ALLIANCE CAPITAL RESERVES, 497, 1997-12-05

ALLIANCE CAPITAL RESERVES
497, 1997-12-05

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<PAGE>

This is filed pursuant to Rule 497(c).
Files Nos. 002-61564 and 811-02835.

<PAGE>

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YIELD MESSAGES
For current recorded yield information 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.
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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
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 October 31, 1997, 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.

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CONTENTS
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<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>
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ALLIANCE
CAPITAL
RESERVES

[LOGO OF ALLIANCE CAPITAL(R) APPEARS HERE]

PROSPECTUS
OCTOBER 31, 1997

ALC39PRO7
<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)
Management Fees......................................................... .46%
12b-1 Fees.............................................................. .25
Other Expenses.......................................................... .29
----
Total Fund Operating Expenses........................................... 1.00%
</TABLE>

EXAMPLE

<TABLE>
<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 EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
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FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR (AUDITED)
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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,
-----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
<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. .0452 .0471 .0447 .0255 .0266 .0438 .0662 .0782 .0788 0.0625
Net realized gain on
investments.......... -0- -0- -0- -0- .0003 .0013 -0- -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
Net increase in net
assets from
operations........... .0452 .0471 .0447 .0255 .0269 .0451 .0662 .0782 .0788 0.0625
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income.... (.0452) (.0471) (.0447) (.0255) (.0266) (.0438) (.0662) (.0782) (.0788) (0.0625)
Distributions from net
realized gains....... -0- -0- -0- -0- (.0003) (.0013) -0- -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
Total dividends and
distributions........ (.0452) (.0471) (.0447) (.0255) (.0269) (.0451) (.0662) (.0782) (.0788) (0.0625)
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
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)... 4.63% 4.82% 4.57% 2.58% 2.73% 4.61% 6.84% 8.14% 8.20% 6.45%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
year (in millions)... $ 5,733 $ 4,804 $ 3,024 $ 2,417 $ 2,112 $ 1,947 $ 1,937 $ 1,891 $ 1,536 $ 1,392
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements...... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% .97% .88% .95% .95%
Expenses, before
waivers and
reimbursements...... 1.00% 1.00% 1.03% 1.03% 1.00% 1.00% .97% .98% 1.05% 1.05%
Net investment
income(b)........... 4.53% 4.69% 4.51% 2.57% 2.65% 4.37% 6.62% 7.82% 7.87% 6.26%
</TABLE>
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(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.
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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, 1997 amounted to an annualized yield of 4.72%,
equivalent to an effective yield of 4.83%.

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 money market income--and who place value on an investment
having safety, liquidity, stability, simplicity, and convenience. In-
vestors using the Fund avoid certain administrative burdens that they
would incur by investing in money market securities 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
<TABLE>
<S> <C>
No withdrawal fees or penalties Checkwriting
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
</TABLE>
3
<PAGE>

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INVESTMENT OBJECTIVES AND POLICIES
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The Fund's investment 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 of one year or less, which maturities may extend to 397
days. While the Fund may not change this policy or the other fundamental in-
vestment 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 additional 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 compa-
nies, that the Fund's objectives 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 as-
sets 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; (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 companies having outstanding debt securities rated AAA or AA
by Standard & Poor's, or Aaa or Aa by Moody's] and participation interests in
loans extended by banks to such companies; and (4) repurchase agreements that
are collateralized in full each day by liquid securities 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. Government securities or
State Street Bank and Trust Company, the Fund's Custodian, 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 money market securities in which the Fund
invests may have variable or floating rates of interest ("variable rate obli-
gations") as permitted by Rule 2a-7 under the Investment Company Act of 1940,
as amended (the "Act"). Variable rate obligations have interest rates which
are adjusted either at predesignated periodic intervals or whenever there is a
change in the market rate to which the interest rate of the variable rate ob-
ligation is tied. Some variable rate obligations allow the holder to demand
payment of principal at anytime, or at specified intervals. The Fund follows
Rule 2a-7 with respect to the diversification, quality, and maturity of vari-
able rate obligations.

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.

4
<PAGE>

The Fund may also invest up to 10% of the value of its net assets in securi-
ties as to which a liquid trading market does not exist, provided such invest-
ments are consistent with the Fund's investment objectives. Such securities
may include securities that are not readily marketable, such as certain secu-
rities that are subject to legal or contractual restrictions on resale (other
than those restricted securities determined to be liquid as described above)
and repurchase agreements not terminable within seven days. As to these secu-
rities, the Fund is subject to a risk that should the Fund desire to sell them
when a ready buyer is not available at a price the Fund deems representative
of their value, the value of the Fund's net assets could be adversely affect-
ed.

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

The Fund will comply with Rule 2a-7, including the diversification, quality
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 under
"Investment Objectives and Policies." To the extent that the Fund's limita-
tions are more permissive than Rule 2a-7, the Fund will comply with the more
restrictive provisions of the Rule.

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
(except the U.S. Government) although with respect to 25% 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) having
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 se-
curities during any periods of abnormally heavy redemption requests; (5) mort-
gage, pledge or hypothecate its assets except to secure such borrowings; or
(6) enter into repurchase agreements, if as a result thereof, more than 10% of
the Fund's assets would be subject to repurchase agreements not terminable
within seven days.

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.

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PURCHASE AND REDEMPTION OF SHARES
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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

5
<PAGE>

deposit it into your brokerage account. Please indicate 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. Checks
cannot be written for more than the principal balance (not including any ac-
crued dividends) in your account. You must first fill out the Signature Card,
which you can obtain from your Account Executive. There is a charge for check
reorders. The checkwriting service enables you to receive the daily dividends
declared on the shares to be redeemed until the day that your check is pre-
sented for payment.

