are not stripped.

In addition, other U.S. Government agencies and
instrumentalities have issued stripped securities that are
similar to SMRS. Such securities include those that are issued
with an IO class and a PO class. Although these stripped
securities are purchased and sold by institutional investors
through several investment banking firms acting as brokers or
dealers, these securities were only recently developed. As a
result, established trading markets have not yet developed and,
accordingly, these securities may be illiquid. However, these
securities will be treated as liquid provided they are so

<PAGE>

determined by, or under procedures approved by, the Board of
Directors.

The CMOs in which the Fund is permitted to invest are
debt obligations issued by special purpose entities that are
secured by mortgage-backed certificates, certificates issued by
governmental and government-related guarantors, including GNMA,
FNMA and FHLMC, together with certain funds and other collateral.
Multi-class pass-through securities are equity interests in a
trust composed of mortgage loans or other mortgage-related
securities. Payments of principal and interest on underlying
collateral provide the funds to pay debt service on the CMO or
make scheduled distributions on the multi-class pass-through
security. The issuer of a CMO may elect to be treated as a real
estate mortgage investment conduit ("REMIC").

In a CMO, a series of bonds or certificates is issued in
multiple classes. Each class of a CMO, often referred to as a
"tranche," is issued at a specific coupon rate and has a stated
maturity or final distribution date. Principal prepayments on
collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final
distribution dates. Interest is paid or accrues on all classes
of a CMO on a monthly, quarterly or semi-annual basis. The
principal and interest on the underlying mortgages may be
allocated among the several classes of a series of a CMO in many
ways.

FORWARD COMMITMENTS. The Fund may enter into forward
commitments for the purchase or sale of securities. Such
transactions may include purchases on a "when-issued" basis or
purchases or sales on a "delayed delivery" basis. In some cases,
a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a "when, as
and if issued" trade).

When forward commitment transactions are negotiated, the
price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but delivery and payment for the
securities take place at a later date, normally within four
months after the transaction, although delayed settlements beyond
four months may be negotiated. Securities purchased or sold
under a forward commitment are subject to market fluctuation, and
no interest accrues to the purchaser prior to the settlement
date. At the time the Fund enters into a forward commitment, it
will record the transaction and thereafter reflect the value of
the security purchased or, if a sale, the proceeds to be
received, in determining its net asset value. Any unrealized
appreciation or depreciation reflected in such valuation of a
"when, as and if issued" security would be cancelled in the event

<PAGE>

that the required conditions did not occur and the trade was
cancelled.

The use of forward commitments enables the Fund to
protect against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling
bond prices, the Fund might sell securities in its portfolio on a
forward commitment basis to limit its exposure to falling bond
prices. In periods of falling interest rates and rising bond
prices, the Fund might sell a security in its portfolio and
purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the Adviser were to
forecast incorrectly the direction of interest rate movements,
the Fund might be required to complete such when-issued or
forward transactions at prices less favorable than current market
values.

The Fund's right to receive or deliver a security under
a forward commitment may be sold prior to the settlement date,
but the Fund will enter into forward commitments only with the
intention of actually receiving or delivering the securities, as
the case may be. To facilitate such transactions, the Fund's
custodian will maintain, in the separate account of the Fund,
liquid assets having value equal to, or greater than, any
commitments to purchase securities on a forward commitment basis.
If the Fund, however, chooses to dispose of the right to receive
or deliver a security subject to a forward commitment prior to
the settlement date of the transaction, it can incur a gain or
loss. In the event the other party to a forward commitment
transaction were to default, the Fund might lose the opportunity
to invest money at favorable rates or to dispose of securities at
favorable prices.

Although the Fund intends to make such purchases for
speculative purposes, purchases of securities on such bases may
involve more risk than other types of purchases. For example, by
committing to purchase securities in the future, the Fund
subjects itself to a risk of loss on such commitments as well as
on its portfolio securities. Also, the Fund may have to sell
assets that have been set aside in order to meet redemptions. In
addition, if the Fund determines it is advisable as a matter of
investment strategy to sell the forward commitment or when-issued
or delayed delivery securities before delivery, the Fund may
incur a gain or loss because of market fluctuations since the
time the commitment to purchase such securities was made. Any
such gain or loss would be treated as a capital gain or loss and
would be treated for tax purposes as such. When the time comes
to pay for the securities to be purchased under a forward
commitment or on a when-issued or delayed delivery basis, the
Fund will meet its obligations from the then available cash flow

<PAGE>

or the sale of securities, or, although it would not normally
expect to do so, from the sale of the forward commitment or when-
issued or delayed delivery securities themselves (which may have
a value greater or less than the Fund's payment obligation).

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund
may purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
of adverse changes in the relationship between the U.S. Dollar
and foreign currencies. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded
by currency traders and their customers.

The Fund may enter into a forward contract, for example,
when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in"
the U.S. Dollar price of the security ("transaction hedge"). The
Fund may not engage in transaction hedges with respect to the
currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency.
Additionally, for example, when the Fund believes that a foreign
currency may suffer a substantial decline against the U.S.
Dollar, it may enter into a forward sale contract to sell an
amount of that foreign currency approximating the value of some
or all of the Fund's securities denominated in such foreign
currency, or when the Fund believes that the U.S. Dollar may
suffer a substantial decline against a foreign currency, it may
enter into a forward purchase contract to buy that foreign
currency for a fixed dollar amount ("position hedge"). The Fund
will not position hedge with respect to a particular currency to
an extent greater than the aggregate market value (at the time of
making such sale) of the securities held in its portfolio
denominated or quoted in that currency. In this situation the
Fund may, in the alternative, enter into a forward contract to
sell a different foreign currency for a fixed U.S. Dollar amount
where the Fund believes that the U.S. Dollar value of the
currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. Dollar value of the
currency in which portfolio securities of the Fund are
denominated ("cross-hedge").

To the extent required by applicable law, the Fund's
Custodian will place liquid assets in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts entered into with respect to
position hedges and cross-hedges. If the value of the assets
placed in a separate account declines, additional liquid assets
will be placed in the account on a daily basis so that the value
of the account will equal the amount of the Fund's commitments
with respect to such contracts. As an alternative to maintaining

<PAGE>

all or part of the separate account, the Fund may purchase a call
option permitting the Fund to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Fund may purchase a
put option permitting the Fund to sell the amount of foreign
currency subject to a forward purchase contract at a price as
high or higher than the forward contract price. In addition, the
Fund may use such other methods of "cover" as are permitted by
applicable law.

While these contracts are not presently regulated by the
Commodity Futures Trading Commission (the "CFTC"), the CFTC may
in the future assert authority to regulate forward contracts. In
such event the Fund's ability to utilize forward contracts in the
manner set forth in the Prospectus may be restricted.

The Fund will not speculate in forward currency
contracts. The Fund will only enter forward foreign currency
exchange contracts with counterparties that, in the option of the
Adviser, do not present undue credit risk. Generally, such
forward contracts will be for a period of less than three months.

Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the anticipated devaluation
level. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not
entered into such contracts. The matching of the increase in
value of a forward contract and the decline in the U.S. Dollar
equivalent value of the foreign currency-denominated asset that
is the subject of the hedge generally will not be precise. In
addition, the Fund may not always be able to enter into foreign
currency forward contracts at attractive prices and this will
limit the Fund's ability to use such contract to hedge or cross-
hedge its assets. Also, with regard to the Fund's use of cross-
hedges, there can be no assurance that historical correlations
between the movement of certain foreign currencies relative to
the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying the Fund's cross-hedges and the
movements in the exchange rates of the foreign currencies in
which the Fund's assets that are the subject of such cross-hedges
are denominated.

LENDING OF PORTFOLIO SECURITIES. Consistent with
applicable regulatory requirements, the Fund may lend its

<PAGE>

portfolio securities provided the loan is continuously secured by
cash, marketable securities issued or guaranteed by the U.S.
Government or its agencies, or a standby letter of credit issued
by qualified banks equal to no less than the market value,
determined daily, of the securities loaned. In lending its
portfolio securities, the Fund will require that interest or
dividends on securities loaned be paid to the Fund. Where voting
or consent rights with respect to loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit it to exercise
such voting or consent rights if the exercise of such rights
involves issues having a material effect on the Fund's investment
in the securities loaned. Loans will be made only to firms
deemed by the Adviser to be of good standing and will not be made
unless, in the judgment of the Adviser, the consideration to be
earned from such loans would justify the risk. The Fund may
invest any cash collateral in portfolio securities and earn
additional income, or receive an agreed-upon amount of income
from a borrower who has delivered equivalent collateral. The Fund
will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights,
subscription rights, and rights to dividends, interest or
distributions. The Fund may pay reasonable finders',
administrative, and custodial fees in connection with a loan.

REPURCHASE AGREEMENTS. The Fund may enter into
agreements pertaining to U.S. Government Securities with member
banks of the Federal Reserve System or "primary dealers" (as
designated by the Federal Reserve Bank of New York) in such
securities. There is no percentage restriction on the Fund's
ability to enter into repurchase agreements. Currently, the Fund
intends to enter into repurchase agreements only with its
custodian and such primary dealers. 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
interest rate which is effective for the period of time the
buyer's money is invested in the security and which is related to
the current market rate rather than the coupon rate on the
purchased security. Such agreements permit the Fund to keep all
of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. The Fund
requires continual maintenance by its custodian for its account
in the Federal Reserve/Treasury Book Entry System of collateral
in an amount equal to, or in excess of, the resale price. In the
event a vendor defaulted on its repurchase obligation, the Fund
might suffer a loss to the extent that the proceeds from the sale
of the collateral were less than the repurchase price. In the
event of a vendor's bankruptcy, the Fund might be delayed in, or
prevented from, selling the collateral for its benefit. The

<PAGE>

Fund's Board of Directors has established procedures, which are
periodically reviewed by the Board, pursuant to which the Fund's
Adviser monitors the creditworthiness of the dealers with which
the Fund enters into repurchase agreement transactions.

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 a day or a few days later.
The resale price is greater than the purchase price, reflecting
an agreed-upon interest rate for the period the buyer's money is
invested in the security. Such agreements permit the Fund to keep
all of its assets at work while retaining "overnight" flexibility
in pursuit of investments of a longer-term nature. If a vendor
defaults on its repurchase obligation, the Fund would suffer a
loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If a vendor goes
bankrupt, the Fund might be delayed in, or be prevented from,
selling the collateral for its benefit.

Repurchase agreements may exhibit the characteristics of
loans by the Fund. During the term of the repurchase agreement,
the Fund retains the security subject to the repurchase agreement
as collateral securing the seller's repurchase obligation,
continually monitors on a daily basis the market value of the
security subject to the agreement and requires the seller to
deposit with the Fund collateral equal to any amount by which the
market value of the security subject to the repurchase agreement
falls below the resale amount provided under the repurchase
agreement.

