ALLIANCE CAPITAL RESERVES, 485BPOS, 1996-10-31

ALLIANCE CAPITAL RESERVES
485BPOS, 1996-10-31

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<PAGE>

As filed with the Securities and Exchange
Commission on October 31, 1996

File No. 2-61564

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. 30 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF l940

Amendment No. 28 X

ALLIANCE CAPITAL RESERVES
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code:(800) 221-5672

EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)

It is proposed that this filing will become effective (Check
appropriate line)
X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.

Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant's Rule 24f-2 notice for
its fiscal year ended June 30, 1996 was filed on August 29, 1996.

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 404(c))

N-1A Item No. Location in Prospectuses
(Caption)

PART A

Item 1. Cover Page Cover Page

Item 2. Synopsis Expense Information

Item 3. Financial Highlights Financial Highlights

Item 4. General Description Investment Objectives
of Registrant and Policies

Item 5. Management of the Fund Additional Information

Item 6. Capital Stock and Other Additional Information
Securities

Item 7. Purchase of Securities Purchase and Redemption
Being Offered of Shares; Additional
Information

Item 8. Redemption or Repurchase Purchase and Redemption
of Shares

Item 9. Pending Legal Proceedings Not Applicable

PART B
Location in Statement
Of Additional Information
(Caption)

Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information Management; General
and History Information

Item 13. Investment Objectives Investment Objectives
and Policies and Policies; Investment
Restrictions

Item 14. Management of the Fund Management

<PAGE>

Item 15. Control Persons and Management
Principal Holders of
Securities

Item 16. Investment Advisory and Management
Other Services

Item 17. Brokerage Allocation General Information

Item 18. Capital Stock and Other Daily Dividends -
Securities Determination of Net
Asset Value; General
Information

Item 19. Purchase, Redemption and Purchase and Redemption
Pricing of Securities Being of Shares; Daily
Offered Dividends - Determination
of Net Asset Value

Item 20. Tax Status Taxes

Item 21. Underwriters General Information

Item 22. Calculation of General Information
Performance Data

Item 23. Financial Statements Financial Statements;
Report of Independent
Accountants

<PAGE>

--------------------------------------
YIELD MESSAGES
For current recorded yield informa-
tion on Alliance Capital Reserves,
call on a touch-tone telephone
toll-free (800) 251-0539 and press
the following sequence of
keys: [_]1[_]#[_]1[_]#[_]3[_]9[_]#.
For non-touch-tone telephones, call
toll-free (800) 221-9513.
--------------------------------------

Alliance Capital Reserves (the
"Fund") is a series of Alliance
Capital Reserves, a diversified,
open-end investment company. The
Fund is a money market fund with
investment objectives of safety,
liquidity and income. This prospec-
tus sets forth the information
about the Fund that a prospective
investor should know before invest-
ing. Please retain it for future
reference.

An investment in the Fund is (i)
neither insured nor guaranteed by
the U.S. Government; (ii) not a de-
posit or obligation of, or guaran-
teed or endorsed by, any bank; and
(iii) not federally insured by the
Federal Deposit Insurance Corpora-
tion, the Federal Reserve Board or
any other agency. There can be no
assurance that the Fund will be
able to maintain a stable net asset
value of $1.00 per share.

A "Statement of Additional Infor-
mation," dated November 1, 1996,
which provides a further discussion
of certain areas in this prospectus
and other matters which may be of
interest to some investors, has
been filed with the Securities and
Exchange Commission and is incorpo-
rated herein by reference. For a
free copy, call (800) 221-5672 or
write Alliance Fund Services, Inc.
at the address shown on page 8.

THESE SECURITIES HAVE NOT BEEN AP-
PROVED OR DISAPPROVED BY THE SECU-
RITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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

- ----------------------------------------------
CONTENTS
--------
<TABLE>
<S> <C>
Expense Information................... 2
Financial Highlights.................. 2
Introduction.......................... 3
Investment Objectives and Policies.... 4
Purchase and Redemption of Shares..... 5
Additional Information................ 6
</TABLE>
- ----------------------------------------------

- ----------------------------------------------
ALLIANCE

CAPITAL

RESERVES

- ----------------------------------------------

[ALLIANCE CAPITAL LOGO APPEARS HERE]

PROSPECTUS

NOVEMBER 1, 1996

ALC39PRO6
- ----------------------------------------------
<PAGE>

EXPENSE INFORMATION

SHAREHOLDER TRANSACTION EXPENSES

The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets; net of expense reimbursement)
Management Fees......................................................... .46%
12b-1 Fees.............................................................. .25
Other Expenses.......................................................... .29
----
Total Fund Operating Expenses........................................... 1.00%
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return (cumulatively through the end of
each time period): $10 $32 $55 $122
</TABLE>

The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly and indirectly. The expenses listed in the table are net of the con-
tractual reimbursement by the Adviser described in this prospectus. The ex-
penses of the Fund, before such reimbursement and fee waiver would be: Manage-
ment Fees--.47%, 12b-1 Fees--.25%, Other Expenses--.29% and Total Operating
Expenses--1.01%. The example should not be considered a representation of past
or future expenses; actual expenses may be greater or less than those shown.

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR (AUDITED)
- --------------------------------------------------------------------------------

The following tables have been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of Addi-
tional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .0471 .0447 .0255 .0266 .0438 .0662 .0782 .0788 0.0625 0.0549
Net realized gain on
investments............ -0- -0- -0- .0003 .0013 -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
Net increase in net
assets from operations. .0471 .0447 .0255 .0269 .0451 .0662 .0782 .0788 0.0625 0.0549
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
LESS: DISTRIBUTIONS
Dividends from net
investment income...... (.0471) (.0447) (.0255) (.0266) (.0438) (.0662) (.0782) (.0788) (0.0625) (0.0549)
Distributions from net
realized gains......... -0- -0- -0- (.0003) (.0013) -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
Total dividends and
distributions.......... (.0471) (.0447) (.0255) (.0269) (.0451) (.0662) (.0782) (.0788) (0.0625) (0.0549)
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
Net asset value, end of
period................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ====== ====== ======= =======
TOTAL RETURNS
Total investment return
based on:
Net asset value(a)..... 4.82% 4.57% 2.58% 2.73% 4.61% 6.84% 8.14% 8.20% 6.45% 5.64%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(in millions).......... $4,804 $3,024 $2,417 $2,112 $1,947 $1,937 $1,891 $1,536 $1,392 $1,458
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements........ 1.00% 1.00% 1.00% 1.00% 1.00% .97% .88% .95% .95% .99%
Expenses, before
waivers and
reimbursements........ 1.00% 1.03% 1.03% 1.00% 1.00% .97% .98% 1.05% 1.05% 1.09%
Net investment
income(b)............. 4.69% 4.51% 2.57% 2.65% 4.37% 6.62% 7.82% 7.87% 6.26% 5.50%
</TABLE>
- -------
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Adviser.
- -------------------------------------------------------------------------------

From time to time the Fund advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
compounding, the dividends paid are assumed to be reinvested. Dividends for
the seven days ended June 30, 1996 amounted to an annualized yield of 4.44%,
equivalent to an effective yield of 4.54%.

2
<PAGE>

ALLIANCE CAPITAL RESERVES . . . . . . . with investment objectives of
========================

SAFETY . LIQUIDITY . INCOME

We seek safety for the Fund by investing in a broadly diversified
list of money market securities which are selected for their high
quality, liquidity and stability of principal. Liquidity of the in-
vestment portfolio is increased even more by our emphasis on short-
term issues. Specifically, at the time of investment no security pur-
chased can have a maturity exceeding one year, which maturity may ex-
tend to 397 days, and the average maturity of the portfolio cannot ex-
ceed 90 days.

The short average maturity of the portfolio enhances our ability to
maintain the Fund's share price at $1.00--this, in turn, provides both
stability of value and liquidity to you and your fellow shareholders.

Our professional investment managers seek the maximum current income
for the Fund that is consistent with safety and maintenance of liquid-
ity. In addition to their knowledge and experience with money markets,
our managers obtain yield advantages for the Fund by making many secu-
rity purchases in especially large amounts such as $1 million and mul-
tiples thereof. Persons investing for themselves usually cannot ex-
ploit such money market opportunities due to the large investment
sizes required.

WHO SHOULD INVEST IN THE FUND?

The Fund is designed for individuals, brokers, institutions, advis-
ers, custodians, charities, fiduciaries, or corporations who can bene-
fit from high money market income--and who place value on an invest-
ment having safety, liquidity, stability, simplicity, and convenience.
Investors using the Fund avoid certain mechanical burdens that they
would incur by investing in money markets directly, such as monitoring
of maturity dates, safeguarding of receipts and deliveries, and the
maintenance of tax information and other records.

MAJOR FEATURES AND SERVICES OF ALLIANCE CAPITAL RESERVES

No withdrawal fees or penalties Free check-writing ($100 minimum per
Low-expense Distribution Plan check)
(.25 of 1% maximum annual rate) Free institutional record-keeping serv-
Daily compounding of dividends ices
First-day income for investments IRA, SEP, 403 (b) (7) and employer-
Same-day funds for withdrawals sponsored retirement plans
Low investment minimums

3
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objectives are--in the following order of priority--
safety of principal, excellent liquidity, and maximum current income to the ex-
tent consistent with the first two objectives. As a matter of fundamental poli-
cy, the Fund pursues its objectives by maintaining a portfolio of high quality
money market securities, all of which at the time of investment have remaining
maturities of one year or less, which maturities may extend to 397 days. While
the Fund may not change this policy or the "other fundamental investment poli-
cies" described in a separate section below without shareholder approval, it
may, upon notice to shareholders, but without such approval, change the follow-
ing investment policies or create additional classes of shares in order to es-
tablish portfolios which may have different investment objectives. There can be
no assurance, as is true with all investment companies, that the Fund's objec-
tives will be achieved.

MONEY MARKET SECURITIES

The money market securities in which the Fund invests include: (1) marketable
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities (collectively, the "U.S. Government"); (2) certificates of
deposit, bankers' acceptances and interest-bearing savings deposits issued or
guaranteed by banks or savings and loan associations having total assets of
more than $1 billion and which are members of the Federal Deposit Insurance
Corporation and certificates of deposit and bankers' acceptances denominated in
U.S. dollars and issued by U.S. branches of foreign banks having total assets
of at least $1 billion that are believed by the Adviser to be of quality equiv-
alent to that of other such instruments in which the Fund may invest; (3) com-
mercial paper of prime quality [i.e., rated A-1+ or A-1 by Standard & Poor's
Corporation ("Standard & Poor's") or Prime-1 by Moody's Investors Service, Inc.
("Moody's") or, if not rated, issued by companies having outstanding debt secu-
rities rated AAA or AA by Standard & Poor's, or Aaa or Aa by Moody's] and par-
ticipation interests in loans extended by banks to such companies; and (4) re-
purchase agreements that are collateralized in full each day by liquid securi-
ties of the types listed above. These agreements are entered into with "primary
dealers" (as designated by the Federal Reserve Bank of New York) in U.S. Gov-
ernment securities or State Street Bank and Trust Company, the Fund's Custodi-
an, and would create a loss to the Fund if, in the event of a dealer default,
the proceeds from the sale of the collateral were less than the repurchase
price. The Fund may also invest in certificates of deposit issued by, and time
deposits maintained at, foreign branches of domestic banks described in (2)
above and prime quality dollar-denominated commercial paper issued by foreign
companies meeting the criteria specified in (3) above.

The Fund may purchase restricted securities that are determined by the Ad-
viser to be liquid in accordance with procedures adopted by the Trustees of the
Fund, including securities eligible for resale under Rule 144A under the Secu-
rities Act of 1933 (the "Securities Act") and commercial paper issued in reli-
ance upon the exemption from registration in Section 4(2) of the Securities
Act. Restricted securities are securities subject to contractual or legal re-
strictions on resale, such as those arising from an issuer's reliance upon cer-
tain exemptions from registration under the Securities Act.

The Fund may invest in asset-backed securities that meet its existing diver-
sification, quality and maturity criteria. Asset-backed securities are securi-
ties issued by special purpose entities whose primary assets consist of a pool
of loans or accounts receivable. The securities may be in the form of a benefi-
cial interest in a special purpose trust, limited partnership interest, or com-
mercial paper or other debt securities issued by a special purpose corporation.
Although the securities may have some form of credit or liquidity enhancement,
payments on the

4
<PAGE>

securities depend predominately upon collection of the loans and receivables
held by the issuer. It is the Fund's current intention to limit its investment
in such securities to not more than 5% of its net assets.

The Fund will comply with Rule 2a-7 under the Investment Company Act of 1940
(the "Act"), as amended from time to time, including the diversification, qual-
ity and maturity limitations imposed by the Rule. A more detailed description
of Rule 2a-7 is set forth in the Fund's Statement of Additional Information un-
der "Investment Objectives and Policies."

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the Fund
may not: (1) invest more than 25% of its assets in the securities of issuers
conducting their principal business activities in any one industry although
there is no such limitation with respect to U.S. Government securities or cer-
tificates of deposit, bankers' acceptances and interest bearing savings depos-
its; (2) invest more than 5% of its assets in securities of any one issuer (ex-
cept the U.S. Government) although with respect to one-quarter of its total as-
sets it may invest without regard to such limitation; (3) invest more than 5%
of its assets in the securities of any issuer (except the U.S. Government) hav-
ing less than three years of continuous operation or purchase more than 10% of
any class of the outstanding securities of any issuer (except the U.S. Govern-
ment); (4) borrow money except from banks on a temporary basis or via entering
into reverse repurchase agreements in aggregate amounts not exceeding 15% of
its assets and to facilitate the orderly maturation and sale of portfolio secu-
rities during any periods of abnormally heavy redemption requests; or (5) mort-
gage, pledge or hypothecate its assets except to secure such borrowings.