B. BY SWEEP

If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer from your Fund account sufficient cash to cover any debit
balance that may occur 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, see the
Statement of Additional Information.

The Fund offers a variety of shareholder services. For more information about
these services, call the Fund at (800) 221-5672.

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ADDITIONAL INFORMATION
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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.

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 in
this Prospectus. The Fund reserves the right to suspend or terminate its tele-
phone redemption service at any time without notice. Neither the Fund nor the
Adviser, or Alliance Fund Services, Inc. will

6
<PAGE>

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 gen-
uine, including among others, recording such telephone instructions and caus-
ing written confirmations of the resulting transactions to be sent to share-
holders. If the Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone instructions. Se-
lected dealers or agents may charge a fee 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.

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 has
cleared, up to fifteen days following the purchase date. If the redemption re-
quest 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.

MINIMUMS. The Fund has minimums of $1,000 for initial investments, $100 for
subsequent investments and a $500 minimum maintenance balance for each ac-
count. These minimums do not apply to shareholder accounts maintained through
brokerage firms or other financial institutions, as such financial intermedi-
aries may maintain their own minimums.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is
determined each business day at 4:00 p.m. (New York time) and is paid immedi-
ately thereafter pro rata to shareholders of record via automatic investment
in additional full and fractional shares in each shareholder's account. As
such additional shares are entitled to dividends on following days, a com-
pounding 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
ordinary 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 dis-
tributions 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
investment advice and, in general, to conduct the Fund's management and in-
vestment program, subject to the general supervision and control of the Trust-
ees of the Fund. For the fiscal year ended June 30, 1997, the Fund paid the
Adviser a fee equal to .47 of 1% of the average daily value of the Fund's net
assets.

The Adviser is a leading international investment manager, supervising client
accounts with assets as of September 30, 1997 totaling more than $217 billion
(of which more than $81 billion represented the assets of investment compa-
nies). The Adviser's clients are primarily major corporate employee benefit
plans, public employee retirement plans, insurance companies, banks, founda-
tions and endowment funds. The 54 registered investment companies managed by
the Adviser comprising 116 separate investment portfolios currently have over
two million shareholders. As of September 30, 1997, the Adviser was retained
as an investment manager of employee benefit fund assets for 28 of the Fortune
100 companies.

Alliance Capital Management Corporation, the sole general partner of, and the
owner of a 1% general partnership interest in, the Adviser, is an indirect

7
<PAGE>

wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States, one of the largest life insurance companies in the United States,
which is a wholly-owned subsidiary of The Equitable Companies Incorporated, a
holding company controlled by AXA, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in the Fund's Statement of Additional Information under "Management of
the Fund."

Under a Distribution Services Agreement (the "Agreement"), the Fund makes
payments to the Adviser at a maximum annual rate of .25 of 1% of the Fund's
aggregate average daily net assets. For the fiscal year ended June 30, 1997,
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
significant amounts from the Adviser's own resources) are paid by the Adviser
to broker-dealers and other financial intermediaries for their distribution
assistance and to banks and other depository institutions for administrative
and accounting services provided to the Fund, with any remaining amounts being
used to partially defray other expenses incurred by the Adviser in distribut-
ing Fund shares. The Fund believes that the administrative services provided
by depository institutions are permissible activities under present banking
laws and regulations and will take appropriate actions (which should not ad-
versely affect the Fund or its shareholders) in the future to maintain such
legal conformity should any changes in, or interpretations of, such laws or
regulations occur.

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.

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, hav-
ing 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. 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. Share-
holders 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
account statements to be sent to other parties.

<PAGE>

This is filed pursuant to Rule 497(c).
Files Nos. 002-61564 and 811-02835.

<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 following 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 October 31, 1997, 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 OCTOBER 31, 1997

ALC36PRO7
<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.......................................................... .48%
12b-1 Fees............................................................... .25
Other Expenses........................................................... .27
----
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--.50%, 12b-1 Fees--.25%, Other Expenses--.27% and Total Operating
Expenses--1.02%. 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)

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>
FEBRUARY 16,
YEAR ENDED JUNE 30, 1989(A)
-------------------------------------------------------------- THROUGH
1997 1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989
------ ------ ------ ------ ------ ------ ------ ------ -------------
<S> <C> <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 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .045 .047 .045 .025 .027 .044 .066 .079 .033
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net in-
vestment income....... (.045) (.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 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURNS
Total investment return
based on:
Net asset value(b)..... 4.64% 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)..... $1,011 $ 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% 1.00% .97% .89% .99%(c)
Expenses, before waiv-
ers and reimburse-
ments................. 1.06% 1.00% 1.04% 1.09% 1.04% 1.04% 1.03% .99% 1.09%(c)
Net investment
income(d)............. 4.55% 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, 1997, after expense reimbursement, amounted to
an annualized yield of 4.72%, equivalent to an effective yield of 4.83%. Ab-
sent such reimbursement, the annualized yield for such period would have been
4.66%, equivalent to an effective yield of 4.77%.

2
<PAGE>

[LOGO OF ALLIANCE MONEY RESERVES APPEARS HERE]

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 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.

Our professional investment managers seek the maximum current income
for the Fund that is consistent with safety of principal and liquidi-
ty. 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?