ILLIQUID SECURITIES. The Fund will not invest more than
15% of its net assets in illiquid securities. For this purpose,
illiquid securities are securities restricted as to disposition
under Federal securities laws and include, among others,
(a) direct placements or other securities which are subject to
legal or contractual restrictions on resale or for which there is
no readily available market (e.g., trading in the security is
suspended or, in the case of unlisted securities, market makers
do not exist or will not entertain bids or offers), and
(b) repurchase agreements not terminable within seven days.
Securities that have legal or contractual restrictions on resale
but have a readily available market are not deemed illiquid for
purposes of this limitation.

Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), securities which are
otherwise not readily marketable and repurchase agreements having
a maturity of longer than seven days. Securities which have not
been registered under the Securities Act are referred to as

<PAGE>

private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual
funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations
on resale may have an adverse effect on the marketability of
portfolio securities and a mutual fund might be unable to dispose
of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days. A mutual fund might
also have to register such restricted securities in order to
dispose of them resulting in additional expense and delay.
Adverse market conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.

Rule 144A under the Securities Act allows a broader
institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act for resales of certain securities to qualified
institutional buyers. An insufficient number of qualified
institutional buyers interested in purchasing certain restricted
securities held by the Fund, however, could affect adversely the
marketability of such portfolio securities and the Fund might be
unable to dispose of such securities promptly or at reasonable
prices. Rule 144A has already produced enhanced liquidity for
many restricted securities, and market liquidity for such
securities may continue to expand as a result of this regulation
and the consequent inception of the PORTAL System, which is an
automated system for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers sponsored
by the National Association of Securities Dealers, Inc. (NASD).

The Adviser, acting under the supervision of the Board
of Directors, will monitor the liquidity of restricted securities
in the Fund that are eligible for resale pursuant to Rule 144A.
In reaching liquidity decisions, the Adviser will consider, among
others, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers issuing

<PAGE>

quotations to purchase or sell the security; (3) the number of
other potential purchasers of the security; (4) the number of
dealers undertaking to make a market in the security; (5) the
nature of the security (including its unregistered nature) and
the nature of the marketplace for the security (e.g., the time
needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer); and (6) any applicable
Commission interpretation or position with respect to such type
of securities.

The Fund may not be able to readily sell securities for
which there is no ready market. To the extent that these
securities are foreign securities, there is no law in many of the
countries in which the Fund may invest similar to the Securities
Act requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of
securities, either as to length of time the securities may be
held or manner of resale. There may, however, be contractual
restrictions on resale of securities.

PORTFOLIO TURNOVER. Because the Fund will actively use
trading to achieve its investment objective and policies, the
Fund may be subject to a greater degree of turnover and, thus, a
higher incidence of short-term capital gains taxable as ordinary
income than might be expected from investment companies which
invest substantially all of their funds on a long-term basis, and
correspondingly larger mark-up charges can be expected to be
borne by the Fund. Management anticipates that the annual
turnover in the Fund may be in excess of [ ]%. An annual
turnover rate of [ ]% occurs, for example, when all of the
securities in the Fund are replaced [ times] in a
period of one year.

The value of the Fund's shares will be influenced by the
factors which generally affect securities, such as the economic
and political outlook, earnings, dividends and the supply and
demand for various classes of securities. There can be, of
course, no assurance that the Fund's investment objective will be
achieved.

CERTAIN RISK CONSIDERATIONS

RISKS OF INVESTMENTS IN FOREIGN SECURITIES. Foreign
issuers are subject to accounting and financial standards and
requirements that differ, in some cases significantly, from those
applicable to U.S. issuers. In particular, the assets and
profits appearing on the financial statements of a foreign issuer
may not reflect its financial position or results of operations
in the way they would be reflected had the financial statement
been prepared in accordance with U.S. generally accepted
accounting principles. In addition, for an issuer that keeps

<PAGE>

accounting records in local currency, inflation accounting rules
in some of the countries in which the Fund will invest require,
for both tax and accounting purposes, that certain assets and
liabilities be restated on the issuer's balance sheet in order to
express items in terms of currency of constant purchasing power.
Inflation accounting may indirectly generate losses or profits.
Consequently, financial data may be materially affected by
restatements for inflation and may not accurately reflect the
real condition of those issuers and securities markets.
Substantially less information is publicly available about
certain non-U.S. issuers than is available about U.S. issuers.

Expropriation, confiscatory taxation,
nationalization, political, economic or social instability or
other similar developments, such as military coups, have occurred
in the past in countries in which the Fund will invest and could
adversely affect the Fund's assets should these conditions or
events recur.

Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Fund. Certain countries in which the Fund will invest
require governmental approval prior to investments by foreign
persons, limit the amount of investment by foreign persons in a
particular issuer, limit the investment by foreign persons only
to a specific class of securities of an issuer that may have less
advantageous rights than the classes available for purchase by
domiciliaries of the countries and/or impose additional taxes on
foreign investors.

Certain countries other than those on which the
Fund will focus it investments may require governmental approval
for the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. In
addition, if a deterioration occurs in a country's balance of
payments, the country could impose temporary restrictions on
foreign capital remittances.

Income from certain investments held by the Fund
could be reduced by foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance. The Fund's net asset value may also be
affected by changes in the rates or methods of taxation
applicable to the Fund or to entities in which the Fund has
invested. The Adviser generally will consider the cost of any
taxes in determining whether to acquire any particular
investments, but can provide no assurance that the tax treatment
of investments held by the Fund will not be subject to change.

<PAGE>

For many foreign securities, there are U.S. dollar-
denominated American Depository Receipts (ADRs) which are traded
in the United States on exchanges or over-the-counter, are issued
by domestic banks or trust companies and which market quotations
are readily available. ADRs do not lessen the foreign exchange
risk inherent in investing in the securities of foreign issuers.
However, by investing in ADRs rather than directly in stock of
foreign issuers, the Fund can avoid currency risks which might
occur during the settlement period for either purchases or sales.
The Fund may purchase foreign securities directly, as well as
through ADRs.

RISKS OF INVESTMENTS IN MORTGAGE-BACKED SECURITIES. The
values of CMOs and other mortgage-related securities are affected
by a number of factors. Unlike traditional debt securities, which
have fixed maturity dates, mortgage-related securities may be
paid earlier than expected as a result of prepayments of
underlying mortgages. Such prepayments generally occur during
periods of falling mortgage interest rates. If property owners
make unscheduled prepayments of their mortgage loans, these
prepayments will result in the early payment of the applicable
mortgage-related securities. In that event, the Fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in investments that provide as high a
yield as the mortgage-related securities. Early payments
associated with mortgage-related securities cause these
securities to experience significantly greater price and yield
volatility than is experienced by traditional fixed-income
securities. The occurrence of mortgage prepayments is affected
by the level of general interest rates, general economic
conditions, and other social and demographic factors. During
periods of falling interest rates, the rate of mortgage
prepayments tends to increase, thereby tending to decrease the
life of mortgage-related securities. Conversely, during periods
of rising interest rates, a reduction in prepayments may increase
the effective life of mortgage-related securities, subjecting
them to greater risk of decline in market value in response to
rising interest rates. If the life of a mortgage-related
security is inaccurately predicted, the Fund may not be able to
realize the rate of return it expected.

Although the market for mortgage-related securities is
becoming increasingly liquid, the secondary markets for CMOs,
IOs, and POs may be more volatile and less liquid than those for
other mortgage-related securities, thereby potentially limiting
the Fund's ability to buy or sell those securities at any
particular time.

As with fixed-income securities generally, the value of
mortgage-related securities can also be adversely affected by
increases in general interest rates relative to the yield

<PAGE>

provided by such securities. Such an adverse effect is
especially possible with fixed-rate mortgage securities. If the
yield available on other investments rises above the yield of the
fixed-rate mortgage securities as a result of general increases
in interest rate levels, the value of the mortgage-related
securities will decline. Although the negative effect could be
lessened if the mortgage-related securities were to be paid
earlier (thus permitting the Fund to reinvest the prepayment
proceeds in investments yielding the higher current interest
rate), as described above the rates of mortgage prepayments and
early payments of mortgage-related securities generally tend to
decline during a period of rising interest rates.

Although the values of ARMS may not be affected as much
as the values of fixed-rate mortgage securities by rising
interest rates, ARMS may still decline in value as a result of
rising interest rates. Although, as described above, the yields
on ARMS vary with changes in the applicable interest rate or
index, there is often a lag between increases in general interest
rates and increases in the yield on ARMS as a result of
relatively infrequent interest rate reset dates. In addition,
adjustable-rate mortgages and ARMS often have interest rate or
payment caps that limit the ability of the adjustable-rate
mortgages or ARMS to fully reflect increases in the general level
of interest rates.

SECURITIES RATINGS. [Securities rated Baa are
considered by Moody's to have speculative characteristics.
Sustained periods of deteriorating economic conditions or rising
interest rates are more likely to lead to a weakening in the
issuer's capacity to pay interest and repay principal than in the
case of higher-rated securities.]

The ratings of fixed-income securities by Moody's and
S&P are a generally accepted barometer of credit risk. They are,
however, subject to certain limitations from an investor's
standpoint. The rating of an issuer is heavily weighted by past
developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time a rating
is assigned and the time it is updated. In addition, there may
be varying degrees of difference in credit risk of securities
within each rating category.

The Adviser will try to reduce the risk inherent in the
Fund's investment approach through credit analysis,
diversification and attention to current developments and trends
in interest rates and economic conditions. However, there can be
no assurance that losses will not occur. In considering
investments for the Fund, the Adviser will attempt to identify
those high-yielding securities whose financial condition is
adequate to meet future obligations, has improved, or is expected

<PAGE>

to improve in the future. The Adviser's analysis focuses on
relative values based on such factors as interest or dividend
coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.

Non-rated securities will also be considered for
investment by the Fund when the Adviser believes that the
financial condition of the issuers of such securities, or the
protection afforded by the terms of the securities themselves,
limits the risk to the Fund to a degree comparable to that of
rated securities which are consistent with the Fund's objectives
and policies.

1940 ACT RESTRICTIONS. Under the 1940 Act, the Fund is
not permitted to borrow unless immediately after such borrowing
there is "asset coverage," as that term is defined and used in
the 1940 Act, of at least 300% for all borrowings of the Fund.
In addition, under the 1940 Act, in the event asset coverage
falls below 300%, the Fund must within three days reduce the
amount of its borrowing to such an extent that the asset coverage
of its borrowings is at least 300%. Assuming, for example,
outstanding borrowings representing not more than one-third of
the Fund's total assets less liabilities (other than such
borrowings), the asset coverage of the Fund's portfolio would be
300%; while outstanding borrowings representing 25% of the total
assets less liabilities (other than such borrowings), the asset
coverage of the Fund's portfolio would be 400%. The Fund will
maintain asset coverage of outstanding borrowings of at least
300% and if necessary will, to the extent possible, reduce the
amounts borrowed by making repayments from time to time in order
to do so. Such repayments could require the Fund to sell
portfolio securities at times considered disadvantageous by the
Adviser and such sales could cause the Fund to incur related
transaction costs and to realize taxable gains.

Under the 1940 Act, the Fund may invest not more than
10% of its total assets in securities of other investment
companies. In addition, under the 1940 Act the Fund may not own
more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the value of the
Fund's total assets may be invested in the securities of any
investment company.