As a matter of operating policy, fundamental policy number (2) would give the
Fund the ability to invest, with respect to 25% of its assets, more than 5% of
its assets in any one issuer only in the event Rule 2a-7 is amended in the fu-
ture.

- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

OPENING ACCOUNTS

Instruct your Account Executive to open an account in the Fund in conjunction
with your brokerage account.

SUBSEQUENT INVESTMENTS

A. BY CHECK THROUGH YOUR BROKERAGE FIRM

Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.

B. BY SWEEP

Your brokerage firm may offer an automatic "sweep" for the Fund in the opera-
tion of brokerage cash accounts for its customers. Contact your Account Execu-
tive to determine if a sweep is available and what the sweep parameters are.

REDEMPTIONS

A. BY CHECKWRITING

With this service, you may write checks made payable to any payee in any
amount of $100 or more. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account. You must first
fill out the Signature Card, which you can obtain from your Account Executive.
There is no additional charge for the checkwriting service. The checkwriting
service enables you to receive the daily dividends declared on the shares to be
redeemed until the day that your check is presented for payment.

B. BY SWEEP

If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer

5
<PAGE>

from your Fund account sufficient cash to cover any debit balance that may oc-
cur in your cash account for any reason.

OPENING AN ACCOUNT DIRECTLY WITH THE FUND;
SHAREHOLDER SERVICES

If you wish to obtain an Application Form to open an account directly with
the Fund or if you have any questions about the Form, purchasing shares or
other Fund procedures, please telephone the Fund toll-free (800) 221-5672.

For more information on the purchase and redemption of Fund shares, as well
as shareholder services, see the Statement of Additional Information.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be constant
at $1.00 per share, although this price is not guaranteed. The net asset value
of the Fund's shares is determined at 12:00 Noon and 4:00 p.m. (New York time)
each business day. The net asset value per share is calculated by taking the
sum of the value of the Fund's investments (amortized cost value is used for
this purpose) and any cash or other assets, subtracting liabilities, and divid-
ing by the total number of shares outstanding. All expenses, including the fees
payable to the Adviser, are accrued daily.

TIMING OF INVESTMENTS AND REDEMPTIONS. The Fund has two transaction times
each business day, 12:00 Noon and 4:00 p.m. (New York time). New investments
represented by Federal funds or bank wire monies received by State Street Bank
at any time during a day prior to 4:00 p.m. are entitled to the full dividend
to be paid to shareholders for that day. Shares do not earn dividends on the
day a redemption is effected regardless of whether the redemption order is re-
ceived before or after 12:00 Noon. However, if you wish to have Federal funds
wired the same day as your telephone redemption request, make sure that your
request will be received by the Fund prior to 12:00 Noon.

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 diffi-
culty 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
page 8 of this prospectus. The Fund reserves the right to suspend or terminate
its telephone redemption service at any time without notice. Neither the Fund
nor the Adviser, or Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund reasonably be-
lieves 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.

Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days, unless redemptions have
been suspended or postponed due to the determination of an "emergency" by the
Securities and Exchange Commission or to certain other unusual conditions.

not be forwarded to you until the Fund is reasonably assured that your check or
electronic funds transfer has cleared, up to fifteen days following the pur-
chase date. If the redemption request during such period is in the form of a
Fund check, the check will be marked "insufficient funds" and be returned un-
paid to the presenting bank.

MINIMUMS. The Fund has minimums of $1,000 for initial investments, $100 for
subsequent investments and a $500 minimum maintenance balance for each account.
These minimums do not apply to shareholder accounts maintained through broker-
age firms or other financial institutions, as such financial intermediaries may
maintain their own minimums. The Fund imposes a service charge upon financial
intermediaries to reflect the relatively higher costs of small accounts and
small transactions; these intermediaries may in turn pass on such charges to
affected accounts. Accounts not maintained through a financial intermediary are
notified of low balances and required to increase their balance or be subject
to liquidation of their account. See the Statement of Additional Information
for further information.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is de-
termined each business day at 4:00 p.m. (New York time) and is paid immediately
thereafter pro rata to shareholders of record via automatic investment in addi-
tional full and fractional shares in each shareholder's account. As such addi-
tional shares are entitled to dividends on following days, a compounding growth
of income occurs.

Net income consists of all accrued interest income on Fund assets less the
Fund's expenses applicable to that dividend period. Realized gains and losses
are reflected in net asset value and are not included in net income.

For Federal income tax purposes, distributions out of interest income earned
by the Fund and net realized short-term capital gains are taxable to you as or-
dinary income, and distributions of net realized long-term capital gains, if
any, are taxable as long-term capital gains irrespective of the length of time
you may have held your shares. Distributions by the Fund may also be subject to
certain state and local taxes. Each year shortly after December 31, the Fund
will send you tax information stating the amount and type of all its distribu-
tions for the year just ended.

THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, NY 10105 under an Advisory Agree- ment to provide in-
vestment advice and, in general, to conduct the Fund's management and invest-
ment program, subject to the general supervision and control of the Trustees of
the Fund. For the fiscal year ended June 30, 1996, the Fund paid the Adviser a
fee equal to .47 of 1% of the average daily value of the Fund's net assets.

Under a Distribution Services Agreement (the "Agreement"), the Fund makes pay-
ments to the Adviser at a maximum annual rate of .25 of 1% of the Fund's aggre-
gate average daily net assets. For the fiscal year ended June 30, 1996, the
Fund paid the Adviser at an annual rate of .25 of 1% of the average daily value
of the Fund's net assets. Substantially all such monies (together with signifi-
cant amounts from the Adviser's own resources) are paid by the Adviser to bro-
ker-dealers and other financial intermediaries for their distribution assis-
tance and to banks and other depository institutions for administrative and ac-
counting services provided to the Fund, with any remaining amounts being used
to partially defray other expenses incurred by the Adviser in distributing Fund
shares. The Fund believes that the administrative services provided by deposi-
tory institutions are permissible activities under present banking laws and
regulations and will take appropriate actions (which should not adversely af-
fect the Fund or its shareholders) in the future to maintain such legal confor-
mity should any changes in, or interpretations of, such laws or regulations oc-
cur.

The Adviser will reimburse the Fund to the extent that the Fund's aggregate
operating expenses (including the Adviser's fee and expenses of the Agreement)
exceed 1% of its average daily net assets for any fiscal year.

7
<PAGE>

CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent charges
a fee for its services.

FUND ORGANIZATION. The Fund is a series of Alliance Capital Reserves (the
"Trust"). The Fund is one of two series of the Trust; shares of the other se-
ries, Alliance Money Reserves, are offered by a separate prospectus. The Trust
is a diversified, open-end investment company registered under the Act. The
Trust was reorganized as a Massachusetts business trust in October 1984, having
previously been a Maryland Corporation since its formation in April 1978. The
Trust's activities are supervised by its Trustees. Normally, each share of each
series is entitled to one vote, and vote as a single series on matters that af-
fect both series in substantially the same manner. Massachusetts law does not
require annual meetings of shareholders and it is anticipated that shareholder
meetings will be held only when required by Federal law. Shareholders have
available certain procedures for the removal of Trustees.

REPORTS. You receive semi-annual and annual reports of the Fund as well as a
monthly summary of your account. You can arrange for a copy of each of your ac-
count statements to be sent to other parties.

TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross
Charles H. P. Duell
William H. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White

OFFICERS
Ronald M. Whitehill, President
John R. Bonczek, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Wayne D. Lyski, Senior Vice President
Patricia Netter, Senior Vice President
Ronald R. Valeggia, Senior Vice President
Drew Biegel, Vice President
John F. Chiodi, Jr., Vice President
Doris T. Ciliberti, Vice President
William J. Fagan, Vice President
Joseph R. LaSpina, Vice President
Linda D. Neil, Vice President
Raymond J. Papera, Vice President
Pamela F. Richardson, Vice President
Mark D. Gersten, Treasurer & Chief Financial Officer
Edmund P. Bergan, Jr., Secretary

<PAGE>

- ---------------------------------------------------------
YIELD MESSAGES
For current recorded yield information on Alliance
Money Reserves, call on a touch-tone telephone
toll-free (800) 251-0539 and press the follow-
ing sequence of keys: [1] [#] [1] [#] [3] [6] [#].
For non-touch-tone telephones, call toll-free
(800) 221-9513.
- ---------------------------------------------------------

Alliance Money Reserves (the "Fund") is a series of Alliance Capital Reserves,
a diversified, open-end management investment company. The Fund is a money
market fund with an investment objective of maximum current income to the
extent consistent with safety of principal and liquidity. This prospectus sets
forth the information about the Fund that a prospective investor should know
before investing. Please retain it for future reference.

An investment in the Fund is (i) neither insured nor guaranteed by the U.S.
Government; (ii) not a deposit or obligation of, or guaranteed or endorsed by,
any bank; and (iii) not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. There can be no
assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share.

A "Statement of Additional Information," dated November 1, 1996, which
provides a further discussion of certain areas in this prospectus and other
matters which may be of interest to some investors, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, call (800) 221-5672 or write Alliance Fund Services, Inc. at the
address shown on page 8.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

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

- --------------------------------------------------------------------------------
CONTENTS
--------
<TABLE>
<S> <C>
Expense Information....................................................... 2
Financial Highlights...................................................... 2
Introduction.............................................................. 3
Investment Objective and Policies......................................... 4
Purchase and Redemption of Shares......................................... 5
Additional Information.................................................... 6
</TABLE>
- --------------------------------------------------------------------------------

ALLIANCE
MONEY
RESERVES

- --------------------------------------------------------------------------------

[LOGO OF ALLIANCE CAPITAL APPEARS HERE]

PROSPECTUS
NOVEMBER 1, 1996

ALC36PRO6

- --------------------------------------------------------------------------------

<PAGE>

EXPENSE INFORMATION

SHAREHOLDER TRANSACTION EXPENSES

The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets; net of expense reimbursement)
<S> <C>
Management Fees.......................................................... .46%
12b-1 Fees............................................................... .25
Other Expenses........................................................... .29
----
Total Fund Operating Expenses............................................ 1.00%
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual
return (cumulatively through the end of each time period): $10 $32 $55 $122
</TABLE>

The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly and indirectly. The expenses listed in the table are net of the con-
tractual reimbursement by the Adviser described in this prospectus. The ex-
penses of the Fund, before such reimbursement and fee waiver would be: Manage-
ment Fees-- .50%, 12b-1 Fees-- .25%, Other Expenses-- .29% and Total Operating
Expenses-- 1.04%. The example should not be considered a representation of
past or future expenses; actual expenses may be greater or less than those
shown.

FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(AUDITED)

<TABLE>
<CAPTION>
FEBRUARY 16,
YEAR ENDED JUNE 30, 1989(A)
---------------------------------------------------- THROUGH
1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989
----- ------ ------ ------ ------ ------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ------ ------ ------ ------ ------ ----- -----
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .047 .045 .025 .027 .044 .066 .079 .033
----- ------ ------ ------ ------ ------ ----- -----
LESS: DISTRIBUTIONS
Dividends from net in-
vestment income....... (.047) (.045) (.025) (.027) (.044) (.066) (.079) (.033)
----- ------ ------ ------ ------ ------ ----- -----
Net asset value, end of
period................ $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ====== ====== ====== ====== ====== ===== =====
TOTAL RETURN
Total investment return
based on:
Net asset value(b)..... 4.81% 4.50% 2.57% 2.71% 4.47% 6.87% 8.26% 9.18%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (in millions)..... $ 755 $2,510 $1,795 $1,626 $1,412 $1,262 $993 $563
Ratio to average net as-
sets of:
Expenses, net of waiv-
ers and reimburse-
ments................. 1.00% 1.00% 1.00% 1.00% 1.00% .97% .89% .99%(c)
Expenses, before waiv-
ers and reimburse-
ments................. 1.00% 1.04% 1.09% 1.04% 1.04% 1.03% .99% 1.09%(c)
Net investment
income(d)............. 4.80% 4.53% 2.55% 2.67% 4.33% 6.56% 7.92% 9.16%(c)
</TABLE>
- -------------
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
- -------------------------------------------------------------------------------

From time to time, the Fund advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
compounding, the dividends paid are assumed to be reinvested. Dividends for
the seven days ended June 30, 1996, after expense reimbursement, amounted to
an annualized yield of 4.48%, equivalent to an effective yield of 4.58%. Ab-
sent such reimbursement, the annualized yield for such period would have been
4.00%, equivalent to an effective yield of 4.08%.

2
<PAGE>

ALLIANCE MONEY RESERVES . . . . . . .

INCOME . SAFETY . LIQUIDITY

We seek safety for the Fund by investing in a broadly diversified list of
money market securities which are selected for their high quality, liquidity
and stability of principal. Liquidity of the investment portfolio is increased
even more by our emphasis on short-term issues. Specifically, at the time of
investment, no security purchased can have a maturity exceeding one year, which
maturity may extend to 397 days, and the average maturity of the portfolio
cannot exceed 90 days.

The short average maturity of the portfolio enhances our ability to maintain
the Fund's share price at $1.00--this, in turn, provides both stability of
value and liquidity to you and your fellow shareholders.

Our professional investment managers seek the maximum current income for the
Fund that is consistent with safety of principal and liquidity. In addition to
their knowledge and experience with money markets, our managers obtain yield
advantages for the Fund by making many security purchases in especially large
amounts such as $1 million and multiples thereof. Persons investing for
themselves usually cannot exploit such money market opportunities due to the
large investment sizes required.