MAJOR FEATURES AND SERVICES OF ALLIANCE MONEY RESERVES

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

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 be-
low 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) marketable
obligations of, or guaranteed by, the United States Government, its agencies
or instrumentalities (collectively, the "U.S. Government"); (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; (3) commercial paper, including vari-
able 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 In-
vestors Service, Inc., or Duff 1 or Duff 2 by Duff & Phelps Inc. or, if not
rated, issued by U.S. or foreign companies having outstanding debt securities
rated AAA, AA or A by Standard & Poor's, or Aaa, Aa or A 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. 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 proce-
dures adopted by the Trustees for evaluating and monitoring the creditworthi-
ness of such vendors. A repurchase agreement would create a loss to the Fund
if, in the event of a vendor default, the proceeds from the sale of the col-
lateral were less than the repurchase price. The money market securities in
which the Fund invests may have variable or floating rates of interest ("vari-
able rate obligations") as permitted by Rule 2a-7 under the Investment Company
Act of 1940, as amended (the "Act"). Variable rate obligations have interest
rates which are adjusted either at predesignated periodic intervals or when-
ever there is a change in the market rate to which the interest rate of the
variable rate obligation is tied. Some variable rate obligations allow the
holder to demand payment of principal at any time, or at specified intervals.
The Fund follows Rule 2a-7 with respect to the diversification, quality and
maturity of variable rate obligations.

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.

4
<PAGE>

are not readily marketable, such as certain securities that are subject to le-
gal or contractual restrictions on resale (other than those restricted securi-
ties determined to be liquid as described above) and repurchase agreements not
terminable within seven days. As to these securities, the Fund is subject to a
risk that should the Fund desire to sell them when a ready buyer is not avail-
able at a price the Fund deems representative of their value, the value of the
Fund's net assets could be adversely affected.

The Fund will comply with Rule 2a-7, including the diversification, quality
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 under
"Investment Objective and Policies." To the extent that the Fund's limitations
are more permissive than Rule 2a-7, the Fund will comply with the more re-
strictive provisions of the Rule.

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 25% 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) having
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 se-
curities during any periods of abnormally heavy redemption requests; (5) mort-
gage, pledge or hypothecate its assets except to secure such borrowings; or
(6) enter into repurchase agreements, if as a result thereof, more than 10% of
the Fund's assets would be subject to repurchase agreements not terminable
within seven days.

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

5
<PAGE>

REDEMPTIONS

A. BY CHECKWRITING

B. BY SWEEP

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

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

The Fund offers a variety of shareholder services. For more information about
these services, call the Fund at (800) 221-5672.

ADDITIONAL INFORMATION

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 in
this Prospectus. The Fund reserves the right to suspend or terminate its tele-
phone redemption service at any time without notice. Neither the Fund nor the
Adviser, or Alliance Fund Services, Inc. will be responsible for the authen-
ticity 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 in-

6
<PAGE>

structions. Selected dealers or agents may charge a fee for handling telephone
requests for redemptions.

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
investment advice and, in general, to conduct the Fund's management and in-
vestment program, subject to the general supervision and control of the Trust-
ees of the Fund. For the fiscal year ended June 30, 1997, the Fund paid the
Adviser a fee equal to .44 of 1% of the average daily value of the Fund's net
assets.

7
<PAGE>

Fund's Statement of Additional Information under "Management of the Fund."

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 Octo-
ber 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 Trust-
ees.

<PAGE>

This is filed pursuant to Rule 497(c).
Files Nos. 002-61564 and 811-02835.

<PAGE>

(LOGO) ALLIANCE CAPITAL RESERVES

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

STATEMENT OF ADDITIONAL INFORMATION
October 31, 1997

TABLE OF CONTENTS
Page

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

Investment Objectives and Policies........................ 2

Investment Restrictions................................... 9

Management................................................ 11

Purchase and Redemption of Shares......................... 20

Additional Information.................................... 24

Daily Dividends-Determination of Net Asset Value.......... 27

Taxes..................................................... 28

General Information....................................... 29

Appendix-Commercial Paper and Bond Ratings................ 32

Financial Statements...................................... 34-42

Independent Auditor's Report.............................. 43

_____________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated October 31, 1997. 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 Alliance Capital Management L.P. (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. For a further description of variable
amount master demand notes, see "Floating and Variable Rate
Obligations" below.

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

<PAGE>

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
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.* 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.

Floating and Variable Rate Obligations. The Fund may
purchase floating and variable rate obligations, including
floating and variable rate demand notes and bonds. The Fund may
invest in variable and floating rate obligations whose interest
rates are adjusted either at predesignated periodic intervals or
whenever there is a change in the market rate to which the
security's interest rate is tied. The Fund may also purchase
floating and variable rate demand notes and bonds, which are
obligations ordinarily having stated maturities in excess of 13
months, but which permit the holder to demand payment of
principal at any time, or at specified intervals not exceeding 13
months, in each case upon not more than 30 days' notice.

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

<PAGE>

instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they
are redeemable at face value, plus accrued interest.
Accordingly, when these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay
principal and interest on demand.

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.

Illiquid Securities. The Fund may also invest up to 10%
of the value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are
consistent with the Fund's investment objectives. Such
securities may include securities that are not readily
marketable, such as certain securities that are subject to legal
or contractual restrictions on resale (other than those
restricted securities determined to be liquid as described below)
and repurchase agreements not terminable within seven days. As
to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available
at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.

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").

<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 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,
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

<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.

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
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.

<PAGE>

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, generally restricts
its portfolio to the types of investments summarized above. 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 of "Investment
Objectives and Policies," 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.

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>

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. If a percentage
restriction is adhered to at the time of an investment, a later
increase or decrease in percentage resulting from a change in
value of portfolio securities or in amount of the Fund's assets
will not constitute a violation of that restriction.

The Fund:

<PAGE>

1. May not purchase any security which has a maturity
date more than one year** 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;

____________________

** 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 the
Adviser.

Trustees

DAVE H. WILLIAMS,*** 65, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
____________________

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

<PAGE>

("ACMC"),**** sole general partner of the Adviser with which he
has been associated since prior to 1992.