Certain Fundamental Investment Policies

The Fund has adopted the following investment
restrictions, which may not be changed without the approval of
the holders of a majority of the Fund's outstanding voting
securities. The approval of a majority of the Fund's outstanding
voting securities means the affirmative vote of (i) 67% or more
of the shares represented at a meeting at which more than 50% of

<PAGE>

the outstanding shares are present in person or by proxy, or (ii)
more than 50% of the outstanding shares, whichever is less.

As a matter of fundamental policy, the Fund may
not:

1. Purchase more than [ ]% of the
outstanding voting securities of any one issuer;

2. Invest 25% or more of its total assets in
securities of a single issuer, except that this
restriction does not apply to U.S. Government
Securities;

3. Make loans except through (a) the
purchase of debt obligations in accordance with its
investment objective and policies; (b) the lending
of portfolio securities; or (c) the use of
repurchase agreements;

4. Borrow money or issue senior securities
except the Fund may, in accordance with the
provisions of the 1940 Act, (i) borrow from a bank
in a privately arranged transaction and (ii) borrow
for temporary purposes in an amount not exceeding
5% of the value of the total assets of the Fund;

5. Pledge, hypothecate, mortgage or
otherwise encumber its assets, except to secure
permitted borrowings;

6. Invest in companies for the purpose of
exercising control; or

7. (a) Purchase or sell real estate, except
that it may purchase and sell securities of
companies which deal in real estate or interests
therein and securities that are secured by real
estate, provided such securities are securities of
the type in which the Fund may invest; (b) purchase
or sell commodities or commodity contracts,
including futures contracts (except foreign
currencies, futures on securities indices and
forward contracts or contracts for the future
acquisition or delivery of securities and foreign
currencies and other similar contracts); (c) invest
in interests in oil, gas, or other mineral
exploration or development programs; (d) purchase
securities on margin, except for such short-term
credits as may be necessary for the clearance of
transactions; and (e) act as an underwriter of

<PAGE>

securities, except that the Fund may acquire
restricted securities under circumstances in which,
if such securities were sold, the Fund might be
deemed to be an underwriter for purposes of the
Securities Act.

___________________________________________________________

MANAGEMENT OF THE FUND
___________________________________________________________

Directors and Officers

The Directors and principal officers of the Fund,
their ages and their principal occupations during the past
five years are set forth below. Each of the Directors and
officers are trustees, directors and officers 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, New York 10105.

Directors

[TO BE ADDED]

Officers

[TO BE ADDED]

The Fund does not pay any fees to, or reimburse
expenses of, its Directors who are considered "interested
persons" of the Fund. The aggregate compensation to be paid
by the Fund to each of the Directors during the Fund's
fiscal period ending [ ] (estimating future
payments based upon existing arrangements), and the
aggregate compensation paid to each of the Directors during
calendar year 1998 by all of the registered investment
companies to which the Adviser provides investment advisory
services (collectively, the "Alliance Fund Complex"), and
the total number of registered investment companies (and
separate investment portfolios within those companies) in
the Alliance Fund Complex with respect to which each of the
Directors serves as a director or trustee, are set forth
below. Neither the Fund nor any other registered investment
company in the Alliance Fund Complex provides compensation
in the form of pension or retirement benefits to any of its
directors or trustees.

<PAGE>

Total Number of Total Number
Investment of Investment
Total Companies in Portfolios Within
Compensation the Alliance the Alliance
From the Fund Complex, Fund Complex,
Alliance Fund Including the Including the
Complex, Fund, for which Fund, as to which
Aggregate Including the the Director the Director
Name of Compensation Fund, During is a Director is a Director or
Director From the Fund 1998 or Trustee Trustee
___________ _____________ ______________ _____________ _______________

_______________
** estimated

As of [ ], 1999, the Directors and officers of
the Fund as a group owned less than 1% of the shares of the Fund.

Adviser

The Adviser, 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 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 Board of
Directors (see "Management of the Fund" in the Prospectus).

The Adviser is a leading international investment
manager supervising client accounts with assets as of March 31,
1999, totaling more than $301 billion (of which more than $127
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. The 54 registered investment
companies managed by the Adviser, comprising 119 separate
investment portfolios, currently have more than four million
shareholder accounts. As of March 31, 1999, the Adviser and its
subsidiaries employed approximately [2,000] employees who operate
out of domestic offices and the offices of subsidiaries in
Bahrain, Bangalore, Cairo, Chennai, Hong Kong, Istanbul,
Johannesburg, London, Luxembourg, Madrid, Moscow, Mumbai, New
Delhi, Paris, Pune, Sao Paolo, Seoul, Singapore, Sydney, Tokyo,
Toronto, Vienna and Warsaw. As of March 31, 1999, the Adviser
was retained as an investment manager for employee benefit plan
assets of 30 of the FORTUNE 100 companies.

<PAGE>

ACMC, 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 a French insurance holding
company which at March 1, 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.

The Advisory Agreement became effective on [ ],
1999. The Advisory Agreement was approved by the unanimous vote,
cast in person, of the Fund's Directors including the Directors
who are not parties to the Advisory Agreement or interested
persons as defined in the Act, of any such party, at a meeting
called for the purpose and held on [ ], 1999.

Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of the particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities

<PAGE>

being sold, there may be an adverse effect on price. It is the
policy of the Adviser to allocate advisory recommendations and
the placing of orders in a manner which is deemed equitable by
the Adviser to the accounts involved, including the Fund. When
two or more of the clients of the Adviser (including the Fund)
are purchasing or selling the same security on a given day from
the same broker or dealer, such transactions may be averaged as
to price.

As to the obtaining of services other than those
specifically provided to the Fund by the Adviser, the Fund may
employ its own personnel. For such services, it also may utilize
personnel employed by the Adviser or by other subsidiaries of
Equitable. In such event, the services will be provided to the
Fund at cost and the payments specifically approved by the Fund's
Board of Directors.

The Advisory Agreement is terminable without penalty on
60 days' written notice by a vote of a majority of the
outstanding voting securities of the Fund or by a vote of a
majority of the Fund's Directors, or by the Adviser on 60 days
written notice, and will automatically terminate in the event of
its assignment. The Advisory Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser, or of reckless disregard of its
obligations thereunder, the Adviser shall not be liable for any
action or failure to act in accordance with its duties
thereunder.

The Advisory Agreement continues in effect until each [
], and thereafter for successive twelve month periods computed
from each [ ], provided that such continuance is
specifically approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's
Board of Directors, including in either case approval by a
majority of the Directors who are not parties to the Advisory
Agreement or interested persons of such parties as defined by the
1940 Act.

The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to 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

<PAGE>

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.,
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, The Alliance
Fund, Inc., The Alliance Portfolios, and The Hudson River Trust,
all registered open-end investment companies; ACM Government
Income Fund, Inc., ACM Government Securities Fund, Inc., ACM
Government Spectrum Fund, Inc., ACM Government Opportunity Fund,
Inc., ACM Managed Dollar Income Fund, Inc., ACM Managed Income
Fund, Inc., ACM Municipal Securities Income Fund, Inc., Alliance
All-Market Advantage Fund, Inc., Alliance World Dollar Government
Fund, Inc., Alliance World Dollar Government Fund II, Inc., The
Austria Fund, Inc., The Korean Investment Fund, Inc., The
Southern Africa Fund, Inc. and The Spain Fund, Inc., all
registered closed-end investment companies.

___________________________________________________________

EXPENSES OF THE FUND
___________________________________________________________

Distribution Services Agreement

The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Principal Underwriter to distribute
the Fund's shares and to permit the Fund to pay distribution
services fees to defray expenses associated with distribution of
its Class A shares, Class B shares and Class C shares in
accordance with a plan of distribution which is included in the
Agreement and which has been duly adopted and approved in
accordance with Rule 12b-1 adopted by the Securities and Exchange
Commission (the "Commission") under the 1940 Act (the "Rule 12b-1
Plan").

Distribution services fees are accrued daily and paid
monthly and charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge and at the same time to permit the Principal
Underwriter to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of

<PAGE>

the combined contingent deferred sales charge and respective
distribution services fee on the Class B shares and Class C
shares are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and distribution services fee
provides for the financing of the distribution of the relevant
class of the Fund's shares.

Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund on a quarterly basis. Also, the Agreement provides that the
selection and nomination of Directors who are not "interested
persons" of the Fund, as defined in the 1940 Act, are committed
to the discretion of such disinterested Directors then in office.
The Agreement was initially approved by the Directors of the Fund
at a meeting held on [ ], 1999.

The Agreement will continue in effect until [ ],
2000 and continue in effect thereafter so long as its continuance
is specifically approved at least annually by the Directors of
the Fund or by vote of the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act) of
that class, and, in either case, by a majority of the Directors
of the Fund who are not parties to the Agreement or interested
persons, as defined in the 1940 Act, of any such party (other
than as directors of the Fund) and who have no direct or indirect
financial interest in the operation of the Rule 12b-1 Plan or any
agreement related thereto.

The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.

All material amendments to the Agreement must be
approved by a vote of the Directors or the holders of a majority
of the Fund's outstanding voting securities, voting separately by

<PAGE>

class, and in either case, by a majority of the disinterested
Directors, cast in person at a meeting called for the purpose of
voting on such approval; and the Agreement may not be amended in
order to increase materially the costs that the Fund may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting securities of the class or
classes affected. The Agreement may be terminated (a) by the
Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting
separately by class, or by a majority vote of the Directors who
are not "interested persons" as defined in the 1940 Act, or
(b) by the Principal Underwriter. To terminate the Agreement,
any party must give the other parties 60 days' written notice.
To terminate the Rule 12b-1 Plan only, the Fund need give no
notice to the Principal Underwriter. The Agreement will
terminate automatically in the event of its assignment.

Transfer Agency Agreement

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of each of the Class A shares, Class B shares and
Class C shares of the Fund, plus reimbursement for out-of-pocket
expenses. The transfer agency fee with respect to the Class B
shares and Class C shares is higher than the transfer agency fee
with respect to the Class A shares, reflecting the additional
costs associated with the Class B and Class C contingent deferred
sales charge.

_______________________________________________________________

PURCHASE OF SHARES
_______________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Buy Shares."

General

Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), or without
any initial sales charge and, as long as the shares are held for
one year or more, without any contingent deferred sales charge
("Class C shares"). Shares of the Fund that are offered subject
to a sales charge are offered through (i) investment dealers that
are members of the National Association of Securities Dealers,
Inc. and have entered into selected dealer agreements with the
Principal Underwriter ("selected dealers"), (ii) depository

<PAGE>

institutions and other financial intermediaries or their
affiliates, that have entered into selected agent agreements with
the Principal Underwriter ("selected agents") and (iii) the
Principal Underwriter.

Investors may purchase shares of the Fund either through
selected broker-dealers, agents, financial intermediaries or
other financial representatives or directly through the Principal
Underwriter. A transaction, service, administrative or other
similar fee may be charged by your broker-dealer, agent,
financial intermediary or other financial representative with
respect to the purchase, sale or exchange of Class A, Class B or
Class C shares made through such financial representative. Such
financial representative may also impose requirements with
respect to the purchase, sale or exchange of shares that are
different from, or in addition to, those imposed by the Fund,
including requirements as to the minimum initial and subsequent
investment amounts. Sales personnel of selected dealers and
agents distributing the Fund's shares may receive differing
compensation for selling Class A, Class B or Class C shares. The
Fund 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.