WHO SHOULD INVEST IN THE FUND?

The Fund is designed for individuals, brokers, institutions, advisers,
custodians, charities, fiduciaries, or corporations who can benefit from high
money market income--and who place value on an investment having safety,
liquidity, stability, simplicity, and convenience. Investors using the Fund
avoid certain mechanical burdens that they would incur by investing in money
markets directly, such as monitoring of maturity dates, safeguarding of
receipts and deliveries, and the maintenance of tax information and other
records.

MAJOR FEATURES AND SERVICES OF ALLIANCE MONEY RESERVES

No withdrawal fees or penalties Free check-writing ($100 minimum per check)
Low-expense Distribution Plan Free institutional record-keeping services
(.25 of 1% maximum annual rate) IRA, SEP, 403 (b) (7) and employer-sponsored
Daily compounding of dividends retirement plans
First-day income for investments Low investment minimums
Same-day funds for withdrawals

3
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is maximum current income to the extent con-
sistent with safety of principal and liquidity. As a matter of fundamental
policy, the Fund pursues its objective by maintaining a portfolio of high
quality U.S. dollar-denominated money market securities, all of which at the
time of investment have remaining maturities of one year or less, which matu-
rities may extend to 397 days. While the Fund may not change this policy or
the "other fundamental investment policies" described in a separate section
below without shareholder approval, it may, upon notice to shareholders, but
without such approval, change the following investment policies or create ad-
ditional classes of shares in order to establish portfolios which may have
different investment objectives. There can be no assurance, as is true with
all investment companies, that the Fund's objective will be achieved.

MONEY MARKET SECURITIES

The money market securities in which the Fund invests include: (1) market-
able obligations of, or guaranteed by, the United States Government, its agen-
cies or instrumentalities (collectively, the "U.S. Government"); (2) certifi-
cates of deposit and bankers' acceptances issued or guaranteed by, or time de-
posits maintained at, banks or savings and loan associations (including for-
eign branches of U.S banks or U.S. or foreign branches of foreign banks) hav-
ing total assets of more than $500 million; (3) commercial paper of high qual-
ity [i.e., rated A-1 or A-2 by Standard & Poor's Corporation ("Standard &
Poor's"), Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's"),
Fitch-1 or Fitch-2 by Fitch Investors Service, Inc., or Duff 1 or Duff 2 by
Duff & Phelps Inc. or, if not rated, issued by U.S. or foreign companies hav-
ing outstanding debt securities rated AAA, AA or A by Standard & Poor's, or
Aaa, Aa or A by Moody's] and participation interests in loans extended by
banks to such companies; and (4) repurchase agreements that are collateralized
in full each day by liquid securities of the types listed above. Repurchase
agreements may be entered into only with those banks (including State Street
Bank and Trust Company, the Fund's Custodian) or broker-dealers ("vendors")
that are eligible under the procedures adopted by the Trustees for evaluating
and monitoring the creditworthiness of such vendors. A repurchase agreement
would create a loss to the Fund if, in the event of a vendor default, the pro-
ceeds from the sale of the collateral were less than the repurchase price.

To the extent the Fund purchases money market instruments issued by foreign
entities, consideration will be given to the domestic marketability of such
instruments, and possible interruptions of, or restrictions on, the flow of
international currency transactions.

The Fund may purchase restricted securities that are determined by the Ad-
viser to be liquid in accordance with procedures adopted by the Trustees of
the Fund, including securities eligible for resale under Rule 144A under the
Securities Act of 1933 (the "Securities Act") and commercial paper issued in
reliance upon the exemption from registration in Section 4(2) of the Securi-
ties Act. Restricted securities are securities subject to contractual or legal
restrictions on resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act.

The Fund may invest in asset-backed securities that meet its existing diver-
sification, quality and maturity criteria. Asset-backed securities are securi-
ties issued by special purpose entities whose primary assets consist of a pool
of loans or accounts receivable. The securities may be in the form of a bene-
ficial interest in a special purpose trust, limited partnership interest, or
commercial paper or other debt securities issued by a special purpose corpora-
tion. Although the securities may have some form of credit or liquidity en-
hancement, payments on the securities depend predominately upon collection of
the loans and receivables held by the issuer. It is the

4
<PAGE>

Fund's current intention to limit its investment in such securities to not more
than 5% of its net assets.

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the Fund
may not: (1) invest more than 25% of its assets in the securities of issuers
conducting their principal business activities in any one industry although
there is no such limitation with respect to U.S. Government securities or cer-
tificates of deposit, bankers' acceptances and interest bearing savings depos-
its; (2) invest more than 5% of its assets in the securities of any one issuer
(except the U.S. Government) although with respect to one-quarter of its total
assets it may invest without regard to such limitation; (3) invest more than 5%
of its assets in the securities of any issuer (except the U.S. Government) hav-
ing less than three years of continuous operation or purchase more than 10% of
any class of the outstanding securities of any issuer (except the U.S. Govern-
ment); (4) borrow money except from banks on a temporary basis or via entering
into reverse repurchase agreements in aggregate amounts not exceeding 15% of
its assets and to facilitate the orderly maturation and sale of portfolio secu-
rities during any periods of abnormally heavy redemption requests; or (5) mort-
gage, pledge or hypothecate its assets except to secure such borrowings.

PURCHASE AND REDEMPTION OF SHARES

OPENING ACCOUNTS

Instruct your Account Executive to open an account in the Fund in conjunction
with your brokerage account.

SUBSEQUENT INVESTMENTS

A. BY CHECK THROUGH YOUR BROKERAGE FIRM

Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.

B. BY SWEEP

REDEMPTIONS

A. BY CHECKWRITING

B. BY SWEEP

If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer

5
<PAGE>

from your Fund account sufficient cash to cover any debit balance that may oc-
cur in your cash account for any reason.

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

For more information on the purchase and redemption of Fund shares, as well
as shareholder services, see the Statement of Additional Information.

ADDITIONAL INFORMATION

SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be con-
stant at $1.00 per share, although this price is not guaranteed. The net asset
value of the Fund's shares is determined at 12:00 Noon and 4:00 p.m. (New York
time) each business day. The net asset value per share is calculated by taking
the sum of the value of the Fund's investments (amortized cost value is used
for this purpose) and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares outstanding. All expenses, including
the fees payable to the Adviser, are accrued daily.

During periods of drastic economic or market development, 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 diffi-
culty 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
page 8 of this prospectus. The Fund reserves the right to suspend or terminate
its telephone redemption service at any time without notice. Neither the Fund
nor the Adviser, 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 confirma-
tions 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 un-
authorized or fraudulent telephone instructions. Selected dealers or agents
may charge a commission for handling telephone requests for redemptions.

If your Fund shares are not maintained through a financial intermediary, pro-
ceeds from any subsequent redemption by you of Fund shares that were purchased
by check or electronic funds transfer will not be forwarded to you until the
Fund is reasonably assured that your check or electronic funds transfer

6
<PAGE>

has cleared, up to fifteen days following the purchase date. If the redemption
request during such period is in the form of a Fund check, the check will be
marked "insufficient funds" and be returned unpaid to the presenting bank.

THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, NY 10105, under an Advisory Agreement to provide in-
vestment advice and, in general, to conduct the Fund's management and invest-
ment program, subject to the general supervision and control of the Trustees of
the Fund. For the fiscal year ended June 30, 1996, the Fund paid the Adviser a
fee equal to .49 of 1% of the average daily value of the Fund's net assets.

7
<PAGE>

FUND ORGANIZATION. The Fund is a series of Alliance Capital Reserves (the
"Trust"). The Trust is a diversified, open-end investment company registered
under the Act. The Fund is one of two series of the Trust; shares of the other
series, also named Alliance Capital Reserves, are offered by a separate pro-
spectus. The Trust was reorganized as a Massachusetts business trust in October
1984, having previously been a Maryland Corporation since its formation in
April 1978. The Trust's activities are supervised by its Trustees. Normally,
each share of each series is entitled to one vote, and vote as a single series
on matters that affect both series in substantially the same manner. Massachu-
setts law does not require annual meetings of shareholders and it is antici-
pated that shareholder meetings will be held only when required by Federal law.
Shareholders have available certain procedures for the removal of Trustees.

----------------

TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross
Charles H. P. Duell
William H. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White

OFFICERS
Ronald M. Whitehill, President
John R. Bonczek, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Wayne D. Lyski, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Patricia Netter, Senior Vice President
Ronald R. Valeggia, Senior Vice President
Drew Biegel, Vice President
John F. Chiodi, Jr., Vice President
Doris T. Ciliberti, Vice President
William J. Fagan, Vice President
Joseph R. LaSpina, Vice President
Linda D. Neil, Vice President
Raymond J. Papera, Vice President
Pamela F. Richardson, Vice President
Mark D. Gersten, Treasurer & Chief Financial
Officer
Edmund P. Bergan, Jr., Secretary

<PAGE>

(LOGO) ALLIANCE CAPITAL RESERVES

P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996

TABLE OF CONTENTS
Page

The Fund -

Investment Objectives and Policies -

Investment Restrictions -

Management -

Purchase and Redemption of Shares -

Additional Information -

Daily Dividends-Determination of Net Asset Value -

Taxes -

General Information -

Appendix-Commercial Paper and Bond Ratings -

Financial Statements _

Independent Auditor's Report _

_____________________

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated November 1, 1996. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.

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

<PAGE>

_________________________________________________________

THE FUND
_________________________________________________________

Alliance Capital Reserves (the "Fund") is one of two
portfolios of Alliance Capital Reserves (the "Trust"), a
diversified, open-end investment company. The other portfolio,
Alliance Money Reserves, is described in a separate Prospectus
and Statement of Additional Information, which may be obtained
from Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New
Jersey 07096-1520, toll free (800) 221-5672.

INVESTMENT OBJECTIVES AND POLICIES

The Fund's objectives are - in the following order of
priority - safety of principal, excellent liquidity, and maximum
current income to the extent consistent with the first two
objectives. As a matter of fundamental policy, the Fund pursues
its objectives by maintaining a portfolio of high-quality money
market securities all of which, at the time of investment, have
remaining maturities not exceeding one year or less (which
maturities pursuant to Rule 2a-7 under the Investment Company Act
of 1940, as amended (the "Act"), may extend to 397 days).
Accordingly, the Fund may make the following investments
diversified by maturities and issuers:

1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of
an act of Congress. The latter issues include, but are not
limited to, obligations of the Bank for Cooperatives, Federal
Financing Bank, Federal Home Loan Bank, Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of the
securities are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to
borrow from the Treasury, and still others are supported only by
the credit of the agency or instrumentality.

2. Certificates of deposit, bankers' acceptances and
interest-bearing savings deposits issued or guaranteed by banks
or savings and loan associations having total assets of more than
$1 billion and which are members of the Federal Deposit Insurance
Corporation and certificates of deposit and bankers' acceptances
denominated in U.S. dollars and issued by U.S. branches of

<PAGE>

foreign banks having total assets of at least $1 billion that are
believed by the Adviser to be of quality equivalent to that of
other such instruments in which the Fund may invest.
Certificates of deposit are receipts issued by a depository
institution in exchange for the deposit of funds. The issuer
agrees to pay the amount deposited plus interest to the bearer of
the receipt on the date specified on the certificate. Such
certificates may include, for example, those issued by foreign
subsidiaries of such banks which are guaranteed by them. The
certificate usually can be traded in the secondary market prior
to maturity. Bankers' acceptances typically arise from short-
term credit arrangements designed to enable businesses to obtain
funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an
importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in
effect, unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.

3. Commercial paper, including variable amount master
demand notes, of prime quality [i.e. rated A-1+ or A-1 by
Standard & Poor's Corporation ("Standard & Poor's") or Prime-1 by
Moody's Investors Service, Inc. ("Moody's") or, if not rated,
issued by domestic and foreign companies which have an
outstanding debt issue rated AAA or AA by Standard & Poor's, or
Aaa or Aa by Moody's]. For a description of such ratings see the
Appendix. Commercial paper consists of short-term (usually from
1 to 270 days) unsecured promissory notes issued by corporations
in order to finance their current operations. A variable amount
master demand note represents a direct borrowing arrangement
involving periodically fluctuating rates of interest under a
letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine
to invest varying amounts.

4. Repurchase agreements pertaining to the above
securities. 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. The resale price is greater than
the purchase price, reflecting an agreed-upon market rate which
is effective for the period of time the buyer's money is invested
in the security and which is not related to the coupon rate on
the purchased security. Repurchase agreements may be entered
into with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities or with State Street Bank and Trust
Company ("State Street Bank"), the Fund's Custodian. It is the

<PAGE>

Fund's current practice, which may be changed at any time without
shareholder approval, to enter into repurchase agreements only
with such primary dealers and State Street Bank. For each
repurchase agreement, the Fund requires continual maintenance of
the market value of underlying collateral in amounts equal to, or
in excess of, the agreement amount. While the maturities of the
underlying collateral may exceed one year, the term of the
repurchase agreement is always less than one year. In the event
that 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. If the
vendor became bankrupt, the Fund might be delayed in selling the
collateral. Repurchase agreements often are for short periods
such as one day or a week, but may be longer. Repurchase
agreements not terminable within seven days will be limited to no
more than 10% of the Fund's assets.1 Pursuant to Rule 2a-7, a
repurchase agreement is deemed to be an acquisition of the
underlying securities provided that the obligation of the seller
to repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
vendor of a fully collateralized repurchase agreement is deemed
to be the issuer of the underlying securities.

Reverse Repurchase Agreements. While the Fund has not
previously and has no future plans to do so, it may enter into
reverse repurchase agreements, which involve the sale of money
market securities held by the Fund with an agreement to
repurchase the securities at an agreed-upon price, date and
interest payment.