JOHN D. CARIFA*, 52, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1992.

SAM Y. CROSS, 70, was, since prior to December 1992,
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, 59, is President of Middleton Place
Foundation with which he has been associated since prior to 1992.
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., 65, 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 1992. His address is 2 Greenwich Plaza, Suite
100, Greenwich, CT 06830.

DONALD J. ROBINSON, 63, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently Senior Counsel to
that firm. He was a Trustee of the Museum of the City of New
York from 1977 to 1995. His address is 666 Fifth Avenue, 19th
Floor, New York, New York 10103.

DAVID K. STORRS, 53, is President and Chief Executive
Officer of Alternative Investment Group, LLC (a venture capital
firm). He was formerly President of The Common Fund (investment
management for educational institutions) with which he had been
associated since prior to 1992. His address is 65 South Gate
Lane, Southport, Connecticut 06490.

SHELBY WHITE, 59, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

____________________

**** 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>

Officers

RONALD M. WHITEHILL - President, 59, 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 1992.

KATHLEEN A. CORBET - Senior Vice President, 37, is an
Executive Vice President of ACMC. Prior thereto, she was
employed by Equitable Capital since prior to 1992.

DREW BIEGEL - Senior Vice President, 46, is a Vice
President of ACMC which he has been associated with since prior
to 1992.

JOHN R. BONCZEK - Senior Vice President, 37, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

ROBERT I. KURZWEIL - Senior Vice President, 46, 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 1992.

WAYNE D. LYSKI - Senior Vice President, 56, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1992.

PATRICIA NETTER - Senior Vice President, 46, is a Vice
President of ACMC with which she has been associated since prior
to 1992.

KENNETH T. CARTY - Vice President, 36, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOHN F. CHIODI, Jr. - Vice President, 31, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

DORIS T. CILIBERTI - Vice President, 33, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1992.

MARIA R. CONA - Vice President, 42, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1992.

<PAGE>

WILLIAM J. FAGAN - Vice President, 35, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOSEPH R. LASPINA -Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

LINDA D. NEIL - Vice President, 37, 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 1992.

RAYMOND J. PAPERA - Vice President, 41, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

EDMUND P. BERGAN, Jr. - Secretary, 47, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1992.

MARK D. GERSTEN - Treasurer and Chief Financial Officer,
47, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1992.

VINCENT S. NOTO - Controller, 32, is a Money Market Fund
Manager, Mutual Funds of Alliance Fund Services, Inc. with which
he has been associated since prior to 1992.

As of October 15, 1997, the Trustees and officers as a
group owned less than 1% of the shares 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, 1997, the
aggregate compensation paid to each of the Trustees during
calendar year 1996 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies (and separate investment portfolios within
those companies) in the Alliance Fund Complex with respect to
which each of the Trustees serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees.

<PAGE>

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

Dave H. Williams $-0- $-0- 6 15
John D. Carifa $-0- $-0- 52 114
Sam Y. Cross $2,897 $ 12,000 3 12
Charles H.P. Duell $2,897 $ 12,000 3 12
William H. Foulk, Jr. $3,020 $144,250 34 70
Elizabeth J. McCormack $2,522 $ 9,750 3 12
Donald J. Robinson $-0- $137,250 42 102
David K. Storrs $2,897 $ 12,000 3 12
Shelby White $2,897 $ 12,000 3 12

On August 11, 1997, Elizabeth J. McCormack resigned as a
Trustee.

On September 8, 1997, Donald J. Robinson was elected as
a Trustee.

The Adviser

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

The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1997 of more than $217 billion (of which more than
$81 billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds. As of September 30, 1997, the
Adviser was an investment manager of employee benefit fund assets
for 28 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,500
employees who operated out of five domestic offices and the
offices of subsidiaries in Bahrain, Bangalore, Chennai, Istanbul,
London, Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto and

<PAGE>

affiliate offices located in Vienna, Warsaw, Hong Kong, Sao Paulo
and Moscow. The 54 registered investment companies comprising
more than 116 separate investment portfolios managed by the
Adviser currently have more than two million shareholders.

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"). ECI is a holding company
controlled by AXA-UAP, a French insurance holding company which
at September 30, 1997, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1997, ACMC,
Inc. and Equitable Capital Management Corporation, each a wholly-
owned direct or indirect subsidiary of Equitable, together with
Equitable, owned in the aggregate approximately 57% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser.

AXA-UAP is a holding company for an international group
of insurance and related financial services companies. AXA-UAP's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically with activities,
principally in Western Europe, North America and the Asia/Pacific
area. AXA-UAP is also engaged in asset management, investment
banking, securities trading, brokerage, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.

Based on information provided by AXA-UAP, as of
September 30, 1997 more than 25% of the voting power of AXA-UAP
was controlled directly and indirectly by FINAXA, a French
holding company. As of September 30, 1997 more than 25% of the
voting power of FINAXA was controlled directly and indirectly by
four French mutual insurance companies (the "Mutuelles AXA"), one
of which, AXA Assurances I.A.R.D. Mutuelle, itself controlled
more than 25% of the voting power of FINAXA. Acting as a group,
the Mutuelles AXA control AXA-UAP and FINAXA.

Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
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

<PAGE>

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, 1995, 1996 and 1997, the
Adviser received from the Fund advisory fees (net of
reimbursement for the fiscal year ended June 30, 1997) of
$11,459,444, $19,411,685 and $25,922,659, 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 $149,500, $162,000 and $172,000 in respect of
such services for the fiscal years ended June 30, 1995, 1996 and
1997, respectively.

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 ratified
by the Trustees. For the fiscal years ended June 30, 1995, 1996
and 1997, the Fund reimbursed such broker-dealers a total of
$556,217, $928,072 and $1,840,626, respectively.