The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"--Class A Shares". On each Fund business day on which a
purchase or redemption order is received by the Fund and trading
in the types of securities in which the Fund invests might
materially affect the value of Fund shares, the per share net
asset value is computed in accordance with the Fund's Articles of
Incorporation and By-Laws as of the next close of regular trading
on the New York Stock Exchange (the "Exchange") (currently
4:00 p.m. Eastern time) by dividing the value of the Fund's total
assets, less its liabilities, by the total number of its shares
then outstanding. A Fund business day is any day on which the
Exchange is open for trading.

The respective per share net asset values of the
Class A, Class B and Class C shares are expected to be
substantially the same. Under certain circumstances, however,
the per share net asset values of the Class B and Class C shares
may be lower than the per share net asset values of the Class A
shares, as a result of the differential daily expense accruals of
the distribution and transfer agency fees applicable with respect
to those classes of shares. Even under those circumstances, the
per share net asset values of the three classes eventually will
tend to converge immediately after the payment of dividends,

<PAGE>

which will differ by approximately the amount of the expense
accrual differential among the classes.

The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers, agents or financial representatives, as
applicable, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer,
agent or financial representative receives the order prior to the
close of regular trading on the Exchange and transmits it to the
Principal Underwriter prior to 5:00 p.m. Eastern time. The
selected dealer, agent or financial representative, as
applicable, is responsible for transmitting such orders by
5:00 p.m. If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.

Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by Electronic
Funds Transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.

Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary

<PAGE>

expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.

In addition to the discount or commission paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents, in
connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, cash or other incentives
will be conditioned upon the sale of a specified minimum dollar
amount of the shares of the Fund and/or other Alliance Mutual
Funds, as defined below, during a specific period of time. On
some occasions, such cash or other incentives may take the form
of payment for attendance at seminars, meals, sporting events or
theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel taken by persons
associated with a dealer or agent to urban or resort locations
within or outside the United States. Such dealer or agent may
elect to receive cash incentives of equivalent amount in lieu of
such payments.

Class A, Class B and Class C shares each represent an
interest in the same portfolio of investments of the Fund, have
the same rights and are identical in all respects, except that
(i) Class A shares bear the expense of the initial sales charge
(or contingent deferred sales charge when applicable) and Class B
and Class C shares bear the expense of the deferred sales charge,
(ii) Class B shares and Class C shares each bear the expense of a
higher distribution services fee than that borne by Class A
shares, (iii) Class B shares and Class C shares bear higher
transfer agency costs than those borne by Class A shares,
(iv) each of Class A, Class B and Class C shares has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan
pursuant to which its distribution services fee is paid and other
matters for which separate class voting is appropriate under
applicable law, provided that, if the Fund submits to a vote of
the Class A shareholders, an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder
with respect to the Class A shares, then such amendment will also
be submitted to the Class B shareholders and the Class A and
Class B shareholders will vote separately by class, and
(v) Class B shares are subject to a conversion feature. Each
class has different exchange privileges and certain different
shareholder service options available.

<PAGE>

The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Directors
of the Fund, pursuant to their fiduciary duties under the 1940
Act and state law, will seek to ensure that no such conflict
arises.

Alternative Purchase Arrangements

The alternative purchase arrangements available with
respect to Class A shares, Class B shares and Class C shares
permit an investor to choose the method of purchasing shares that
is most beneficial given the amount of the purchase, the length
of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated
distribution services fee and contingent deferred sales charge on
Class B shares prior to conversion, or the accumulated
distribution services fee and contingent deferred sales charge on
Class C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on
Class A shares, as described below. In this regard, the
Principal Underwriter will reject any order (except orders from
certain retirement plans and certain employee benefit plans) for
more than $250,000 for Class B shares. (See Appendix A for
information concerning the eligibility of certain employee
benefit plans to purchase Class B shares at net asset value
without being subject to a contingent deferred sales charge and
the ineligibility of certain such plans to purchase Class A
shares.) Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject
any order for more than $1,000,000 for Class C shares.

Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration

<PAGE>

against the fact that, because of such initial sales charges, not
all their funds will be invested initially.

Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively. For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge on Class A shares would have to hold his or
her investment approximately seven years for the Class C
distribution services fee to exceed the initial sales charge plus
the accumulated distribution services fee of Class A shares. In
this example, an investor intending to maintain his or her
investment for a longer period might consider purchasing Class A
shares. This example does not take into account the time value
of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net
asset value or the effect of different performance assumptions.

Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.

Class A Shares

The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.

<PAGE>

Sales Charge
Discount or
Commission
As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price Price
________ ________ ________ ____________

Less than
$100,000 . . . 4.44% 4.25% 4.00%
$100,000 but
less than
$250,000. . . . 3.36 3.25 3.00
$250,000 but
less than
$500,000. . . . 2.30 2.25 2.00
$500,000 but
less than
$1,000,000*. . . 1.78 1.75 1.50
_____________

* There is no initial sales charge on transactions of $1,000,000
or more.

With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
Shares." In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling

<PAGE>

Class A shares. With respect to purchases of $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.

No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge or (iii) upon the automatic conversion of Class B
shares as described below under "Class B Shares-Conversion
Feature." The Fund receives the entire net asset value of its
Class A shares sold to investors. The Principal Underwriter's
commission is the sales charge shown above less any applicable
discount or commission "reallowed" to selected dealers and
agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. In this regard, the Principal Underwriter may elect to
reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the
Principal Underwriter. A selected dealer who receives
reallowance in excess of 90% of such a sales charge may be deemed
to be an "underwriter" under the Securities Act.

Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on July [ ], 1999.

Net Asset Value per Class A Share at
July [ ], 1999 $10.00

Class A Per Share Sales Charge 4.25%
of offering price (4.44% of net asset
value per share) $ .44

Class A Per Share Offering Price to
the Public $10.44
======

<PAGE>

Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but may be subject in most such cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
charge. The circumstances under which such investors may pay a
reduced initial sales charge are described below.

Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase," if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:

AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.

<PAGE>

Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
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 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
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Short-Term U.S. Government Fund

Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the front cover of this Statement of Additional
Information.

Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business
on the previous day) of (a) all shares of the
Fund held by the investor and (b) all shares

<PAGE>

of any other Alliance Mutual Fund held by the
investor; and

(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with
that of the investor into a single "purchase"
(see above).

For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the 2.25% rate applicable to a single $300,000
purchase of shares of the Fund, rather than the 3.25% rate.

To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.

Statement of Intention. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $250,000 within a
period of 13 months in Class A shares (or Class A, Class B and/or
Class C shares) of the Fund or any other Alliance Mutual Fund.
Class A investors investing pursuant to the Statement of
Intention must invest at least $50,000 with their initial
purchase of shares of the Fund. Each purchase of shares under a
Statement of Intention will be made at the public offering price
or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Statement of
Intention. At the investor's option, a Statement of Intention
may include purchases of shares of the Fund or any other Alliance
Mutual Fund made not more than 90 days prior to the date that the
investor signs the Statement of Intention; however, the 13-month
period during which the Statement of Intention is in effect will
begin on the date of the earliest purchase to be included.

Investors qualifying for the Combined Purchase
Privilege described above may purchase shares of the Alliance
Mutual Funds under a single Statement of Intention. For example,
if at the time an investor signs a Statement of Intention to
invest at least $100,000 in Class A shares of the Fund, the
investor and the investor's spouse each purchase shares of the
Fund worth $20,000 (for a total of $40,000), it will only be
necessary to invest a total of $60,000 during the following 13
months in shares of the Fund or any other Alliance Mutual Fund,

<PAGE>

to qualify for the 3.25% sales charge on the total amount being
invested (the sales charge applicable to an investment of
$100,000).

The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed shares will
be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention
and qualifies for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
the rate of the sales charge applicable to the actual amount of
the aggregate purchases.

Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.

Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of the sales charges set forth in this
Statement of Additional Information, to an investment 13 times
larger than such initial purchase. The sales charge applicable
to each succeeding monthly purchase will be that normally
applicable, under such schedule, to an investment equal to the
sum of (i) the total purchase previously made during the 13-month
period and (ii) the current month's purchase multiplied by the
number of months (including the current month) remaining in the
13-month period. Sales charges previously paid during such
period will not be retroactively adjusted on the basis of later
purchases.

<PAGE>

Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date, and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes,
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.

Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a contingent deferred sales charge to certain
categories of investors including:

(i) investment management clients of the
Adviser or its affiliates;

(ii) officers and present or former Directors
of the Fund; present or former directors
and trustees of other investment
companies managed by the Adviser; present
or retired full-time employees of the
Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their
affiliates; officers and directors of
ACMC, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates;
officers, directors and present full-time
employees of selected dealers or agents;
or the spouse, sibling, direct ancestor
or direct descendant (collectively,
"relatives") of any such person; or any
trust, individual retirement account or
retirement plan account for the benefit
of any such person or relative; or the
estate of any such person or relative, if
such shares are purchased for investment
purposes (such shares may not be resold
except to the Fund);

<PAGE>

(iii) the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their
affiliates; certain employee benefit
plans for employees of the Adviser, the
Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates;

(iv) registered investment advisers or other
financial intermediaries who charge a
management, consulting or other fee for
their services and who purchase shares
through a broker or agent approved by the
Principal Underwriter and clients of such
registered investment advisers or
financial intermediaries whose accounts
are linked to the master account of such
investment adviser or financial
intermediary on the books of such
approved broker or agent;

(v) persons participating in a fee-based
program, sponsored and maintained by a
registered broker-dealer or other
financial intermediary and approved by
the Principal Underwriter, pursuant to
which such persons pay an asset-based fee
to such broker-dealer or financial
intermediary, or its affiliate or agent,
for services in the nature of investment
advisory or administrative services;

(vi) persons who establish to the Principal
Underwriter's satisfaction that they are
investing, within such time period as may
be designated by the Principal
Underwriter, proceeds of redemption of
shares of such other registered
investment companies as may be designated
from time to time by the Principal
Underwriter; and

(vii) employer-sponsored qualified pension or
profit-sharing plans (including Section
401(k) plans), custodial accounts
maintained pursuant to Section 403(b)(7),
retirement plans and individual
retirement accounts (including individual
retirement accounts to which simplified
employee pension ("SEP") contributions
are made), if such plans or accounts are
established or administered under

<PAGE>

programs sponsored by administrators or
other persons that have been approved by
the Principal Underwriter.

Class B Shares

Investors may purchase Class B shares at the public
offering price equal to the net asset value per share of the
Class B shares on the date of purchase without the imposition of
a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will
receive the full amount of the investor's purchase payment.

Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.

Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.