Asset-backed Securities. The Fund may invest in asset-
backed securities that meet its existing diversification, quality
and maturity criteria. Asset-backed securities are securities
issued by special purpose entities whose primary assets consist
of a pool of loans or accounts receivable. The securities may be
in the form of a beneficial interest in a special purpose trust,
limited partnership interest, or commercial paper or other debt
securities issued by a special purpose corporation. Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer. It is the
Fund's current intention to limit its investment in such
securities to not more than 5% of its net assets.

Liquid Restricted Securities. The Fund may purchase
restricted securities that are determined by the Adviser to be
____________________

1. As used throughout the Prospectus and Statement of Additional
Information, term "assets" shall refer to the Funds total
assets.

<PAGE>

liquid in accordance with procedures adopted by the Trustees.
Restricted securities are securities subject to contractual or
legal restrictions on resale, such as those arising from an
issuer's reliance upon certain exemptions from registration under
the Securities Act of 1933 (the "Securities Act").

In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues in which the Fund may invest
include, among others, securities issued by major corporations
without registration under the Securities Act in reliance on the
exemption from registration afforded by Section 3(a)(3) of such
Act and commercial paper issued in reliance on the private
placement exemption from registration which is afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the
Federal securities laws in that any resale must also be made in
an exempt transaction. Section 4(2) paper is normally resold to
other institutional investors through or with the assistance of
investment dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders. In recognition of
this fact, the Staff of the Securities and Exchange Commission
has stated that Section 4(2) paper my be determined to be liquid
by the Fund's Trustees, so long as certain conditions, which are
described below, are met.

In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the SEC adopted
Rule 144A under the Securities Act to establish a safe harbor
from the Securities Act's registration requirements for resale of
certain restricted securities to qualified institutional buyers.
Section 4(2) paper that is issued by a company that files reports
under the Securities Exchange Act of 1934 is generally eligible
to be resold in reliance on the safe harbor of Rule 144A.
Pursuant to Rule 144A, the institutional restricted securities
markets may provide both readily ascertainable values for
restricted securities and the ability to liquidate an investment
in order to satisfy share redemption orders on a timely basis. An
insufficient number of qualified institutional buyers interested
in purchasing certain restricted securities held by the Fund,

<PAGE>

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 Rule 144A and the consequent inception
of the PORTAL System sponsored by the National Association of
Securities Dealers, Inc., an automated system for the trading,
clearance and settlement of unregistered securities.

The Fund's Trustees have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
The Trustees have delegated the function of making day-to-day
determinations of liquidity to the Adviser, pursuant to
guidelines approved by the Trustees. The Adviser takes into
account a number of factors in determining whether a restricted
security being considered for purchase is liquid, including at
least the following:

(i) the frequency of trades and quotations for the
security;

(ii) the number of dealers making quotations to
purchase or sell the security;

(iii) the number of other potential purchasers of
the security;

(iv) the number of dealers undertaking to make a
market in the security;

(v) the nature of the security (including its
unregistered nature) and the nature of the marketplace
for the security (e.g., the time needed to dispose of
the security, the method of soliciting offers and the
mechanics of transfer); and

(vi) any applicable Securities and Exchange
Commission interpretation or position with respect to
such types of securities.

To make the determination that an issue of Section 4(2)
paper is liquid, the Adviser must conclude that the following
conditions have been met:

(i) the Section 4(2) paper must not be traded flat
or in default as to principal or interest; and

(ii) the Section 4(2) paper must be rated in one of
the two highest rating categories by at least two
NRSROs, or if only one NRSRO rates the security, by that

<PAGE>

NRSRO; if the security is unrated, Alliance must
determine that the security is of equivalent quality.

The Adviser must also consider the trading market for
the specific security, taking into account all relevant factors.

Following the purchase of a restricted security by the
Fund, the Adviser monitors continuously the liquidity of such
security and reports to the Trustees regarding purchases of
liquid restricted securities.

While there are many kinds of short-term securities used
by money market investors, the Fund, in keeping with its primary
investment objective of safety of principal, restricts its
portfolio to the types of investments listed above. Of note, the
Fund does not invest in letters of credit. The Fund may make
investments in certificates of deposit issued by foreign branches
of domestic banks and certificates of deposit or bankers'
acceptances issued by U.S. branches of foreign banks specified
above, and commercial paper issued by foreign companies meeting
the rating criteria specified in Section 3 above. To the extent
that the Fund invests in such instruments, consideration is given
to their domestic marketability, the lower reserve requirements
generally mandated for overseas banking operations, the possible
impact of interruptions in the flow of international currency
transactions, potential political and social instability or
expropriation, imposition of foreign taxes, less government
supervision of issuers, difficulty in enforcing contractual
obligations and lack of uniform accounting standards. As even
the safest of securities involve some risk, there can be no
assurance, as is true with all investment companies, that the
Fund's objectives will be achieved. The market value of the
Fund's investments tends to decrease during periods of rising
interest rates and to increase during intervals of falling rates.

Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets. The Fund's investment objectives may not
be changed without the affirmative vote of a majority of the
Fund's outstanding shares as defined below. Except as otherwise
provided, the Fund's investment policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed by the Trustees of the Trust without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.

<PAGE>

Rule 2a-7 under the Act. The Fund will comply with Rule
2a- 7 under the Act, as amended from time to time, including the
diversification, quality and maturity limitations imposed by the
Rule.

Currently, pursuant to Rule 2a-7, the Fund may invest
only in U.S. dollar-denominated "eligible securities" (as that
term is defined in the Rule) that have been determined by the
Adviser to present minimal credit risks pursuant to procedures
approved by the Trustees. Generally, an eligible security is a
security that (i) has a remaining maturity of 397 days or less
and (ii) is rated, or is issued by an issuer with short-term debt
outstanding that is rated in one of the two highest rating
categories by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO. A security that originally had a maturity
of greater than 397 days is an eligible security if its remaining
maturity at the time of purchase is 397 calendar days or less and
the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible
securities if the Adviser determines that they are of comparable
quality to a rated eligible security pursuant to guidelines
approved by the Trustees. A description of the ratings of some
NRSROs appears in the Appendix attached hereto.

Under Rule 2a-7 the Fund may not invest more than five
percent of its assets in the securities of any one issuer other
than the United States Government, its agencies and
instrumentalities. In addition, the Fund may not invest in a
security that has received, or is deemed comparable in quality to
a security that has received, the second highest rating by the
requisite number of NRSROs (a "second tier security") if
immediately after the acquisition thereof the Fund would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities.

INVESTMENT RESTRICTIONS

The following restrictions may not be changed without
the affirmative vote of a majority of the Fund's outstanding
shares, which means the vote of (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less.

<PAGE>

The Fund:

1. May not purchase any security which has a maturity
date more than one year2 from the date of the Fund's purchase;

2. May not invest more than 25% of its assets in the
securities of issuers conducting their principal business
activities in any one industry provided that for purposes of this
restriction (a) there is no limitation with respect to
investments in securities issued or guaranteed by the United
States Government, its agencies or instrumentalities,
certificates of deposit, bankers' acceptances and interest-
bearing savings deposits and (b) neither all finance companies as
a group nor all utility companies as a group are considered a
single industry;

3. May not invest more than 5% of its assets in the
securities of any one issuer (exclusive of securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities), except that up to 25% of the value of the
Fund's total assets may be invested without regard to such 5%
limitation;

4. May not invest in more than 10% of any one class of
an issuer's outstanding securities (exclusive of securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities);

5. May not borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements in aggregate amounts not to exceed 15% of the Fund's
assets and to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of
abnormally heavy redemption requests, if they should occur; such
borrowings may not be used to purchase investments and the Fund
will not purchase any investment while any such borrowings exist;

6. May not pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned or
held by the Fund except as may be necessary in connection with
any borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 15% of the
Fund's assets;

7. May not make loans, provided that the Fund may
purchase money market securities and enter into repurchase
agreements;
____________________

2. Which maturity, pursuant to Rule 2a-7, may extend to 397
days.

<PAGE>

8. May not enter into repurchase agreements if, as a
result thereof, more than 10% of the Fund's assets would be
subject to repurchase agreements not terminable within seven days
(which may be considered to be illiquid); or

9. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
maintain a short position or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Fund's assets would be invested in such
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of the
Adviser who own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer; or (h) act as an underwriter of
securities.

MANAGEMENT

Trustees and Officers

The Trustees and principal officers of the Trust and
their principal occupations during the past five years are set
forth below. Unless otherwise specified, the address of each
such person is 1345 Avenue of the Americas, New York, N.Y.
10105. Those Trustees whose names are preceded by an asterisk
are "interested persons" of the Trust as determined under the
Act. Each Trustee and officer is also a director, trustee or
officer of other registered investment companies sponsored by
Alliance Capital Management L.P. (the "Adviser").

Trustees

<PAGE>

DAVE H. WILLIAMS3 , 64, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC")4 *, sole general partner of the Adviser with which he
has been associated since prior to 1991.

JOHN D. CARIFA,* 51, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1991.

SAM Y. CROSS, 69, was, since prior to December 1991,
Executive Vice President of The Federal Reserve Bank of New York
and manager for foreign operations for The Federal Reserve
System. He is also a director of Fuji Bank and Trust Co. His
address is 200 East 66th Street, New York, New York 10021.

CHARLES H. P. DUELL, 58, is President of Middleton Place
Foundation with which he has been associated since prior to 1991.
He is also a Director of GRC International, Inc., a Trustee
Emeritus of the National Trust for Historic Preservation and
serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.

WILLIAM H. FOULK, JR., 64, is an independent consultant.
He was formerly Senior Manager of Barrett Associates, Inc., a
registered investment adviser, with which he had been associated
since prior to 1991. His address is 2 Hekma Road, Greenwich, CT
06831.

ELIZABETH J. McCORMACK, 74, is an Associate of
Rockefeller Family and Associates (philanthropic organization)
and has been since prior to 1991. She is a Director of Philip
Morris, Inc., Champion International Corporation and The American
Savings Bank. She is a Trustee of Hamilton College, and a Member
of the Board of Overseers Managers of Swarthmore College and the
Memorial Sloan-Kettering Cancer Center. Her address is 30
Rockefeller Plaza, New York, New York 10112.

DAVID K. STORRS, 52, is an independent consultant. He
was formerly President of The Common Fund (investment management
for educational institutions) with which he had been associated
since prior to 1991. His address is 65 South Gate Lane,
Southport, Connecticut 06490.
____________________

3. An "interested person" of the Fund as defined in the Act.

4. For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.

<PAGE>

SHELBY WHITE, 58, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

Officers

RONALD M. WHITEHILL - President, 58, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since 1993.
Previously, he was Senior Vice President and Managing Director of
Reserve Fund since prior to 1991.

JOHN R. BONCZEK - Senior Vice President, 36, is a Vice
President of ACMC with which he has been associated since prior
to 1991.

KATHLEEN A. CORBET - Senior Vice President, 36, has been
a Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1991.

ROBERT I. KURZWEIL - Senior Vice President, 45, has been
a Vice President of ACMC since May 1994. Previously, he was Vice
President of Sales and Business Development for Automatic Data
Processing with which he had been associated since prior to 1991.

WAYNE D. LYSKI - Senior Vice President, 55, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1991.

PATRICIA NETTER - Senior Vice President, 45, is a Vice
President of ACMC with which she has been associated since prior
to 1991.

RONALD R. VALEGGIA - Senior Vice President, 49, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1991.

DREW BIEGEL - Vice President, 45, is a Vice President of
ACMC which he has been associated with since prior to 1991.

JOHN F. CHIODI, Jr. - Vice President, 30, is a Vice
President of ACMC with which he has been associated since prior
to 1991.

DORIS T. CILIBERTI - Vice President, 32, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1991.

<PAGE>

WILLIAM J. FAGAN - Vice President, 34, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1991.

JOSEPH R. LASPINA -Vice President, 36, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1991.

LINDA D. NEIL - Vice President, 36, is an Assistant Vice
President of ACMC with which she has been associated since August
1993. Previously, she was an Associate Director of The Reserve
Fund since prior to 1991.

RAYMOND J. PAPERA - Vice President, 40, is a Vice
President of ACMC with which he has been associated since prior
to 1991.

PAMELA F. RICHARDSON - Vice President, 43, is a Vice
President of ACMC with which she has been associated since prior
to 1991.

EDMUND P. BERGAN, Jr. - Secretary, 46, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1991.

MARK D. GERSTEN - Treasurer and Chief Financial Officer,
46, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1991.

JOSEPH J. MANTINEO - Controller, 37, is a Vice President
of AFS with which he has been associated since prior to 1991.

As of October 16, 1996,the Trustees and officers as a
group owned less than 1% of the share of the Fund.

The Fund does not pay any fees to, or reimburse expenses
of, its Trustees who are considered "interested persons" of the
Fund. The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal year ended June 30, 1996, the
aggregate compensation paid to each of the Trustees during
calendar year 1995 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 funds in the Alliance Fund Complex with respect to which each
of the Trustees serves as a director or trustee, are set forth
below. Neither the Fund nor any other fund in the Alliance Fund

<PAGE>

Complex provides compensation in the form of pension or
retirement benefits to any of its directors or trustees.

<PAGE>

Total Number
of Funds in
the Alliance
Total Fund Complex
Compensation Including the
from the Fund, as to
Alliance which the
Aggregate Fund Complex, Trustee is a
Name of Trustee Compensation Including the Director or
of the Fund from the Fund Fund Trustee

Dave H. Williams $-0- $-0- 6
John D. Carifa $-0- $-0- 50
Sam Y. Cross $2,596 $ 14,250 3
Charles H.P. Duell $2,596 $ 15,000 3
William H. Foulk, Jr. $3,000 $143,500 31
Elizabeth J. McCormack $2,243 $ 12,000 3
David K. Storrs $2,596 $ 12,000 3
Shelby White $2,596 $ 13,500 3

The Adviser

Alliance Capital Management L.P., a New York Stock
Exchange listed company with principal offices at 1345 Avenue of
the Americas, New York, New York 10105, has been retained under
an investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Board of Directors.

The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of more than $168 billion (of which more than $55 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included as of June 30, 1996,
33 of the FORTUNE 100 companies. As of that date, the Adviser
and its subsidiaries employed approximately 1,450 employees who
operated out of domestic offices and the offices of subsidiaries
in Bombay, Istanbul, London, Paris, Sao Paulo, Sydney, Tokyo,
Toronto, Bahrain, Luxembourg and Singapore. The 51 registered
investment companies comprising more than 100 separate investment
portfolios managed by the Adviser currently have more than two
million shareholders.

<PAGE>

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of June 30, 1996,
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 ("Units"). As of June 30, 1996, approximately 33% and
10% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Trustees of the Fund

As of March 1, 1996, AXA and its subsidiaries owned
approximately 63.9% of the issued and outstanding shares of
capital stock of ECI. AXA is the 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
in France, the United States, Australia, the United Kingdom,
Canada and other countries, principally in the Asia Pacific area.
AXA is also engaged in asset management, investment banking,
securities trading, brokerage, real estate and other financial
services activities in the United States, Europe and the Asia
Pacific area. Based on information provided by AXA, as of
March 1, 1996, 42.1% of the issued ordinary shares (representing
53.4% of the voting power) of AXA were owned by Midi
Participations, a French holding company ("Midi"). The shares of
Midi were, in turn, owned 61.4% (representing 62.5% of the voting
power) by Finaxa, a French holding company, and 38.6%
(representing 37.5% of the voting power) by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation (one of
which, Belgica Insurance Holding S.A., a Belgian corporation,
owned 30.8%, representing 33.1% of the voting power). As of
March 1, 1996, 61.1% of the voting shares (representing 73.4% of
the voting power) of Finaxa were owned by five French mutual
insurance companies (the "Mutuelles AXA") (one of which, AXA
Assurances I.A.R.D. Mutuelle, owned 34.7% of the voting shares
representing 40.4% of the voting power), and 25.5% of the voting
shares of Finaxa (representing 16% of the voting power) were
owned by Banque Paribas, a French bank. Including the ordinary
shares owned by Midi, as of March 1, 1996, the Mutuelles AXA

<PAGE>

directly or indirectly owned 51% of the issued ordinary shares
(representing 64.7% of the voting power) of AXA. Acting as a
group, the Mutuelles AXA control AXA, Midi and Finaxa.

Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees of the Trust who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual
rate of .50 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .49 of 1% of the next $.25
billion of such assets, .48 of 1% of the next $.25 billion of
such assets, .47 of 1% of the next $.25 billion of such assets,
.46 of 1% of the next $1 billion of such assets and .45 of 1% of
the average daily value of the Fund's net assets in excess of $3
billion. The fee is accrued daily and paid monthly. The Adviser
will reimburse the Fund to the extent that its net expenses
(excluding taxes, brokerage, interest and extraordinary expenses)
exceed 1% of its average daily net assets for any fiscal year.
For the fiscal years ended June 30, 1994, 1995 and 1996, the
Adviser received from the Fund advisory fees of $10,429,368,
$11,459,444 and $19,411,685, respectively. In accordance with
the Distribution Services Agreement described below, the Fund may
pay a portion of advertising and promotional expenses in
connection with the sale of shares of the Fund. The Fund also
pays for printing of prospectuses and other reports to
shareholders and all expenses and fees related to registration
and filing with the Securities and Exchange Commission and with
state regulatory authorities. The Fund pays all other expenses
incurred in its operations, including the Adviser's management
fees; custody, transfer and dividend disbursing expenses; legal
and auditing costs; clerical, administrative accounting, and
other office costs; fees and expenses of Trustees who are not
affiliated with the Adviser; costs of maintenance of the Trust's
existence; and interest charges, taxes, brokerage fees, and
commissions. As to the obtaining of clerical and accounting
services not required to be provided to the Fund by the Adviser
under the Advisory Agreement, the Fund may employ its own
personnel. For such services, it also may utilize personnel
employed by the Adviser; if so done, the services are provided to
the Fund at cost and the payments therefor must be specifically
approved in advance by the Trustees. The Fund paid to the
Adviser a total of $136,000, $149,500 and $162,000 in respect of
such services for the fiscal years ended June 30, 1994, 1995 and
1996, respectively.

<PAGE>

The Fund has made arrangements with certain broker-
dealers whose customers are Fund shareholders pursuant to which
the broker-dealers perform shareholder servicing functions, such
as opening new shareholder accounts, processing purchase and
redemption transactions, and responding to inquiries regarding
the Fund's current yield and the status of shareholder accounts.
The Fund pays for the electronic communications equipment
maintained at the broker-dealers' offices that permits access to
the Fund's computer files and, in addition, reimburses the
broker-dealers at cost for personnel expenses involved in
providing the services. All such reimbursements must be approved
in advance by the Trustees. For the fiscal years ended June 30,
1994, 1995 and 1996, the Fund reimbursed such broker-dealers a
total of $610,537, $556,217 and $928,072, respectively.

The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1997
was approved by the vote, cast in person by all the Trustees of
the Trust who neither were interested persons of the Trust nor
had any direct or indirect financial interest in the Agreement or
any related agreement, at a meeting called for that purpose on
June 3, 1996.

The Advisory Agreement remains in effect from year to
year provided that such continuance is specifically approved at
least annually by a vote of a majority of the outstanding shares
of the Fund or by the Fund's Trustees including in either case
approval by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons as defined in the Act.
The Advisory Agreement may be terminated without penalty on 60
days' written notice at the option of either party or by a vote
of the outstanding voting securities of the Fund; it will
automatically terminate in the event of assignment. The Adviser
is not liable for any action or inaction with regard to its
obligations under the Advisory Agreement as long as it does not
exhibit willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations.

Distribution Services Agreement

<PAGE>

Distributors, Inc. (the "Distributor") and the Adviser, which
applies to both series of the Trust. Pursuant to the Plan, the
Fund pays to the Adviser a Rule 12b-1 distribution services fee
which may not exceed an annual rate of .25 of 1% of the Trust's
(equal to each of its series') aggregate average daily net
assets. In addition, under the Agreement the Adviser makes
payments for distribution assistance and for administrative and
accounting services from its own resources which may include the
management fee paid by the Fund.

Payments under the Agreement are used in their entirety
for (i) payments to broker-dealers and other financial
intermediaries, including the Fund's Distributor, for
distribution assistance and to banks and other depository
institutions for administrative and accounting services, and (ii)
otherwise promoting the sale of shares of the Fund such as by
paying for the preparation, printing and distribution of
prospectuses and other promotional materials sent to existing and
prospective shareholders and by directly or indirectly purchasing
radio, television, newspaper and other advertising. In approving
the Agreement the Trustees determined that there was a reasonable
likelihood that the Agreement would benefit the Trust and its
shareholders. During the fiscal year ended June 30, 1996, the
Fund made payments to the Adviser for expenditures under the
Agreement in amounts aggregating $10,256,491 which constituted
.25% at an annual rate of the Fund's average daily net assets
during the period, and the Adviser made payments from its own
resources as described above aggregating $11,012,507. Of the
$21,268,998 paid by the Adviser and the Fund under the Agreement,
$301,000 was paid for advertising, printing and mailing of
prospectuses to persons other than current shareholders; and
$20,967,998 was paid to broker-dealers and other financial
intermediaries for distribution assistance.

<PAGE>

institutions from providing other services for investment
companies such as the administrative and accounting services
described above. The Trustees will consider appropriate
modifications to the Trust's operations, including discontinuance
of payments under the Agreement to banks and other depository
institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to
provide the above-mentioned services.

The Treasurer of the Trust reports the amounts expended
under the Agreement and the purposes for which such expenditures
were made to the Trustees on a quarterly basis. Also, the
Agreement provides that the selection and nomination of
disinterested Trustees (as defined in the Act) are committed to
the discretion of the disinterested Trustees then in office.

The Agreement became effective on July 22, 1992.
Continuance of the Agreement until June 30, 1997 was approved by
the vote, cast in person by all the Trustees of the Trust who
neither were interested persons of the Trust nor had any direct
or indirect financial interest in the Agreement or any related
agreement, at a meeting called for that purpose on June 3, 1996.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested
persons of the Fund nor have any direct or indirect financial
interest in the Agreement or in any related agreement, cast in
person at a meeting called for that purpose.

All material amendments to the Agreement must be
approved by a vote of the Trustees, including a majority of the
disinterested Trustees, cast in person at a meeting called for
that purpose, and the Agreement may not be amended in order to
increase materially the costs which the Fund may bear pursuant to
the Agreement without the approval of a majority of the
outstanding shares of the Fund. The Agreement may also be
terminated at any time by a majority vote of the disinterested
Trustees, or by a majority of the outstanding shares of the Fund
or by the Distributor. Any agreement with a qualifying broker-
dealer or other financial intermediary may be terminated without
penalty on not more than sixty days' written notice by a vote of
the majority of non-party Trustees, by a vote of a majority of
the outstanding shares of the Fund, or by the Distributor and
will terminate automatically in the event of its assignment.

The Agreement is in compliance with rules of the
National Association of Securities Dealers, Inc. (the "NASD")
which became effective July 7, 1993 and which limit the annual
asset-based sales charges and service fees that a mutual fund may

<PAGE>

impose to .75% and .25%, respectively, of average annual net
assets.

PURCHASE AND REDEMPTION OF SHARES

Generally, shares of the Fund are sold and redeemed on a
continuous basis without sales or redemption charges at their net
asset value which is expected to be constant at $1.00 per share,
although this price is not guaranteed.

Accounts Not Maintained Through Financial Intermediaries

Opening Accounts -- New Investments

A. When Funds are Sent by Wire (the wire method
permits immediate credit)

1) Telephone the Fund toll-free at (800)
824-1916. The Fund will ask for the name of
the account as you wish it to be registered,
address of the account, and taxpayer
identification number (social security number
for an individual). The Fund will then
provide you with an account number.

2) Instruct your bank to wire Federal funds
(minimum $1,000) exactly as follows:

ABA 0110 0002 8
State Street Bank and Trust Company
Boston, MA 02101
Alliance Capital Reserves
DDA 9903-279-9

Your account name as registered with the Fund
Your account number as registered with the
Fund

3) Mail a completed Application Form to:

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

B. When Funds are Sent by Check

1) Fill out an Application Form.

<PAGE>

2) Mail the completed Application Form along with
your check or negotiable bank draft (minimum
$1,000), payable to "Alliance Capital
Reserves," to Alliance Fund Services, Inc. as
in A(3) above.

Subsequent Investments

A. Investments by Wire (to obtain immediate credit)

Instruct your bank to wire Federal funds (minimum $100)
to State Street Bank and Trust Company ("State Street Bank") as
in A(2) above.

B. Investments by Check

Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Capital Reserves," to Alliance Fund
Services, Inc. as in A(3) above.

Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.

Investments Made by Check

Money transmitted by a check drawn on a member of the
Federal Reserve System is converted to Federal funds in one
business day following receipt and, thus, is then invested in the
Fund. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted and invested. All
payments must be in United States dollars.

PROCEEDS FROM ANY SUBSEQUENT REDEMPTION BY YOU OF FUND
SHARES THAT WERE PURCHASED BY CHECK OR ELECTRONIC FUNDS TRANSFER
WILL NOT BE FORWARDED TO YOU UNTIL THE FUND IS REASONABLY ASSURED
THAT YOUR CHECK OR ELECTRONIC FUNDS TRANSFER HAS CLEARED, UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE. If the redemption
request during such period is in the form of a Fund check, the
check will be marked "insufficient funds" and be returned unpaid
to the presenting bank.

Redemptions

C. By Telephone

<PAGE>

to Alliance Fund Services, Inc. by telephone toll-free (800) 824-
1916. Such redemption orders must include your account name as
registered with the Fund and the account number.

If your telephone redemption order is received by
Alliance Fund Services, Inc. prior to 12:00 Noon (New York time),
we will send the proceeds in Federal funds by wire to your
designated bank account that day. The minimum amount for a wire
is $1,000. If your telephone redemption order is received by
Alliance Fund Services, Inc. after 12:00 Noon and before 4:00
p.m., we will wire the proceeds the next business day. You also
may request that proceeds be sent by check to your designated
bank. Redemptions are made without any charge to you.

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. Neither the Fund nor the Adviser, 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.

D. By Check-Writing

With this service, you may write checks made payable to
any payee in any amount of $100 or more. Checks cannot be
written for more than the principal balance (not including any
accrued dividends) in your account. First, you must fill out the
Signature Card which is with the Application Form. If you wish
to establish this check-writing service, subsequent to the
opening of your Fund account, contact the Fund by telephone or
mail. There is no separate charge for the check-writing service,
except that State Street Bank will impose its normal charges for
checks which are returned unpaid because of insufficient funds or
for checks upon which you have placed a stop order.

<PAGE>

The check-writing service enables you to receive the daily
dividends declared on the shares to be redeemed until the day
that your check is presented to State Street Bank for payment.

E. By Mail

You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by duly
endorsed certificates, if issued, should be mailed to Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-
1520. Such orders must include the account name as registered
with the Fund and the account number. All written orders for
redemption, and accompanying certificates, if any, must be signed
by all owners of the account with the signatures guaranteed by an
institution which is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.

Additional Information

Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
the Fund's Distributor accepts purchase orders from its customers
up to 2:15 p.m. for issuance at the 4:00 p.m. transaction time
and price.) A brokerage firm acting on behalf of a customer in
connection with transactions in Fund shares is subject to the
same legal obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.

Orders for the purchase of Fund shares become effective
at the next transaction time after Federal funds or bank wire
monies become available to State Street Bank for a shareholder's
investment. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve
wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately
available funds; similar immediate availability is accorded
monies received at State Street Bank by bank wire. Money
transmitted by a check drawn on a member of the Federal Reserve

<PAGE>

System is converted to Federal funds in one business day
following receipt. Checks drawn on banks which are not members
of the Federal Reserve System may take longer. All payments
(including checks from individual investors) must be in United
States dollars.

All shares purchased are confirmed to each shareholder
and are credited to his or her account at the net asset value.
To avoid unnecessary expense to the Fund and to facilitate the
immediate redemption of shares, share certificates, for which no
charge is made, are not issued except upon the written request of
a shareholder. Certificates are not issued for fractional
shares. Shares for which certificates have been issued are not
eligible for any of the optional methods of withdrawal; namely,
the telephone, telegraph, check-writing or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.

Arrangements for Telephone Redemptions. If you wish to
use the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Fund Services,
Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520, with your
signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.

Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or Alliance Fund Service, Inc.
at (800) 221-5672.

Retirement Plans. The Fund's objectives of safety of
principal, excellent liquidity and maximum current income to the
extent consistent with the first two objectives may make it a
suitable investment vehicle for part or all of the assets held in
various tax-deferred retirement plans. The Fund has available
forms of individual retirement account (IRA), simplified employee
pension plans (SEP), 403(b)(7) plans and employer-sponsored
retirement plans (Keogh or HR10 Plan). Certain services
described in this prospectus may not be available to retirement
accounts and plans. Persons desiring information concerning

<PAGE>

these plans should write or telephone the Fund or AFS at (800)
221-5672.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, is the custodian under these plans. The custodian
charges a nominal account establishment fee and a nominal annual
maintenance fee. A portion of such fees is remitted to AFS to
compensate that organization for services rendered to retirement
plan accounts maintained with the Fund.

Periodic Distribution Plans. Without affecting your
right to use any of the methods of redemption described above, by
checking the appropriate boxes on the Application Form, you may
elect to participate additionally in the following plans without
any separate charge. Under the Income Distribution Plan you
receive monthly payments of all the income earned in your Fund
account, with payments forwarded by check or electronically via
the Automated Clearing House ("ACH") network shortly after the
close of the month. Under the Systematic Withdrawal Plan, you
may request payments by check or electronically via the ACH
network in any specified amount of $50 or more each month or in
any intermittent pattern of months. If desired, you can order,
via a signature-guaranteed letter to the Fund, such periodic
payments to be sent to another person. Shareholders wishing
either of the above plans electronically through the ACH network
should write or telephone the Fund or AFS at (800) 221-5672.

The Fund has the right to close out an account if it has
a zero balance on December 31 and no account activity for the
first six months of the subsequent year. Therefore, unless this
has occurred, a shareholder with a zero balance, when
reinvesting, should continue to use his account number.
Otherwise, the account should be re-opened pursuant to procedures
described above or through instructions given to a financial
intermediary.

<PAGE>

for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency (as
determined by the Securities and Exchange Commission) exists, or
the Securities and Exchange Commission has ordered such a
suspension for the protection of shareholders. The value of a
shareholder's investment at the time of redemption may be more or
less than his or her cost, depending on the market value of the
securities held by the Fund at such time and the income earned.

DAILY DIVIDENDS-DETERMINATION OF NET ASSET VALUE

All net income of the Fund is determined after the close
of each business day, currently 4:00 p.m. New York time (and at
such other times as the Trustees may determine) and is paid
immediately thereafter pro rata to shareholders of record via
automatic investment in additional full and fractional shares in
each shareholder's account at the rate of one share for each
dollar distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

Net income consists of all accrued interest income on
Fund portfolio assets less the Fund's expenses applicable to that
dividend period. Realized gains and losses are reflected in net
asset value and are not included in net income. Net asset value
per share is expected to remain constant at $1.00 since all net
income is declared as a dividend each time net income is
determined.

The valuation of the Fund's portfolio securities is
based upon their amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of the Fund may be higher than that of
a fund with identical investments utilizing a method of valuation
based upon market prices for its portfolio instruments; the
converse would apply in a period of rising interest rates.

<PAGE>

purchases instruments which, at the time of investment having
remaining maturities of no more than one year, which maturities
may extend to 397 days. The Fund maintains procedures designed
to stabilize, to the extent reasonably possible, the price per
share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Fund's portfolio
holdings by the Trustees at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Fund calculated by using available market quotations
or market equivalents deviates from net asset value based on
amortized cost. If such deviation exceeds 1/2 of 1%, the
Trustees will promptly consider what action, if any, should be
initiated. In the event the Trustees determine that such a
deviation may result in material dilution or other unfair results
to new investors or existing shareholders, they will consider
corrective action which might include (1) selling instruments
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares; or (3) establishing a net asset value per
share using available market quotations or equivalents. There
can be no assurance, however, that the Fund's net asset value per
share will remain constant at $1.00.

The net asset value of the shares is determined each
business day at 12:00 Noon and 4:00 p.m. (New York time). The
net asset value per share is calculated by taking the sum of the
value of the Fund's investments and any cash or other assets,
subtracting liabilities, and dividing by the total number of
shares outstanding. All expenses, including the fees payable to
the Adviser, are accrued daily.

TAXES

The Fund has qualified in each fiscal year to date and
intends to qualify in each future year to be taxed as a regulated
investment company under the Internal Revenue Code of 1986, as
amended (the "Code") and, as such, will not be liable for Federal
income and excise taxes on the net income and capital gains
distributed to its shareholders. Since the Fund distributes all
of its net income and capital gains, the Fund itself should
thereby avoid all Federal income and excise taxes.

<PAGE>

nearly all of its gross income in the form of interest and the
balance in the form of short-term capital gains, it is expected
that for corporate shareholders, none of the Fund's distributions
will be eligible for the dividends-received deduction under
current law.

GENERAL INFORMATION

Portfolio Transactions. Subject to the general
supervision of the Trustees of the Fund, the Adviser is
responsible for the investment decisions and the placing of the
orders for portfolio transactions for the Fund. Because the Fund
invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Fund's shares since the Fund's portfolio
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which does not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.

The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. During the fiscal
years ended June 30, 1994, 1995 and 1996, the Fund paid no
brokerage commissions.

<PAGE>

Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of additional classes would be governed by the Act and the
law of the Commonwealth of Massachusetts. Shares of each
portfolio are normally entitled to one vote for all purposes.
Generally, shares of all portfolios vote as a single series for
the election of Trustees and on any other matter affecting all
portfolios in substantially the same manner. As to matters
affecting each portfolio differently, such as approval of the
Advisory Agreement and changes in investment policy, shares of
each portfolio vote as separate classes. Certain procedures for
the removal by shareholders of trustees of investment trusts,
such as the Fund, are set forth in Section 16(c) of the Act.

At October 16, 1996, there were 5,263,277,362 shares of
beneficial interest of the Fund outstanding. To the knowledge of
the Fund the following persons owned of record, and no person
owned beneficially, 5% or more of the outstanding shares of the
Fund as of October 16, 1996:

Name and Address No. of Shares % of Fund

Robert W. Baird & Co. 370,264,300.4230 7.03%
As Agent, Omnibus A/C For
Exclusive Benefit Of Customers
First Wisconsin Bldg.
777 East Wisconsin Ave.
Milwaukee WI 53202-5302

Legal Matters. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, New York, New York, counsel
for the Fund and the Adviser. Seward & Kissel has relied upon
the opinion of Sullivan & Worcester, Boston, Massachusetts, for
matters relating to Massachusetts law.

Accountants. An opinion relating to the Fund's financial
statements is given herein by McGladrey & Pullen, LLP, New York,
New York, independent auditors for the Fund.

<PAGE>

IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Such yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933. Yield quotations are thus determined by (i)
computing the net changes over a seven-day period, exclusive of
capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of such
period, (ii) dividing the net change in account value by the
value of the account at the beginning of such period, and (iii)
multiplying such base period return by (365/7) with the resulting
yield figure carried to the nearest hundredth of one percent.
The Fund's effective annual yield represents a compounding of the
annualized yield according to the following formula:

effective yield = [(base period return + 1) 365/7] - 1.

The Fund's yield for the seven-day period ended June 30, 1996
was 4.44% which is the equivalent of a 4.54% compounded effective
yield. Current yield information can be obtained by a recorded
message by telephoning toll-free at (800) 221-9513.

Additional Information. This Statement of Additional
Information does not contain all the information set forth in the
Registration Statement filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of
the Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.

<PAGE>

APPENDIX

A-1+, A-1, Prime-1, Fitch-1 and Duff 1 Commercial Paper Ratings

"A-1+" is the highest, and "A-1" the second highest,
commercial paper ratings assigned by Standard & Poor's and
"Prime-1" is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Standard & Poor's
uses the numbers 1+, 1, 2 and 3 to denote relative strength
within its highest classification of "A", while Moody's uses the
numbers 1, 2 and 3 to denote relative strength within its highest
classification of "Prime". Commercial paper issuers rated "A" by
Standard & Poor's have the following characteristics: liquidity
ratios are better than industry average; long-term debt rating is
A or better; the issuer has access to at least two additional
channels of borrowing; basic earnings and cash flow are in an
upward trend; and typically, the issuer is a strong company in a
well-established industry and has superior management.
Commercial paper issuers rated "Prime" by Moody's have the
following characteristics: their short-term debt obligations
carry the smallest degree of investment risk; margins of support
for current indebtedness are large or stable with cash flow and
asset protection well assured; current liquidity provides ample
coverage of near-term liabilities and unused alternative
financing arrangements are generally available; and while
protective elements may change over the intermediate or longer
term, such changes are most unlikely to impair the fundamentally
strong position of short-term obligations. Commercial paper
rated "Fitch-1" is considered to be the highest grade paper and
is regarded as having the strongest degree of assurance for
timely payment. Commercial paper issues rated "Duff 1" by Duff &
Phelps, Inc. have the following characteristics: very high
certainty of timely payment, excellent liquidity factors
supported by strong fundamental protection factors, and risk
factors which are very small.

AAA & AA and Aaa & Aa Bond Ratings

Bonds rated AAA and Aaa have the highest ratings assigned to
debt obligations by Standard & Poor's and Moody's, respectively.
Standard & Poor's AAA rating indicates an extremely strong
capacity to pay principal and interest. Bonds rated AA by
Standard & Poor's also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small
degree. Moody's Aaa rating indicates the ultimate degree of
protection as to principal and interest. Moody's Aa rated bonds,
though also high-grade issues, are rated lower than Aaa bonds

<PAGE>

because margins of protection may not be as large or fluctuations
of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear
somewhat larger.

33
00250122.AE3

<PAGE>

STATEMENT OF NET ASSETS
JUNE 30, 1996 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
COMMERCIAL PAPER-63.4%
ABBEY NATIONAL
$ 20,000 7/26/96 5.06% $19,929,722
23,800 11/29/96 5.35 23,265,922
ABN AMRO N. AMERICAN FINANCE
30,000 10/25/96 4.96 29,520,533
50,000 2/14/97 5.38 48,296,334
AES BARBERS POINT INC.
20,000 7/12/96 5.35 19,967,306
AGA CAPITAL CORP.
25,200 7/10/96 5.31 25,166,547
AKZO NOBEL, INC.
6,000 7/23/96 5.30 5,980,567
10,000 8/30/96 5.30 9,911,667
25,000 11/27/96 5.30 24,451,597
25,000 8/05/96 5.32 24,870,694
ALLIANZ OF AMERICA FINANCE CORP.
17,500 7/25/96 5.30 17,438,167
32,646 8/15/96 5.30 32,429,720
24,535 8/20/96 5.30 24,354,395
22,200 7/23/96 5.35 22,127,418
ASI FUNDING
16,000 8/15/96 5.32 15,893,600
BANCA CRT FINANCIAL CORP.
35,000 7/08/96 5.33 34,963,726
BANCO NACIONAL DE COMERICO
37,500 7/15/96 5.18 37,424,458
BAYER, INC.
42,500 7/08/96 5.30 42,456,201
30,000 9/04/96 5.40 29,707,500
BETA FINANCE CORP.
15,000 9/12/96* 5.20 14,841,833
BHF FINANCE DELAWARE, INC.
31,000 10/18/96 5.30 30,502,536
48,000 7/08/96 5.31 47,950,440
25,000 7/08/96 5.32 24,974,139
CAISSE D'AMORTISSEMENT
45,000 7/22/96 5.34 44,859,825
40,000 9/19/96 5.37 39,522,667
25,000 10/21/96 5.40 24,580,000
85,000 10/24/96 5.40 83,533,750
CAISSE DES DEPOTS ET CONSIGNATIONS
70,000 7/17/96 5.33% 69,834,178
56,600 7/22/96 5.34 56,423,691
75,000 7/25/96 5.34 74,733,000
CEMEX
25,000 8/22/96 5.30 24,808,611
CHIAO TUNG BANK CO., LTD.
30,000 8/05/96 4.98 29,854,750
6,180 10/15/96 5.35 6,082,648
CLIPPER RECEIVABLES CORP.
55,000 7/11/96 5.35 54,918,264
COMMERZBANK
80,000 8/21/96 5.36 79,392,533
COMMONWEALTH BANK OF AUSTRALIA
50,000 7/23/96 5.34 49,836,833
COPLEY FINANCING CORP.
18,000 7/24/96 5.40 17,937,900
CREGEM NORTH AMERICA, INC.
50,000 8/21/96 4.98 49,647,250
DRESDNER U.S. FINANCE, INC.
22,500 8/26/96 4.98 22,325,702
DUPONT (E. I.) DE NEMOURS & CO.
30,000 7/11/96 5.32 29,955,666
15,000 7/15/96 5.32 14,968,967
EKSPORTFINANS
22,000 7/02/96 5.30 21,996,761
9,000 7/25/96 5.32 8,968,080
18,150 8/05/96 5.33 18,055,948
ELECTRICITE DE FRANCE
25,000 11/21/96 5.30 24,473,681
ELECTRICITY CORP. OF NEW ZEALAND, LTD.
20,000 11/08/96 5.33 19,615,056
14,000 1/30/97 5.40 13,552,700
20,000 1/31/97 5.40 19,358,000
EQUIPMENT INTERMEDIATION PARTNERSHIP
20,000 7/08/96 5.33 19,979,272
FINANCE ONE FUNDING CORP.
10,000 8/21/96 5.30 9,924,917
10,100 7/02/96 5.32 10,098,507

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
FORD MOTOR CREDIT CORP.
$100,000 7/12/96 5.32% $ 99,837,444
15,000 7/01/96 5.37 14,999,999
GENERAL ELECTRIC CAPITAL SERVICES INC.
50,000 8/21/96 5.38 49,618,917
50,000 8/22/96 5.38 49,611,444
50,000 8/26/96 5.38 49,581,556
GENERALE BANK
35,000 8/09/96 5.31 34,798,663
GOVERNMENT DEVELOPMENT BANK OF
PUERTO RICO
17,000 9/03/96 5.33 16,838,915
10,000 9/04/96 5.33 9,903,764
IMI FUNDING CORP.
12,000 8/26/96 5.30 11,901,067
11,306 10/30/96 5.30 11,104,596
51,406 12/03/96 5.36 50,219,664
12,000 11/29/96 5.42 11,727,193
J.P. MORGAN & CO., INC.
60,000 7/01/96 5.56 60,000,000
KINGDOM OF SWEDEN
30,000 12/19/96 5.32 29,241,900
50,000 1/10/97 5.38 48,557,861
20,000 2/10/97 5.38 19,330,489
KREDIETBANK N.A. FINANCE CORP.
110,500 7/08/96 5.35 110,385,049
MEC FINANCE USA, INC.
15,000 7/24/96 5.16 14,950,550
MITSUBISHI INTERNATIONAL CORP.
7,000 7/15/96 5.30 6,985,572
30,000 8/27/96 5.30 29,748,250
24,000 9/03/96 5.35 23,771,734
10,000 8/15/96 5.36 9,933,000
MORGAN STANLEY GROUP, INC.
40,000 7/15/96 5.30 39,917,556
75,000 7/11/96 5.33 74,888,958
OLD LINE FUNDING CORP.
30,000 7/18/96 5.33 29,924,492
PACIFIC DUNLOP LTD.
15,000 7/19/96 5.33 14,960,025
PEMEX CAPITAL INC.
10,000 7/23/96 5.30 9,967,611
20,000 8/06/96 5.32 19,893,599
RANGER FUNDING
25,121 7/08/96 5.32% 25,095,014
REPUBLIC NEW YORK CORPORATION
20,000 8/20/96 5.35 19,851,389
25,000 9/20/96 5.40 24,696,250
SIGMA FINANCE, INC.
33,500 8/15/96* 4.88 33,295,859
14,000 9/05/96* 5.35 13,862,684
SUMITOMO CORP. OF AMERICA
4,000 8/22/96 5.31 3,969,320
20,000 8/21/96 5.32 19,849,267
10,000 9/16/96 5.34 9,885,783
20,000 9/12/96 5.35 19,783,028
5,000 9/26/96 5.35 4,935,354
17,000 7/12/96 5.37 16,972,106
TASMANIAN PUBLIC FINANCE CORP.
16,100 8/08/96 5.33 16,009,420
TRANSAMERICA CORP.
24,035 7/08/96 5.32 24,010,138
UBS FINANCE DELAWARE, INC.
15,600 7/02/96 5.39 15,597,664
100,000 7/01/96 5.55 100,000,000
UNI FUNDING, INC.
16,000 7/26/96 5.30 15,941,111
UNILEVER CAPITAL CORP.
24,000 10/25/96 4.94 23,617,973
VATTENFALL TREASURY, INC.
20,000 7/22/96 5.30 19,938,167
45,000 10/16/96 5.37 44,281,762
WESTPAC CAPITAL CORP.
50,000 9/09/96 5.21 49,493,472
WMC FINANCE, LTD.
15,500 7/19/96 5.33 15,458,693
13,500 7/17/96 5.35 13,467,900
XEROX CREDIT CORP.
17,000 8/06/96 5.35 16,909,050

Total Commercial Paper
(amortized cost $3,045,185,451) 3,045,185,451

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT-20.2%
ABN AMRO
$ 18,000 5.12%, 9/06/96 5.15% $ 17,998,997
AMERICAN EXPRESS CENTURION BANK
50,000 5.35%, 7/08/96 5.35 50,000,000
BANK OF TOKYO
90,000 5.50%, 7/15/96 5.50 90,000,000
BANQUE NATIONALE DE PARIS
10,000 5.38%, 8/06/96 5.37 10,000,099
5,000 5.39%, 8/13/96 5.35 5,000,203
BARCLAYS BANK
50,000 5.32%, 7/23/96 5.31 50,000,184
60,000 5.33%, 7/23/96 5.32 60,000,364
BARNETT BANK OF SOUTH FLORIDA
84,000 5.39%, 7/08/96 5.42 83,999,249
BAYERISCHE HYPOBANK
67,000 5.38%, 7/16/96 5.35 66,999,590
BAYERISCHE LANDESBANK
6,000 5.33%, 7/01/96 5.33 6,000,000
DEUTSCHE BANK
20,000 5.48%, 1/03/97 5.65 19,974,244
24,000 5.53%, 4/02/97 5.80 23,951,633
DRESDNER BANK
40,000 5.90%, 6/03/97 5.90 40,000,000
HARRIS TRUST & SAVINGS
40,000 5.40%, 8/09/96 5.40 39,999,965
HESSISCHE LANDESBANK
10,000 5.10%, 9/06/96 5.15 9,999,093
25,000 5.70%, 4/29/97 5.80 24,979,638
NATIONAL BANK OF DETROIT
85,000 5.43%, 8/26/96 5.42 85,001,307
NATIONAL WESTMINSTER BANK
50,000 5.33%, 7/12/96 5.32 50,000,174
NORINCHUKIN BANK
30,000 5.48%, 7/26/96 5.47 30,000,205
40,000 5.56%, 7/10/96 5.55 40,000,099
SANWA BANK
18,000 5.41%, 7/12/96 5.44 17,999,800
19,000 5.44%, 7/12/96 5.43 19,000,058
SOCIETE GENERALE N.A., INC.
36,000 5.33%, 7/02/96 5.34 35,999,983
SUMITOMO BANK
45,000 5.40%, 7/02/96 5.39 45,000,012
WESTPAC BANK
50,000 5.06%, 8/21/96 5.03% 50,002,072

Total Certificates of Deposit
(amortized cost $971,906,969) 971,906,969

CORPORATE OBLIGATIONS-5.8%
BETA FINANCE CORP.
20,000 5.41%, 9/25/96 FRN* 5.41 20,000,000
FIRST BANK OF SIOUX FALLS
SOUTH DAKOTA, NA
100,000 5.34%, 7/03/96 5.36 99,999,876
GENERAL ELECTRIC CAPITAL CORP.
25,000 7.85%, 7/17/96 5.80 25,021,151
GOLDMAN SACHS GROUP L.P.
100,000 5.49%, 9/13/96 FRN 5.49 100,000,000
TOYOTA MOTOR CREDIT CORP.
35,000 5.00%, 2/26/97 5.10 34,973,606

Total Corporate Obligations
(amortized cost $279,994,633) 279,994,633

U.S. GOVERNMENT AND AGENCY OBLIGATIONS-5.3%
AID HOUSING GUARANTY PROJECT PORTUGAL
12,500 5.94%, 12/01/16 FRN 5.94 12,500,000
FEDERAL FARM CREDIT BANK
50,000 5.21%, 1/22/97 FRN 5.25 49,989,173
FEDERAL HOME LOAN BANK
20,000 5.27%, 11/13/96 FRN 5.34 19,994,992
50,000 5.30%, 10/16/96 FRN 5.43 49,982,206
42,500 5.83%, 1/31/97 FRN 5.27 42,636,547
FEDERAL NATIONAL MORTGAGE ASSOCIATION
25,000 5.41%, 9/27/96 FRN 5.41 25,000,000
OVERSEAS PRIVATE INVESTMENT CORP.
1,250 5.94%, 6/10/97 FRN 5.94 1,250,000
U.S. TREASURY NOTES
25,000 6.63%, 3/31/97 5.15 25,265,235
25,000 7.50%, 1/31/97 5.09 25,333,880

Total U.S. Government and
Agency Obligations
(amortized cost $251,952,033) 251,952,033

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ------------------------------------------------------------------------
BANK OBLIGATIONS-3.7%
BANK OF NEW YORK
$ 40,000 5.14%, 9/09/96 5.15% $ 39,999,242
INTERAMERICAN DEVELOPMENT BANK
12,746 6.75%, 2/14/97 5.10 12,862,906
MORGAN GUARANTY TRUST CO.
55,000 5.50%, 1/08/97 5.50 55,000,000
WACHOVIA BANK
45,000 5.34%, 1/03/97 FRN 5.45 44,978,842
25,000 6.20%, 8/05/96 5.22 25,021,018

Total Bank Obligations
(amortized cost $177,862,008) 177,862,008

REPURCHASE AGREEMENTS-0.8%
MORGAN STANLEY REPO
25,000 5.15%, dated 6/28/96, due 7/01/96
in the amount of $25,010,729
(cost $25,000,000; collateralized
by $22,695,000 U.S. Treasury Bond,
7.875%, 2/15/21, value $25,712,519) 5.15 25,000,000
STATE STREET BANK AND TRUST CO.
10,800 5.10%, dated 6/28/96, due 7/01/96
in the amount of $10,804,590
(cost $10,800,000; collateralized
by $11,530,000 Federal National
Mortgage Assn, 7.00%, 1/01/26,
value $11,097,625) 5.10% 10,800,000

Total Repurchase Agreements
(amortized cost $35,800,000) 35,800,000

TIME DEPOSIT-0.5%
INDUSTRIAL BANK OF JAPAN
25,000 5.25%, 7/01/96

(amortized cost $25,000,000) 5.25 25,000,000

TOTAL INVESTMENTS-99.7%
(amortized cost $4,787,701,094) 4,787,701,094
Other assets less liabilities-0.3% 16,378,184

NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 4,804,786,512
shares outstanding) $4,804,079,278

+ All securities either mature or their interest rate changes in one year or
less.
* Restricted securities (see Note F).

Glossary:
FRN - Floating Rate Note

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $233,464,369

EXPENSES
Advisory fee (Note B) $19,411,685
Distribution assistance and administrative
service (Note C) 11,346,563
Transfer agency (Note B) 8,164,363
Registration fees 878,348
Printing 563,546
Custodian fees 527,866
Audit and legal fees 46,690
Trustees' fees 15,995
Miscellaneous 70,910
Total expenses 41,025,966
Net investment income 192,438,403

REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (46,151)

NET INCREASE IN NET ASSETS FROM OPERATIONS $192,392,252

See notes to financial statements.

STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
JUNE 30,1996 JUNE 30,1995
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 192,438,403 $ 113,392,834
Net realized loss on investments (46,151) (525,149)
Net increase in net assets from operations 192,392,252 112,867,685

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (192,438,403) (113,392,834)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 1,780,033,338 607,356,139
Total increase 1,779,987,187 606,830,990

NET ASSETS
Beginning of year 3,024,092,091 2,417,261,101
End of year $4,804,079,278 $3,024,092,091

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Capital Reserves (the "Trust") is an open-end diversified investment
company registered under the Investment Company Act of 1940. The Trust consists
of two portfolios: Alliance Capital Reserves (the "Portfolio") and Alliance
Money Reserves. Each portfolio is considered to be a separate entity for
financial reporting and tax purposes. As a matter of fundamental policy, each
Portfolio pursues its objectives by maintaining a portfolio of high-quality
money market securities all of which, at the time of investment, have remaining
maturities of 397 days or less. The following is a summary of significant
accounting policies followed by the Portfolio.

1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity.

2. TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.

3. DIVIDENDS
The Portfolio declares dividends daily and automatically reinvests such
dividends in additional shares at net asset value. Net realized capital gains
on investments, if any, are expected to be distributed near year end.

4. GENERAL
Interest income is accrued as earned. Security transactions are recorded on a
trade date basis. Realized gain (loss) from security transactions is recorded
on the identified cost basis. It is the Portfolio's policy to take possession
of securities as collateral under repurchase agreements and to determine on a
daily basis that the value of such securities are sufficient to cover the value
of the repurchase agreements.

NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45 of 1% in excess of $3 billion. The Adviser has agreed to reimburse the
Portfolio to the extent that its annual aggregate expenses (excluding taxes,
brokerage, interest and, where permitted, extraordinary expenses) exceed 1% of
its average daily net assets for any fiscal year. No reimbursement was required
for the year ended June 30, 1996. The Portfolio compensates Alliance Fund
Services, Inc. (a wholly-owned subsidiary of the Adviser) for providing
personnel and facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $5,068,973 for the year ended June 30, 1996.

NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at an annual
rate of up to .25 of 1% of the average daily value of the Portfolio's net
assets.

The Plan provides that the Adviser will use amounts payable under the Plan in
their entirety for (i) payments to broker-dealers and other financial
intermediaries, including the Portfolio's distributor, for distribution
assistance and payments to banks and other depository institutions for
administrative and accounting services and (ii) otherwise promoting the sale of
shares of the Portfolio. For the year ended June 30, 1996, the distribution fee
amounted to $10,256,491. In addition, the Portfolio reimbursed certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, accounting, bookkeeping, legal and compliance support.
For the year ended June 30, 1996, such payments by the Portfolio amounted to
$1,090,072 of which $162,000 was paid to the Adviser.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1996, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1996 the
Portfolio had a capital loss carryforward of $707,234 of which $85,995 expires
in 2001, $49,939 expires in 2002, $525,149 expires in 2003 and $46,151 expires
in 2004.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1996, capital paid-in aggregated $4,804,786,512. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1996 1995
---------------- ----------------
Shares sold 21,097,386,036 11,681,203,006
Shares issued on reinvestments of dividends 192,438,403 113,392,834
Shares redeemed (19,509,791,101) (11,187,239,701)
Net increase 1,780,033,338 607,356,139

NOTE F: RESTRICTED SECURITIES
The following securities are restricted as to resale except among qualified
institutional investors such as the Portfolio.

DATE% OF NET
SECURITY ACQUIRED VALUE ASSETS
- ------------------------------- -------- ----------- ------------
Beta Finance Corp., 5.20%,
9/12/96 Commercial Paper 3/12/96 $14,841,833 0.31%
Beta Finance Corp., 5.41%,
9/25/96 FRN 9/25/95 20,000,000 0.42
Sigma Finance, Inc., 4.88%,
8/15/96 Commercial Paper 2/13/96 33,295,859 0.69
Sigma Finance, Inc., 5.35%,
9/05/96 Commercial Paper 6/06/96 13,862,684 0.29
----------- ------
$82,000,376 1.71%

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

NOTE G: FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each year.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .0471 .0447 .0255 .0266 .0438
Net realized gain on investments -0- -0- -0- .0003 .0013
Net increase in net assets from operations .0471 .0447 .0255 .0269 .0451

LESS: DISTRIBUTIONS
Dividends from net investment income (.0471) (.0447) (.0255) (.0266) (.0438)
Distributions from net realized gains -0- -0- -0- (.0003) (.0013)
Total dividends and distributions (.0471) (.0447) (.0255) (.0269) (.0451)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURNS
Total investment return based on:
net asset value (a) 4.82% 4.57% 2.58% 2.73% 4.61%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $4,804 $3,024 $2,417 $2,112 $1,947
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements 1.00% 1.03% 1.03% 1.00% 1.00%
Net investment income 4.69% 4.51% 2.57% 2.65% 4.37%
</TABLE>

(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.

INDEPENDENT AUDITOR'S REPORT ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE CAPITAL RESERVES PORTFOLIO

We have audited the accompanying statement of net assets of Alliance Capital
Reserves Portfolio as of June 30, 1996 and the related statements of
operations, changes in net assets, and financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian.

An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Capital Reserves Portfolio as of June 30, 1996, and the results of its
operations, changes in its net assets, and its financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.

McGladrey & Pullen, LLP
New York, New York
July 26, 1996

<PAGE>

(LOGO) (R) ALLIANCE CAPITAL
- Alliance Money Reserves

P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996

TABLE OF CONTENTS

Page

The Fund............................................ 2

Investment Objective and Policies................... 2

Investment Restrictions............................. 8

Management.......................................... 10

Purchase and Redemption of Shares................... 19

Additional Information.............................. 23

Daily Dividends-Determination of Net Asset Value.... 25

Taxes............................................... 27

General Information................................. 27

Appendix-Commercial Paper and Bond Ratings.......... 31

Financial Statements................................ 33-37

Independent Auditor's Report........................ 38

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

<PAGE>

THE FUND

Alliance Money Reserves (the "Fund") is one of two
portfolios of Alliance Capital Reserves (the "Trust"), a
diversified, open-end investment company. The other portfolio,
also named Alliance Capital Reserves, is described in a separate
Prospectus and Statement of Additional Information, which may be
obtained from Alliance Fund Services, Inc., P.O. Box 1520,
Secaucus, New Jersey 07096-1520, toll free (800) 221-5672.

INVESTMENT OBJECTIVE AND POLICIES

The Fund's objective is maximum current income, to the
extent it is consistent with safety of principal and liquidity.
As a matter of fundamental policy, the Fund pursues its objective
by maintaining a portfolio of high quality U.S. dollar-
denominated money market securities, all of which at the time of
investment have remaining maturities not exceeding one year or
less (which maturities pursuant to Rule 2a-7 under the Investment
Company Act of 1940 as amended, (the "Act"), may extend to 397
days). Accordingly, the Fund may make the following investments
diversified by maturities and issuers:

2. Certificates of deposit and bankers' acceptances
issued or guaranteed by, or time deposits maintained at, banks or
savings and loan associations (including foreign branches of U.S.
banks or U.S. or foreign branches of foreign banks) having total
assets of more than $500 million. Certificates of deposit are
receipts issued by a depository institution in exchange for the

<PAGE>

deposit of funds. The issuer agrees to pay the amount deposited
plus interest to the bearer of the receipt on the date specified
on the certificate. The certificate usually can be traded in the
secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to
enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on
a bank by an exporter or an importer to obtain a stated amount of
funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date.
The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the
going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most
acceptances have maturities of six months or less.

3. Commercial paper, including variable amount master
demand notes, of high quality [i.e. rated A-1 or A-2 by Standard
& Poor's Corporation ("Standard & Poor's"), Prime-1 or Prime-2 by
Moody's Investors Service, Inc., ("Moody's") Fitch-1 or Fitch-2
by Fitch Investors Service, Inc., or Duff 1 or Duff 2 by Duff &
Phelps Inc. or, if not rated, issued by U.S. or foreign companies
which have an outstanding debt issue rated AAA, AA or A by
Standard & Poor's, or Aaa, Aa or A by Moody's and participation
interests in loans extended by banks to such companies.] For a
description of such ratings see the Appendix. Commercial paper
consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their
current operations. A variable amount master demand note
represents a direct borrowing arrangement involving periodically
fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to
which the lender may determine to invest varying amounts.

4. Repurchase agreements that are collateralized in
full each day by liquid securities of the types listed above. 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. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Repurchase agreements may be entered into
only with those banks (including State Street Bank and Trust
Company, the Fund's Custodian) or broker-dealers ("vendors") that
are eligible under the procedures adopted by the Trustees of the
Trust for evaluating and monitoring such vendors' credit-
worthiness. For each repurchase agreement, the Fund requires
continual maintenance of the market value of underlying
collateral in amounts equal to, or in excess of, the agreement

<PAGE>

amount. While the maturities of the underlying collateral may
exceed one year, the term of the repurchase agreement is always
less than one year. In the event that 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. If the vendor became bankrupt, the Fund
might be delayed in selling the collateral. Repurchase
agreements often are for short periods such as one day or a week,
but may be longer. Repurchase agreements not terminable within
seven days will be limited to no more than 10% of the Fund's
assets.5 Pursuant to Rule 2a-7, a repurchase agreement is deemed
to be an acquisition of the underlying securities provided that
the obligation of the seller to repurchase the securities from
the money market fund is collateralized fully (as defined in such
Rule). Accordingly, the vendor of a fully collateralized
repurchase agreement is deemed to be the issuer of the underlying
securities.

Reverse Repurchase Agreements. While the Fund has no
plans to do so, it may enter into reverse repurchase agreements,
which involve the sale of money market securities held by the
Fund with an agreement to repurchase the securities at an agreed-
upon price, date and interest payment.

Liquid Restricted Securities. The Fund may purchase
restricted securities that are determined by the Adviser to be
liquid in accordance with procedures adopted by the Trustees.
Restricted securities are securities subject to contractual or
legal restrictions on resale, such as those arising from an
issuer's reliance upon certain exemptions from registration under
the Securities Act of 1933 (the "Securities Act").

____________________

5. As used throughout the Prospectus and Statement of Additional
Information, the term "assets" shall refer to the Fund's
total assets.

<PAGE>

In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues in which the Fund may invest
include, among others, securities issued by major corporations
without registration under the Securities Act in reliance on the
exemption from registration afforded by Section 3(a)(3) of such
Act and commercial paper issued in reliance on the private
placement exemption from registration which is afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the
Federal securities laws in that any resale must also be made in
an exempt transaction. Section 4(2) paper is normally resold to
other institutional investors through or with the assistance of
investment dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders. In recognition of
this fact, the Staff of the Securities and Exchange Commission
has stated that Section 4(2) paper may be determined to be liquid
by the Fund's Trustees, so long as certain conditions, which are
described below, are met.

<PAGE>

of the PORTAL System sponsored by the National Association of
Securities Dealers, Inc., an automated system for the trading,
clearance and settlement of unregistered securities.

(i) the frequency of trades and quotations
for the security;

(ii) the number of dealers making quotations
to purchase or sell the security;

(iii) the number of other potential purchasers
of the security;

(iv) the number of dealers undertaking to make
a market in the security;

(v) the nature of the security (including its
unregistered nature) and the nature of
the marketplace for the security (e.g.,
the time needed to dispose of the
security, the method of soliciting offers
and the mechanics of transfer); and

(vi) any applicable Securities and Exchange
Commission interpretation or position
with respect to such types of securities.

To make the determination that an issue of Section 4(2)
paper is liquid, the Adviser must conclude that the following
conditions have been met:

(i) the Section 4(2) paper must not be traded
flat or in default as to principal or
interest; and

(ii) the Section 4(2) paper must be rated in
one of the two highest rating categories
by at least two NRSROs, or if only one
NRSRO rates the security, by that NRSRO;
if the security is unrated, Alliance must
determine that the security is of
equivalent quality.

<PAGE>

The Adviser must also consider the trading market for
the specific security, taking into account all relevant factors.

The Fund may make investments in certificates of deposit
and bankers' acceptances issued or guaranteed by, or time
deposits maintained at, foreign branches of U.S. banks and U.S.
and foreign branches of foreign banks, and commercial paper
issued by foreign companies. To the extent that the Fund makes
such investments, consideration is given to their domestic
marketability, the lower reserve requirements generally mandated
for overseas banking operations, the possible impact of
interruptions in the flow of international currency transactions,
potential political and social instability or expropriation,
imposition of foreign taxes, the lower level of government
supervision of issuers, the difficulty in enforcing contractual
obligations and the lack of uniform accounting and financial
reporting standards. There can be no assurance, as is true with
all investment companies, that the Fund's objective will be
achieved. The market value of the Fund's investments tends to
decrease during periods of rising interest rates and to increase
during intervals of falling rates.

Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets. The Fund's investment objective may not
be changed without the affirmative vote of a majority of the
Fund's outstanding shares as defined below. Except as otherwise
provided, the Fund's investment policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed by the Trustees of the Trust without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.

Rule 2a-7 under the Act. The Fund will comply with Rule
2a-7 under the Act, as amended from time to time, including the
diversification, quality and maturity limitations imposed by the
Rule.

<PAGE>

approved by the Trustees. Generally, an eligible security is a
security that (i) has a remaining maturity of 397 days or less
and (ii) is rated, or is issued by an issuer with short-term debt
outstanding that is rated in one of the two highest rating
categories by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO. A security that originally had a maturity
of greater than 397 days is an eligible security if its remaining
maturity at the time of purchase is 397 calendar days or less and
the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible
securities if the Adviser determines that they are of comparable
quality to a rated eligible security pursuant to guidelines
approved by the Trustees. A description of the ratings of some
NRSROs appears in the Appendix attached hereto.

INVESTMENT RESTRICTIONS

The Fund:

1. May not purchase any security which has a maturity
date more than one year6 from the date of the Fund's purchase;

____________________

6. Which maturity, pursuant to Rule 2a-7, may extend to 397 day.

<PAGE>

7. May not make loans, provided that the Fund may
purchase money market securities and enter into repurchase
agreements;

9. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,

<PAGE>

acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
maintain a short position or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Fund's assets would be invested in such
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of the
Adviser who own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer; or (h) act as an underwriter of
securities.

MANAGEMENT

Trustees and Officers

The Trustees and principal officers of the Trust and
their principal occupations during the past five years are set
forth below. Unless otherwise specified, the address of each
such person is 1345 Avenue of the Americas, New York, New York
10105. Those Trustees whose names are preceded by an asterisk are
"interested persons" of the Trust as determined under the Act.
Each Trustee and officer is also a director, trustee or officer
of other registered investment companies sponsored by Alliance
Capital Management L.P. (the "Adviser").

Trustees

DAVE H. WILLIAMS, 64,7 Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC"),8 sole general partner of the Adviser with which he has
____________________

7. An "interested person" of the Fund as defined in the Act.

8. For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.

<PAGE>

been associated since prior to 1991.

JOHN D. CARIFA, 51,9 is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1991.

DAVID K. STORRS, 52, is an independent consultant. He
was formerly President of The Common Fund (investment management
for educational institutions) with which he had been since prior
to 1991. His address is 65 South Gate Lane, Southport,
Connecticut 06490.

SHELBY WHITE, 58, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

____________________

9. An "interested person" of the Fund as defined in the Act.