<PAGE>

The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1998
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 16, 1997.

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

Rule 12b-1 adopted by the Securities and Exchange
Commission under the Act permits an investment company to
directly or indirectly pay expenses associated with the
distribution of its shares in accordance with a duly adopted and
approved plan. The Fund has entered into a Distribution Services
Agreement (the "Agreement") which includes a plan adopted
pursuant to Rule 12b-1 (the "Plan") with Alliance Fund
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 Distributor and Donaldson, Lufkin &
Jenrette Securities Corporation and its Pershing Division,
affiliates of the Adviser, for distribution assistance and to
banks and other depository institutions for administrative and
accounting services, and (ii) otherwise promoting the sale of
shares of the Fund such as by paying for the preparation,
printing and distribution of prospectuses and other promotional

<PAGE>

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, 1997, the Fund made payments to
the Adviser for expenditures under the Agreement in amounts
aggregating $13,873,700 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 $14,257,894. Of the $28,131,594 paid by the Adviser
and the Fund under the Agreement, $183,000 was paid for
advertising, printing and mailing of prospectuses to persons
other than current shareholders; and $27,948,594 was paid to
broker-dealers and other financial intermediaries for
distribution assistance.

The administrative and accounting services provided by
banks and other depository institutions may include, but are not
limited to, establishing and maintaining shareholder accounts,
sub-accounting, processing of purchase and redemption orders,
sending confirmations of transactions, forwarding financial
reports and other communications to shareholders and responding
to shareholder inquiries regarding the Trust. As interpreted by
courts and administrative agencies, certain laws and regulations
limit the ability of a bank or other depository institution to
become an underwriter or distributor of securities. However, in
the opinion of the Fund's management based on the advice of
counsel, these laws and regulations do not prohibit such
depository institutions from providing other services for
investment companies such as the administrative and accounting
services described above. The Trustees will consider appropriate
modifications to the 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, 1998 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 16, 1997.

<PAGE>

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
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

<PAGE>

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.

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.

<PAGE>

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

A. By Telephone

You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed)
between 9:00 a.m. and 5:00 p.m. (New York time) via orders given
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

<PAGE>

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.

B. By Checkwriting

With this service, you may write checks made payable to
any payee. 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 checkwriting
service, subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate charge for
the checkwriting service, except that State Street Bank may
impose charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a
stop order. There is currently a $7.50 charge for check
reorders.

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 to State Street Bank for payment.

C. 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

<PAGE>

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
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,

<PAGE>

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
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.

<PAGE>

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.

A "business day," during which purchases and redemptions
of Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday, exclusive of New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day;
if one of these holidays falls on a Saturday or Sunday, purchases
and redemptions will likewise not be processed on the preceding
Friday or the following Monday, respectively. However, on any
such day that is an official bank holiday in Massachusetts,
neither purchases nor wired redemptions can become effective
because Federal funds cannot be received or sent by State Street
Bank. On such days, therefore, the Fund can only accept
redemption orders for which shareholders desire remittance by
check. The right of redemption may be suspended or the date of a
redemption payment postponed for any period during which the New
York Stock Exchange is closed (other than customary weekend and
holiday closings), when trading on the New York Stock Exchange is
restricted, or an emergency (as determined by the 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.

<PAGE>

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.

The Fund utilizes the amortized cost method of valuation
of portfolio securities in accordance with the provisions of Rule
2a-7 under the Act. Pursuant to such rule, the Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less and
invests only in securities of high quality. The Fund also
purchases instruments which, at the time of investment having
remaining maturities of no more than 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
to the extent required by Rule 2a-7 under the Act 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.

<PAGE>

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.

<PAGE>

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.

For shareholders' Federal income tax purposes, all
distributions by the Fund out of interest income and net realized
short-term capital gains are treated as ordinary income, and
distributions of long-term capital gains, if any, are treated as
long-term capital gains irrespective of the length of time the
shareholder held shares in the Fund. Since the Fund derives
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.

<PAGE>

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, 1995, 1996 and 1997, the Fund paid no
brokerage commissions.

Capitalization. All shares of the Fund, when issued,
are fully paid and non-assessable. The Trustees are authorized
to reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of 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 15, 1997, there were 6,261,741 shares of
beneficial interest of the Fund outstanding. To the knowledge of
the Fund there were no persons who owned of record, or
beneficially, 5% or more of the outstanding shares of the Fund as
of October 15, 1997.

Shareholder Liability. Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or
obligations of the Fund and requires that the Trustees use their
best efforts to ensure that notice of such disclaimer be given in
each note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or officers of the Trust. The
Declaration of Trust provides for indemnification out of the
property of the Fund for all loss and expense of any shareholder
of the Fund held personally liable for the obligations of the

<PAGE>

Fund. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances
in which the Fund would be unable to meet its obligations. In
the view of the Adviser, such risk is not material.

Legal Matters. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, New York, New
York, counsel for the Fund 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.

Yield Quotations. Advertisements containing yield
quotations for the Fund may from time to time be sent to
investors or placed in newspapers, magazines or other media on
behalf of the Fund. These advertisements may quote performance
rankings, ratings or data from independent organizations or
financial publications such as Lipper Analytical Services, Inc.,
Morningstar, Inc., IBC's Money Fund Report, IBC's Money Market
Insight or Bank Rate Monitor or compare the Fund's performance to
bank money market deposit accounts, certificates of deposit or
various indices. 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, 1997 was 4.72% which is the equivalent of a 4.83%
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

<PAGE>

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

A-1

<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.