To illustrate, assume that an investor purchased 10,000
Class B shares at $10 per share (at a cost of $100,000) and in
the second year after purchase, the net asset value per share is
$12 and, during such time, the investor has acquired 1,000
additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 5,000
Class B shares (proceeds of $60,000), 1,000 Class B shares will
not be subject to the charge because of dividend reinvestment.
With respect to the remaining 4,000 Class B shares, the charge is
applied only to the original cost of $10 per share and not to the
increase in net asset value of $2 per share. Therefore, $40,000
of the $60,000 redemption proceeds will be charged at a rate of

<PAGE>

3.0% (the applicable rate in the second year after purchase, as
set forth below).

The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.

Contingent Deferred Sales Charge as a
Year Since Purchase % of Dollar Amount Subject to Charge
____________________ ____________________________________

First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter None

In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions and, second,
of shares held longest during the time they are subject to the
sales charge. When shares acquired in an exchange are redeemed,
the applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of the
purchase of shares of the corresponding class of the Alliance
Mutual Fund originally purchased by the shareholder.

The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who
has attained the age of 70-1/2, (iii) that had been purchased by
present or former Directors of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services -- Systematic Withdrawal Plan" below).

Conversion Feature. Eight years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose

<PAGE>

of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.

For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.

The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.

Class C Shares

Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares, and
will thus have a higher expense ratio and pay correspondingly
lower dividends than Class A shares.

Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of

<PAGE>

1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares." In determining the contingent deferred
sales charge applicable to a redemption of Class C shares, it
will be assumed that the redemption is, first, of any shares that
are not subject to a contingent deferred sales charge (for
example, because the shares have been held beyond the period
during which the charge applies or were acquired upon the
reinvestment of dividends or distributions) and, second, of
shares held longest during the time they are subject to the sales
charge.

Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares.

Conversion of Advisor Class Shares to Class A Shares

Advisor Class shares may be held solely through the fee-
based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares--General" and by
investment advisory clients of, and by certain other persons
associated with, the Adviser and its affiliates or the Fund. If
(i) a holder of Advisor Class shares ceases to participate in the
fee-based program or plan or, to be associated with the
investment adviser or financial intermediary, in each case that
satisfies the requirements to purchase shares set forth under
"Purchase of Shares--General" or (ii) the holder is otherwise no
longer eligible to purchase Advisor Class shares as described in
the Advisor Class Prospectus and this Statement of Additional
Information (each, a "Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically and
without notice to the shareholder, other than the notice

<PAGE>

contained in the Advisor Class Prospectus and this Statement of
Additional Information, to Class A shares of the Fund during the
calendar month following the month in which the Fund is informed
of the occurrence of the Conversion Event. The failure of a
shareholder of a fee-based program to satisfy the minimum
investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee or other charge.
Class A shares currently bear a .30% distribution services fee
and have a higher expense ratio than Advisor Class shares. As a
result, Class A shares may pay correspondingly lower dividends
and have a lower net asset value than Advisor Class shares.

_______________________________________________________________

REDEMPTION AND REPURCHASE OF SHARES
_______________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How to Sell Shares."

Redemption

Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within
seven days after the Fund's receipt of such tender for
redemption. If a shareholder is in doubt about what documents
are required by his or her fee-based program or employee benefit
plan, the shareholder should contact his or her financial
representative.

The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission

<PAGE>

may by order permit for the protection of security holders of the
Fund.

Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.

To redeem shares of the Fund for which no stock
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.

To redeem shares of the Fund represented by stock
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.

Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by electronic
funds transfer of shares for which no stock certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from Alliance Fund Services, Inc.
A telephone redemption request by electronic funds transfer may
not exceed $100,000 (except for certain omnibus accounts), and
must be made by 4:00 p.m. Eastern time on a Fund business day as
defined above. Proceeds of telephone redemptions will be sent by

<PAGE>

electronic funds transfer to a shareholder's designated bank
account at a bank selected by the shareholder that is a member of
the NACHA.

Telephone Redemption By Check. Each Fund shareholder is
eligible to request redemption by check of Fund shares for which
no stock certificates have been issued by telephone at (800)
221-5672 before 4:00 p.m. Eastern time on a Fund business day in
an amount not exceeding $50,000. Proceeds of such redemptions
are remitted by check to the shareholder's address of record. A
shareholder otherwise eligible for telephone redemption by check
may cancel the privilege by written instruction to Alliance Fund
Services, Inc., or by checking the appropriate box on the
Subscription Application found in the Prospectus.

Telephone Redemptions - General. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information. The
Fund reserves the right to suspend or terminate its telephone
redemption service at any time without notice. Telephone
redemption is not available with respect to shares (i) for which
certificates have been issued, (ii) held in nominee or "street
name" accounts, (iii) held by a shareholder who has changed his
or her address of record within the preceding 30 calendar days or
(iv) held in any retirement plan account. Neither the Fund nor
the Adviser, the Principal Underwriter or Alliance Fund Services,
Inc. will be responsible for the authenticity of telephone
requests for redemptions that the Fund reasonably believes to be
genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine,
including, among others, recording such telephone instructions
and causing written confirmations of the resulting transactions
to be sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.

Repurchase

The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,

<PAGE>

with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.

General

The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.

_______________________________________________________________

SHAREHOLDER SERVICES
_______________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B and Class C shares
unless otherwise indicated.

<PAGE>

Automatic Investment Program

Investors may purchase shares of the Fund through an
automatic investment program utilizing electronic funds transfer
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least
$50,000 for the initial purchase) are used to purchase shares
through the selected dealer or selected agent designated by the
investor at the public offering price next determined after the
Principal Underwriter receives the proceeds from the investor's
bank. In electronic form, drafts can be made on or about a date
each month selected by the shareholder. Investors wishing to
establish an automatic investment program in connection with
their initial investment should complete the appropriate portion
of the Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. at the
address or telephone numbers shown on the cover of this Statement
of Additional Information to establish an automatic investment
program.

Exchange Privilege

You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by the Adviser).
Exchanges of shares are made at the net asset value next
determined and without sales or service charges. Exchanges may
be made by telephone or written request. Telephone exchange
requests must be received by Alliance Fund Services, Inc. by
4:00 p.m. Eastern time on a Fund business day in order to receive
that day's net asset value.

Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.

Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call Alliance Fund Services, Inc. at (800) 221-5672 to exchange
uncertificated shares. Exchanges of shares as described above in
this section are taxable transactions for federal income tax
purposes. The exchange service may be changed, suspended, or
terminated on 60 days' written notice.

<PAGE>

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.

Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc., receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange, at (800) 221-5672
before 4:00 p.m., Eastern time, on a Fund business day as defined
above. Telephone requests for exchange received before 4:00 p.m.
Eastern time on a Fund business day will be processed as of the
close of business on that day. During periods of drastic
economic or market developments, such as the market break of
October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto.

<PAGE>

None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for exchanges are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers, agents or
financial representatives, as applicable, may charge a commission
for handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance Mutual Fund being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.

Retirement Plans

The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "For Literature" telephone number on the cover of
this Statement of Additional Information, or write to:

Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520

Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.

<PAGE>

Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.

If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan reaches $1 million
on or before December 15 in any year, all Class B or Class C
shares of the Fund held by the plan can be exchanged at the
plan's request without any sales charge, for Class A shares of
the Fund.

Simplified Employee Pension Plan ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.

403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirement plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to Alliance Fund Services, Inc. as compensation for its services
to the retirement plan accounts maintained with the Fund.

Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.

Dividend Direction Plan

A shareholder who already maintains, in addition to his
or her Class A, Class B or Class C Fund account, a Class A,
Class B or Class C account with one or more other Alliance Mutual
Funds may direct that income dividends and/or capital gains paid
on the shareholder's Class A, Class B or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such

<PAGE>

other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "For Literature" telephone number shown on the
cover of this Statement of Additional Information. Investors
wishing to establish a dividend direction plan in connection with
their initial investment should complete the appropriate section
of the Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.

Systematic Withdrawal Plan

General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such payments will be subject to any
taxes applicable to redemptions and, except as discussed below,
any applicable contingent deferred sales charge. Shares acquired
with reinvested dividends and distributions will be liquidated
first to provide such withdrawal payments and thereafter other
shares will be liquidated to the extent necessary, and depending
upon the amount withdrawn, the investor's principal may be
depleted. A systematic withdrawal plan may be terminated at any
time by the shareholder or the Fund.

Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares--General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a holder of Class A
shares who is maintaining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times
the annual withdrawal or $5,000, whichever is less.

Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic

<PAGE>

withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "For Literature" telephone number shown on the cover of this
Statement of Additional Information.

CDSC Waiver for Class B Shares and Class C Shares.
Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B or Class C shares in a shareholder's account may
be redeemed free of any contingent deferred sales charge.

With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held
the longest will be redeemed next. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.

With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.

Statements and Reports

Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent accountants, [ ],
as well as a confirmation of each purchase and redemption. By
contacting his or her broker or Alliance Fund Services, Inc., a
shareholder can arrange for copies of his or her account
statements to be sent to another person.

_______________________________________________________________

NET ASSET VALUE
_______________________________________________________________

The per share net asset value is computed in accordance
with the Fund's Articles of Incorporation and By-Laws at the next
close of regular trading on the Exchange (ordinarily 4:00 p.m.
Eastern time) following receipt of a purchase or redemption order
by the Fund on each Fund business day on which such an order is

<PAGE>

received and on such other days as the Board of Directors deems
appropriate or necessary in order to comply with Rule 22c-1 under
the 1940 Act. The Fund's per share net asset value is calculated
by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any weekday on which the Exchange is open
for trading.

In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the Exchange or on a
foreign securities exchange (other than foreign securities
exchanges whose operations are similar to those of the United
States over-the-counter market) are valued, except as indicted
below, at the last sale price reflected on the consolidated tape
at the close of the Exchange or, in the case of a foreign
securities exchange, at the last quoted sale price, in each case
on the business day as of which such value is being determined.
If there has been no sale on such day, the securities are valued
at the quoted bid prices on such day. If no bid prices are
quoted on such day, then the security is valued at the mean of
the bid and asked prices at the close of the Exchange on such day
as obtained from one or more dealers regularly making a market in
such security. Where a bid and asked price can be obtained from
only one such dealer, such security is valued at the mean of the
bid and asked price obtained from such dealer unless it is
determined that such price does not represent current market
value, in which case the security shall be value in good faith at
fair value by, or pursuant to procedures established by, the
Board of Directors. Securities for which no bid and asked price
quotations are readily available are valued in good faith at fair
value by, or in accordance with procedures established by, the
Board of Directors. Readily marketable securities not listed on
the Exchange or on a foreign securities exchange are valued in
like manner. Portfolio securities traded on the Exchange and on
one or more foreign or other national securities exchanges, and
portfolio securities not traded on the Exchange but traded on one
or more foreign or other national securities exchanges are valued
in accordance with these procedures by reference to the principal
exchange on which the securities are traded.

Readily marketable securities traded only in the over-
the-counter market, securities listed on a foreign securities
exchange whose operations are similar to those of the United
States over-the-counter market, and debt securities listed on a
U.S. national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the
bid and asked prices at the close of the Exchange on such day as

<PAGE>

obtained from two or more dealers regularly making a market in
such security. Where a bid and asked price can be obtained from
only one such dealer, such security is valued at the mean of the
bid and asked price obtained from such dealer unless it is
determined that such price does not represent current market
value, in which case the security shall be value in good faith at
fair value by, or pursuant to procedures established by, the
Board of Directors.

Open futures contracts will be valued using the closing
settlement price or, in the absence of such a price, the most
recent quoted bid price, If there are no quotations available for
the day of valuations, the last available closing settlement
price will be used.

U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).

Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
The prices provided by pricing service take into account many
factors, including institutional size trading in similar groups
of securities and any developments related to specific
securities. Mortgage-backed securities may be valued at prices
obtained from a bond pricing service or at a price obtained from
one or more of the major broker/dealers in such securities. In
cases where broker/dealer quotes are obtained, the Adviser may
establish procedures whereby changes in market yields or spreads
are used to adjust, on a daily basis, a recently obtained quoted
bid price on a security.

All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.

Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Fund business
day. In addition, trading in foreign markets may not take place
on all Fund business days. Furthermore, trading may take place
in various foreign markets on days that are not Fund business
days. The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio

<PAGE>

securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the Exchange will not be reflected in the Fund's calculation
of net asset value unless these prices do not reflect current
market value, in which case the securities will be valued in good
faith at fair value by, or in accordance with procedures
established by, the Board of Directors.

The Board of Directors may suspend the determination of
the Fund's, net asset value (and the offering and sales of
shares), subject to the rules of the Commission and other
governmental rules and regulations, at a time when: (1) the
Exchange is closed, other than customary weekend and holiday
closings, (2) an emergency exists as a result of which it is not
reasonably practicable for the Fund to dispose of securities
owned by it or to determine fairly the value of its net assets,
or (3) for the protection of shareholders, the Commission by
order permits a suspension of the right of redemption or a
postponement of the date of payment on redemption.

For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in a
foreign currency will be converted into U.S. dollars at the mean
of the current bid and asked prices of such currency against the
U.S. dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the
basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If such quotations are
not available as of the close of the Exchange, the rate of
exchange will be determined in good faith by, or under the
direction of, the Board of Directors.

The assets attributable to the Class A shares, Class B
shares and Class C shares will be invested together in a single
portfolio. The net asset value of each class will be determined
separately by subtracting the liabilities allocated to that class
from the assets belonging to that class in conformance with the
provisions of a plan adopted by the Fund in accordance with Rule
18f-3 under the 1940 Act.

_______________________________________________________________

DIVIDENDS, DISTRIBUTIONS AND TAXES
_______________________________________________________________

Dividends paid by the Fund, if any, with respect to
Class A, Class B and Class C shares will be calculated in the
same manner at the same time on the same day and will be in the
same amount, except that the higher distribution services
applicable to Class B and C shares, and any incremental transfer

<PAGE>

agency costs relating to Class B and Class C shares, will be
borne exclusively by the class to which they relate.

United States Federal Income Taxation
Of Dividends and Distributions

General. The Fund intends for each taxable year to
qualify to be taxed as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). To so
qualify, the Fund must, among other things, (i) derive at least
90% of its gross income in each taxable year from dividends,
interest, payments with respect to securities loans, gains from
the sale or other disposition of stock or securities or foreign
currency, or certain other income (including, but not limited to,
gains from options, futures and forward contracts) derived with
respect to its business of investing in stock, securities or
currency; (ii) diversify its holdings so that, at the end of each
quarter of its taxable year, the following two conditions are
met: (a) at least 50% of the value of the Fund's assets is
represented by cash, U.S. Government Securities, securities of
other regulated investment companies and other securities with
respect to which the Fund's investment is limited, in respect of
any one issuer, to an amount not greater than 5% of the Fund's
assets and 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than
U.S. Government Securities or securities of other regulated
investment companies).

If the Fund qualifies as a regulated investment company
for any taxable year and makes timely distributions to its
shareholders of 90% or more of its investment company taxable
income for that year (calculated without regard to its net
capital gain, i.e., the excess of its net long-term capital gain
over its net short-term capital loss), it will not be subject to
federal income tax on the portion of its taxable income for the
year (including any net capital gain) that it distributes to
shareholders.

The Fund will also avoid the 4% federal excise tax that
would otherwise apply to certain undistributed income for a given
calendar year if it makes timely distributions to the
shareholders equal to at least the sum of (i) 98% of its ordinary
income for that year; (ii) 98% of its capital gain net income and
foreign currency gains for the twelve-month period ending on
October 31 of that year; and (iii) any ordinary income or capital
gain net income from the preceding calendar year that was not
distributed during that year. For this purpose, income or gain
retained by the Fund that is subject to corporate income tax will
be considered to have been distributed by the Fund by year-end.
For federal income and excise tax purposes, dividends declared

<PAGE>

and payable to shareholders of record as of a date in October,
November or December of a given year but actually paid during the
immediately following January will be treated as if paid by the
Fund on December 31 of that calendar year, and will be taxable to
these shareholders for the year declared, and not for the year in
which the shareholders actually receive the dividend.

The Fund intends to make timely distributions of the
Fund's taxable income (including any net capital gain) so that
the Fund will not be subject to federal income or excise taxes.
However, exchange control or other regulations on the
repatriation of investment income, capital or the proceeds of
securities sales, if any exist or are enacted in the future, may
limit the Fund's ability to make distributions sufficient in
amount to avoid being subject to one or both of such federal
taxes.

Dividends and Distributions. Dividends of the Fund's
net ordinary income and distributions of any net realized short-
term capital gain will be taxable to shareholders as ordinary
income. In the case of corporate shareholders, such dividends
may be eligible for the dividends-received deduction, except that
the amount eligible for the deduction is limited to the amount of
qualifying dividends received by the Fund. A corporation's
dividends-received deduction will be disallowed unless the
corporation holds shares in the Fund at least 46 days during the
90-day period beginning 45 days before the date on which the
corporation becomes entitled to receive the dividend. In
determining the holding period of such shares for this purpose,
any period during which the corporation's risk of loss is offset
by means of options, short sales or similar transactions is not
counted. Furthermore, the dividends-received deduction will be
disallowed to the extent a corporation's investment in shares of
the Fund is financed with indebtedness.

Pursuant to the Taxpayer Relief Act of 1997, two
different tax rates apply to net capital gains--that is, the
excess of net gains from capital assets held for more than one
year over net losses from capital assets held for not more than
one year. One rate (generally 28%) applies to net gains on
capital assets held for more than one year but not more than 18
months ("mid-term gains"), and a second rate (generally 20%)
applies to the balance of such net capital gains ("adjusted net
capital gains"). Distributions of mid-term gains and adjusted
net capital gains will be taxable to shareholders as such,
regardless of how long a shareholder has held shares in the Fund.
Distributions of net capital gains are not eligible for the
dividends-received deduction referred to above.

<PAGE>

Any dividend or distribution received by a shareholder
on shares of the Fund will have the effect of reducing the net
asset value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular
shareholder, would be taxable to him as described above.
Dividends are taxable in the manner discussed regardless of
whether they are paid to the shareholder in cash or are
reinvested in additional shares of the Fund.

After the end of the taxable year, the Fund will notify
shareholders of the federal income tax status of any
distributions made by the Fund to shareholders during such year.

It is the present policy of the Fund to distribute to
shareholders all net investment income and to distribute realized
capital gains, if any, annually. There is no fixed dividend rate
and there can be no assurance that the Fund will pay any
dividends. The amount of any dividend or distribution paid on
shares of the Fund must necessarily depend upon the realization
of income and capital gains from the Fund's investments.

Sales and Redemptions. Any gain or loss arising from a
sale or redemption of Fund shares generally will be capital gain
or loss except in the case of dealers or certain financial
institutions. Such gain or loss will be long-term capital gain
or loss if such shareholder has held such shares for more than
one year at the time of the sale or redemption; and otherwise
short-term capital gain or loss. In the case of an individual
shareholder, the applicable tax rate imposed on long-term capital
gain differs depending on whether the shares were held at the
time of the sale or redemption for more than eighteen months, or
for more than one year but not more than eighteen months. If a
shareholder has held shares in the Fund for six months or less
and during that period has received a distribution of net capital
gains, any loss recognized by the shareholder on the sale of
those shares during the six-month period will be treated as a
long-term capital loss to the extent of the distribution. In
determining the holding period of such shares for this purpose,
any period during which a shareholder's risk of loss is offset by
means of options, short sales or similar transactions is not
counted.

Any loss realized by a shareholder on a sale or exchange
of shares of the Fund will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30
days before and ending 30 days after the shares are sold or
exchanged. For this purpose, acquisitions pursuant to the
Dividend Reinvestment Plan would constitute a replacement if made

<PAGE>

within the period. If disallowed, the loss will be reflected in
an upward adjustment to the basis of the shares acquired.

Foreign Taxes. Income received by the Fund may also be
subject to foreign income taxes, including withholding taxes. The
United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of such taxes
or exemption from taxes on such income. It is impossible to
determine the effective rate of foreign tax in advance since the
amount of the Fund's assets to be invested within various
countries is not known. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of
stocks or securities of foreign corporations, the Fund will be
eligible and intends to file an election with the Internal
Revenue Service to pass through to its shareholders the amount of
foreign taxes paid by the Fund. However, there can be no
assurance that the Fund will be able to do so. Pursuant to this
election a United States shareholder will be required to
(i) include in gross income (in addition to taxable dividends
actually received) his pro rata share of foreign taxes paid by
the Fund, (ii) treat his pro rata share of such foreign taxes as
having been paid by him, and (iii) either deduct such pro rata
share of foreign taxes in computing his taxable income or treat
such foreign taxes as a credit against United States federal
income taxes. Shareholders who are not liable for federal income
taxes, such as retirement plans qualified under section 401 of
the Code, will not be affected by any such pass through of taxes
by the Fund. No deduction for foreign taxes may be claimed by an
individual United States shareholder who does not itemize
deductions. In addition, certain individual United States
shareholders may be subject to rules which limit or reduce their
ability to fully deduct, or claim a credit for, their pro rata
share of the foreign taxes paid by the Fund. A shareholder's
foreign tax credit with respect to a dividend received from the
Fund will be disallowed unless the shareholder holds shares in
the Fund on the ex-dividend date and for at least 15 other days
during the 30-day period beginning 15 days prior to the ex-
dividend date. Each shareholder will be notified within 60 days
after the close of the Fund's taxable year whether the foreign
taxes paid by the Fund will pass through for that year and, if
so, such notification will designate (i) the shareholder's
portion of the foreign taxes paid to each such country and
(ii) the portion of dividends that represents income derived from
sources within each such country.

Backup Withholding. The Fund may be required to
withhold federal income tax at the rate of 31% of all taxable
distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification numbers or to
make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup

<PAGE>

withholding. Corporate shareholders and certain other
shareholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against a shareholder's
federal income tax liability or refunded.

United States Federal Income Taxation of the Fund

The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.

Currency Fluctuations-"Section 988" Gains or Losses.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency, which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its shareholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as a non-taxable return of
capital to shareholders, rather than as an ordinary dividend,
reducing each shareholder's basis in his Fund shares. If such
distributions exceed such shareholder's basis, such excess will
be treated as a gain from the sale of shares.