A-2
00250122.AH9

<PAGE>

ALLIANCE CAPITAL RESERVES

ALLIANCE CAPITAL

ANNUAL REPORT
JUNE 30, 1997

STATEMENT OF NET ASSETS
JUNE 30, 1997 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-51.0%
ABBEY NATIONAL
$ 17,060 7/08/97 5.55% $17,041,589
86,000 7/09/97 5.61 85,892,787
13,000 8/21/97 5.62 12,896,498
ABN AMRO N. AMERICAN FINANCE
15,000 7/15/97 5.32 14,968,967
25,000 7/08/97 5.36 24,973,944
AGA CAPITAL CORP.
13,000 7/08/97 (a) 5.56 12,985,946
9,900 7/24/97 (a) 5.58 9,864,706
9,000 7/09/97 (a) 5.60 8,988,800
10,000 7/28/97 (a) 5.60 9,958,000
15,000 7/07/97 (a) 5.70 14,985,750
AKZO NOBEL, INC.
17,000 11/21/97 5.58 16,623,195
ALLIANZ OF AMERICA FINANCE CORP.
12,000 8/11/97 (a) 5.57 11,923,877
20,000 7/10/97 (a) 5.65 19,971,750
5,000 8/18/97 (a) 5.72 4,961,867
ASSOCIATES CORP. OF NORTH AMERICA
65,000 8/13/97 5.60 64,565,222
58,000 7/30/97 5.66 57,735,552
ATLAS FUNDING CORP.
27,000 7/15/97 (a) 5.67 26,940,465
BANCA CERFIN
16,000 8/07/97 5.39 15,911,364
BANCO NACIONAL DE COMERICO
22,500 9/17/97 5.55 22,229,438
54,000 12/02/97 5.60 52,706,400
BAT CAPITAL CORP.
35,000 8/05/97 (a) 5.57 34,810,465
17,000 8/13/97 (a) 5.58 16,886,695
BBV FINANCE DELAWARE, INC.
15,000 7/29/97 5.35 14,937,583
BHF FINANCE DELAWARE, INC.
160,000 9/24/97 5.58 157,893,889
BIL NORTH AMERICA, INC.
15,000 8/18/97 5.29 14,894,200
10,000 7/03/97 5.63 9,996,872
BRADFORD & BINGLEY BUILDING SOCIETY
45,000 7/09/97 5.59% 44,944,100
BT SECURITIES INC.
25,000 9/15/97 5.59 24,704,972
CAISSE CENTRALE JARDINS DU QUEBEC
35,000 8/05/97 5.40 34,816,250
CEMEX
28,250 8/11/97 5.71 28,066,289
CHIAO TUNG BANK CO., LTD.
18,000 8/26/97 5.33 17,850,760
COMMONWEALTH BANK OF AUSTRALIA
40,000 7/14/97 5.42 39,921,711
COPLEY FINANCING CORP.
19,200 7/11/97 (a) 5.55 19,170,400
CREGEM NORTH AMERICA, INC.
30,000 9/12/97 5.62 29,658,117
CS FIRST BOSTON
45,000 8/19/97 5.40 44,669,250
37,000 7/01/97 5.62 37,000,000
37,000 10/08/97 5.70 36,420,025
20,000 10/08/97 5.73 19,684,850
EKSPORTFINANS
14,000 7/03/97 5.63 13,995,621
EMBARCADERO CENTER IV
7,400 7/07/97 5.66 7,393,019
FORD MOTOR CREDIT CORP.
185,000 7/09/97 5.56 184,771,422
GENERAL ELECTRIC CAPITAL CORP.
175,000 7/10/97 5.56 174,756,750
45,000 7/28/97 5.63 44,809,988
GENERALE BANK
20,000 7/28/97 5.39 19,919,150
20,000 7/16/97 5.40 19,955,000
25,000 7/16/97 5.55 24,942,187
25,000 10/27/97 5.79 24,525,542

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
GLENCORE FINANCE, LTD.
$ 90,000 8/25/97 5.43% $89,253,375
60,000 8/26/97 5.43 59,493,200
30,000 9/15/97 5.58 29,646,600
30,500 8/28/97 5.64 30,222,857
HENKEL CORP.
22,000 9/09/97 5.60 21,760,444
64,000 9/17/97 5.68 63,212,373
6,000 10/20/97 5.70 5,894,550
IMI FUNDING CORP.
64,100 7/01/97 5.58 64,100,000
20,000 7/21/97 5.60 19,937,778
INDUSTRIAL BANK KOREA
18,000 9/15/97 5.70 17,783,400
10,000 7/29/97 5.72 9,955,511
27,000 8/27/97 5.72 26,755,470
25,000 9/03/97 5.75 24,744,444
INTERNATIONAL NEDERLAND
17,000 9/09/97 5.58 16,815,550
KOREAN DEVELOPMENT BANK
15,000 8/22/97 5.65 14,877,583
139,000 8/25/97 5.66 137,798,036
47,713 7/25/97 5.68 47,532,327
45,500 8/11/97 5.68 45,205,666
MERRILL LYNCH & CO., INC.
63,000 1/14/98 5.85 60,983,213
NATIONAL CITY BANK
34,000 9/29/97 5.59 33,524,850
PEMEX CAPITAL INC.
90,000 7/30/97 5.39 89,609,225
ROSE FUNDING
54,462 8/28/97 (a) 5.65 53,966,245
SIGMA FINANCE, INC.
15,000 7/25/97 (a) 5.41 14,945,900
31,706 7/15/97 (a) 5.43 31,639,048
SUMITOMO BANK
50,000 7/07/97 5.65 49,952,917
TORONTO DOMINION HOLDINGS
40,000 12/23/97 5.58 38,915,000
UNI FUNDING, INC.
37,000 9/15/97 5.58 36,564,140
63,700 7/21/97 5.60 63,501,822
32,000 9/05/97 5.60 31,671,467
UNIBANCO UNIAO DE BANCOS
25,000 9/17/97 5.59 24,697,208
18,000 9/18/97 5.59 17,779,195
VENANTIUS AB
5,000 7/16/97 5.38 4,988,792