Futures and Forward Contracts. Certain regulated
futures contracts, and forward foreign currency contracts are
considered "section 1256 contracts" for federal income tax
purposes. Section 1256 contracts held by the Fund at the end of
each taxable year will be "marked to market" and treated for
federal income tax purposes as though sold for fair market value
on the last business day of such taxable year. Gain or loss
realized by the Fund on section 1256 contracts other than forward

<PAGE>

foreign currency contracts will be considered 60% long-term and
40% short-term capital gain or loss. Gain or loss realized by
the Fund on forward foreign currency contracts generally will be
treated as section 988 gain or loss and will therefore be
characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available
to be distributed to shareholders as ordinary income, as
described above. The Fund can elect to exempt its section 1256
contracts which are part of a "mixed straddle" (as described
below) from the application of section 1256.

The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. The
regulations issued under this authority generally should not
apply to the type of hedging transactions in which the Fund
intends to engage.

Tax Straddles. Any futures contract, forward foreign
currency contract, or other position entered into or held by the
Fund in conjunction with any other position held by the Fund may
constitute a "straddle" for federal income tax purposes. A
straddle of which at least one, but not all, the positions are
section 1256 contracts may constitute a "mixed straddle". In
general, straddles are subject to certain rules that may affect
the character and timing of the Fund's gains and losses with
respect to straddle positions by requiring, among other things,
that (i) loss realized on disposition of one position of a
straddle not be recognized to the extent that the Fund has
unrealized gains with respect to the other position in such
straddle; (ii) the Fund's holding period in straddle positions be
suspended while the straddle exists (possibly resulting in gain
being treated as short-term capital gain rather than long-term
capital gain); (iii) losses recognized with respect to certain
straddle positions which are part of a mixed straddle and which
are non-section 1256 positions be treated as 60% long-term and
40% short-term capital loss; (iv) losses recognized with respect
to certain straddle positions which would otherwise constitute
short-term capital losses be treated as long-term capital losses;
and (v) the deduction of interest and carrying charges
attributable to certain straddle positions may be deferred. The
Treasury Department is authorized to issue regulations providing
for the proper treatment of a mixed straddle where at least one
position is ordinary and at least one position is capital. No
such regulations have yet been issued. Various elections are
available to the Fund which may mitigate the effects of the
straddle rules, particularly with respect to mixed straddles. In
general, the straddle rules described above do not apply to any

<PAGE>

straddles held by the Fund all of the offsetting positions of
which consist of section 1256 contracts.

Taxation of Foreign Stockholders

The foregoing discussion relates only to United States
federal income tax law as it affects shareholders who are United
States citizens or residents or United States corporations. The
effects of federal income tax law on shareholders who are non-
resident alien individuals or foreign corporations may be
substantially different. Foreign investors should therefore
consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.

Other Taxation

The Fund may be subject to other state and local
taxes.

_______________________________________________________________

PORTFOLIO TRANSACTIONS
_______________________________________________________________

The management of the Fund has the responsibility for
allocating its brokerage orders and may direct orders to any
broker. It is the Fund's general policy to seek favorable net
prices and prompt reliable execution in connection with the
purchase or sale of all portfolio securities. In the purchase
and sale of over-the-counter securities, it is the Fund's policy
to use the primary market makers except when a better price can
be obtained by using a broker. The Board of Directors has
approved, as in the best interests of the Fund and the
shareholders, a policy of considering, among other factors, sales
of the Fund's shares as a factor in the selection of
broker-dealers to execute portfolio transactions, subject to best
execution. The Adviser is authorized under the Advisory
Agreement to place brokerage business with such brokers and
dealers. The use of brokers who supply supplemental research and
analysis and other services may result in the payment of higher
commissions than those available from other brokers and dealers
who provide only the execution of portfolio transactions. In
addition, the supplemental research and analysis and other
services that may be obtained from brokers and dealers through
which brokerage transactions are effected may be useful to the
Adviser in connection with advisory clients other than the Fund.

Investment decisions for the Fund are made independently
from those for other investment companies and other advisory
accounts managed by the Adviser. It may happen, on occasion,
that the same security is held in the portfolio of the Fund and

<PAGE>

one or more of such other companies or accounts. Simultaneous
transactions are likely when several funds or accounts are
managed by the same adviser, particularly when a security is
suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts
managed by the Adviser are simultaneously engaged in the purchase
or sale of the same security, the transactions are allocated to
the respective companies or accounts both as to amount and price,
in accordance with a method deemed equitable to each company or
account. In some cases this system may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for the Fund.

Allocations are made by the officers of the Fund or of
the Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.

The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc., and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.

The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ, for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.

Some of the Fund's portfolio transactions in equity
securities may occur on foreign stock exchanges. Transactions on
stock exchanges involve the payment of brokerage commissions. On
many foreign stock exchanges these commissions are fixed.

<PAGE>

Securities traded in foreign over-the-counter markets (including
most fixed-income securities) are purchased from and sold to
dealers acting as principal. Over-the-counter transactions
generally do not involve the payment of a stated commission, but
the price usually includes an undisclosed commission or markup.
The prices of underwritten offerings, however, generally include
a stated underwriter's discount. The Adviser expects to effect
the bulk of its transactions in securities of companies based in
foreign countries through brokers, dealers or underwriters
located in such countries. U.S. Government or other U.S.
securities constituting permissible investments will be purchased
and sold through U.S. brokers, dealers or underwriters.

_______________________________________________________________

GENERAL INFORMATION
_______________________________________________________________

Capitalization

The authorized capital stock of the Fund currently
consists of 3,000,000,000 shares of Class A Common Stock,
3,000,000,000 shares of Class B Common Stock and 3,000,000,000
shares of Class C Common Stock, each having a par value of $.001
per share. All shares of the Fund, when issued, are fully paid
and non-assessable. The Directors are authorized to reclassify
any unissued shares to any number of additional series and
classes without shareholder approval. Accordingly, the Directors
in the future, for reasons such as the desire to establish one or
more additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class or series
would be governed by the 1940 Act and the law of the State of
Maryland. If shares of another series were issued in connection
with the creation of a second portfolio, each share of either
portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Directors, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Investment Advisory Contract and changes in investment
policy, shares of each portfolio would vote as a separate series.
Procedures for calling a shareholders' meeting for the removal of
Directors of the Fund, similar to those set forth in Section
16(c) of the 1940 Act will be available to shareholders of the
Fund. The rights of the holders of shares of a series may not be
modified except by the vote of a majority of the outstanding
shares of such series.

It is anticipated that annual shareholder meetings will
not be held; shareholder meetings will be held only when required

<PAGE>

by federal or state law. Shareholders have available certain
procedures for the removal of Directors.

A shareholder will be entitled to share pro rata with
other holders of the same class of shares all dividends and
distributions arising from the Fund's assets and, upon redeeming
shares, will receive the then current net asset value of the Fund
represented by the redeemed shares less any applicable CDSC. The
Fund is empowered to establish, without shareholder approval,
additional portfolios, which may have different investment
objectives and policies than those of the Fund, and additional
classes of shares within the Fund. If an additional portfolio or
class were established in the Fund, each share of the portfolio
or class would normally be entitled to one vote for all purposes.
Generally, shares of each portfolio and class would vote together
as a single class on matters, such as the election of Directors,
that affect each portfolio and class in substantially the same
manner. Class A, B and C shares have identical voting, dividend,
liquidation and other rights, except that each class bears its
own transfer agency expenses, each of Class A, Class B and Class
C shares of the Fund bears its own distribution expenses and
Class B shares convert to Class A shares under certain
circumstances. Each class of shares of the Fund votes separately
with respect to the Fund's Rule 12b-1 distribution plan and other
matters for which separate class voting is appropriate under
applicable law. Shares are freely transferable, are entitled to
dividends as determined by the Directors and, in liquidation of
the Fund, are entitled to receive the net assets of the Fund.

Custodian

[ ] will act as the Fund's custodian for the
assets of the Fund but plays no part in deciding the purchase or
sale of portfolio securities. Subject to the supervision of the
Fund's Directors, [ ] may enter into sub-custodial
agreements for the holding of the Fund's foreign securities.

Principal Underwriter

Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase shares of the Fund. Under the Agreement, the
Fund has agreed to indemnify the Principal Underwriter, in the
absence of its willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations thereunder, against
certain civil liabilities, including liabilities under the
Securities Act.

<PAGE>

Counsel

Legal matters in connection with the issuance of the
common stock offered hereby are passed upon by Seward & Kissel
LLP, New York, New York. Seward & Kissel LLP has relied upon the
opinion of Venable, Baetjer and Howard, LLP, Baltimore, Maryland,
for matters relating to Maryland law.

Independent Accountants

[ ], New York, New York, has been
appointed as independent accountants for the Fund.

Performance Information

From time to time the Fund advertises its "total
return." Computed separately for each class, the Fund's "total
return" is its average annual compounded total return for its
most recently completed one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for
such a period is computed by finding, through the use of a
formula prescribed by the Commission, the average annual
compounded rate of return over the period that would equate an
assumed initial amount invested to the value of such investment
at the end of the period. For purposes of computing total
return, income dividends and capital gains distributions paid on
shares of the Fund are assumed to have been reinvested when paid
and the maximum sales charge applicable to purchases of Fund
shares is assumed to have been paid.

The Fund's total return is computed separately for
Class A, Class B and Class C shares. The Fund's total return is
not fixed and will fluctuate in response to prevailing market
conditions or as a function of the type and quality of the
securities in the Fund's portfolio and its expenses. Total
return information is useful in reviewing the Fund's performance
but such information may not provide a basis for comparison with
bank deposits or other investments which pay a fixed yield for a
stated period of time. An investor's principal invested in the
Fund is not fixed and will fluctuate in response to prevailing
market conditions.

Advertisements quoting performance rankings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc., and
Morningstar, Inc. and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers,
magazines such as Barron's, Business Week, Changing Times,
Forbes, Investor's Daily, Money Magazine, The New York Times and
The Wall Street Journal or other media on behalf of the Fund.

<PAGE>

Additional Information

Any shareholder inquiries may be directed to the
shareholder's broker or to Alliance Fund Services, Inc. at the
address or telephone numbers shown on the front cover of this
Statement of 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
Commission under the Securities Act. Copies of the Registration
Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of
the Commission in Washington, D.C.

<PAGE>

____________________________________________________________

FINANCIAL STATEMENT AND
REPORT OF INDEPENDENT ACCOUNTANTS
____________________________________________________________

No financial statements are included in this
Registration Statement since, on the date of filing, the
Registrant, being a newly organized corporation, has no assets or
known liabilities and has sold no shares of common stock. Prior
to the effective date of this Registration Statement, the
required financial statements will be filed by amendment hereto.

<PAGE>

____________________________________________________________

APPENDIX A:

CERTAIN EMPLOYEE BENEFIT PLANS
____________________________________________________________

Employee benefit plans described below which are
intended to be tax-qualified under section 401(a) of the Internal
Revenue Code of 1986, as amended ("Tax Qualified Plans"), for
which Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate thereof ("Merrill Lynch") is recordkeeper (or with
respect to which recordkeeping services are provided pursuant to
certain arrangements as described in paragraph (ii) below)
("Merrill Lynch Plans") are subject to specific requirements as
to the Fund shares which they may purchase. Notwithstanding
anything to the contrary contained elsewhere in this Statement of
Additional Information, the following Merrill Lynch Plans are not
eligible to purchase Class A shares and are eligible to purchase
Class B shares of the Fund at net asset value without being
subject to a contingent deferred sales charge:

(i) Plans for which Merrill Lynch is the recordkeeper on a
daily valuation basis, if when the plan is established
as an active plan on Merrill Lynch's recordkeeping
system:

(a) the plan is one which is not already
investing in shares of mutual funds or
interests in other commingled investment
vehicles of which Merrill Lynch Asset
Management, L.P. is investment adviser or
manager ("MLAM Funds"), and either (A) the
aggregate assets of the plan are less than
$3 million or (B) the total of the sum of
(x) the employees eligible to participate in
the plan and (y) those persons, not
including any such employees, for whom a
plan account having a balance therein is
maintained, is less than 500, each of (A)
and (B) to be determined by Merrill Lynch in
the normal course prior to the date the plan
is established as an active plan on Merrill
Lynch's recordkeeping system (an "Active
Plan"); or

(b) the plan is one which is already investing
in shares of or interests in MLAM Funds and
the assets of the plan have an aggregate
value of less than $5 million, as determined

A-1

<PAGE>

by Merrill Lynch as of the date the plan
becomes an Active Plan.

For purposes of applying (a) and (b), there
are to be aggregated all assets of any Tax-
Qualified Plan maintained by the sponsor of
the Merrill Lynch Plan (or any of the
sponsor's affiliates) (determined to be such
by Merrill Lynch) which are being invested
in shares of or interests in MLAM Funds,
Alliance Mutual Funds or other mutual funds
made available pursuant to an agreement
between Merrill Lynch and the principal
underwriter thereof (or one of its
affiliates) and which are being held in a
Merrill Lynch account.

(ii) Plans for which the recordkeeper is not Merrill Lynch,
but which are recordkept on a daily valuation basis by
a recordkeeper with which Merrill Lynch has a
subcontracting or other alliance arrangement for the
performance of recordkeeping services, if the plan is
determined by Merrill Lynch to be so eligible and the
assets of the plan are less than $3 million.

Class B shares of the Fund held by any of the
above-described Merrill Lynch Plans are to be replaced at
Merrill Lynch's direction through conversion, exchange or
otherwise by Class A shares of the Fund on the earlier of
the date that the value of the plan's aggregate assets first
equals or exceeds $5 million or the date on which any Class
B share of the Fund held by the plan would convert to a
Class A share of the Fund as described under "Purchase of
Shares" and "Redemption and Repurchase of Shares."

Any Tax Qualified Plan, including any Merrill Lynch
Plan, which does not purchase Class B shares of the Fund
without being subject to a contingent deferred sales charge
under the above criteria is eligible to purchase Class B
shares subject to a contingent deferred sales charge as well
as other classes of shares of the Fund as set forth above
under "Purchase of Shares" and "Redemption and Repurchase of
Shares."

A-2

<PAGE>

PART C

OTHER INFORMATION

ITEM 23. Exhibits

(a) Copy of Articles of Incorporation - Filed herewith.

(b) Form of proposed By-Laws of the Registrant.*

(d) Form of proposed Advisory Agreement between the
Registrant and Alliance Capital Management L.P.*

(e) (1) Form of proposed Distribution Services Agreement
between the Registrant and Alliance Fund
Distributors, Inc.*

(2) Form of Selected Dealer Agreement between Alliance
Fund Distributors, Inc. and selected dealers
offering shares of Registrant.*

(3) Form of Selected Agent Agreement between Alliance
Fund Distributors, Inc. and selected agents making
available shares of Registrant.*

(f) Not applicable.

(g) Custodian Contract.*

(h) Form of proposed Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc.*

(i) (1) Opinion and Consent of Seward & Kissel.*

(2) Opinion and Consent of Venable, Baetjer and Howard,
LLP.*

(j) Consent of Independent Accountants.*

(k) Not applicable.

(l) Investment representation letter of Alliance Capital
Management L.P.*

(m) Form of proposed Rule 12b-1 Plan.*

(n) Not applicable.

(o) Form of proposed Rule 18f - 3 Plan.*

C-1

<PAGE>

Other Exhibits - Powers of Attorney.*

ITEM 24. Persons Controlled by or under Common Control with
Registrant.

None. The Registrant is a recently organized
corporation and has no outstanding shares of common
stock.

___________________________

* To be filed in a pre-effective amendment

C-2

<PAGE>

ITEM 25. Indemnification.

It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum
extent permitted by Section 2-418 of the General
Corporation Law of the State of Maryland, which is
incorporated by reference herein, and as set forth in
Article EIGHTH of Registrant's Articles of
Incorporation, filed as Exhibit (a) hereto, Article VII
and Article VIII of Registrant's By-Laws, filed as
Exhibit (b) hereto, and Section 10 of the proposed
Distribution Services Agreement, filed as Exhibit (e)(1)
hereto. The Adviser's liability for any loss suffered
by the Registrant or its shareholders is set forth in
Section 4 of the proposed Advisory Agreement, filed as
Exhibit (d) hereto.

Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors,
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 Securities
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 director, officer or controlling
person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such
director, 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 of
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its directors,
officers, investment manager and principal underwriters
only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was
brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts,
that the indemnitee was not liable by reason of

C-3

<PAGE>

disabling conduct, by (a) the vote of a majority of a
quorum of the directors who are neither "interested
persons" of the Registrant as defined in section
2(a)(19) of the Investment Company Act of 1940 nor
parties to the proceeding ("disinterested, non-party
directors"), or (b) an independent legal counsel in a
written opinion. The Registrant will advance attorneys
fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters
in defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless it
is ultimately determined that he is entitled to
indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured against
losses arising by reason of any lawful advances, or
(3) a majority of a quorum of disinterested, non-party
directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.

The Registrant participates in a joint
trustees/directors and officers liability insurance
policy issued by the ICI Mutual Insurance Company.
Coverage under this policy has been extended to
directors, trustees and officers of the investment
companies managed by Alliance Capital Management L.P.
Under this policy, outside trustees and directors are
covered up to the limits specified for any claim against
them for acts committed in their capacities as trustee
or director. A pro rata share of the premium for this
coverage is charged to each investment company and to
the Adviser.

ITEM 26. Business and Other Connections of Adviser.

The descriptions of Alliance Capital Management L.P.
under the captions "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

C-4

<PAGE>

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.
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.

C-5

<PAGE>

POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT

Michael J. Laughlin Director and Chairman

John D. Carifa Director

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

Anne S. Drennan Senior Vice President
and Treasurer

Benji A. Baer Senior Vice President

Karen J. Bullot Senior Vice President

John R. Carl 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

C-6

<PAGE>

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

Jamie A. Atkinson Vice President

Kenneth F. Barkoff Vice President

Charles M. Barrett Vice President

Casimir F. Bolanowski Vice President

Michael E. Brannan Vice President

Robert F. Brendli Vice President

Christopher L. Butts Vice President

Timothy W. Call Vice President

Jonathan W. Cangalosi Vice President

C-7

<PAGE>

Kevin T. Cannon Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Russell R. Corby 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

John E. English 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

Alan Halfenger Vice President

William B. Hanigan Vice President

Michael S. Hart Vice President

Scott F. Heyer Vice President

Timothy A. Hill Vice President

C-8

<PAGE>

Brian R. Hoegee Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Michael J. Hutten Vice President

Scott Hutton Vice President

Oscar J. Isoba Vice President

Richard D. Keppler Vice President

Donna M. Lamback Vice President

P. Dean Lampe Vice President

Nicholas J. Lapi Vice President

Henry Michael Lesmeister Vice President

Eric L. Levinson 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

Peter J. O'Brien Vice President

John C. O'Connell Vice President

John J. O'Connor Vice President

C-9

<PAGE>

Richard J. Olszewski Vice President

Catherine N. Peterson Vice President

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

Vincent T. Strangio 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

C-10

<PAGE>

Patrick Look Assistant Vice
President and
Assistant Treasurer

Michael W. Alexander Assistant Vice
President

Richard J. Appaluccio 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

Terri J. Daly Assistant Vice
President

Ralph A. DiMeglio Assistant Vice
President

Faith C. Deutsch Assistant Vice
President

Adam E. Engelhardt Assistant Vice
President

Duff C. Ferguson Assistant Vice
President

Theresa Iosca Assistant Vice
President

Erik A. Jorgensen Assistant Vice
President

Eric G. Kalender Assistant Vice
President

Edward W. Kelly Assistant Vice
President

C-11

<PAGE>

Victor Kopelakis Assistant Vice
President

Michael Laino Assistant Vice
President

Evamarie C. Lombardo Assistant Vice
President

Kristine J. Luisi Assistant Vice
President

Kathryn Austin Masters Assistant Vice
President

Richard F. Meier 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

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-12

<PAGE>

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 and at the offices of [ ], the
Registrant's custodian, [ ]. 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.

The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
any Director of the Fund in accordance with Section 16
of the Investment Company Act of 1940.

C-13

<PAGE>

SIGNATURES

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 Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York and the State
of New York, on the 6th day of May, 1999.

Alliance Health Care Fund, Inc.

/s/Edmund P. Bergan, Jr.
________________________
Edmund P. Bergan, Jr.
Chairman and President

Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities and on the date
indicated.

Signature Title Date
_____________ __________ ________

(1) Principal Executive Officer:

/s/ Edmund P. Bergan, Jr. Chairman and May 6, 1999
______________________ President
Edmund P. Bergan, Jr.

(2) Principal Financial
and Accounting Officer:

/s/ Mark D. Gersten Treasurer May 6, 1999
_____________________ and Chief
Mark D. Gersten Financial
Officer

(3) Sole Director:

/s/ Edmund P. Bergan, Jr.
_________________________ May 6, 1999
Edmund P. Bergan, Jr.

C-14

<PAGE>

Index To Exhibits

(a) Articles of Incorporation.

C-15
00250248.AA1

<PAGE>

SEWARD & KISSEL LLP
One Battery Park Plaza
New York, N.Y. 10004

Telephone (212) 574-1200
Facsimile: (212) 480-8421

May 6, 1999

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Alliance Health Care Fund, Inc.
(CIK# 0001085421)

Dear Ladies and Gentlemen:

On behalf of Alliance Health Care Fund, Inc., a Maryland
corporation (the "Fund"), we submit for filing the Fund's
Notification of Registration on Form N-8A and its Registration
Statement on Form N-1A in connection with the registration of the
Fund under the Investment Company Act of 1940, as amended, and
the registration of an indefinite number of shares of Class A,
Class B and Class C Common Stock of the Fund, par value $.001 per
share, under the Securities Act of 1933, as amended.

Please contact the undersigned in writing or by
telephone at (212) 574-1295, or contact Thomas G. MacDonald of
this office at (212) 574-1263 with any questions or comments
regarding these filings.

Very truly yours,

/s/ Michael Hession

Enclosures

00250248.AA8