Total Commercial Paper
(amortized cost $2,925,249,410) 2,925,249,410

CERTIFICATES OF DEPOSIT-25.3%
AMERICAN EXPRESS CENTURION BANK
25,000 5.56%, 7/23/97 5.58 24,999,530
BANK OF NEW YORK
20,000 5.51%, 7/09/97 5.51 20,000,000
BANK OF TOKYO
45,000 5.75%, 9/30/97 5.75 45,000,000
37,000 5.80%, 7/08/97 5.80 37,000,000
67,000 5.80%, 9/09/97 5.80 67,000,000
103,000 5.84%, 7/18/97 5.84 103,000,000
21,000 5.85%, 8/06/97 5.85 21,000,000
BAYERISCHE VEREINSBANK
45,000 5.50%, 7/07/97 5.50 45,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
70,000 5.70%, 8/14/97 5.70 70,000,000
CARIPLO FINANCE, INC.
10,000 5.68%, 9/26/97 5.67 10,000,238
48,000 5.75%, 7/17/97 5.74 48,000,210
CHASE MANHATTAN BANK
25,000 5.53%, 7/31/97 5.50 25,001,404
HESSISCHE LANDESBANK
58,000 6.13%, 4/07/98 6.25 57,949,093
J.P. MORGAN & CO., INC.
15,000 5.78%, 8/05/97 5.62 14,998,349
KOREAN DEVELOPMENT BANK
30,000 5.77%, 9/12/97 5.75 30,001,199

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
MIDLAND BANK PLC
$ 50,000 5.52%, 7/29/97 5.67% $49,989,077
NORINCHUKIN BANK
37,000 5.74%, 7/28/97 5.74 37,000,000
46,000 5.80%, 7/09/97 5.79 46,000,101
45,000 5.81%, 9/08/97 5.80 45,000,850
50,000 5.83%, 7/22/97 5.82 50,000,287
95,000 5.84%, 8/07/97 5.83 95,001,443
SANWA BANK
42,000 5.65%, 7/07/97 5.65 42,000,000
70,000 5.66%, 7/14/97 5.66 70,000,000
26,000 5.69%, 7/10/97 5.66 26,000,160
SOCIETE GENERALE N.A., INC.
30,000 5.49%, 8/11/97 5.84 29,986,388
50,000 5.56%, 9/03/97 5.55 50,000,864
58,000 5.72%, 9/02/97 5.67 58,004,645
42,000 5.73%, 8/06/97 5.72 42,000,414
SUMITOMO BANK
30,000 5.68%, 7/15/97 5.68 30,000,000
42,000 5.68%, 7/09/97 5.70 41,999,680
16,000 5.70%, 7/03/97 5.68 16,000,015
UNION BANK
100,000 5.56%, 7/10/97 5.56 100,000,000

Total Certificates of Deposit
(amortized cost $1,447,933,947) 1,447,933,947

BANK OBLIGATIONS-9.6%
AUSTRALIA & NEW ZEALAND BANK
22,000 5.90%, 9/23/97 5.88 21,991,217
BAYERISCHE VEREINSBANK
170,000 5.56%, 6/30/98 FRN 5.62 169,901,314
DEUTSCHE BANK
160,000 5.61%, 7/01/98 FRN 5.71 159,844,720
LASALLE NATIONAL BANK
25,000 5.74%, 12/15/97 5.74 25,000,000
MORGAN GUARANTY TRUST CO.
60,000 5.69%, 11/14/97 FRN 5.77 59,979,045
75,000 5.96%, 6/22/98 5.99 74,975,535
SMM TRUST
40,000 5.69%, 5/29/98 FRN (a) 5.69 40,000,000

Total Bank Obligations
(amortized cost $551,691,831) 551,691,831

CORPORATE OBLIGATIONS-6.9%
CENTAURI CORP. USA
25,000 5.56%, 2/06/98 FRN (a) 5.58 24,999,269
GENERAL ELECTRIC CAPITAL CORP.
33,000 5.75%, 1/05/98 FRN 5.75 33,000,000
J.P. MORGAN & CO., INC.
88,000 5.38%, 8/15/97 FRN 5.43 87,994,785
MERRILL LYNCH & CO., INC.
60,000 5.60%, 1/22/98 FRN 5.64 59,991,841
37,000 5.66%, 3/16/98 5.74 36,997,508
50,000 5.71%, 12/24/97 FRN 5.73 49,995,323
60,000 5.78%, 1/29/98 FRN 5.80 59,993,161
SALTS III CAYMAN ISLANDS CORP.
40,000 5.79%, 7/23/97 (a) 5.79 40,000,000

Total Corporate Obligations
(amortized cost $392,971,887) 392,971,887

PROMISSORY NOTE-4.7%
GOLDMAN SACHS GROUP L.P.
140,000 5.69%, 10/14/97 FRN 5.69 140,000,000
130,000 5.81%, 11/26/97 FRN 5.81 130,000,000

Total Promissory Note
(amortized cost $270,000,000) 270,000,000

U.S. GOVERNMENT AND AGENCY
OBLIGATIONS-3.3%
AID HOUSING GUARANTY PROJECT PORTUGAL
12,188 5.77%, 12/01/16 FRN 5.77 12,187,500
FEDERAL FARM CREDIT BANK
66,000 5.41%, 8/03/98 FRN 5.46 65,966,225
FEDERAL HOME LOAN MORTGAGE ASSN.
26,000 7/01/97 6.00 26,000,000

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSN.
$ 88,000 5.37%, 8/25/97 FRN 5.41% $87,994,878

Total U.S. Government
and Agency Obligations
(amortized cost $192,148,603) 192,148,603

TIME DEPOSITS-1.7%
CANADIAN IMPERIAL BANK
29,000 6.38%, 7/01/97 6.38 29,000,000
DEUTSCHE BANK
55,600 6.25%, 7/01/97 6.25 55,600,000
WEST DEUTSCHE LANDESBANK
11,000 6.38%, 7/01/97 6.38 11,000,000

Total Time Deposits
(amortized cost $95,600,000) 95,600,000

TOTAL INVESTMENTS-102.5%
(amortized cost $5,875,595,678) $5,875,595,678
Other assets less liabilities-(2.5%) (142,790,315)

NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
5,733,513,484 shares outstanding) $5,732,805,363

# All securities either mature or their interest rate changes in one year or
less.

(a) Securities issued in reliance on section 4(2) or Rule 144A of the
Securities Act of 1933. Rule 144A securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. These
securities have been determined by the Adviser to be liquid pursuant to
procedures adopted by the Trustees. At June 30, 1997, these securities amounted
to $396,999,183 representing 6.9% of net assets.

Glossary:
FRN - Floating Rate Note

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $306,914,227

EXPENSES
Advisory fee (Note B) $25,922,659
Distribution assistance and administrative
service (Note C) 15,886,326
Transfer agency (Note B) 11,128,361
Registration fees 1,031,662
Custodian fees 707,717
Printing 674,200
Audit and legal fees 56,343
Trustees' fees 17,406
Miscellaneous 70,125
Total expenses 55,494,799
Net investment income 251,419,428

REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (887)

NET INCREASE IN NET ASSETS FROM OPERATIONS $251,418,541

STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 251,419,428 $ 192,438,403
Net realized loss on investment transactions (887) (46,151)
Net increase in net assets from operations 251,418,541 192,392,252

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (251,419,428) (192,438,403)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 928,726,972 1,780,033,338
Total increase 928,726,085 1,779,987,187

NET ASSETS
Beginning of year 4,804,079,278 3,024,092,091
End of year $5,732,805,363 $4,804,079,278

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 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, the
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. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment transactions is recorded
on the identified cost basis.

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, 1997. 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 $6,685,249 for the year ended June 30, 1997.

NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
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 such payments in their
entirety for distribution assistance and promotional activities. For the year
ended June 30, 1997, the distribution fee amounted to $13,873,700. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection with providing shareholder services and may reimburse
the Adviser for accounting and bookkeeping and legal and compliance support.
For the year ended June 30, 1997, such payments by the Portfolio amounted to
$2,012,626 of which $172,000 was paid to the Adviser.

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1997 the
Portfolio had a capital loss carryforward of $708,121 of which $85,995 expires
in 2001, $49,939 expires in 2002, $464,313 expires in 2003, $106,987 expires in
2004 and $887 expires in the year 2005.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1997, capital paid-in aggregated $5,733,513,484. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
---------------- ----------------
Shares sold 26,431,373,115 21,097,386,036
Shares issued on reinvestments of dividends 251,419,428 192,438,403
Shares redeemed (25,754,065,571) (19,509,791,101)
Net increase 928,726,972 1,780,033,338

FINANCIAL HIGHLIGHTS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------
<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 .0452 .0471 .0447 .0255 .0266
Net realized gain on investment transactions -0- -0- -0- -0- .0003
Net increase in net assets from operations .0452 .0471 .0447 .0255 .0269

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.0452) (.0471) (.0447) (.0255) (.0266)
Distributions from net realized gains -0- -0- -0- -0- (.0003)
Total dividends and distributions (.0452) (.0471) (.0447) (.0255) (.0269)
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) 4.63% 4.82% 4.57% 2.58% 2.73%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $5,733 $4,804 $3,024 $2,417 $2,112
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% 1.00% 1.03% 1.03% 1.00%
Net investment income 4.53% 4.69% 4.51% 2.57% 2.65%
</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, 1997 and the related statements of
operations, changes in net assets, and financial highlights for the periods
indicated in the accompanying financial statements. These financial statement
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, 1997, by correspondence with the custodian and brokers.

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, 1997, and the results of its
operations, changes in its net assets, and its financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.

McGladrey & Pullen, LLP
New York, New York
July 29, 1997

<PAGE>

(LOGO) ALLIANCE CAPITAL RESERVES
- Alliance Money Reserves

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

STATEMENT OF ADDITIONAL INFORMATION
October 31, 1997

TABLE OF CONTENTS

Page

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

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

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

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

Purchase and Redemption of Shares...........................20

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

Daily Dividends-Determination of Net Asset Value............26

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

General Information.........................................28

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

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

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

_________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated October 31, 1997. 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 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
deposit of funds. The issuer agrees to pay the amount deposited

<PAGE>

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. For a
further description of variable amount master demand notes, see
"Floating and Variable Rate Obligations" below.

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'
creditworthiness. For each repurchase agreement, the Fund
requires continual maintenance of the market value of underlying

<PAGE>

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.***** 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.

The Fund also invests in variable amount master demand
notes (which may have demand features in excess of 30 days) which
are obligations that permit the Fund to invest fluctuating
amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower.
Because these obligations are direct lending arrangements between
the lender and the borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they
are redeemable at face value, plus accrued interest.
Accordingly, when these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay
principal and interest on demand.
____________________

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

<PAGE>

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 Alliance Capital
Management L.P. (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").

<PAGE>

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.

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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: