<PAGE>
As filed with the Securities and Exchange
Commission on October 30, 1997
File No. 2-61564
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
Pre-Effective Amendment No.
Post-Effective Amendment No. 31 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF l940
Amendment No. 29 X
ALLIANCE CAPITAL RESERVES
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including
Area Code: (800) 221-5672
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
It is proposed that this filing will become effective (Check
appropriate line)
X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
______75 days after filing pursuant to paragraph (a)(2)
______on (date) pursuant to paragraph (a)(2) of Rule 485.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectuses
(Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Financial Highlights Financial Highlights
Item 4. General Description Investment Objectives
of Registrant and Policies
Item 5. Management of the Fund Additional Information
Item 6. Capital Stock and Other Additional Information
Securities
Item 7. Purchase of Securities Purchase and Redemption
Being Offered of Shares; Additional
Information
Item 8. Redemption or Repurchase Purchase and Redemption
of Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B
Location in Statement
Of Additional Information
(Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Management; General
and History Information
Item 13. Investment Objectives Investment Objectives
and Policies and Policies; Investment
Restrictions
<PAGE>
Item 14. Management of the
Fund Management
Item 15. Control Persons and
Principal Holders of
Securities Management
Item 16. Investment Advisory
and Other Services Management
Item 17. Brokerage Allocation General Information
Item 18. Capital Stock and Daily Dividends -
Other Securities Determination of Net Asset
Value; General Information
Item 19. Purchase, Redemption Purchase and Redemption
and Pricing of Of Shares; Daily
Securities Being Dividends -
Offered Determination of Net
Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters General Information
Item 22. Calculation of General Information
Performance Data
Item 23. Financial Statements Financial Statements;
Report of Independent
Accountants
<PAGE>
<PAGE>
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.
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 November 1, 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 Objectives and Policies........................................ 4
Purchase and Redemption of Shares......................................... 5
Additional Information.................................................... 6
</TABLE>
ALLIANCE
CAPITAL
RESERVES
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
PROSPECTUS
NOVEMBER 1, 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; net of expense reimbursement)
Management Fees......................................................... .46%
12b-1 Fees.............................................................. .25
Other Expenses.......................................................... .29
----
Total Fund Operating Expenses........................................... 1.00%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return (cumulatively through the end of
each time period): $10 $32 $55 $122
</TABLE>
The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly and indirectly. The expenses listed in the table are net of the con-
tractual reimbursement by the Adviser described in this prospectus. The ex-
penses of the Fund before such reimbursement and fee waiver would be: Manage-
ment Fees--.46%, 12b-1 Fees--.25%, Other Expenses--.29% and Total Operating
Expenses--1.00%. The example should not be considered a representation of past
or future expenses; actual expenses may be greater or less than those shown.
FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR (AUDITED)
The following tables have been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of Addi-
tional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------------
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>
- -------
(a)Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(b)Net of expenses reimbursed or waived by the Adviser.
- -------------------------------------------------------------------------------
From time to time the Fund advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
compounding, the dividends paid are assumed to be reinvested. Dividends for
the seven days ended June 30, 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
No withdrawal fees or penalties Checkwriting
Low-expense Distribution Plan Free institutional record-keeping
(.25 of 1% maximum annual rate) services
Daily compounding of dividends IRA, SEP, 403 (b) (7) and employer-
First-day income for investments sponsored retirement plans
Same-day funds for withdrawals Low investment minimums
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are--in the following order of priority--
safety of principal, excellent liquidity, and maximum current income to the
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.
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
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 in any
amount. Checks cannot be written for more than the principal balance (not in-
cluding any accrued 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 presented 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.
ADDITIONAL INFORMATION
SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be con-
stant at $1.00 per share, although this price is not guaranteed. The net asset
value of the Fund's shares is determined at 12:00 Noon and 4:00 p.m. (New York
time) each business day. The net asset value per share is calculated by taking
the sum of the value of the Fund's investments (amortized cost value is used
for this purpose) and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares outstanding. All expenses, including
the fees payable to the Adviser, are accrued daily.
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 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 .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 $199 billion
(of which more than $71 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 29 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.
8
<PAGE>
<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 November 1, 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 NOVEMBER 1, 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.
The short average maturity of the portfolio enhances our ability to
maintain the Fund's share price at $1.00--this, in turn, provides both
stability of value and liquidity to you and your fellow shareholders.
Our professional investment managers seek the maximum current income
for the Fund that is consistent with safety of principal and 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?
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 MONEY RESERVES
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-spon-
Daily compounding of dividends sored retirement plans
First-day income for investments Low investment minimums
Same-day funds for withdrawals
3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is maximum current income to the extent con-
sistent with safety of principal and liquidity. As a matter of fundamental
policy, the Fund pursues its objective by maintaining a portfolio of high
quality U.S. dollar-denominated money market securities, all of which at the
time of investment have remaining maturities of one year or less, which matu-
rities may extend to 397 days. While the Fund may not change this policy or
the other fundamental investment policies described in a separate section 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 rates, 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.
The Fund may purchase restricted securities that are determined by the Ad-
viser to be liquid in accordance with procedures adopted by the Trustees of
the Fund, including securities eligible for resale under Rule 144A under the
Securities Act of 1933 (the "Securities Act") and commercial paper issued in
reliance upon the exemption from registration in Section 4(2) of the Securi-
ties Act. Restricted securities are securities subject to contractual or legal
restrictions on resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act.
The Fund may 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
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 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 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.
As a matter of operating policy, fundamental policy number (2) would give the
Fund the ability to invest, with respect to 25% of its assets, more than 5% of
its assets in any one issuer only in the event Rule 2a-7 is amended in the fu-
ture.
PURCHASE AND REDEMPTION OF SHARES
OPENING ACCOUNTS
Instruct your Account Executive to open an account in the Fund in conjunction
with your brokerage account.
SUBSEQUENT INVESTMENTS
A. BY CHECK THROUGH YOUR BROKERAGE FIRM
Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.
B. BY SWEEP
Your brokerage firm may offer an automatic "sweep" for the Fund in the opera-
tion of brokerage cash accounts for its customers. Contact your Account Execu-
tive to determine if a sweep is available and what the sweep parameters are.
5
<PAGE>
REDEMPTIONS
A. BY CHECKWRITING
With this service, you may write checks made payable to any payee in any
amount. Checks cannot be written for more than the principal balance (not in-
cluding any accrued 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 presented 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.
ADDITIONAL INFORMATION
SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be con-
stant at $1.00 per share, although this price is not guaranteed. The net asset
value of the Fund's shares is determined at 12:00 Noon and 4:00 p.m. (New York
time) each business day. The net asset value per share is calculated by taking
the sum of the value of the Fund's investments (amortized cost value is used
for this purpose) and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares outstanding. All expenses, including
the fees payable to the Adviser, are accrued daily.
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 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.
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 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.
The Adviser is a leading international investment manager, supervising client
accounts with assets as of September 30, 1997 totaling more than $199 billion
(of which more than $71 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 29 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
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
7
<PAGE>
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 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.
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.
8
<PAGE>
(LOGO) ALLIANCE CAPITAL RESERVES
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
STATEMENT OF ADDITIONAL INFORMATION
November 3, 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 November 1, 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
2
<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
3
<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.
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
____________________
* As used throughout the Prospectus and Statement of
Additional Information, term "assets" shall refer to the
Fund's total assets.
4
<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").
5
<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
6
<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.
7
<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. Of
note, the Fund does not invest in letters of credit. The Fund
may make investments in certificates of deposit issued by foreign
branches of domestic banks and certificates of deposit or
bankers' acceptances issued by U.S. branches of foreign banks
specified above, and commercial paper issued by foreign companies
meeting the rating criteria specified in Section 3 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.
8
<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.
The Fund:
1. May not purchase any security which has a maturity
date more than one year** from the date of the Fund's purchase;
____________________
** Which maturity, pursuant to Rule 2a-7, may extend to 397
days.
9
<PAGE>
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;
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,
10
<PAGE>
acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
maintain a short position or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Fund's assets would be invested in such
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of the
Adviser who own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer; or (h) act as an underwriter of
securities.
MANAGEMENT
Trustees and Officers
The Trustees and principal officers of the Trust and
their principal occupations during the past five years are set
forth below. Unless otherwise specified, the address of each
such person is 1345 Avenue of the Americas, New York, 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
("ACMC"),**** sole general partner of the Adviser with which he
has been associated since prior to 1992.
____________________
*** An "interested person" of the Fund as defined in the Act.
**** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation,
the sole general partner of the Adviser, and to the
predecessor general partner of the Adviser of the same
name.
11
<PAGE>
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.
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.
12
<PAGE>
KATHLEEN A. CORBET - Senior Vice President, 37, has been
a Senior Vice President of ACMC since July 1993. 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.
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.
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<PAGE>
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.
14
<PAGE>
Total Number Total Number
of Funds in of Investment
the Alliance Portfolios
Total 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 New York Stock
Exchange listed company with principal offices at 1345 Avenue of
the Americas, New York, New York 10105, has been retained under
an investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Trustees.
The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1997 of more than $199 billion (of which more than
$71 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 retained as an investment manager of employee benefit
fund assets for 29 of the FORTUNE 100 companies. As of that
date, the Adviser and its subsidiaries employed approximately
1,450 employees who operated out of five domestic offices and the
offices of subsidiaries in , Istanbul, London, Mumbai, Paris, Sao
Paulo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
15
<PAGE>
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"), a holding company controlled by
AXA-VAP, a French insurance holding company. As of March 1,
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 ("Units"). As of March 31, 1997, approximately 34% and
9% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including an employee
of the Adviser who serves as a Director of the Fund.
As of March 1, 1997, AXA-VAP and its subsidiaries owned
60.7% of the issued and outstanding shares of the capital stock
of ECI. ECI is a public company with shares traded on the
Exchange. AXA-VAP, a French company, is the holding company for
an international group of insurance and related financial
services companies. AXA-VAP'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-VAP 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-VAP, on March 1,
1997, 22.5% of the issued ordinary shares (representing 33.0% of
the voting power) of AXA-VAP were controlled directly and
indirectly by Finaxa, a French holding company. As of March 1,
1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 34.9% of the shares, representing 40.0%
of the voting power), and 23.7% of the shares of Finaxa
(representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa, on March 1, 1997, the Mutuelles AXA
directly or indirectly controlled 26.0% of the issued ordinary
shares (representing 38.1% of the voting power) of AXA-VAP.
16
<PAGE>
Acting as a group, the Mutuelles AXA control AXA-VAP and
Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to
acquire 100% of the ordinary shares ("VAP Shares") of FF10 each
of Compagnie VAP, a societe anonyme organized under the laws of
France ("VAP"), in exchange for ordinary shares ("Shares") and
Certificates of Guaranteed Value ("Certificates") of AXA. Each
VAP shareholder that tendered VAP Shares in the Exchange Offer
received two Shares and two Certificates for every five VAP
Shares so tendered. On January 24, 1997, AXA acquired 91.37% of
the outstanding VAP Shares. AXA-VAP currently intends to merge
(the "Merger") with VAP at some future date in 1997. It is
anticipated that approximately 11,706,826 additional Shares will
be issued in connection with the Merger to VAP shareholders who
did not tender VAP Shares in the Exchange Offer. If the Merger
had been completed at March 1, 1997, Finaxa would have
beneficially owned (directly and indirectly) approximately 21.7%
of the Shares (representing approximately 32.0% of the voting
power), and the Mutuelles AXA would have controlled (directly or
indirectly through their interest in Finaxa) 25.1% of the issued
ordinary shares (representing 36.8% of the voting power) of AXA-
VAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14,
1997 and May 14, 1997, holders of the Bonds had the option to
convert each Bond into 5.15 Shares. On May 15, 1997, each Bond
still outstanding was redeemed into cash at FF1,285 plus FF9.29
accrued interest. Finaxa converted the Bonds it had owned into
2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been
completed at March 1, 1997, Finaxa would have beneficially owned
(directly and indirectly) approximately 21.4% of the Shares
(representing 31.3% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their
interest in Finaxa) 24.7% of the issued ordinary shares
(representing 36.0% of the voting power) of AXA-VAP.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees of the Trust who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual
rate of .50 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .49 of 1% of the next $.25
billion of such assets, .48 of 1% of the next $.25 billion of
such assets, .47 of 1% of the next $.25 billion of such assets,
.46 of 1% of the next $1 billion of such assets and .45 of 1% of
the average daily value of the Fund's net assets in excess of $3
billion. The fee is accrued daily and paid monthly. The Adviser
17
<PAGE>
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.
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
18
<PAGE>
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, an
affiliate of the Adviser, for distribution assistance and to
banks and other depository institutions for administrative and
accounting services, and (ii) otherwise promoting the sale of
shares of the Fund such as by paying for the preparation,
printing and distribution of prospectuses and other promotional
materials sent to existing and prospective shareholders and by
directly or indirectly purchasing radio, television, newspaper
and other advertising. In approving the Agreement the Trustees
determined that there was a reasonable likelihood that the
Agreement would benefit the Trust and its shareholders. During
19
<PAGE>
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.
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.
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<PAGE>
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
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
21
<PAGE>
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.
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.
22
<PAGE>
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
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
23
<PAGE>
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 in any amount of $100 or more. Checks cannot be
written for more than the principal balance (not including any
accrued dividends) in your account. First, you must fill out the
Signature Card which is with the Application Form. If you wish
to establish this 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 will impose its normal charges for checks
which are returned unpaid because of insufficient funds or for
checks upon which you have placed a stop order. There is 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
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,
24
<PAGE>
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,
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
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<PAGE>
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.
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.
26
<PAGE>
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, Washington's Birthday
(observed) 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.
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
27
<PAGE>
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 one year, which maturities
may extend to 397 days. The Fund maintains procedures designed
to stabilize, to the extent reasonably possible, the price per
share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Fund's portfolio
holdings by the Trustees at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Fund calculated by using available market quotations
or market equivalents deviates from net asset value based on
amortized cost. If such deviation exceeds 1/2 of 1%, the
Trustees will promptly consider what action, if any, should be
initiated. In the event the Trustees determine that such a
deviation may result in material dilution or other unfair results
to new investors or existing shareholders, they will consider
corrective action which might include (1) selling instruments
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares; or (3) establishing a net asset value per
share using available market quotations or equivalents. There
can be no assurance, however, that the Fund's net asset value per
share will remain constant at $1.00.
The net asset value of the shares is determined each
business day at 12:00 Noon and 4:00 p.m. (New York time). The
net asset value per share is calculated by taking the sum of the
value of the Fund's investments and any cash or other assets,
subtracting liabilities, and dividing by the total number of
shares outstanding. All expenses, including the fees payable to
the Adviser, are accrued daily.
28
<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.
The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
29
<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
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
the Trustees use their best efforts to ensure that notice of such
disclaimer be given in each note, bond, contract, instrument,
certificate or undertaking made or issued by the Trustees or
officers of the Trust. The Agreement and 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
30
<PAGE>
personally liable for the obligations of the 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
31
<PAGE>
the Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.
32
<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
1
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
2
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
3
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.
4
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.
5
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.
6
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
7
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.
8
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.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Capital Reserves Portfolio as of June 30, 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
9
<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.AG8
<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
November 3, 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 November 1, 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:
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 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
2
<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
3
<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.
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.
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.
4
<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.
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 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").
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
5
<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.
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
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
6
<PAGE>
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.
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.
The Fund may make investments in certificates of deposit
and bankers' acceptances issued or guaranteed by, or time
deposits maintained at, foreign branches of U.S. banks and
7
<PAGE>
foreign branches of foreign banks, and commercial paper issued by
foreign companies. To the extent that the Fund makes such
investments, consideration is given to their domestic
marketability, the lower reserve requirements generally mandated
for overseas banking operations, the possible impact of
interruptions in the flow of international currency transactions,
potential political and social instability or expropriation,
imposition of foreign taxes, the lower level of government
supervision of issuers, the difficulty in enforcing contractual
obligations and the lack of uniform accounting and financial
reporting standards. There can be no assurance, as is true with
all investment companies, that the Fund's objective will be
achieved. The market value of the Fund's investments tends to
decrease during periods of rising interest rates and to increase
during intervals of falling rates.
Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets.
The Fund's investment objective may not be changed
without the affirmative vote of a majority of the Fund's
outstanding shares as defined below. Except as otherwise
provided, the Fund's investment policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed by the Trustees of the Trust without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.
Rule 2a-7 under the Act. The Fund will comply with
Rule 2a-7 under the Act, as amended from time to time, including
the diversification, quality and maturity limitations imposed by
the Rule. To the extent that the Fund's limitations are more
permissive than Rule 2a-7, the Fund will comply with the more
restrictive provisions of the Rule.
Currently, pursuant to Rule 2a-7, the Fund may invest
only in U.S. dollar-denominated "eligible securities" (as that
term is defined in the Rule) that have been determined by the
Adviser to present minimal credit risks pursuant to procedures
approved by the Trustees. Generally, an eligible security is a
security that (i) has a remaining maturity of 397 days or less
and (ii) is rated, or is issued by an issuer with short-term debt
outstanding that is rated in one of the two highest rating
categories by two nationally recognized statistical rating
organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO. A security that originally had a maturity
8
<PAGE>
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.
The Fund:
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-
____________________
****** Which maturity, pursuant to Rule 2a-7, may extend to 397
days.
9
<PAGE>
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;
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
10
<PAGE>
maintain a short position or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Fund's assets would be invested in such
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of the
Adviser who own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer; or (h) act as an underwriter of
securities.
MANAGEMENT
Trustees and Officers
The Trustees and principal officers of the Trust and
their principal occupations during the past five years are set
forth below. Unless otherwise specified, the address of each
such person is 1345 Avenue of the Americas, New York, New York
10105. Those Trustees whose names are preceded by an asterisk are
"interested persons" of the Trust as determined under the Act.
Each Trustee and officer is also a director, trustee or officer
of other registered investment companies sponsored by the
Adviser.
Trustees
******* DAVE H. WILLIAMS, 65, Chairman, is Chairman of
the Board of Directors of Alliance Capital Management Corporation
("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.
____________________
*******An "interested person" of the Fund as defined in the Act.
********For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation,
the sole general partner of the Adviser, and to the
predecessor general partner of the Adviser of the same
name.
11
<PAGE>
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
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.
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, has been
a Senior Vice President of ACMC since July 1993. Prior thereto,
she was employed by Equitable Capital since prior to 1992.
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<PAGE>
DREW BIEGEL - Senior Vice President, 46, is a Vice
President of ACMC with which he has been associated 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 he has been associated since prior
to 1992.
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.
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<PAGE>
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.
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.
and Alliance Fund Distributors, Inc. with which he has been
associated since prior to 1992.
VINCENT S. NOTO- Controller, 32 is an Assistant Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1992.
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.
14
<PAGE>
Total Number Total Number
of Funds in of Investment
the Alliance Portfolios Within
Total Fund Complex, 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 $1,837 $ 12,000 3 12
Charles H.P. Duell $1,837 $ 12,000 3 12
William H. Foulk, Jr. $3,020 $144,250 34 70
Elizabeth J. McCormack $1,462 $ 9,750 3 12
Donald J. Robinson $-0- $137,250 42 102
David K. Storrs $1,837 $ 12,000 3 12
Shelby White $1,837 $ 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 New York Stock
Exchange listed company with principal offices at 1345 Avenue of
the Americas, New York, New York 10105, has been retained under
an investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Trustees.
The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1997 of more than $199 billion (of which more than
$71 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 retained as an investment manager of employee benefit
fund assets for 29 of the FORTUNE 100 companies. As of that
date, the Adviser and its subsidiaries employed approximately
1,450 employees who operated out of five domestic offices and the
offices of subsidiaries in , Istanbul, London, Mumbai, Paris, Sao
15
<PAGE>
Paulo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
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"), a holding company controlled by
AXA-VAP, a French insurance holding company. As of March 1,
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 ("Units"). As of March 31, 1997, approximately 34% and
9% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including an employee
of the Adviser who serves as a Director of the Fund.
As of March 1, 1997, AXA-VAP and its subsidiaries owned
60.7% of the issued and outstanding shares of the capital stock
of ECI. ECI is a public company with shares traded on the
Exchange. AXA-VAP, a French company, is the holding company for
an international group of insurance and related financial
services companies. AXA-VAP'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-VAP 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-VAP, on March 1,
1997, 22.5% of the issued ordinary shares (representing 33.0% of
the voting power) of AXA-VAP were controlled directly and
indirectly by Finaxa, a French holding company. As of March 1,
1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 34.9% of the shares, representing 40.0%
of the voting power), and 23.7% of the shares of Finaxa
(representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa, on March 1, 1997, the Mutuelles AXA
directly or indirectly controlled 26.0% of the issued ordinary
16
<PAGE>
shares (representing 38.1% of the voting power) of AXA-VAP.
Acting as a group, the Mutuelles AXA control AXA-VAP and
Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to
acquire 100% of the ordinary shares ("VAP Shares") of FF10 each
of Compagnie VAP, a societe anonyme organized under the laws of
France ("VAP"), in exchange for ordinary shares ("Shares") and
Certificates of Guaranteed Value ("Certificates") of AXA. Each
VAP shareholder that tendered VAP Shares in the Exchange Offer
received two Shares and two Certificates for every five VAP
Shares so tendered. On January 24, 1997, AXA acquired 91.37% of
the outstanding VAP Shares. AXA-VAP currently intends to merge
(the "Merger") with VAP at some future date in 1997. It is
anticipated that approximately 11,706,826 additional Shares will
be issued in connection with the Merger to VAP shareholders who
did not tender VAP Shares in the Exchange Offer. If the Merger
had been completed at March 1, 1997, Finaxa would have
beneficially owned (directly and indirectly) approximately 21.7%
of the Shares (representing approximately 32.0% of the voting
power), and the Mutuelles AXA would have controlled (directly or
indirectly through their interest in Finaxa) 25.1% of the issued
ordinary shares (representing 36.8% of the voting power) of AXA-
VAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14,
1997 and May 14, 1997, holders of the Bonds had the option to
convert each Bond into 5.15 Shares. On May 15, 1997, each Bond
still outstanding was redeemed into cash at FF1,285 plus FF9.29
accrued interest. Finaxa converted the Bonds it had owned into
2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been
completed at March 1, 1997, Finaxa would have beneficially owned
(directly and indirectly) approximately 21.4% of the Shares
(representing 31.3% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their
interest in Finaxa) 24.7% of the issued ordinary shares
(representing 36.0% of the voting power) of AXA-VAP.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees of the Trust who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual
rate of .50 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .49 of 1% of the next $.25
billion of such assets, .48 of 1% of the next $.25 billion of
such assets, .47 of 1% of the next $.25 billion of such assets,
.46 of 1% of the next $1 billion of such assets and .45 of 1% of
the average daily value of the Fund's net assets in excess of $3
17
<PAGE>
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 of $9,690,146,
$9,368,272 and $4,501,952, 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. In respect of such services for the fiscal years ended
June 30, 1995, 1996 and 1997, the Fund paid to the Adviser a
total of $140,000, $139,000 and $134,000, 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
$1,850,063, $1,657,812 and $558,619, respectively.
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
18
<PAGE>
June 16, 1997.
The Advisory Agreement remains in effect from year to
year provided that such continuance is specifically approved
annually by a vote of a majority of the outstanding shares of the
Fund or by the Fund's Trustees, including in either case approved
by a majority of the Trustees who are not parties to the Advisory
Agreement or interested persons as defined by 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, an
affiliate of the Adviser, for distribution assistance and to
banks and other depository institutions for administrative and
accounting services, and (ii) otherwise promoting the sale of
shares of the Fund such as by paying for the preparation,
printing and distribution of prospectuses and other promotional
materials sent to existing and prospective shareholders and by
directly or indirectly purchasing radio, television, newspaper
and other advertising. In approving the Agreement, the Trustees
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders. During
the fiscal year ended June 30, 1997, the Fund made payments to
19
<PAGE>
the Adviser for expenditures under the Agreement in amounts
aggregating $2,250,976 which constituted .25 of 1% at an annual
rate of the Fund's average daily net assets and the Adviser made
payments from its own resources as described above aggregating
$2,211,779. Of the $4,462,755 paid by the Adviser and the Fund
under the Agreement, $52,000 was paid for advertising, printing
and mailing of prospectuses to persons other than current
shareholders; and $4,410,755 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 Trust'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.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested of the
Trust 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.
20
<PAGE>
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 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
21
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State Street Bank and Trust Company
Boston, MA 02101
Alliance Money 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 Money 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 Money Reserves," to Alliance Fund
Services, Inc. as in A(3) above.
Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.
Investments Made by Check
Money transmitted by a check drawn on a member of the
Federal Reserve System is converted to Federal funds in one
business day following receipt and, thus, is then invested in the
Fund. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted and invested. All
payments must be in United States dollars.
22
<PAGE>
PROCEEDS FROM ANY SUBSEQUENT REDEMPTION BY YOU OF FUND
SHARES THAT WERE PURCHASED BY CHECK OR ELECTRONIC FUNDS TRANSFER
WILL NOT BE FORWARDED TO YOU UNTIL THE FUND IS REASONABLY ASSURED
THAT YOUR CHECK OR ELECTRONIC FUNDS TRANSFER HAS CLEARED, UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE. If the redemption
request during such period is in the form of a Fund check, the
check will be marked "insufficient funds" and be returned unpaid
to the presenting bank.
Redemptions
C. By Telephone
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
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
23
<PAGE>
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.
D. By Checkwriting
With this service, you may write checks made payable to
any payee in any. 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 will impose its normal charges for checks which are
returned unpaid because of insufficient funds or for checks upon
which you have placed a stop order. There is 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.
E. By Mail
You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by duly
endorsed certificates, if issued, should be mailed to Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-
1520. Such orders must include the account name as registered
with the Fund and the account number. All written orders for
redemption, and accompanying certificates, if any, must be signed
by all owners of the account with the signatures guaranteed by an
institution which is an "eligible guarantor" as defined in Rule
17 Ad-15 under the Securities Exchange Act of 1934, as amended.
Additional Information
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
24
<PAGE>
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, checkwriting or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.
Arrangements for Telephone Redemptions. If you wish to
use the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Fund Services,
Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520, with your
signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.
Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
25
<PAGE>
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.
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.
26
<PAGE>
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, Washington's Birthday
(observed), 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 wire 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.
27
<PAGE>
DAILY DIVIDENDS-DETERMINATION OF NET ASSET VALUE
All net income of the Fund is determined after the close
of each business day, currently 4:00 p.m. (New York time) (and at
such other times as the Trustees may determine) and is paid
immediately thereafter pro rata to shareholders of record via
automatic investment in additional full and fractional shares in
each shareholder's account at the rate of one share for each
dollar distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.
Net income consists of all accrued interest income on
Fund portfolio assets less the Fund's expenses applicable to that
dividend period. Realized gains and losses are reflected in net
asset value and are not included in net income. Net asset value
per share is expected to remain constant at $1.00 since all net
income is declared as a dividend each time net income is
determined.
The valuation of the Fund's portfolio securities is
based upon their amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of the Fund may be higher than that of
a fund with identical investments utilizing a method of valuation
based upon market prices for its portfolio instruments; the
converse would apply in a period of rising interest rates.
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, have
remaining maturities of no more than one year which maturities
may extend to 397 days. The Fund maintains procedures designed
to stabilize, to the extent reasonably possible, the price per
share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Fund's portfolio
holdings by the Trustees at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Fund calculated by using available market quotations
or market equivalents deviates from net asset value based on
28
<PAGE>
amortized cost. If such deviation exceeds 1/2 of 1%, the
Trustees will promptly consider what action, if any, should be
initiated. In the event the Trustees determine that such a
deviation may result in material dilution or other unfair results
to new investors or existing shareholders, they will consider
corrective action which might include (1) selling instruments
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of
net income on shares; or (3) establishing a net asset value per
share using available market quotations or equivalents. There
can be no assurance, however, that the Fund's net asset value per
share will remain constant at $1.00.
The net asset value of the shares is determined each
business day at 12:00 Noon and 4:00 p.m. (New York time). The
net asset value per share is calculated by taking the sum of the
value of the Fund's investments and any cash or other assets,
subtracting liabilities, and dividing by the total number of
shares outstanding. All expenses, including the fees payable to
the Adviser, are accrued daily.
TAXES
The Fund has qualified 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.
29
<PAGE>
General Information
Portfolio Transactions. Subject to the general
supervision of the Trustees of the Fund, the Adviser is
responsible for the investment decisions and the placing of the
orders for portfolio transactions for the Fund. Because the Fund
invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Fund's shares since the Fund's portfolio
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which does not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.
The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. During the fiscal
years ended June 30, 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 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
30
<PAGE>
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 Trust,
are set forth in Section 16(c) of the Act.
At October 15, 1997, there were 1,097,400,372 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
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
the Trustees use their best efforts to ensure that notice of such
disclaimer be given in each note, bond, contract, instrument,
certificate or undertaking made or issued by the Trustees or
officers of the Trust. The Agreement and 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 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 Trust 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 Trust.
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
31
<PAGE>
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.
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%. Absent such
reimbursement, the annualized yield for such period would have
been 4.66%, equivalent to an effective yield of 4.77%. Current
yield information can be obtained by a recorded message by
telephoning toll-free at (800) 221-9513 or in New York State at
(212) 785-9106.
Additional Information. This Statement of Additional
Information does not contain all the information set forth in the
Registration Statement filed by the Trust with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of
the Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.
32
<PAGE>
ALLIANCE MONEY RESERVES
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1997
STATEMENT OF NET ASSETS
JUNE 30, 1997 ALLIANCE MONEY RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-56.2%
ABBEY NATIONAL
$ 4,000 7/08/97 5.55% $ 3,995,683
14,000 7/09/97 5.61 13,982,547
2,600 8/21/97 5.62 2,579,300
AGA CAPITAL, INC.
2,700 7/09/97 (a) 5.60 2,696,640
AKZO NOBEL, INC.
3,000 11/21/97 5.58 2,933,505
ALLIANZ OF AMERICA FINANCE CORP.
3,000 8/11/97 (a) 5.57 2,980,969
5,000 7/01/97 (a) 5.62 5,000,000
3,000 7/10/97 (a) 5.65 2,995,763
7,000 7/15/97 (a) 5.67 6,984,565
5,800 7/21/97 (a) 5.67 5,781,730
ASSOCIATES CORP. OF NORTH AMERICA
10,000 8/13/97 5.60 9,933,111
12,000 7/30/97 5.66 11,945,287
ATLAS FUNDING CORP.
5,117 7/15/97 (a) 5.67 5,105,717
BANCA CERFIN
4,000 8/07/97 5.39 3,977,841
BANCA CRT FINANCIAL CORP.
8,000 7/07/97 5.57 7,992,573
BANCO NACIONAL DE COMERCIO
5,000 9/17/97 5.55 4,939,875
15,000 12/02/97 5.60 14,640,667
BAT CAPITAL CORP.
5,000 8/05/97 (a) 5.57 4,972,924
8,000 8/13/97 (a) 5.58 7,946,680
BBV FINANCE DELAWARE, INC.
10,000 7/29/97 5.35 9,958,389
BHF FINANCE DELAWARE, INC.
30,000 9/24/97 5.58 29,605,104
BIL NORTH AMERICA, INC.
5,000 8/18/97 5.29 4,964,733
5,000 7/03/97 5.63 4,998,436
CAISSE CENTRALE JARDINS DU QUEBEC
5,000 8/05/97 5.40 4,973,750
8,000 8/21/97 5.40 7,938,800
7,000 9/12/97 5.70 6,919,092
CAISSE D'AMORTISSEMENT
4,694 10/03/97 5.48 4,626,834
CHIAO TUNG BANK CO., LTD.
5,000 8/26/97 5.33 4,958,544
COMMONWEALTH BANK OF AUSTRALIA
2,000 7/29/97 5.35 1,991,678
COPLEY FINANCING CORP.
5,000 7/11/97 (a) 5.55 4,992,292
CREGEM NORTH AMERICA, INC.
8,000 9/12/97 5.62 7,908,831
CS FIRST BOSTON
5,000 8/19/97 5.40 4,963,250
7,000 7/01/97 5.62 7,000,000
7,000 10/08/97 5.70 6,890,275
3,000 10/08/97 5.73 2,952,727
EKSPORTFINANS
4,100 7/03/97 5.63 4,098,718
18,000 7/03/97 5.93 17,994,070
EMBARCADERO CENTER ASSOCIATES
4,250 7/21/97 5.66 4,236,636
GENERALE BANK
30,000 7/16/97 5.55 29,930,625
7,000 8/27/97 5.61 6,937,822
GLENCORE FINANCE, LTD.
13,000 8/25/97 5.43 12,892,154
10,000 8/26/97 5.43 9,915,533
8,000 9/15/97 5.58 7,905,760
5,000 8/28/97 5.64 4,954,567
GOVERNMENT DEVELOPMENT
BANK OF PUERTO RICO
10,000 9/17/97 5.58 9,879,100
HENKEL CORP.
5,000 9/09/97 5.60 4,945,556
11,000 9/17/97 5.68 10,864,627
18,000 10/20/97 5.70 17,683,650
IMI FUNDING CORP.
6,366 7/01/97 5.30 6,366,000
7,000 7/23/97 5.37 6,977,028
20,000 7/01/97 5.58 20,000,000
10,000 7/21/97 5.60 9,968,889
INDUSTRIAL BANK KOREA
8,000 9/15/97 5.70 7,903,733
10,000 7/29/97 5.72 9,955,511
8,000 8/27/97 5.72 7,927,547
5,000 9/03/97 5.75 4,948,889
INTERNATIONALE NEDERLAND
5,500 9/09/97 5.58 5,440,325
1
STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE MONEY RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
KOREAN DEVELOPMENT BANK
$ 10,000 8/22/97 5.65% $ 9,918,389
10,000 8/25/97 5.66 9,913,528
10,000 7/25/97 5.68 9,962,133
MERRILL LYNCH & CO., INC.
11,000 1/14/98 5.85 10,647,862
NATIONAL AUSTRALIA FUNDING
6,000 7/03/97 5.75 5,998,083
NATIONAL CITY BANK
7,000 9/29/97 5.59 6,902,175
PEMEX CAPITAL INC.
10,000 7/30/97 5.39 9,956,581
SOCIETE GENERALE N.A., INC.
4,000 7/14/97 5.32 3,992,316
TORONTO DOMINION HOLDINGS
10,000 12/23/97 5.58 9,728,750
UNI FUNDING, INC.
7,000 9/15/97 5.58 6,917,540
20,000 7/21/97 5.60 19,937,778
6,000 9/05/97 5.60 5,938,400
Total Commercial Paper
(amortized cost $568,568,387) 568,568,387
CERTIFICATES OF DEPOSIT-22.2%
BANK OF NEW YORK
5,000 5.51%, 7/09/97 5.51 5,000,000
BANK OF TOKYO
8,000 5.75%, 9/30/97 5.75 8,000,000
7,000 5.80%, 7/08/97 5.80 7,000,000
12,000 5.80%, 9/09/97 5.80 12,000,000
15,000 5.84%, 7/18/97 5.84 15,000,000
6,000 5.85%, 8/06/97 5.85 6,000,000
BAYERISCHE VEREINSBANK
5,000 5.50%, 7/07/97 5.50 5,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
12,000 5.70%, 8/14/97 5.70 12,000,000
CARIPLO FINANCE, INC.
5,000 5.68%, 9/26/97 5.67 5,000,119
6,000 5.75%, 7/17/97 5.74 6,000,026
HESSISCHE LANDESBANK
11,000 6.13%, 4/07/98 6.25 10,990,345
J.P. MORGAN & CO., INC.
2,000 5.78%, 8/05/97 5.62 1,999,780
KOREAN DEVELOPMENT BANK
18,000 5.77%, 9/12/97 5.75 18,000,719
NORINCHUKIN BANK
5,000 5.74%, 7/28/97 5.74 5,000,000
4,000 5.80%, 7/09/97 5.79 4,000,009
5,000 5.81%, 9/08/97 5.80 5,000,094
10,000 5.83%, 7/22/97 5.82 10,000,057
20,000 5.84%, 8/07/97 5.83 20,000,304
SANWA BANK
8,000 5.65%, 7/07/97 5.65 8,000,000
10,000 5.66%, 7/14/97 5.66 10,000,000
7,000 5.69%, 7/10/97 5.66 7,000,043
SOCIETE GENERALE N.A., INC.
10,000 5.72%, 9/02/97 5.67 10,000,801
8,000 5.73%, 8/06/97 5.72 8,000,079
SUMITOMO BANK
7,000 5.68%, 7/09/97 5.70 6,999,947
14,000 5.68%, 7/15/97 5.68 14,000,000
4,000 5.70%, 7/03/97 5.68 4,000,004
Total Certificates of Deposit
(amortized cost $223,992,327) 223,992,327
BANK OBLIGATIONS-8.9%
AUSTRALIA & NEW ZEALAND BANK
3,000 5.90%, 9/23/97 5.88 2,998,802
BAYERISCHE VEREINSBANK
30,000 5.56%, 6/30/98 FRN 5.62 29,982,585
DEUTSCHE BANK
28,000 5.61%, 7/01/98 FRN 5.71 27,972,826
MORGAN GUARANTY TRUST CO.
10,000 5.69%, 11/14/97 FRN 5.77 9,996,508
19,000 5.96%, 6/22/98 5.99 18,993,802
Total Bank Obligations
(amortized cost $89,944,523) 89,944,523
CORPORATE OBLIGATIONS-7.3%
GENERAL ELECTRIC CAPITAL CORP.
10,000 5.75%, 1/05/98 FRN 5.75 10,000,000
J.P. MORGAN & CO., INC.
12,000 5.38%, 8/15/97 FRN 5.43 11,999,289
MERRILL LYNCH & CO., INC.
5,000 5.71%, 12/24/97 FRN 5.73 4,999,532
8,000 5.78%, 1/29/98 FRN 5.80 7,999,088
8,000 5.60%, 1/22/98 FRN 5.64 7,998,912
6,000 5.66%, 3/16/98 5.74 5,999,596
SALTS III CAYMAN ISLANDS CORP.
25,000 5.79%, 7/23/97 (a) 5.79 25,000,000
2
ALLIANCE MONEY RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
Total Corporate Obligations
(amortized cost $73,996,417) $73,996,417
PROMISSORY NOTES-4.5%
GOLDMAN SACHS GROUP L.P.
$ 20,000 5.71%, 10/14/97 FRN 5.71% 20,000,000
25,000 5.81%, 11/26/97 FRN 5.81 25,000,000
Total Promissory Notes
(amortized cost $45,000,000) 45,000,000
U.S GOVERNMENT & AGENCIES-2.2%
FEDERAL FARM CREDIT BANK
10,000 5.41%, 8/03/98 FRN 5.46 9,994,883
FEDERAL NATIONAL MORTGAGE ASSN.
12,000 5.37%, 8/25/97 FRN 5.41 11,999,301
Total U.S Government & Agencies
(amortized cost $21,994,184) $21,994,184
TIME DEPOSIT-1.2%
CANADIAN IMPERIAL BANK
12,500 6.38%, 7/01/97 6.38%
(amortized cost $12,500,000) 12,500,000
TOTAL INVESTMENTS-102.5%
(amortized cost $1,035,995,838) 1,035,995,838
Other assets less liabilities-(2.5%) (25,232,636)
NET ASSETS-100%
(offering and redemption price of
$1.00 per share; 1,011,953,177 shares
outstanding) $1,010,763,202
# 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 $74,457,280 representing 7.4% of net assets.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE MONEY RESERVES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $49,999,048
EXPENSES
Advisory fee (Note B) $4,501,952
Distribution assistance and administrative service
(Note C) 2,943,595
Transfer agency (Note B) 1,134,745
Registration fees 545,912
Custodian fees 260,070
Printing 53,747
Audit and legal fees 27,299
Trustees' fees 11,765
Miscellaneous 23,094
Total expenses 9,502,179
Less: expense reimbursement (498,276)
Net expenses 9,003,903
Net investment income 40,995,145
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 1,959
NET INCREASE IN NET ASSETS FROM OPERATIONS $40,997,104
See notes to financial statements.
4
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE MONEY RESERVES
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
--------------- ----------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 40,995,145 $ 91,025,881
Net realized gain on investment transactions 1,959 219,665
Net increase in net assets from operations 40,997,104 91,245,546
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (40,995,145) (91,025,881)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (Note E) 256,174,217 (1,755,232,623)
Total increase (decrease) 256,176,176 (1,755,012,958)
NET ASSETS
Beginning of year 754,587,026 2,509,599,984
End of year $1,010,763,202 $ 754,587,026
See notes to financial statements.
5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 ALLIANCE MONEY 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 and Alliance Money Reserves (the
"Portfolio"). 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 aggregate expenses (excluding taxes,
brokerage, interest and, where permitted, extraordinary expenses) exceed 1% of
its average daily net assets for any fiscal year. For the year ended June 30,
1997, the reimbursement amounted to $498,276. 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 $591,082 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 $2,250,976. 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
$692,619 of which $134,000 was paid to the Adviser.
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 $1,189,975 of which $595,606
expires in 1999, $72,812 expires in 2001, $64,655 expires in 2002 and $456,902
expires in the year 2003.
6
ALLIANCE MONEY RESERVES
_______________________________________________________________________________
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1997, capital paid-in aggregated $1,011,953,177. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
--------------- ---------------
Shares sold 2,835,564,705 7,775,799,887
Shares issued on reinvestments of dividends 40,995,145 91,025,881
Shares redeemed (2,620,385,633) (9,622,058,391)
Net increase (decrease) 256,174,217 (1,755,232,623)
7
FINANCIAL HIGHLIGHTS ALLIANCE MONEY 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 (a) .045 .047 .045 .025 .027
LESS: DIVIDENDS
Dividends from net investment income (.045) (.047) (.045) (.025) (.027)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 4.64% 4.81% 4.50% 2.57% 2.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $1,011 $755 $2,510 $1,795 $1,626
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 1.06% 1.00% 1.04% 1.09% 1.04%
Net investment income (a) 4.55% 4.80% 4.53% 2.55% 2.67%
</TABLE>
(a) Net of expenses reimbursed or waived by the Adviser.
(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.
8
INDEPENDENT AUDITOR'S REPORT ALLIANCE MONEY RESERVES
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE MONEY RESERVES PORTFOLIO
We have audited the accompanying statement of net assets of Alliance Money
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 statements
and financial highlights are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Money 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
9
<PAGE>
APPENDIX
Prime-1, Prime-2, A-1, A-2, Fitch-1, Fitch-2,
Duff 1 and Duff 2 Commercial Paper Ratings
The Fund will invest only in paper maintaining a high
quality rating.
"Prime-1" is the highest commercial paper rating
assigned by Moody's Investors Services, Inc. ("Moody's"), and
indicates superior ability for repayment of senior short-term
debt obligations. "Prime-2" is the second highest, and denotes a
strong, but somewhat lesser degree of assurance. Commercial
paper issuers rated "Prime" 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 issuers rate "A" by Standard & Poor's
have the following characteristics: liquidity ratios are better
than industry average; long term debt 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 with superior management. Standard & Poor's
uses the numbers 1+, 1, 2 and 3 to denote relative strength
within its highest classification of "A". The numbers 1 and 2
indicate the relative degree of safety regarding timely payment
with "A-1" paper being somewhat higher than "A-3".
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. "Fitch-2" is considered
very good grade paper and reflects an assurance of timely payment
only slightly less in degree than the strongest issue.
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. Issues rated "Duff 2" have a good certainty of timely
A-1
<PAGE>
payment, sound liquidity factors and company fundamentals, small
risk factors, and good access to capital markets.
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. Standard & Poor's "A" rated bonds
have a strong capacity to pay interest and repay principal but
are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than are higher rated
bonds.
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 because margins of protection may not be as large,
fluctuations of protective elements may be of greater amplitude
or there may be other elements present which make the long term
risks appeal somewhat larger. Moody's "A" rated bonds are
considered upper medium grade obligations possessing many
favorable investment attributes. Although factors giving
security to principal and interest are considered adequate,
elements may exist which suggest that the bonds may be
susceptible to impairment sometime in the future.
A-2
00250122.AG8
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits for Each Portfolio of
the Fund
(a) Financial Highlights
Included in the Prospectuses:
Financial Information
Included in the Statements of Additional Information:
Statement of Net Assets, June 30, 1997
Statement of Operations, June 30, 1997
Statement of Changes in Net Assets for the years ended
June 30, 1996 and June 30, 1997
Notes to Financial Highlights, June 30, 1997
Report of Independent Auditors
Included in Part C of the Registration Statement
All other schedules are omitted as the required
information is inapplicable
(b) Exhibits
(1) Declaration of Trust - Filed herewith.
(2) By-Laws - Filed herewith.
(3) Not applicable.
(4) (a) Specimen form of Share Certificate for
Alliance Capital Reserves - Incorporated by
reference to Exhibit No. 4 to Post-Effective
Amendment No. 19 of the Registrant's
Registration Statement on Form N-1A, filed
October 31, 1988.
(b) Specimen form of Share Certificate for
Alliance Money Reserves - Incorporated by
reference to Exhibit No. 4(b) to Post-
Effective Amendment No. 22 of the Registrant's
Registration Statement on Form N-1A, filed
August 31, 1990.
(5) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Filed herewith.
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<PAGE>
(6) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Filed herewith.
(7) Not applicable.
(8) Custodian Contract between the Registrant and State
Street Bank and Trust Company - Filed herewith.
(9) Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc. - Filed herewith.
(10) Not applicable.
(11) Consent of Independent Auditors - Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6 hereto.
(16) Schedule of Computation of Performance Quotation
Provided in Response to Item 22 - Filed herewith.
(27) Not applicable.
Other Exhibits:
Powers of Attorney of: Dave H. Williams, John
D. Carifa, Charles H. P. Duell, William H. Foulk,
Jr., Alfred Lee Loomis, III, Elizabeth J.
McCormack, David K. Storrs, John Winthrop -
Incorporated by reference to Other Exhibits to
Post-Effective Amendment No. 19 of the Registrant's
Registration Statement on Form N-1A, filed on
October 31, 1988.
Powers of Attorney of: Sam Y. Cross and Shelby
White - Incorporated by reference to Other Exhibits
to Post-Effective Amendment No. 25 of the
Registrant's Registration Statement on Form N-1A,
filed on September 3, 1992.
Powers of Attorney of: John D. Carifa, Sam Y.
Cross, Charles H.P. Duell, William H. Foulk, Jr.,
Elizabeth J. McCormack, David K. Storrs, Shelby
White, Dave H. Williams - Incorporated by reference
to Other Exhibits to Post-Effective Amendment No.
C-2
<PAGE>
30 of the Registrant's Registration Statement on
Form N-1A, filed on October 31, 1996.
Powers of Attorney of: John D. Carifa, Sam Y.
Cross, Charles H.P. Duell, William H. Foulk, Jr.,
Donald J. Robinson, David K. Storrs, Shelby White,
Dave H. Williams - Filed herewith.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Registrant had, as of October 15, 1997, record holders
of shares of Beneficial Interest as follows:
Alliance Capital Reserves 398,681
Alliance Money Reserves 30,009
ITEM 27. Indemnification
It is the Registrant's policy to indemnify its trustees
and officers, employees and other agents as set forth in
Article V of Registrant's Agreement and Declaration of
Trust, filed as Exhibit 1 in response to Item 24 and
Section 7 of the Distribution Agreement filed as Exhibit
6 in response to Item 24, all as set forth below. The
liability of the Registrant's trustees and officers is
also dealt with in Article V of Registrant's Agreement
and Declaration of Trust. The Adviser's liability for
loss suffered by the Registrant or its shareholders is
set forth in Section 4 of the Advisory Agreement filed
as Exhibit 5 in response to Item 24, as set forth below.
Article V of Registrant's Agreement and Declaration of
Trust reads as follows:
Section 5.1 - No Personal Liability of Shareholders,
Trustees, etc.
No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with
Trust Property, including the property of any series of
the Trust, or the acts, obligations or affairs of the
Trust or any series thereof. No Trustee, officer,
employee or agent of the Trust shall be subject to any
personal liability whatsoever to any Person, other than
the Trust or applicable series thereof or its
Shareholders, in connection with Trust Property or the
C-3
<PAGE>
property of any series thereof or the affairs of the
Trust or any series thereof, save only that arising from
bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all
such Persons shall look solely to the Trust Property or
the property of the appropriate series of the Trust for
satisfaction of claims of any nature arising in
connection with the affairs of the Trust or any series
thereof. If any Shareholder, Trustee, officer, employee
or agent, as such, of the Trust is made a party to any
suit or proceeding to enforce any such liability, he
shall not, on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each
Shareholder harmless from and against all claims by
reason of his being or having been a Shareholder, and
shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with
any such claim or liability, provided that any such
expenses shall be paid solely out of the funds and
property of the series of the Trust with respect to
which such Shareholder's Shares are issued. The rights
accruing to a Shareholder under this Section 5.1 shall
not exclude any other right to which such Shareholder
may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify
or reimburse a Shareholder in any appropriate situation
even though no specifically provided herein.
Section 5.2 - Non-Liability of Trustees, etc. No
Trustee, officer, employee or agent of the Trust shall
be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including
without limitation the failure to compel in any way any
former or acting Trustee to redress any breach of trust)
except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
Section 5.3 - Indemnification.
(a) The Trustees shall provide for indemnification by
the Trust (or by the appropriate series thereof) of
every person who is, or has been, a Trustee or officer
of the Trust against all liability and against all
expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the
settlement thereof, in such manner as the Trustees may
provide from time to time in the By-Laws.
C-4
<PAGE>
(b) The words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other
liabilities.
Section 5.4 - No Bond Required of Trustees. No Trustee
shall be obligated to give any bond or other security
for performance of any of his duties hereunder.
Section 5.5 - No Duty of Investigation; Notice in Trust
Instruments, Insurance. No purchaser, lender, transfer
agent or other Person dealing with the Trustees or any
officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by
said officer, employee or agent or be liable for the
application of money or property paid, loaned, or
delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract,
instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing
whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done
by the executors thereof only in their capacity as
Trustees under the Declaration or in their capacity as
officers, employees or agents of the Trust. Every
written obligation, contract, instrument, certificate,
Share, other security of the Trust or undertaking made
or issued by the Trustees shall recite that the same is
executed or made by them not individually, but as
Trustees under the Declaration, and that the obligations
of any such instrument are not binding upon any of the
Trustees or Shareholders, individually, but bind only
the Trust Property or the property of the appropriate
series of the Trust, and may contain any further recital
which they or he may deem appropriate, but the omission
of such recital shall not operate to bind the Trustees
or Shareholders individually. The Trustees shall at all
times maintain insurance for the protection of the Trust
Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees
shall deem adequate to cover possible tort liability,
and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 5.6 - Reliance on Experts, etc. Each Trustee
and officer or employee of the Trust shall, in the
C-5
<PAGE>
performance of his duties, be fully and completely
justified and protected with regard to any act or any
failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust,
upon an opinion of counsel or upon reports made to the
Trust by any of its officers or employees or by the
Investment Adviser, the Distributor, Transfer Agent,
selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by
the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be
a Trustee.
The Advisory Agreement between Registrant and Alliance
Capital Management L.P. provides that Alliance Capital
Management L.P. will not be liable under such agreement
for any mistake of judgment or in any event whatsoever
except for lack of good faith and that nothing therein
shall be deemed to protect, or purport to protect,
Alliance Capital Management L.P. against any liability
to Registrant or its security holders to which it would
otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its
duties thereunder, or by reason of reckless disregard of
its obligations and duties thereunder.
The Distribution Agreement between the Registrant and
Alliance Fund Distributors, Inc. provides that the
Registrant will indemnify, defend and hold Alliance Fund
Distributors, Inc., and any person who controls it
within the meaning of Section 15 of the Investment
Company Act of 1940, free and harmless from and against
any and all claims, demands, liabilities and expenses
which Alliance Fund Distributors, Inc. or any
controlling person may incur arising out of or based
upon any alleged untrue statement of a material fact
contained in Registrant's Registration Statement or
Prospectus or Statement of Additional Information or
arising out of, or based upon any alleged omission to
state a material fact required to be stated in or
necessary to make the statements in either thereof not
misleading; provided, however that nothing therein shall
be so construed as to protect Alliance Fund
Distributors, Inc. against any liability to Registrant
or its security holders to which it would otherwise be
subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties
thereunder, or by reason of reckless disregard of its
obligations and duties thereunder.
C-6
<PAGE>
The foregoing summaries are qualified by the entire text
of Registrant's Agreement and Declaration of Trust, the
Advisory Agreement between Registrant and Alliance
Capital Management L.P. and the Distribution Agreement
between Registrant and Alliance Fund Distributors, Inc.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to trustees,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2,
1980) the Registrant will indemnify its directors,
officers, investment manager and principal underwriters
only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was
brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct") or (2)a reasonable
determination is made, based upon a review of the facts,
that the indemnitee was not liable of disabling conduct,
by (a) the vote of a majority of a quorum of the
directors who are neither "interested persons" of the
Registrant as defined in section 2(a) (19) of the
Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party directors"), or
(b) an independent legal counsel in a written opinion.
The Registrant will advance attorneys fees or other
expenses incurred by its directors, officers, investment
adviser or principal underwriters in defending a
proceeding, upon the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately
C-7
<PAGE>
determined that he is entitled to indemnification and,
as a condition to the advance, (1) the indemnitee shall
provide a security for his undertaking, (2) the
Registrant shall be insured against losses arising by
reason of any lawful advances, or (3) a majority of a
quorum of disinterested, non-party directors of the
Registrant, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to
indemnification.
The Registrant participates in a joint directors and
officers liability insurance policy issued by the ICI
Mutual Insurance Company. Coverage under this policy
has been extended to directors, trustees and officers of
the investment companies managed by Alliance Capital
Management L.P. Under this policy, outside trustees and
directors would be covered up to the limits specified
for any claim against them for acts committed in their
capacities as trustee or director. A pro rata share of
the premium for this coverage is charged to each
investment company.
ITEM 28. Business and Other Connections of Investment
Adviser.
The descriptions of Alliance Capital Management L.P.
under the caption "The Adviser" in the Prospectus and
"Management of the Fund" in the Prospectus and in the
Statement of Additional Information constituting Parts A
and B, respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801- 32361) and amended through
the date hereof, is incorporated by reference.
ITEM 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following
investment companies:
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<PAGE>
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund,
Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
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<PAGE>
Positions and Positions and
Offices With Offices With
Name Underwriter Registrant
____ _____________ _______________
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
Secretary &
General Counsel
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Anne S. Drennan Senior Vice President
& Treasurer
Mark J. Dunbar Senior Vice President
Bradley F. Hanson Senior Vice President
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
& Chief Financial Officer
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Robert E. Powers Senior Vice President
Richard K. Saccullo Senior Vice President
Gregory K. Shannahan Senior Vice President
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<PAGE>
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Sohaila S. Farsheed Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President
& Controller
Andrew L. Gangolf Vice President & Assistant
Assistant General Secretary
Counsel
Mark D. Gersten Vice President Treasurer &
Chief
Financial
Officer
Joseph W. Gibson Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
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<PAGE>
William B. Hanigan Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Shawn P. McClain Vice President
Christopher J.
MacDonald Vice President
Michael F. Mahoney Vice President
Lori E. Master Vice President
Shawn P. McClain Vice President
Maura A. McGrath Vice President
Thomas F. Monnerat Vice President
Joanna D. Murray Vice President
Jeanette M. Nardella Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
Robert T. Pigozzi Vice President
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<PAGE>
James J. Posch Vice President
Domenick Pugliese Vice President Assistant
& Assistant Secretary
General Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Robert C. Schultz Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
William C. White Vice President
Emilie D. Wrapp Vice President Assistant
& Special Counsel Secretary
Charles M. Barrett Assistant Vice President
Robert F. Brendli Assistant Vice President
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
John P. Chase Assistant Vice President
Russell R. Corby Assistant Vice President
Ralph A. DiMeglio Assistant Vice President
Faith Dunn Assistant Vice President
John C. Endahl Assistant Vice President
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<PAGE>
John E. English Assistant Vice President
Duff C. Ferguson Assistant Vice President
John Grambone Assistant Vice President
Brian S. Hanigan Assistant Vice President
James J. Hill Assistant Vice President
Edward W. Kelly Assistant Vice President
Michael Laino Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Richard F. Meier Assistant Vice President
Catherine N. Peterson Assistant Vice President
Carol H. Rappa Assistant Vice President
Clara Sierra Assistant Vice President
Vincent T. Strangio Assistant Vice President
Wesley S. Williams Assistant Vice President
Christopher J. Zingaro Assistant Vice President
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers, securities
records and other original records are maintained
principally at the offices of Alliance Fund Services,
Inc. 500 Plaza Drive, Secaucus, New Jersey 07094 and at
the offices of State Street Bank and Trust Company, the
Registrant's Custodian, 225 Franklin Street, Boston,
Massachusetts 02110. All other records so required to
be maintained are maintained at the offices of Alliance
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<PAGE>
Capital Management L.P., 1345 Avenue of the Americas,
New York, New York 10105.
ITEM 3l. Management Services.
Not applicable.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon request
and without charge.
C-15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirements
for effectiveness of this Amendment to its Registration pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of New York and State of New York on the 30th day of
October 1997.
ALLIANCE CAPITAL RESERVES
by /s/ Ronald M. Whitehill
________________________________
Ronald M. Whitehill
President
Pursuant to the requirements of the Securities Act of l933,
as amended, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated:
Signature Title Date
_________ _____ ____
1) Principal
Executive Officer
/s/ Ronald M. Whitehill President October 30, 1997
_______________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and October 30, 1997
_______________________ Chief Financial
Mark D. Gersten Officer
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<PAGE>
3) All of the Trustees
______________________
John D. Carifa Donald J. Robinson
Sam Y. Cross David K. Storrs
Charles H.P. Duell Shelby White
William H. Foulk, Jr. Dave H. Williams
by /s/ Edmund P. Bergan, Jr. October 30, 1997
_____________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-17
<PAGE>
Index to Exhibits
Page
(1) Declaration of Trust
(2) By-Laws
(5) Advisory Agreement
(6) Distribution Services Agreement
(8) Custodian Contract
(9) Transfer Agency Agreement
(11) Consent of Independent Auditors
(16) Schedule of Computation of Performance Quotation
in Response to Item 22
Other Exhibits
Power of Attorney for:
John D. Carifa
Sam Y. Cross
Charles H.P. Duell
William H. Foulk, Jr.
Donald J. Robinson
David K. Storrs
Shelby White
Dave H. Williams
C-18
00250122.AG8
<PAGE>
ALLIANCE CAPITAL RESERVES
DECLARATION OF TRUST
Dated: October 15, 1984
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I -- Name and Definitions 1
Section 1.1. Name 1
Section 1.2. Definitions 1
ARTICLE II -- Trustees 3
Section 2.1. Number of Trustees 3
Section 2.2. Election and Term 3
Section 2.3. Resignation and Removal 4
Section 2.4. Vacancies 4
Section 2.5. Delegation of Power to Other Trustees 5
ARTICLE III -- Powers of Trustees 5
Section 3.1. General 5
Section 3.2. Investments 6
Section 3.3. Legal Title 7
Section 3.4. Issuance and Repurchase of Securities 7
Section 3.5. Borrowing Money; Lending Trust Assets 7
Section 3.6. Delegation; Committees 7
Section 3.7. Collection and Payment 8
Section 3.8. Expenses 8
Section 3.9. Manner of Acting; By-Laws 8
Section 3.10. Miscellaneous Powers 8
Section 3.11. Principal Transactions 9
ARTICLE IV -- Investment Adviser, Distributor and Transfer
Agent 9
Section 4.1. Investment Adviser 9
Section 4.2. Distributor 10
Section 4.3. Transfer Agent 1O
Section 4.4. Parties to Contract 1O
ARTICLE V -- Limitations of Liability Of Shareholders,
Trustees and Others 11
Section 5.1. No Personal Liability of Shareholders,
Trustees, etc. 11
Section 5.2. Non-Liability of Trustees, etc. 11
Section 5.3. Indemnification 12
Section 5.4. No Bond Required of Trustees 12
Section 5.5. No Duty of Investigation; Notice in
Trust Instruments, Insurance 12
Section 5.6. Reliance on Experts, etc. 13
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<PAGE>
ARTICLE VI -- Shares of Beneficial Interest 13
Section 6.1. Beneficial Interest 13
Section 6 2. Rights of Shareholders 13
Section 6 3. Trust Only 14
Section 6.4. Issuance of Shares 14
Section 6.5. Register of Shares 14
Section 6.6. Transfer of Shares 15
Section 6.7. Notices 15
Section 6.8. Voting Powers 15
Section 6.9. Series or Classes of Shares 16
ARTICLE VII -- Redemptions 19
Section 7.1. Redemptions 19
Section 7.2. Redemption of Shares; Disclosure
of Holding 19
Section 7.3. Redemptions of Accounts of
Less Than $500 20
Section 7.4. Other Redemptions 20
ARTICLE VIII -- Determination of Net Asset Value,
Net Income and Distributions 20
Section 8.1. Net Asset Value 20
Section 8.2. Distributions to Shareholders 20
Section 8.3. Determination of Net Income 21
Section 8.4. Power to Modify Foregoing Procedures 22
ARTICLE IX -- Duration; Termination of Trust;
Amendment; Mergers, Etc. 22
Section 9.1. Duration 22
Section 9.2. Termination of Trust 22
Section 9.3. Amendment Procedure 23
Section 9.4. Merger, Consolidation and Sale of Assets 24
Section 9.5. Incorporation 24
ARTICLE X -- Reports to Shareholders 25
ARTICLE XI -- Miscellaneous 25
Section 11.1. Filing 25
Section 11.2. Resident Agent 26
Section 11.3. Governing Law 26
Section 11.4. Counterparts 26
Section 11.5. Reliance by Third Parties 26
Section 11.6. Provisions in Conflict with Law
or Regulations 26
SIGNATURE PAGE 27
-ii-
<PAGE>
DECLARATION OF TRUST
ALLIANCE CAPITAL RESERVES
Dated October 15, 1984
THE DECLARATION OF TRUST of Alliance Capital Reserves is made
the 15th day of October, 1984 by the parties signatory hereto, as
trustees (such persons, so long as they shall continue in office in
accordance with the terms of this Declaration of Trust, and all other
persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this
Declaration of Trust and are then in office, being hereinafter called
the "Trustees").
W I T N E S S E T H
WHEREAS, the Trustees desire to form a trust fund under the
laws of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the
trust assets be divided into transferable shares of beneficial
interest as hereinafter provided;
NOW, THEREFORE, the Trustees declare that all money and
property contributed to the trust established hereunder shall be held
and managed in trust for the benefit of the holders, from time to
time, of the shares of beneficial interest issued hereunder and
subject to the provisions hereof, to wit:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. - Name. The name of the trust created hereby is
Alliance Capital Reserves.
Section 1.2. - Definitions. Wherever they are used herein,
the following terms have the following respective meanings:
(a) "By-Laws" means the By-Laws referred to in Section 3.9
hereof, as from time to time amended.
(b) the terms "Commission," "Affiliated Person" and
"Interested Person" have the meanings given them in the 1940 Act.
(c) "Custodian" means any Person other than the Trust who
has custody of any Trust Property as required by Section 17(f) of the
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<PAGE>
1940 Act, but does not include a system for the central handling of
securities described in said Section 17(f).
(d) "Declaration" means this Declaration of Trust as amended
from time to time. Reference in this Declaration of Trust to
"Declaration", "hereof", "herein" and "hereunder" shall be deemed to
refer to this Declaration rather than the article or section in which
such words appear.
(e) "Distributor" means the party, other than the Trust, to
the contract described in Section 4.2 hereof.
(f) "Fundamental Policies" shall mean the investment
restrictions set forth in the Prospectus and designated as fundamental
policies therein.
(g) "Investment Adviser" means the party, other than the
Trust, to the contract described in Section 4.1 hereof.
(h) "Majority Shareholder Vote" means the vote of the
holders of a majority of Shares which shall consist of: (i) a majority
of Shares represented in person or by proxy and entitled to vote at a
meeting of Shareholders at which a quorum, as determined in accordance
with the By-Laws, is present; (ii) a majority of Shares issued and
outstanding and entitled to vote when action is taken by written
consent of Shareholders; or (iii) a "majority of the outstanding
voting securities", as that phrase is defined in the 1940 Act, when
action is taken by Shareholders with respect to approval of an
investment advisory or management contract, a distribution assistance
and administrative services plan adopted pursuant to Rule 12b-1 under
the 1940 Act or an underwriting or distribution agreement or
continuance thereof.
(i) "1940 Act" means the Investment Company Act of 1940 and
the rules and regulations thereunder as amended from time to time.
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(k) "Prospectus" means the prospectus (including the
statement of additional information to the extent incorporated by
reference therein) constituting part of the Registration Statement of
the Trust under the Securities Act of 1933, as amended, as such
prospectus may be amended or supplemented and filed with the
Commission from time to time.
(l) "Shareholder" means a record owner of outstanding
Shares.
2
<PAGE>
(m) "Shares" means the units of interest into which the
beneficial interest in the Trust, par value $.001 per share, shall be
divided from time to time, including the shares of any and all series
or classes which may be established by the Trustees, and includes
fractions of Shares as well as whole Shares.
(n) "Transfer Agent" means the party, other than the Trust,
to the contract described in Section 4.3 hereof.
(o) "Trust" means Alliance Capital Reserves.
(p) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(q) "Trustees" means the person or persons who have signed
the Declaration, so long as he or they shall continue in office in
accordance with the terms hereof, and all other persons who may from
time to time be duly elected, qualified and serving as Trustees in
accordance with the provisions hereof, and reference herein to a
Trustee or the Trustees shall refer to such person or persons in their
capacity as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. - Number of Trustees. The number of Trustees
shall be such number as shall be fixed from time to time by a written
instrument signed by a majority of the Trustees, provided, however,
that at all times after the sale of assets and liabilities of Alliance
Capital Reserves, Inc. to the Trust and the issuance of Trust shares
in exchange therefor pursuant to an agreement and plan of
reorganization and liquidation, the number of Trustees shall in no
event be less than three (3) nor more than fifteen (15).
Section 2.2. - Election and Term. At a date and time fixed
by the Trustees which shall be prior to the effective time of the sale
of assets and liabilities of Alliance Capital Reserves, Inc. to the
Trust and the issuance of Trust shares in exchange therefor pursuant
to an agreement and plan of reorganization and liquidation, Alliance
Capital Reserves, Inc., as sole shareholder of the Trust and acting
with the authorization of its own shareholders, shall elect Trustees
to hold office in accordance with the provisions of this Declaration
of Trust. The Trustees shall have the power to set and alter the
terms of office of the Trustees, and they may at any time lengthen or
lessen their own terms or make their terms of unlimited duration,
subject to the resignation and removal provisions of Section 2.3
hereof. Subject to Section 16(a) of the 1940 Act, the Trustees may
elect their own successors and may, pursuant to Section 2.4 hereof,
appoint Trustees to fill vacancies. The Trustees shall adopt By-Laws
3
<PAGE>
not inconsistent with this Declaration or any provisions of law to
provide for election of Trustees by Shareholders at such time or times
as the Trustees shall determine to be necessary or advisable.
Section 2.3. - Resignation and Removal. Any Trustee may
resign his trust (without need for prior or subsequent accounting) by
an instrument in writing signed by him and delivered to the other
Trustees and such resignation shall be effective upon such delivery,
or at a later date according to the terms of the instrument. Any of
the Trustees may be removed (i), with cause, by the action of two-
thirds of the remaining Trustees; (ii) at any special meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding
Shares, or (iii) upon the filing with the custodian of the Trust of a
written declaration signed by Shareholders owning in the aggregate
two-thirds of the outstanding Shares. The Trustees or the officers of
the Trust given such authority in the By-Laws shall promptly call a
special meeting of Shareholders for the purpose of voting upon the
question of removal of any Trustee at a place designated by them upon
the written request of Shareholders owning at least one-tenth of the
outstanding Shares entitled to vote. Shareholders shall be entitled
to at least ten days' notice of any such meeting. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a
Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property or property of any series of
the Trust held in the name of the resigning or removed Trustee. Upon
the incapacity or death of any Trustees, his legal representative
shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding
sentence.
Section 2.4. - Vacancies. The term of office of a Trustee
shall terminate and a vacancy shall occur in the event of the death,
resignation, removal, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office of a Trustee. No such
vacancy shall operate to annul the Declaration or to revoke any
existing agency created pursuant to the terms of the Declaration. In
the case of an existing vacancy, including a vacancy existing by
reason of an increase in the number of Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees
or, prior to the public offering of Shares of the Trust, if only one
Trustee shall then remain in office, the remaining Trustee, shall fill
such vacancy by the appointment of such other person as they or he, in
their or his discretion shall see fit, made by a written instrument
signed by a majority of the remaining Trustees or by the remaining
Trustee, as the case may be. Any such appointment shall not become
effective, however, until the person named in the written instrument
of appointment shall have accepted in writing such appointment and
agreed in writing to be bound by the terms of the Declaration. An
appointment of a Trustee may be made in anticipation of a vacancy to
occur at a later date by reason of retirement, resignation or increase
4
<PAGE>
in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in
the number of Trustees. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in this Section
2.4, the Trustees in office, regardless of their number, shall have
all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by the Declaration. A written
instrument certifying the existence of such vacancy signed by the
majority of the Trustees shall be conclusive evidence of the existence
of such vacancy.
Section 2.5. - Delegation of Power to Other Trustees. Any
Trustee may, by power of attorney, delegate his power for a period not
exceeding six (6) months at any one time to any other Trustee or
Trustees; provided that in no case shall less than two (2) Trustees
personally exercise the powers granted to the Trustees under the
Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. - General. The Trustees shall have exclusive
and absolute control over the property and business of the Trust and
of any series of the Trust to the same extent as if the Trustees were
the sole owners of such property and business in their own right, but
with such powers of delegation as may be permitted by the Declaration.
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain
offices both within and without the Commonwealth of Massachusetts, in
any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies,
colonies, possessions, agencies or instrumentalities of the United
States of America and of foreign governments, and to do all such other
things and execute all such instruments as they deem necessary, proper
or desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any determination
as to what is in the interests of the Trust or any series of the Trust
made by the Trustees in good faith shall be conclusive. In construing
the provisions of the Declaration, the presumption shall be in favor
of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be
construed as limiting the aforesaid power. Such powers of the
Trustees may be exercised without order of or resort to any court.
Section 3.2. - Investments. The Trustees shall have the
power to:
(a) conduct, operate and carry on the business of an
investment company;
5
<PAGE>
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute, lend or otherwise deal in or dispose of common stocks or
securities exchangeable or convertible into common stocks, preferred
stocks, convertible and nonconvertible debt securities, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, options, warrants, futures,
forwards and other securities of any kind, including, without
limitation, those issued, guaranteed or sponsored by any and all
Persons including, without limitation, states, territories and
possessions of the United States, the District of Columbia and any of
the political subdivisions, agencies or instrumentalities thereof, and
by the United States Government or its agencies or instrumentalities,
or international instrumentalities, or by any bank or savings
institution, or by any corporation or organization organized under the
laws of the United States or of any state, territory or possession
thereof, and of corporations or organizations organized under foreign
laws, or in "when issued" contracts for any such securities, or in
commodities and options, futures and forwards on commodities, or
retain assets of the Trust or any series thereof in cash and from time
to time change the investment of the assets of the Trust or any series
thereof; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of
every kind and description, including, without limitation, the right
to consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or corporations to
exercise any of said rights, powers and privileges in respect of any
of said instruments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional securities in which
the Trust or any series of the Trust may invest should the Fundamental
Policies be amended.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees
be limited by any law limiting the investments which may be made by
fiduciaries.
Section 3.3. - Legal Title. Legal title to all of the Trust
Property, including the property of any series of the Trust, shall be
vested in the Trustees as joint tenants except that the Trustees shall
have power to cause legal title to any Trust Property or property of
any series of the Trust to be held by or in the name of one or more of
the Trustees, or in the name of the Trust or the series, or in the
name of any other Person as nominee, on such terms as the Trustees may
determine, provided that the interest of the Trust therein is
appropriately protected. The right, title and interest of the
Trustees in the Trust Property and the property of each series of the
Trust shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee he
shall automatically cease to have any right, title or interest in any
6
<PAGE>
of the Trust Property or the property of any series of the Trust, and
the right, title and interest of such Trustee in all such property
shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective without the requirement that
conveyancing documents be executed and delivered.
Section 3.4. - Issuance and Repurchase of Securities. The
Trustees shall have the power to issue, sell, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose of, transfer,
and otherwise deal in Shares and subject to the provisions set forth
in Articles VII, VIII and IX and Section 6.9 hereof, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition
of Shares any funds or property of the particular series of the Trust
with respect to which such Shares are issued, whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by
laws of the Commonwealth of Massachusetts governing business
corporations.
Section 3.5. - Borrowing Money; Lending Trust Assets. The
Trustees shall have power to borrow money or otherwise obtain credit
and to secure the same by mortgaging, pledging or otherwise subjecting
as security the assets of the Trust, to endorse, guarantee or
undertake the performance of any obligation, contract or engagement of
any other Person and to lend Trust assets.
Section 3.6.- Delegation; Committees. The Trustees shall
have power, consistent with their continuing exclusive authority over
the management of the Trust and the trust Property, to delegate from
time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the
Trustees or otherwise as the Trustees may deem expedient.
Section 3.7. - Collection and Payment. The Trustees shall
have power to collect all property due to the Trust or any series
thereof; to pay all claims, including taxes, against the Trust
Property or the property of any series of the Trust; to prosecute,
defend, compromise or abandon any claims relating to the Trust
Property or the property of any series of the Trust; to foreclose any
security interest securing any obligations, by virtue of which any
property is owed to the Trust or any series thereof; and to enter into
releases, agreements and other instruments.
Section 3.8. - Expenses. The Trustees shall have the power
to incur and pay any expenses which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees.
7
<PAGE>
Section 3.9. - Manner of Acting; By-Laws. Except as
otherwise provided herein or in the By-Laws or by any provision of
law, any action to be taken by the Trustees may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference
telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or
by written consent of all the Trustees. The Trustees may adopt By-Laws
not inconsistent with this Declaration to provide for the conduct of
the business of the Trust and may amend or repeal such By-Laws to the
extent such power is not reserved to the Shareholders.
Section 3.10. - Miscellaneous Powers. The Trustees shall
have the power to: (a) employ or contract with such Persons as the
Trustees may deem desirable for the transaction of the business of the
Trust; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) remove Trustees or fill vacancies in
or add to their number, elect and remove such officers and appoint and
terminate such agents or employees as they consider appropriate, and
appoint from their own number or otherwise, and terminate, any one or
more committees which may exercise some or all of the power and
authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property or the property of the appropriate
series of the Trust, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers,
distributors, selected dealers or independent contractors of the Trust
against all claims arising by reason of holding any such position or
by reason of any action taken or omitted to be taken by any such
Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person
against such liability; (e) establish pension, profit-sharing, Share
purchase, and other retirement, incentive and benefit plans for any
Trustees, officers, employees and agents of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust has
dealings, including the Investment Adviser, Distributor, Transfer
Agent and selected dealers, to such extent as the Trustees shall
determine; (g) guarantee indebtedness or contractual obligations of
others; (h) determine and change the fiscal year of the Trust or any
series of the Trust and the method by which its accounts shall be
kept; and (i) adopt a seal for the Trust, but the absence of such seal
shall not impair the validity of any instrument executed on behalf of
the Trust.
Section 3.11. - Principal Transactions. Except in
transactions permitted by the 1940 Act or any rule or regulation
thereunder, or any order of exemption issued by the Commission, or
effected to implement the provisions of any agreement to which the
Trust is a party, the Trustees shall not, on behalf of the Trust, buy
any securities (other than Shares) from or sell any securities (other
than Shares) to, or lend any assets of the Trust to, any Trustee or
officer of the Trust or any firm of which any such Trustee or officer
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is a member acting as principal, or have any such dealings with the
Investment Adviser, Distributor or Transfer Agent or with any
Affiliated Person of such Person; but the Trust may employ any such
Person, or firm or Company in which such Person is an Interested
Person, as broker, legal counsel, registrar, transfer agent, dividend
disbursing agent or custodian upon customary terms.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR AND TRANSFER AGENT
Section 4.1. - Investment Adviser. Subject to approval by a
Majority Shareholder Vote, the Trustees may in their discretion from
time to time enter into an investment advisory or management contract
whereby the other party to such contract shall undertake to furnish
the Trust or any series thereof such management, investment advisory,
administration, accounting, legal, statistical and research facilities
and services, promotional activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider
desirable and all upon such terms and conditions as the Trustees may
in their discretion determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize the Investment Adviser
(subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or
exchanges of portfolio securities of the Trust or any series thereof
on behalf of the Trustees or may authorize any officer or employee
pursuant to recommendations of the Investment Adviser and all without
further action by the Trustees. Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the
Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such
meeting the approval of continuance of any such investment advisory or
management contract.
Section 4.2. - Distributor. The Trustees may in their
discretion from time to time enter into a contract providing for the
sale of Shares to net the Trust or the applicable series thereof not
less than the net asset value per Share (as described in Article VIII
hereof) and pursuant to which the Trust or series thereof may either
agree to sell the Shares to the other party to the contract or appoint
such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of
this Article IV, including, without limitation, the provision for the
repurchase or sale of shares of the Trust or any series thereof by
such other party as principal or as agent of the Trust.
Section 4.3. - Transfer Agent. The Trustees may in their
discretion from time to time enter into a transfer agency and
shareholder service contract whereby the other party to such contract
shall undertake to furnish transfer agency and shareholder services to
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the Trust or any series thereof. The Contract shall have such terms
and conditions as the Trustees may in their discretion determine which
are not inconsistent with the Declaration. Such services may be
provided by one or more Persons.
Section 4.4. - Parties to Contract. Any contract of the
character described in Sections 4.1, 4.2 or 4.3 of this Article IV and
any other contract may be entered into with any Person, although one
or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder or member of such other party to the
contract, and no such contract shall be invalidated or rendered
voidable by reason of the existence of any such relationship; nor
shall any Person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust or any
series thereof under or by reason of said contract or accountable for
any profit realized directly or indirectly therefrom, provided that
the contract when entered into was not inconsistent with the
provisions of this Article IV. The same Person may be the other party
to any contracts entered into pursuant to Sections 4.1, 4.2 or 4.3
above or otherwise, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of
the contracts referred to in this Section 4.4.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. - No Personal Liability of Shareholders,
Trustees, etc. No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Trust Property,
including the property of any series of the Trust, or the acts,
obligations or affairs of the Trust or any series thereof. No
Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust
or applicable series thereof or its Shareholders, in connection with
Trust Property or the property of any series thereof or the affairs of
the Trust or any series thereof, save only that arising from bad
faith, willful misfeasance, gross negligence or reckless disregard for
his duty to such Person; and all such Persons shall look solely to the
Trust Property or the property of the appropriate series of the Trust
for satisfaction of claims of any nature arising in connection with
the affairs of the Trust or any series thereof. If any Shareholder,
Trustee, officer, employee or agent, as such, of the Trust is made a
party to any suit or proceeding to enforce any such liability, he
shall not, on account thereof, be held to any personal liability. The
Trust shall indemnify and hold each Shareholder harmless from and
against all claims by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and
other expenses reasonably incurred by him in connection with any such
claim or liability, provided that any such expenses shall be paid
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solely out of the funds and property of the series of the Trust with
respect to which such Shareholder's Shares are issued. The rights
accruing to a Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided herein.
Section 5.2. - Non-Liability of Trustees, etc. No Trustee,
officer, employee or agent of the Trust shall be liable to the Trust,
its Shareholders, or to any Shareholder, Trustee, officer, employee,
or agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad faith,
willful misfeasance, gross negligence or reckless disregard of his
duties.
Section 5.3. - Indemnification.
(a) The Trustees shall provide for indemnification by the
Trust (or by the appropriate series thereof) of every person who is,
or has been, a Trustee or officer of the Trust against all liability
and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof, in such manner as the Trustees may
provide from time to time in the By-Laws.
(b) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened; and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
Section 5.4. - No Bond Required of Trustees. No Trustee
shall be obligated to give any bond or other security for performance
of any of his duties hereunder.
Section 5.5. - No Duty of Investigation; Notice in Trust
Instruments, Insurance. No purchaser, lender, transfer agent or other
Person dealing with the Trustees or any officer, employee or agent of
the Trust shall be bound to make any inquiry concerning the validity
of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust
or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been
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executed or done by the executors thereof only in their capacity as
Trustees under the Declaration or in their capacity as officers,
employees or agents of the Trust. Every written obligation, contract,
instrument, certificate, Share, other security of the Trust or
undertaking made or issued by the Trustees shall recite that the same
is executed or made by them not individually, but as Trustees under
the Declaration, and that the obligations of any such instrument are
not binding upon any of the Trustees or Shareholders, individually,
but bind only the Trust Property or the property of the appropriate
series of the Trust, and may contain any further recital which they or
he may deem appropriate, but the omission of such recital shall not
operate to bind the Trustees or Shareholders individually. The
Trustees shall at all times maintain insurance for the protection of
the Trust Property, its Shareholders, Trustees, officers, employees
and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in
their sole judgment shall deem advisable.
Section 5.6. - Reliance on Experts, etc. Each Trustee and
officer or employee of the Trust shall, in the performance of his
duties, be fully and completely justified and protected with regard to
any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust, upon an
opinion of counsel or upon reports made to the Trust by any of its
officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. - Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into transferable shares of
beneficial interest having a par value of $.001 per share. The number
of such shares of beneficial interest authorized hereunder is
unlimited. The Trustees may initially issue whole and fractional
Shares of a single class, each of which shall represent an equal
proportionate share in the Trust with each other Share. Subject to
the provisions of Section 6.9 hereof, the Trustees may, initially or
thereafter, also authorize the creation of additional series of Shares
(the proceeds of which may be invested in separate, independently
managed portfolios) and additional classes of shares within any
series. The Trustees may divide or combine the shares into a greater
or lesser number of Shares without thereby changing the proportionate
interests in the Trust. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in
Shares or a split in Shares, shall be fully paid and non-assessable.
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Section 6.2. - Rights of Shareholders. The ownership of the
Trust Property and the property of each series of the Trust of every
description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for
any partition or division of any property, profits, rights or
interests of the Trust (or series thereof) nor can they be called upon
to assume any losses of the Trust (or series thereof) or suffer an
assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights specifically
set forth in the Declaration. The Shares shall not entitle the holder
to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any series of
Shares.
Section 6.3. - Trust Only. It is the intention of the
Trustees to create only the relationship of Trustee and beneficiary
between the Trustees and each Shareholder from time to time. It is
not the intention of the Trustees to create a general partnership,
limited partnership, joint stock association, corporation, bailment or
any form of legal relationship other than a trust. Nothing in the
Declaration shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.4. - Issuance of Shares. The Trustees, in their
discretion may, from time to time without vote of the Shareholders,
issue Shares, in addition to the then issued and outstanding Shares
and Shares held in the treasury, to such party or parties and for such
amount and type of consideration, including cash or property, at such
time or times (including, without limitation, each business day), and
on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to,
and in connection with, the assumption of liabilities) and businesses.
In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or
combine the Shares into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Trust.
Reductions in the number of outstanding Shares may be made pursuant to
the provisions of Section 8.3. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares and/or
fractions of a Share as described in the Prospectus.
Section 6.5. - Register of Shares. A register shall be kept
at the principal office of the Trust or at an office of the Transfer
Agent which shall contain the names and addresses of the Shareholders
and the number of Shares held by each of them and a record of all
transfers thereof. Such register may be in written form or any other
form capable of being converted into written form within a reasonable
time for visual inspection. Such register shall be conclusive as to
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who are the holders of the Shares and who shall be entitled to receive
dividends or distributions or otherwise to exercise or enjoy the
rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or distribution, nor to have notice given to
him as herein or in the By-Laws provided, until he has given his
address to the Transfer Agent or such other officer or agent of the
Trustees as shall keep the said register for entry thereon. It is not
contemplated that certificates will be issued for the Shares; however,
the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to
their use.
Section 6.6. - Transfer of Shares. Shares shall be
transferable on the records of the Trust only by the record holder
thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly executed
instrument of transfer, together with such evidence of the genuineness
of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such Shares
for all purposes hereunder and neither the Trustees nor any Transfer
Agent or registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy or incompetence of any Shareholder, or otherwise
by operation of law, shall be recorded on the register of Shares as
the holder of such Shares upon production of the proper evidence
thereof to the Trustees or the Transfer Agent, but until such record
is made, the Shareholder of record shall be deemed to be the holder of
such Shares for all purposes hereunder and neither the Trustees nor
any Transfer Agent or registrar nor any officer or agent of the Trust
shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law, except as may otherwise be
provided by the laws of the Commonwealth of Massachusetts.
Section 6.7. - Notices. Any and all notices to which any
Shareholder may be entitled and any and all communications shall be
deemed duly served or given if mailed, postage prepaid, addressed to
any Shareholder of record at his last known address as recorded on the
register of the Trust.
Section 6.8. - Voting Powers. The Shareholders shall have
power to vote only (i) for the election of Trustees as provided in
Section 2.2 hereof, (ii) for the removal of Trustees as provided in
Section 2.3 hereof, (iii) with respect to any investment advisory or
management contract as provided in Section 4.1 hereof, (iv) with
respect to termination of the Trust or any series thereof as provided
in Section 9.2 hereof, (v) with respect to any amendment of the
Declaration to the extent and as provided in Section 9.3 hereof, (vi)
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with respect to any merger, consolidation or sale of assets as
provided in Section 9.4 hereof, (vii) with respect to incorporation of
the Trust to the extent and as provided in Section 9.5 hereof, (viii)
to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, and (ix) with
respect to such additional matters relating to the Trust as may be
required by law, the Declaration, the By-Laws or any registration of
the Trust with the Commission (or any successor agency) or any state,
or as and when the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that Shares held in the treasury
of the Trust as of the record date, as determined in accordance with
the By-Laws, shall not be voted and except that the Trustees may, in
conjunction with the establishment of any series or classes of Shares,
establish conditions under which the several series or classes shall
have separate voting rights or no voting rights. Unless otherwise
required by the 1940 Act or the Rules thereunder, any vote of
Shareholders shall be taken on a series by series basis. There shall
be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, the Declaration or the By-Laws to be
taken by Shareholders. The By-Laws may include further provisions for
Shareholders' votes and meetings and related matters.
Section 6.9. - Series or Classes of Shares. If the Trustees
shall divide the shares of the Trust into two or more series or two or
more classes of any series, as provided in Section 6.1 hereof, the
following provisions shall be applicable:
(a) All provisions herein relating to the Trust shall apply
equally to each series of the Trust except as the context otherwise
requires.
(b) The number of authorized shares and the number of shares
of each series or of each class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued shares or any
shares previously issued and reacquired of any series or class into
one or more series or one or more classes that may be established and
designated from time to time. The Trustees may hold any treasury
shares (of the same or some other series or class), reissue for such
consideration and on such terms as they may determine, or cancel any
shares of any series or any class reacquired by the Trust at their
discretion from time to time.
(c) The power of the Trustees to invest and reinvest the
Trust Property shall be governed by Section 3.2 of this Declaration
with respect to any one or more series which represents the interest
in the assets of the Trust immediately prior to the establishment of
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two or more series and the power of the Trustees to invest and
reinvest assets applicable to any other series shall be as set forth
in the instrument of the Trustees establishing such series which is
hereinafter described.
(d) All consideration received by the Trust for the issue or
sale of Shares of a particular series or class together with all
assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably
belong to that series or class for all purposes, subject only to the
rights of creditors of such series and except as may otherwise be
required by applicable tax laws, and shall be so recorded upon the
books of account of the Trust. In the event that there are any
assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any
particular series or class, the Trustees shall allocate them among any
one or more of the series or classes established and designated from
time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the shareholders of all
series or classes for all purposes.
(e) The assets belonging to each particular series shall be
charged with the liabilities of the Trust in respect of that series
and all expenses, costs, charges and reserves attributable to that
series, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging
to any particular series shall be allocated and charged by the
Trustees to and among any one or more of the series established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each
allocation of liabilities, expenses, costs, charges and reserves by
the Trustees shall be conclusive and binding upon the holders of
Shares of all series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders. The assets of a
particular series of the Trust shall, under no circumstances, be
charged with liabilities attributable to any other series of the
Trust. All persons extending credit to, or contracting with or having
any claim against a particular series of the Trust shall look only to
the assets of that particular series for payment of such credit,
contract or claim.
(f) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 8.2 of this Declaration
with respect to any one or more series or classes which represents the
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interests in the assets of the Trust immediately prior to the
establishment of two or more series or classes. With respect to any
other series or class, dividends and distributions on Shares of a
particular series or class may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise, pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of Shares of
that series or class, from such of the income and capital gains,
accrued or realized, from the assets belonging to that series or
class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that series or class. All dividends
and distributions on Shares of a particular series or class shall be
distributed pro-rata to the Shareholders of that series or class in
proportion to the number of Shares of that series or class held by
such Shareholders at the date and time of record established for the
payment of such dividends or distribution.
(g) Each Share of a series of the Trust shall represent a
beneficial interest in the net assets of such series. Each holder of
Shares of a series shall be entitled to receive his pro-rata share of
distributions of income and capital gains made with respect to such
series. Upon redemption of his Shares or indemnification for
liabilities incurred by reason of his being or having been a
Shareholder of a series, such Shareholder shall be paid solely out of
the funds and property of such series of the Trust. Upon liquidation
or termination of a series of the Trust, Shareholders of such series
shall be entitled to receive a pro-rata share of the net assets of
such series. A Shareholder of a particular series of the Trust shall
not be entitled to participate in a derivative or class action on
behalf of any other series or the Shareholders of any other series of
the Trust.
(h) Notwithstanding any other provision hereof, on any
matter submitted to a vote of Shareholders of the Trust, all Shares
then entitled to vote shall be voted by individual series, except that
(1) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual series, and (2) when the Trustees have
determined that the matter affects only the interests of Shareholders
of a limited number of series, then only the Shareholders of such
series shall be entitled to vote thereon. Except as otherwise
provided in this Article VI, the Trustees shall have the power to
determine the designations, preferences, privileges, limitations and
rights, including voting and dividend rights, of each class and series
of Shares.
(i) The establishment and designation of any series or class
of Shares shall be effective upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such series or
class, or as otherwise provided in such instrument. At any time that
there are no Shares outstanding of any particular series or class
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previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that series
or class and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an
amendment to this Declaration.
ARTICLE VII
REDEMPTIONS
Section 7.1. - Redemptions. All outstanding Shares may be
redeemed at the option of the holders thereof, upon and subject to the
terms and conditions provided in this Article VII. The Trust shall,
upon application of any Shareholder or pursuant to authorization from
any Shareholder, redeem or repurchase from such Shareholder
outstanding Shares for an amount per share determined by the Trustees
in accordance with any applicable laws and regulations; provided that
(a) such amount per share shall not exceed the cash equivalent of the
proportionate interest of each share or of any class or series of
shares in the assets of the Trust at the time of the redemption or
repurchase and (b) if so authorized by the Trustees, the Trust may, at
any time and from time to time, charge fees for effecting such
redemption or repurchase, at such rates as the Trustees may establish,
as and to the extent permitted under the 1940 Act, and may, at any
time and from time to time, pursuant to such Act, suspend such right
of redemption. The procedures for effecting and suspending redemption
shall be as set forth in the Prospectus from time to time. Payment
will be made in such manner as described in the Prospectus.
Section 7.2. - Redemption of Shares; Disclosure of Holding.
If the Trustees shall, at any time and in good faith, be of the
opinion that direct or indirect ownership of Shares or other
securities of the Trust or any series thereof has or may become
concentrated in any Person to an extent which would disqualify the
Trust or any series thereof as a regulated investment company under
the Internal Revenue Code, then the Trustees shall have the power by
lot or other means deemed equitable by them (i) to call for redemption
by any such Person a number, or principal amount, of Shares or other
securities of the Trust or the appropriate series thereof sufficient,
in the opinion of the Trustees, to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust or
series thereof into conformity with the requirements for such
qualification and (ii) to refuse to transfer or issue Shares or other
securities of the Trust or any series thereof to any Person whose
acquisition of the Shares or other securities of the Trust in question
would in the opinion of the Trustees result in such disqualification.
The redemption shall be effected at a redemption price determined in
accordance with Section 7.1 hereof.
The holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information with
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respect to direct and indirect ownership of Shares or other securities
of the Trust or any series thereof as the Trustees deem necessary to
comply with the provisions of the Internal Revenue Code, or to comply
with the requirements of any other authority.
Section 7.3. - Redemptions of Accounts of Less than $500. The
Trustees shall have the power at any time to redeem Shares of any
Shareholder at a redemption price determined in accordance with
Section 7.1 if at such time the aggregate net asset value of the
Shares in such Shareholder's account is less than $500. A Shareholder
will be notified that the value of his account is less than $500 and
allowed at least sixty (60) days to make an additional investment
before redemption is processed.
Section 7.4.- Other Redemptions. The Trust may also reduce
the number of outstanding Shares pursuant to the provisions of Section
8.3 hereof.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 8.1. - Net Asset Value. The net asset value of each
outstanding Share of the Trust or series thereof shall be determined
on such days and at such time or times as the Trustees may determine.
The method of determination of net asset value shall be determined by
the Trustees and shall be as set forth in the Prospectus. The power
and duty to make the daily calculations may be delegated by the
Trustees to the Investment Adviser, the Custodian, the Transfer Agent
or such other person as the Trustees by resolution may determine. The
Trustees may suspend the daily determination of net asset value to the
extent permitted by the 1940 Act.
Section 8.2. - Distributions to Shareholders. The Trustees
shall from time to time distribute ratably among the Shareholders of a
series such proportion of the net profits, surplus (including paid-in
surplus), capital or assets of such series held by the Trustees as
they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of such
series or any assets thereof), and the Trustees may distribute ratably
among the Shareholders additional Shares of such series issuable
hereunder in such manner, at such times and on such terms as the
Trustees may deem proper. Such distributions may be among the
Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at such later date as the Trustees
shall determine. The Trustees may always retain from the net profits
such amount as they may deem necessary to pay the debts or expenses of
the series or to meet obligations of the series, or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt
19
<PAGE>
and offer to Shareholders such dividend reinvestment plans, cash
dividend payout plans or related plans as the Trustees shall deem
appropriate.
Inasmuch as the computation of net income and gains for
Federal income tax purposes may vary from the computation thereof on
the books, the above provisions shall be interpreted to give the
Trustees the power in their discretion to distribute for any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, additional amounts sufficient to enable the Trust or the
series to avoid or reduce liability for taxes.
Section 8.3. - Determination of Net Income. The Trustees
shall have the power to determine the net income of each series of the
Trust one or more times on each business day and at each such
determination declare such net income as dividends in additional
Shares of such series. The determination of net income and the
resultant declaration of dividends shall be as set forth in the
Prospectus. It is expected that each such series will have a positive
net income at the time of each determination. If for any reason the
net income of a series is a negative amount, the Trustees shall have
authority to reduce the number of outstanding Shares of such series.
Such reduction will be effected by having each Shareholder of such
series proportionately contribute to the capital of such series the
necessary Shares of such series that represent the amount of the
excess upon such determination. Each Shareholder will be deemed to
have agreed to such contribution in these circumstances by his
investment in such series of the Trust. The Trustees shall have full
discretion to determine whether any cash or property received shall be
treated as income or as principal and whether any item of expenses
shall be charged to the income or the principal account, and their
determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees
shall have full discretion to determine, in the light of the
particular circumstances, how much, if any, of the value thereof shall
be treated as income, with the balance, if any, to be treated as
principal.
Section 8.4. - Power to Modify Foregoing Procedures.
Notwithstanding any of the foregoing provisions of this Article VIII,
the Trustees may prescribe, in their absolute discretion, such other
bases and times for determining the per Share net asset value of the
Shares or net income, or the declaration and payment of dividends and
distributions, as they may deem necessary or desirable to enable each
series to comply with any provision of the 1940 Act, or any rule or
regulation thereunder, including any rule or regulation adopted
pursuant to Section 22 of the 1940 Act by the Commission or any
securities association registered under the Securities Exchange Act of
1934, or any order of exemption issued by said Commission, all as in
effect now or hereafter amended or modified. Without limiting the
20
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generality of the foregoing, the Trustees may establish classes or
series of Shares in accordance with Section 6.9 hereof.
ARTICLE IX
DURATION; TERMINATION OF
TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1. - Duration. The Trust and each series of the
Trust shall continue without limitation of time but subject to the
provisions of this Article IX.
Section 9.2. - Termination of Trust.
(a) The Trust or any series of the Trust may be terminated
(i) by the affirmative vote of the holders of not less than two-thirds
of the Shares of the Trust or such series outstanding and entitled to
vote at any meeting of Shareholders, or (ii) by an instrument in
writing, without a meeting, signed by a majority of the Trustees and
consented to by the holders of not less than two-thirds of such
Shares, or by such other vote as may be established by the Trustees
with respect to any class or series of Shares, or (iii) by the
Trustees by written notice to the Shareholders. Upon the termination
of the Trust or any series of the Trust:
(i) The Trust or series shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust or series and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust or series
shall have been wound up, including the power to fulfill or discharge
the contracts of the Trust or series, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any
part of the remaining Trust Property or property of such series to one
or more persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and to do all other acts
appropriate to liquidate its business; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition of all
or substantially all the Trust Property or property of such series
shall require Shareholder approval in accordance with Section 9.4
hereof.
(iii) After paying or adequately providing for the payment
of all liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property or property of
such series, in cash or in kind or partly each, among the Shareholders
of the Trust or such series according to their respective rights.
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(b) After termination of the Trust or any series and
distribution to the Shareholders of the Trust or such series as herein
provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact
of such termination, and the Trustees shall thereupon be discharged
from all further liabilities and duties hereunder with respect to the
Trust or such series, and the rights and interests of all Shareholders
of the Trust or such series shall thereupon cease.
Section 9.3. - Amendment Procedure.
(a) This Declaration may be amended by a Majority
Shareholder Vote, at a meeting of Shareholders, or by written consent
without a meeting. The Trustees may also amend this Declaration
without the vote or consent of Shareholders to change the name of the
Trust, to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, or if they deem
it necessary to conform this Declaration to the requirements of
applicable federal laws or regulations or the requirements of the
regulated investment company provisions of the Internal Revenue Code,
but the Trustees shall not be liable for failing so to do.
(b) No amendment may be made under this Section 9.3 which
would change any rights with respect to any Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or
by diminishing or eliminating any voting rights pertaining thereto,
except with the vote or consent of the holders of two-thirds of the
Shares outstanding and entitled to vote, or by such other vote as may
be established by the Trustees with respect to any series or class of
Shares. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and
agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by
the Secretary or any Assistant Secretary of the Trust, setting forth
an amendment and reciting that it was duly adopted by the Shareholders
or by the Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees or certified by
the Secretary or any Assistant Secretary of the Trust, shall be
conclusive evidence of such amendment when lodged among the records of
the Trust.
Notwithstanding any other provision hereof, until such time
as the Trust succeeds to the Registration Statement of Alliance
Capital Reserves, Inc. under the 1940 Act and the Securities Act of
1933, as amended, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
22
<PAGE>
Section 9.4. - Merger, Consolidation and Sale of Assets. The
Trust may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or
exchange all or substantially all of the Trust Property or the
property of any series thereof, including its good will, upon such
terms and conditions and for such consideration when and as
authorized, at any meeting of Shareholders called for the purpose, by
the affirmative vote of the holders of not less than two-thirds of
such Shares, or by such other vote as may be established by the
Trustees with respect to any series or class of Shares; provided,
however, that, if such merger, consolidation, sale, lease or exchange
is recommended by the Trustees, a Majority Shareholder Vote shall be
sufficient authorization; and any such merger, consolidation, sale,
lease or exchange shall be deemed for all purposes to have been
accomplished under and pursuant to the statutes of the Commonwealth of
Massachusetts. In respect of any such merger, consolidation, sale or
exchange of assets, any Shareholder shall be entitled to rights of
appraisal of his Shares to the same extent as a shareholder of a
Massachusetts business corporation in respect of a merger,
consolidation, sale or exchange of assets of a Massachusetts business
corporation, and such rights shall be his exclusive remedy in respect
of his dissent from any such action.
Section 9.5. - Incorporation. With approval of a Majority
Shareholder Vote, or by such other vote as may be established by the
Trustees with respect to any series or class of Shares, the Trustees
may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust,
partnership, association or other organization to take over all of the
Trust Property or the property of any series thereof or to carry on
any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property or the
property of such series to any such corporation, trust, association or
organization in exchange for the shares or securities thereof or
otherwise, and to lend money to, subscribe for the Shares or
securities of, and enter into any contracts with any such corporation,
trust, partnership, association or organization in which the Trust
holds or is about to acquire shares or any other interest. The
Trustees may also cause a merger or consolidation between the Trust
(or any series thereof) or any successor thereto and any such
corporation, trust, partnership, permitted by law, as provided under
the law then in effect. Nothing contained herein shall be construed
as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or
transferring a portion of the Trust Property to such organization and
entities.
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<PAGE>
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the transactions of the
Trust, including financial statements which shall at least annually be
certified by independent public accountants.
ARTICLE XI
MISCELLANEOUS
Section 11.1. - Filing. This Declaration and any amendment
hereto shall filed in the office of the Secretary of the Commonwealth
of Massachusetts and in such other places as may be required under the
laws of Massachusetts and may also be filed or recorded in such other
places as the Trustees deem appropriate. Each amendment so filed
shall be accompanied by a certificate signed and acknowledged by a
Trustee or by the Secretary or any Assistant Secretary of the Trust
stating that such action was duly taken in a manner provided herein,
and unless such amendment or such certificate sets forth some later
time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration, integrating into a
single instrument all of the provisions of the Declaration which are
then in effect and operative, may be executed from time to time by a
majority of the Trustees and shall, upon filing with the Secretary of
the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu
of the original Declaration and the various amendments thereto.
Section 11.2. - Resident Agent. The Trust may appoint and
maintain a resident agent in the Commonwealth of Massachusetts.
Section 11.3. - Governing Law. This Declaration is executed
by the Trustees with reference to the laws of the Commonwealth of
Massachusetts, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and
construed according to the laws of said Commonwealth, notwithstanding
any Massachusetts law governing choice of law which may require the
construction of this Declaration in accordance with the laws of
another state or jurisdiction.
Section 11.4. - Counterparts. The Declaration may be
simultaneously executed in several counterparts, each of which shall
be deemed to be an original, and such counterparts, together, shall
constitute one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.
Section 11.5. - Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust,
24
<PAGE>
appears to be a Trustee hereunder, or Secretary or Assistant Secretary
of the Trust, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any
instrument or writing, (c) the form of any vote passed at a meeting of
Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (e) the
form of any By-Laws adopted by or the identity of any officers elected
by the Trustees, or (f) the existence of any fact or facts which in
any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing
with the Trustees and their successors.
Section 11.6. - Provisions in Conflict with Law or
Regulations.
(a) The provisions of the Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provisions
shall be deemed never to have constituted a part of the Declaration;
provided, however, that such determination shall not affect any of the
remaining provisions of the Declaration or render invalid or improper
any action taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall affect only such provision in such jurisdiction
and shall not in any manner affect such provision in any other
jurisdiction or any other provision of the Declaration in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this
instrument as of the 15th day of October, 1984.
/s/ Phillip H. Didriksen, Jr.
______________________________
Philip H. Didriksen, Jr.
/s/ Sheldon A. Jones
______________________________
Sheldon A. Jones
25
<PAGE>
STATE OF NEW YORK
STATE OF NEW YORK )
ss: October 15, 1984
COUNTY OF NEW YORK)
Then personally appeared the above-named Philip H. Didriksen,
Jr., who acknowledged the foregoing instrument to be his free act and
deed.
Before me.
/s/ James P. Wallin
_________________________
Notary Public
My Commission expires: March 30, 1985
26
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
COMMONWEALTH OF MASSACHUSETTS)
ss: October 16, 1984
COUNTY OF SUFFOLK )
Then personally appeared the above-named Sheldon A. Jones,
who acknowledged the foregoing instrument to be his free act and deed.
Before me.
/s/ Judith B. Bonaffini
_________________________
Notary Public
My Commission expires: October 1, 1987
27
00250122.AG1
<PAGE>
As amended to
July 14, 1978
BY-LAWS
of
ALLIANCE CAPITAL RESERVES, INC.
______________
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The
principal office shall be in the City of Baltimore, State of
Maryland.
Section 2. Other Offices. The Corporation may have
offices also at such other places within and without the State of
Maryland as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders
shall be held at such place, either within the State of Maryland
or at such other place within the United States, as shall be
fixed from time to time by the Board of Directors.
Section 2. Annual Meetings. Annual meetings of
stockholders shall be held on a date fixed from time to time by
the Board of Directors, provided that such meetings shall be held
within 120 days following the end of each fiscal year of the
<PAGE>
Corporation, for the election of directors and the transaction of
any other business within the powers of the Corporation.
Section 3. Notice of Annual Meeting. Written or
printed notice of the annual meeting, stating the place, date and
hour thereof, shall be given to each stockholder entitled to vote
thereat not less than ten or more than ninety days before the
date of the meeting.
Section 4. Special Meetings. Special meetings of
stockholders may be called by the chairman of the board or by the
Board of Directors and shall be called by the secretary upon the
written request of holders of shares entitled to not less than
twenty-five percent of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. In
the case of such request for a special meeting, upon payment by
such stockholders to the corporation of the reasonably estimated
cost of preparing and mailing a notice of such meeting, the
secretary shall give the notice of such meeting. The secretary
shall not be required to call a special meeting to consider any
matter which is substantially the same as a matter acted upon at
any special meeting of stockholders held within the preceding
twelve months unless requested to do so by holders of shares
entitled to cast not less than a majority of all votes entitled
to be cast at such meeting.
2
<PAGE>
Section 5. Notice of Special Meeting. Written or
printed notice of a special meeting of stockholders, stating the
place, date, hour and purpose thereof, shall be given by the
secretary to each stockholder entitled to vote thereat not less
than ten nor more than ninety days before the date fixed for the
meeting.
Section 6. Business of Special Meetings. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 7. Quorum. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of
business.
Section 8. Voting. When a quorum is present at any
meeting, the affirmative vote of a majority of the votes cast
shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the Investment
Company Act of 1940, as from time to time in effect, or other
statutes or rules or orders of the Securities and Exchange
Commission or any successor thereto or of the Articles of
Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such
question.
3
<PAGE>
Section 9. Proxies. Each stockholder shall at every
meeting of stockholders be entitled to one vote in person or by
proxy for each share of the Common Stock having voting power held
by such stockholder, but no proxy shall be voted on after eleven
months from its date, unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, to
express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date which shall be not more than sixty
days and, in the case of a meeting of stockholders, not less than
ten days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. In
lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, twenty days. If the stock
transfer books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. If no record date is fixed
and the stock transfer books are not closed for the determination
4
<PAGE>
of stockholders: (1) The record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of
stockholders shall be at the close of business on the day on
which notice of the meeting of stockholders is mailed or the day
thirty days before the meeting, whichever is the closer date to
the meeting; and (2) The record date for the determination of
stockholders entitled to receive payment of a dividend or an
allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring
the dividend or allotment of rights, is adopted provided that the
payment or allotment date shall not be more than sixty days after
the date of the adoption of such resolution.
Section 11. Inspectors of Election. The directors, in
advance of any meeting, may, but need not, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at
the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best
of his ability. The inspectors, if any, shall determine the
5
<PAGE>
number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness
to all stockholders. On request of the person presiding at the
meeting or any stockholder, the inspector or inspectors, if any,
shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any
fact found by him or them.
Section 12. Informal Action by Stockholders. Except to
the extent prohibited by the Investment Company Act of 1940, as
from time to time in effect, or rules or orders of the Securities
and Exchange Commission or any successor thereto, any action
required or permitted to be taken at any meeting of stockholders
may be taken without a meeting if a consent in writing, setting
forth such action is signed by all the stockholders entitled to
vote on the subject matter thereof and any other stockholders
entitled to notice of a meeting of stockholders (but not to vote
thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed
with the records of the Corporation.
6
<PAGE>
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of
directors which shall constitute the entire Board of Directors
shall be eleven. By amendment of this by-law the number may be
increased or decreased from time to time by the vote of a
majority of the entire Board of Directors within the limits
permitted by law, but the tenure of office of a director in
office at the time of any decrease in the number of directors
shall not be affected as a result thereof. The directors shall
be elected to hold office at the annual meeting of stockholders,
except as provided in Section 2 of this Article, and each
director shall hold office until the next annual meeting of
stockholders or until his successor is elected and qualified.
Any director may resign at any time upon written notice to the
Corporation. Any director may be removed, either with or without
cause, at any meeting of stockholders duly called and at which a
quorum is present by the affirmative vote of the majority of the
votes entitled to be cast thereon, and the vacancy in the Board
of Directors caused by such removal may be filled by the
stockholders at the time of such removal. Directors need not be
stockholders.
Section 2. Vacancies and Newly-created Directorships.
Any vacancy occurring in the Board of Directors for any cause
other than by reason of an increase in the number of directors
7
<PAGE>
may be filled by a majority of the remaining members of the Board
of Directors although such majority is less than a quorum. Any
vacancy occurring by reason of an increase in the number of
directors may be filled by a majority of the directors then in
office, though less than a quorum. A director elected by the
Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of stockholders or until his
successor is elected and qualifies.
Section 3. Powers. The business and affairs of the
Corporation shall be managed by the Board of Directors which
shall exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Articles
of Incorporation or by these By-Laws conferred upon or reserved
to the stockholders.
Section 4. Annual Meeting. The first meeting of each
newly elected Board of Directors shall be held immediately
following the adjournment of the annual meeting of stockholders
and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such
meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 5. Other Meetings. The Board of Directors of
the Corporation or any committee thereof may hold meetings, both
8
<PAGE>
regular and special, either within or without the State of
Maryland. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time
to time be determined by the Board of Directors. Special
meetings of the Board of Directors may be called by the president
or by two or more directors. Notice of special meetings of the
Board of Directors shall be given by the secretary to each
director at least three days before the meeting if by mail or at
least 24 hours before the meeting if given in person or by
telephone or by telegraph. The notice need not specify the
business to be transacted.
Section 6. Quorum and Voting. At meetings of the
Board of Directors, two of the directors at the time in office
(unless there shall at any time be only one director in office
pursuant to these by-laws) but in no event less than one-third of
the entire Board of Directors shall constitute a quorum for the
transaction of business. The action of a majority of the
directors present at a meeting at which a quorum is present shall
be the action of the Board of Directors. If a quorum shall not
be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors,
9
<PAGE>
appoint from among its members an executive committee and other
committees of the Board of Directors, each committee to be
composed of two or more of the directors of the Corporation. The
Board of Directors may, to the extent provided in the resolution,
delegate to such committee, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, except the power to declare dividends, to issue
stock or to recommend to stockholders any action requiring
stockholders' approval. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the Board of Directors. Unless the Board
of Directors designates one or more directors as alternate
members of any committee, who may replace an absent or
disqualified member at any meeting of the committee, the members
of any such committee present at any meeting and not disqualified
from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a
majority of the members or alternate members of such committee
shall constitute a quorum for the transaction of business and the
act of a majority of the members or alternate members present at
any meeting at which a quorum is present shall be the act of the
committee.
10
<PAGE>
Section 8. Minutes of Committee Meetings. The
committees shall keep regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and
Committees. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed
by all members of the Board of Directors or of such committee, as
the case may be, and such written consent is filed with the
minutes of proceeding of the Board of Directors or committee.
Section 10. Meetings by Conference Telephone. The
members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or committee
by means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and such
participation shall constitute presence in person at such
meeting.
Section 11. Fees and Expenses. The directors may be
paid their expenses of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
11
<PAGE>
allowed like reimbursement and compensation for attending
committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and
stockholders mailed to them at their post office addresses
appearing on the books of the Corporation shall be deemed to be
given at the time when deposited in the United States mail.
Section 2. Waiver of Notice. Whenever any notice is
required to be given under the provisions of the statutes, of the
Articles of Incorporation or of these By-Laws, a waiver thereof
in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent of notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting except when
the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation
shall be chosen by the Board of Directors at its first meeting
after each annual meeting of stockholders and shall be a chairman
of the board, a president, a secretary and a treasurer. The
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Board of Directors may choose also such vice presidents and
additional officers or assistant officers as it may deem
advisable. Any number of offices, except the offices of
president and vice president, may be held by the same person. No
officer shall execute, acknowledge or verify any instrument in
more than one capacity if such instrument is required by law to
be executed, acknowledge or verified by two or more officers.
Section 2. Other Officers and Agents. The Board of
Directors may appoint such other officers and agents as it
desires who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the
Corporation shall hold office at the pleasure of the Board of
Directors. Each officer shall hold his office until his
successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Any officer elected or
appointed by the Board of Directors may be removed at any time by
the Board of Directors when, in its judgment, the best interest
of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal
or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board. The chairman of the
board shall be the chief executive officer of the Corporation,
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shall preside at all meetings of stockholders and of the Board of
Directors, shall have general and active management of the
business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
He shall execute on behalf of the Corporation, and may affix the
seal or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 5. President. The president shall, in the
absence of the chairman of the board, preside at all meetings of
the stockholders or of the Board of Directors. He shall be ex
officio a member of all standing committees, shall have general
and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 6. Vice Presidents. The vice presidents shall
act under the direction of the president and in the absence or
disability of the president shall perform the duties and exercise
the powers of the president. They shall perform such other
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duties and have such other powers as Board of Directors may from
time to time prescribe. The Board of Directors may designate one
or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and in that event the
duties and powers of the president shall descend to the vice
presidents in the specified order of seniority.
Section 7. Secretary. The secretary shall attend all
meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of
the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or
president, under whose supervisor he shall be. He shall keep in
safe custody the seal of the Corporation and, when authorized by
the Board of Directors, affix the same to any instrument
requiring it and, when so affixed, it shall be attested by his
signature or by the signature of the treasurer or an assistant
secretary.
Section 8. Assistant Secretaries. The assistant
secretaries in the order of their seniority, unless otherwise
determined by the Board of Directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the
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powers of the secretary. They shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.
Section 9. Treasurer. The treasurer, subject to order
of the Board of Directors and to any agreement made by authority
of the Board of Directors with any custodian of the assets of the
Corporation, shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be
designated by the Board of Directors. He shall disburse the
funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and
shall render to the Board of Directors, at its regular meetings,
or when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the
corporation.
Section 10. Assistant Treasurers. The assistant
treasurers in the order of their seniority, unless otherwise
determined by the Board of Directors, shall, in the absence or
disability of the treasurer, perform the duties and exercise the
powers of the treasurer. They shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.
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ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of Common Stock of
the Corporation who has made full payment of the consideration
for such stock shall be entitled upon request to have a
certificate, signed by, or in the name of the Corporation by, the
chairman of the board or the president or a vice president and
countersigned by the treasurer or an assistant treasurer or the
secretary or an assistant secretary of the Corporation,
certifying the number of whole shares of Common Stock owned by
him in the Corporation.
Section 2. Fractional Share Interests or Scrip. The
Corporation may, but shall not be obliged to, issue fractions of
a share of Common Stock, arrange for the disposition of
fractional interests by those entitled thereto, pay in cash the
fair value of fractions of a share of Common Stock as of the time
when those entitled to receive such fractions are determined, or
issue scrip or other evidence of ownership which shall entitle
the holder to receive a certificate for a full share of Common
Stock upon the surrender of such scrip or other evidence of
ownership aggregating a full share. Fractional shares of Common
Stock shall have proportionately to the respective fractions
represented thereby all the rights of whole shares, including the
right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation,
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excluding however the right to receive a stock certificate
representing such fractional shares. The Board of Directors may
cause such scrip or evidence of ownership to be issued subject to
the condition that it shall become void if not exchanged for
certificates representing full shares of Common Stock before a
specified date or subject to the condition that the shares of
Common Stock for which such scrip or evidence of ownership is
exchangeable may be sold by the Corporation and the proceeds
thereof distributed to the holders of such scrip or evidence of
ownership, or subject to any other reasonable conditions which
the Board of Directors shall deem advisable, including provision
for forfeiture of such proceeds to the Corporation if not claimed
within a period of not less than three years after the date of
the original issuance of scrip certificates.
Section 3. Signatures on Certificates. Any or all of
the signatures on a certificate may be a facsimile. In case any
officer who has signed or whose facsimile signature has been
placed upon a certificate shall cease to be such officer before
such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the
Corporation or a facsimile thereof may, but need not, be affixed
to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates.
The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or
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certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any
affidavit of that fact by the person claiming the certificate or
certificates to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal
representative, to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. Transfer of Shares. Upon request by the
registered owner of shares, and if a certificate has been issued
to represent such shares upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares of
Common Stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, subject to the
Corporation's rights to purchase such shares, it shall be the
duty of the Corporation, if it is satisfied that all provisions
of the Articles of Incorporation, of the By-Laws and of the law
regarding the transfer of shares have been duly complied with, to
record the transaction upon its books, issue a new certificate to
the person entitled thereto upon request for such certificate,
and cancel the old certificate, if any.
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Section 6. Registered Owners. The Corporation shall
be entitled to recognize the person registered on its books as
the owner of shares to be the exclusive owner for all purposes
including redemption, voting and dividends, and the Corporation
shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Maryland.
ARTICLE VII
Net Asset Value
The net asset value of a share of Common Stock of the
Corporation as at the time of a particular determination shall be
the quotient obtained by dividing the value at such time of the
net assets of the Corporation less its liabilities (exclusive of
capital and surplus) by the total number of shares of Common
Stock outstanding at such time, all determined and computed as
follows:
(1) The assets of the Corporation shall be deemed
to include (A) all cash on hand, on deposit, or on call,
(B) all bills and notes and accounts receivable, (C) all
shares of stock and subscription rights and other
securities owned or contracted for by the Corporation,
other than shares of its own Common Stock, (D) all stock
and cash dividends and cash distributions to be received
by the Corporation and not yet received by it but
declared to stockholders of record on or before the time
at which the net asset value is being determined,
(E) all interest accrued on any interest-bearing
securities owned by the Corporation and (F) all other
property of every kind and nature including prepaid
expenses; the value of such assets to be determined as
follows:
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Securities for which market quotations are readily
available shall be valued at the mean between most
recent bid and asked price or yield equivalent as
obtained from dealers that make markets in such
securities. Securities and other assets for which
market quotations are not readily available shall be
valued at fair value as determined in good faith by the
Board of Directors.
(2) The liabilities of the Corporation shall
include (A) all bills and notes and accounts payable,
(B) all administrative expenses payable and/or accrued
(including management and advisory fees payable and/or
accrued, including in the case of any contingent feature
thereof, an estimate based on the facts existing at the
time), (C) all contractual obligations for the payment
of money or property, including the amount of any unpaid
dividend declared upon the Corporation's Common Stock
and payable to stockholders of record on or before the
time at which net asset value is being determined,
(D) all reserves, if any, authorized or approved by the
Board of Directors for taxes, including reserves for
taxes at current rates based on any unrealized
appreciation in the value of the assets of the
Corporation and (E) all other liabilities of the
Corporation of whatsoever kind and nature except
liabilities represented by outstanding capital stock and
surplus of the Corporation.
(3) For the purposes hereof
(A) Common Stock subscribed for shall not be
deemed to be outstanding until immediately after
the time as of which its net asset value is
determined as provided in the Articles of
Incorporation next following the acceptance of the
subscription therefor and the subscription price
thereof shall not be deemed to be an asset of the
Corporation until such time, but immediately
thereafter such capital stock shall be deemed to be
outstanding and until paid the subscription price
thereof shall be deemed to be an asset of the
Corporation.
(B) Common Stock surrendered for redemption
by the Corporation pursuant to the provisions of
the Articles of Incorporation or purchased by the
Corporation pursuant to the provisions of the
Articles of Incorporation or these By-Laws shall be
deemed to be outstanding to and including the time
as of which its net asset value is determined as
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provided in the Articles of Incorporation but not
thereafter, and thereupon and until paid the
redemption or purchase price thereof shall be
deemed to be a liability of the Corporation.
(C) Changes in the holdings of the
Corporation's portfolio securities shall be
accounted for on a trade date basis.
(D) Expenses, including management and
advisory fees, shall be included to date of
calculation.
In addition to the foregoing, the Board of Directors is
empowered, subject to applicable legal requirements, in its
absolute discretion, to establish other methods for determining
the net asset value of each share of Common Stock of the
Corporation.
ARTICLE VIII
Miscellaneous
Section 1. Reserves. There may be set aside out of
any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for repairing or maintaining any property
of the Corporation, or for the purchase of additional property,
or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Dividends. Dividends upon the Common Stock
of the Corporation may, subject to the provisions of the Articles
of Incorporation and of the provisions of applicable law, be
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declared by the Board of Directors at any time. Dividends may be
paid in cash, in property or in shares of the Corporation's
Common Stock, subject to the provisions of the statute and of the
Articles of Incorporation and of applicable law.
Section 3. Checks. All checks or demands for money
and notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board of
Directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 5. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Maryland". The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6. Filing of By-Laws. A certified copy of the
By-Laws, including all amendments, shall be kept at the principal
office of the Corporation in the State of Maryland.
Section 7. Annual Report. The books of account of the
Corporation shall be examined by an independent firm of public
accountants at the close of each annual fiscal period of the
Corporation and at such other times, if any, as may be directed
by the Board of Directors of the Corporation. Within 120 days of
the close of each annual fiscal period a report based upon such
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examination at the close of that fiscal period shall be mailed to
each stockholder of the Corporation of record at the close of
such annual fiscal period, unless the Board of Directors shall
set another record date, at his address as the name appears on
the books of the Corporation. Each such report shall contain such
information as is required to be set forth therein by the
Investment Company Act of 1940 and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder.
Such report shall also be submitted at the annual meeting of the
stockholders and filed within twenty days thereafter at the
principal office of the Corporation in the State of Maryland.
Section 8. Stock Ledger. The Corporation shall
maintain at its principal office outside of the State of Maryland
an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares of stock
held by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written
form within a reasonable time for visual inspection.
Section 9. Ratification of Accountants by
Stockholders. At every annual meeting of the stockholders of the
Corporation there shall be submitted for ratification or
rejection the name of the firm of independent public accountants
which has been selected for the current fiscal year in which such
annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisors of, or
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interested persons (as defined in the Investment Company Act of
1940) of an investment advisor of, or officers or employees of,
the Corporation.
Section 10. Custodian. All securities and similar
investment owned by the Corporation shall be held by a custodian
which shall be either a trust company or a national bank of good
standing, having a capital surplus and undivided profits
aggregating not less than two million dollars ($2,000,000), or a
member firm of the New York Stock Exchange. The terms of custody
of such securities and cash shall include such provisions
required to be contained therein by the Investment Company Act of
1940 and the rules and regulations promulgated thereunder by the
Securities and Exchange Commission.
Upon the resignation or inability to serve of any such
custodian the Corporation shall (a) use its best efforts to
obtain a successor custodian, (b) require the cash and securities
of the Corporation held by the custodian to be delivered directly
to the successor custodian, and (c) in the event that no
successor custodian can be found, submit to the stockholders of
the Corporation, before permitting delivery of such cash and
securities to anyone other than a successor custodian, the
question whether the Corporation shall be dissolved or shall
function without a custodian; provided, however, that nothing
herein contained shall prevent the termination of any agreement
between the Corporation and any such custodian by the affirmative
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vote of the holders of a majority of all the capital stock of the
Corporation at the time outstanding and entitled to vote. Upon
its resignation or inability to serve and pending action by the
Corporation as set forth in this section, the custodian may
deliver any assets of the Corporation held by it to a qualified
bank or trust company in the City of New York or to a member firm
of the New York Stock Exchange selected by it, such assets to be
held subject to the terms of custody which governed such retiring
custodian.
Section 11. Investment Adviser. The Corporation may
enter into an investment advisory or underwriting contract or
contracts with any person, firm, partnership, association or
corporation but such contract or contracts shall continue in
effect only so long as such continuance is specifically approved
annually by a majority of the Board of Directors or by vote of
the holders of a majority of the voting securities of the
Corporation, and in either case by vote of a majority of the
directors who are not parties to such contract or interested
persons (as defined in the Investment Company Act) of any such
party cast in person at a meeting called for the purpose of
voting on such approval.
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ARTICLE IX
Amendments
The Board of Directors shall have the power, by a
majority vote of the entire Board of Directors at any meeting
thereof, to make, alter and repeal by-laws of the Corporation.
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00250122.AG5
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ADVISORY AGREEMENT
ALLIANCE CAPITAL RESERVES
1345 Avenue of the Americas
New York, New York 10105
July 22, 1992
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We are an open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the
"Act"). We are currently authorized to issue one class of shares
and our Trustees are authorized to reclassify and issue any
unissued shares to any number of additional classes or series
(Portfolios) each having its own investment objective, policies
and restrictions, all as more fully described in the Prospectus
and Statement of Additional Information constituting a part of
the Registration Statement filed on our behalf under the
Securities Act of 1933 and the Act. We are engaged in the
business of investing and reinvesting our assets in securities of
the type and in accordance with the limitations specified in our
Declaration of Trust, By-Laws, Registration Statements filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and the Act, and any representations made in our
Prospectus and Statement of Additional Information, all in such
manner and to such extent as may from time to time be authorized
by our Trustees. We enclose copies of the documents listed above
and will from time to time furnish you with any amendments
thereof.
2. (a) We hereby employ you to manage the investment and
reinvestment of the assets in each of our Portfolios as above
specified, and, without limiting the generality of the foregoing,
to provide management and other services specified below.
(b) You will make decisions with respect to all
purchases and sales of securities in each of our Portfolios. To
carry out such decisions, you are hereby authorized, as our agent
and attorney in fact, for our account and at our risk and in our
<PAGE>
name, to place orders for the investment and reinvestment of our
assets. In all purchases, sales and other transactions in
securities in each of our Portfolios you are authorized to
exercise full discretion and act for us in the same manner and
with the same force and effect as we might or could do with
respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to
the furtherance or conduct of such purchases, sales or other
transactions.
(c) You will report to our Trustees at each meeting
thereof all changes in each Portfolio since the prior report, and
will also keep us in touch with important developments affecting
any Portfolio and on your own initiative will furnish us from
time to time with such information as you may believe appropriate
for this purpose, whether concerning the individual banks or
other companies whose securities are included in our Portfolios,
the banking or other industries in which they engage, or the
conditions prevailing in the money market or the economy
generally. You will also furnish us with such statistical and
analytical information with respect to securities in each of our
Portfolios as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of securities in each
of our Portfolios, you will bear in mind the policies set from
time to time by our Trustees as well as the limitations imposed
by our Declaration of Trust and in our Registration Statements
under the Act and the Securities Act of 1933, the limitations in
the Act and of the Internal Revenue Code in respect of regulated
investment companies and the investment objective, policies and
restrictions for each of our Portfolios.
(d) It is understood that you will from time to time
employ or associate with yourselves such persons as you believe
to be particularly fitted to assist you in the execution of your
duties hereunder, the cost of performance of such duties to be
borne and paid by you. No obligation may be incurred on our
behalf in any such respect. During the continuance of this
agreement at our request you will provide to us persons
satisfactory to our Trustees to serve as our officers. You or
your affiliates will also provide persons, who may be our
officers, to render such clerical, accounting, administrative and
other services to us as we may from time to time request of you.
Such personnel may be employees of you or your affiliates. We
will pay to you or your affiliates the cost of such personnel for
rendering such services to us at such rates as shall from time to
time be agreed upon between us, provided that all time devoted to
the investment or reinvestment of securities in each of our
Portfolios or to the promotion of the sale of our shares shall be
for your account. Nothing contained herein shall be construed to
restrict our right to hire our own employees or to contract for
services to be performed by third parties. Furthermore, you or
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your affiliates (other than us) shall furnish us without charge
with such administrative and management supervision and
assistance and such office facilities as you may believe
appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be
subject. You or your affiliates (other than us) shall also be
responsible for the payment of any expenses incurred in promoting
the sale of our shares (other than the portion of the promotional
expenses to be borne by us in accordance with an effective plan
pursuant to Rule 12b-1 under the Act and the costs of printing
our prospectuses and other reports to shareholders and fees
related to registration with the Securities and Exchange
Commission and with state regulatory authorities).
3. It is further agreed that you shall be responsible for
the portion of the net expenses of all our Portfolios (except
taxes, brokerage, interest, and extraordinary expenses) incurred
by us during each of our fiscal years or portion thereof that
this agreement is in effect between us which portion shall be the
excess of the aggregate of such expenses over one per cent (1%)
of our net assets computed on a daily average basis for such
fiscal year (reduced pro rata for any portion of less than a
year). We hereby confirm that, subject to the foregoing, we shall
be responsible and hereby assume the obligation for payment of
all our other expenses, including: (a) payment of the fee payable
to you under paragraph 5 hereof; (b) custody, transfer, and
dividend disbursing expenses; (c) fees of trustees who are not
your affiliated persons; (d) legal and auditing expenses; (e)
clerical, accounting, administrative, and other office costs; (f)
the cost of personnel providing services to us, as provided in
subparagraph (d) of paragraph 2 above; (g) costs of printing our
prospectuses and shareholder reports; (h) expenses and fees
related to registration and filing with the Securities and
Exchange Commission and with state regulatory authorities; and
(i) such promotional expenses as may be contemplated by an
effective plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940; provided, however, that our payment of such
promotional expenses shall be in the amounts, and in accordance
with the procedures, set forth in such plan.
4. We shall expect of you, and you will give us the benefit
of, your best judgment and efforts in rendering these services to
us, and we agree as an inducement to your undertaking these
services that you shall not be liable hereunder for any mistake
of judgment or in any event whatsoever, except for lack of good
faith, provided that nothing herein shall be deemed to protect,
or purport to protect, you against any liability to us or to our
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
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5. In consideration of the foregoing we will pay you a fee
for each Portfolio at the annual rate of: .50 of 1% of the first
$1.25 billion of that Portfolio's average daily net assets; .49
of 1% of the next $.25 billion of such assets; .48 of 1% of the
next $.25 billion of such assets; .47 of 1% of the next $.25
billion of such assets; .46 of 1% of the next $1 billion of such
assets, and; .45 of 1% of such average daily net assets in excess
of $3 billion. Such fee shall be accrued by us daily and shall be
payable in arrears on the last day of each calendar month for
services performed hereunder during such month. Your
reimbursement, if any, of our expenses, as provided in paragraph
3 hereof, shall be estimated and paid to us monthly in arrears,
at the same time as our payment to you for such month.
6. This agreement shall become effective on the date hereof
and shall remain in effect until June 30, 1993 and thereafter for
successive twelve-month periods (computed from each July 1), with
respect to each Portfolio provided that such continuance is
specifically approved at least annually by our Trustees or by
majority vote of the holders of the outstanding voting securities
(as defined in the Act) of such Portfolio, and, in either case,
by a majority of our trustees who are not parties to this
agreement or interested persons, as defined in the Act, of any
such party (other than as trustees of our Trust) provided
further, however, that if the continuation of this agreement is
not approved as to a Portfolio, you may continue to render to
such Portfolio the services described herein in the manner and to
the extent permitted by the Act and the rules and regulations
thereunder. Upon the effectiveness of this agreement, it shall
supersede all previous agreements between us covering the subject
matter hereof. This agreement may be terminated with respect to
any Portfolio at any time, without the payment of any penalty, by
vote of a majority of the outstanding voting securities (as so
defined) of such Portfolio, or by a vote of a majority of our
Trustees on sixty days' written notice to you, or by you with
respect to any Portfolio on sixty days' written notice to us.
7. This agreement may not be transferred, assigned, sold or
in any manner hypothecated or pledged by you and this agreement
shall terminate automatically in the event of any such transfer,
assignment, sale, hypothecation or pledge by you. The terms
"transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission thereunder.
8. (a) Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your employees,
officers, or any of the Directors of Alliance Capital Management
Corporation, general partner, or employees who may also be a
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trustee, officer or employee of ours, or persons otherwise
affiliated with us (within the meaning of the Act) to engage in
any other business or to devote time and attention to the
management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind
to any other trust, corporation, firm, individual or association.
(b) You will notify us of any change in general partners or
your partnership within a reasonable time after such change.
9. Notice is hereby given that this agreement is entered
into on our behalf by an officer of our Trust in his capacity as
an officer and not individually and that the obligations of or
arising out of this agreement are not binding upon any of our
Trustees, officers, shareholders, employees or agents
individually but are binding only upon the assets and property of
our Trust.
If the foregoing is in accordance with your understanding,
you will kindly so indicate by signing and returning to us the
enclosed copy hereof.
Very truly yours,
ALLIANCE CAPITAL RESERVES
By /s/ James P. Syrett
___________________________
James P. Syrett
President
Accepted: As of July 22, 1992
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT CORPORATION,
general partner
By /s/ John D. Carifa
___________________________
John D. Carifa
Executive Vice President
& Chief Financial Officer
5
00250122.AH0
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
ALLIANCE CAPITAL RESERVES
1345 Avenue of the Americas
New York, New York 10105
July 22, 1992, as
amended as of June 16, 1997
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, on the terms and conditions set
forth herein, we have agreed that you shall be, for the period of
this Distribution Services Agreement (the "Agreement"), a
distributor, as our agent, for the unsold portion of such number
of shares of beneficial interest of our Trust, par value $.01 per
share (the "Trust Shares") as may from time to time be
effectively registered under the Securities Act of 1933, as
amended (the "Act").
1. We hereby agree to offer through you as our agent,
and to solicit, through you as our agent, offers to subscribe to,
the unsold balance of the Trust Shares as shall then be
effectively registered under the Act, and you are appointed our
agent for such purpose. All subscriptions for Trust Shares
obtained by you shall be directed to us for acceptance and shall
not be binding on us until accepted by us. You shall have no
authority to make binding subscriptions on our behalf. We
reserve the right to sell Trust Shares through other distributors
or directly to investors through subscriptions received by us at
our principal office in New York, New York. The right given to
you under this agreement shall not apply to Trust Shares issued
in connection with (a) the merger or consolidation of any other
investment company with us, (b) our acquisition by purchase or
otherwise of all or substantially all of the assets or stock of
any other investment company or (c) the reinvestment in Trust
Shares by our shareholders of dividends or other distributions or
any other offering of shares to our shareholders.
2. You will use your best efforts to obtain
subscriptions to Trust Shares upon the terms and conditions
contained herein and in the then current Prospectus and Statement
of Additional Information, including the offering price. You
will send to us promptly all subscriptions placed with you. We
shall advise you of the approximate net asset value per share or
net asset value per share (as used in the Prospectus and
<PAGE>
Statement of Additional Information) on any date requested by you
and at such other times as it shall have been determined by us.
We shall furnish you from time to time, for use in connection
with the offering of Trust Shares, such other information with
respect to us and the Trust Shares as you may reasonably request.
We shall supply you with such copies of our current Prospectus
and Statement of Additional Information in effect from time to
time as you may request. You are not authorized to give any
information or to make any representations, other than those
contained in the Registration Statement, Prospectus and Statement
of Additional Information, as then in effect, filed under the Act
covering Trust Shares or which we may authorize in writing. You
may use employees and agents at your cost and expense to assist
you in carrying out your obligations hereunder but no such
employee or agent shall be deemed to be our agent or have any
rights under this agreement.
3. We reserve the right to suspend the offering of
Trust Shares at any time, in the absolute discretion of our Board
of Trustees, and upon notice of such suspension you shall cease
to offer Trust Shares hereunder.
4. Both of us will cooperate with each other in taking
such action as may be necessary to qualify Trust Shares for sale
under the securities laws of such states as we may designate.
Pursuant to our Advisory Agreement dated July 22, 1992 with
Alliance Capital Management L.P. (the "Adviser"), we will pay all
fees and expenses of registering Trust Shares under the Act and
of qualification of Trust Shares and our qualification under
applicable state securities laws. You shall pay all expenses
relating to your broker-dealer qualification.
5. It is understood that paragraphs 5, 10 and 13
hereof constitutes a plan of distribution (the "Plan") within the
meaning of Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "1940
Act") and is a part of this Agreement. The material aspects of
the Plan are as follows:
(a) The Trust will pay to the Adviser each month a
distribution services fee with respect to each Portfolio of the
Trust ("Portfolio") which will not exceed, on an annualized
basis, .25 of 1% of the Trust's average daily net assets. The
Adviser will use the entire amount so received from the Trust
(i) to make payments to you to compensate broker-dealers or other
persons for providing distribution assistance, (ii) to make
payments to compensate banks and other institutions for providing
administrative and accounting services with respect to Trust
shareholders and (iii) to otherwise promote the sale of shares of
the Trust, including paying for the preparation, printing and
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<PAGE>
distribution of prospectuses and sales literature or other
promotional activities.
(b) The Adviser will as long as the Plan is in effect
make similar payments to you for distribution services performed
by you and for distribution assistance provided by broker-dealers
or other persons as described above and to banks or other
institutions for administrative and accounting services. These
payments will be made by the Adviser from its own resources,
which may include the management fee it receives from the Trust.
The Adviser may in its sole discretion increase or decrease the
amount of distribution assistance payments.
(c) Payments for distribution assistance or
administrative and accounting services are subject to the terms
and conditions of the written agreements between each
broker-dealer or other person and you. Such agreements will be in
a form satisfactory to the Trustees of the Trust.
(d) The Treasurer of the Trust will prepare and furnish
to the Trustees of the Trust at least quarterly a written report
complying with the requirements to Rule 12b-1 setting forth all
amounts expended under the Plan and the purposes for which such
expenditures were made.
(e) The Trust is not obligated to pay any distribution
expense in excess of the distribution services fee described in
subparagraph (a) hereof and any expenses of distribution of the
Trust's shares accrued by the Adviser or you in one fiscal year
of the Trust may not be paid from distribution services fees
received from the Trust in subsequent fiscal years of the Trust.
Distribution services fees received from the Trust also will not
be used to pay any interest expense, carrying charges or other
financing costs, or allocation of overhead.
(f) All agreements with any persons relating to the
implementation of the Plan will be subject to termination,
without penalty, upon not more than sixty days' written notice,
pursuant to the provisions of paragraph 10 hereof.
(g) Neither the Adviser nor you are obligated by the
Plan to execute agreements with qualifying banks, broker-dealers
or other persons and any termination of an agreement with a
particular financial intermediary under the Plan will have no
effect on similar agreements between the Adviser or you and other
participating banks, broker-dealers or other persons pursuant to
the Plan.
6. We represent to you that our Registration
Statement, Prospectus and Statement of Additional Information (as
in effect from time to time) under the Act have been or will be,
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<PAGE>
as the case may be, carefully prepared in conformity with the
requirements of the Act and the rules and regulations of the
Securities and Exchange Commission thereunder. We represent and
warrant to you that our Registration Statement, Prospectus and
Statement of Additional Information contain or will contain all
statements required to be stated therein in accordance with the
Act and the rules and regulations of said Commission, and that
all statements of fact contained or to be contained therein are
or will be true and correct at the time indicated or the
effective date as the case may be; that none of our Registration
Statement, our Prospectus or our Statement of Additional
Information, when it shall become effective or be authorized for
use, will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a
purchaser of Trust Shares. We will from time to time file such
amendment or amendments to our Registration Statement, Prospectus
and Statement of Additional Information as, in the light of
future developments, shall, in the opinion of our counsel, be
necessary in order to have our Registration Statement, Prospectus
and Statement of Additional Information at all times contain all
material facts required to be stated therein or necessary to make
any statements therein not misleading to a purchaser of Trust
Shares, but, if we shall not file such amendment or amendments
within fifteen days after receipt by us of a written request from
you to do so, you may, at your option, terminate this Agreement
immediately. We shall not file any amendment to our Registration
Statement, Prospectus or Statement of Additional Information
without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement contained shall
in any way limit our right to file at any such time such
amendments to our Registration Statement, Prospectus or Statement
of Additional Information, of whatever character, as we may deem
advisable, such right being in all respects absolute and
unconditional. We represent and warrant to you that any
amendment to our Registration Statement, Prospectus or Statement
of Additional Information hereafter filed by us will, when it
becomes effective, contain all statements required to be stated
therein in accordance with the Act and the rules and regulations
of said Commission, that all statements of fact contained therein
will, when the same shall become effective, be true and correct
and that no such amendment, when it becomes effective, will
include an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of
Trust Shares.
7. We agree to indemnify, defend and hold you, and any
person who controls you within the meaning of Section 15 of the
Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of
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<PAGE>
investigating or defending such claims, demands or liabilities
and any reasonable counsel fees incurred in connection therewith)
which you or any such controlling person may incur, under the
Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in
our Registration Statement, Prospectus or Statement of Additional
Information in effect from time to time under the Act or arising
out of or based upon any alleged omission to state a material
fact required to be stated in either thereof or necessary to make
the statements in either thereof not misleading; provided,
however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our
security holders to which you would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence, in
the performance of your duties, or by reason of your reckless
disregard of your obligations and duties under this agreement.
Our agreement to indemnify you and any such controlling person as
aforesaid is expressly conditioned upon our being notified of any
action brought against you or any such controlling person, such
notification to be given by letter or by telegram addressed to us
at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days
after the summons or other first legal process shall have been
served. The failure to so notify us of any such action shall not
relieve us from any liability which we may have to the person
against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of our
indemnity agreement contained in this paragraph 7. We will be
entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by us
and approved by you. In the event we do elect to assume the
defense of any suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of
them; but in case we do not elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by us,
we will reimburse you or the controlling person or persons named
as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. Our
indemnification agreement contained in this paragraph 7 and our
representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of you or any controlling
person and shall survive the sale of any of Trust Shares made
pursuant to subscriptions obtained by you. This agreement of
indemnity will inure exclusively to your benefit, to the benefit
of your successors and assigns, and to the benefit of any
controlling persons and their successors and assigns. We agree
promptly to notify you of the commencement of any litigation or
processing against us in connection with the issue and sale of
any Trust Shares.
5
<PAGE>
8. You agree to indemnify, defend and hold us, our
several officers and trustees, and any person who controls us
within the meaning of Section 15 of the Act, free and harmless
from and against any and all claims, demands, liabilities, and
expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or
trustees, or any such controlling person may incur under the Act
or under common law or otherwise, but only to the extent that
such liability, or expense incurred by us, our officers or
trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished
in writing by you to us for use in our Registration Statement or
Prospectus in effect from time to time under the Act, or shall
arise out of or be based upon any alleged omission to state a
material fact in connection with such information required to be
stated in the Registration Statement or Prospectus or necessary
to make such information not misleading. Your agreement to
indemnify us, our officers and trustees, and any such controlling
person as aforesaid is expressly conditioned upon you being
notified of any action brought against us, our officers or
trustees or any such controlling person, such notification to be
given by letter or telegram addressed to you at your principal
office in New York, New York, and sent to you by the person
against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. You
shall have a right to control the defense of such action, with
counsel of your own choosing, satisfactory to us, if such action
is based solely upon such alleged misstatement or omission on
your part, and in any other event you and we, our officers or
trustees or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any
such action. The failure to so notify you of any such action
shall not relieve you from any liability which you may have to
us, to our officers or trustees, or to such controlling person by
reason of any such untrue statement or omission on your part
otherwise than on account of your indemnity agreement contained
in this paragraph 8.
9. We agree to advise you immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to our Registration Statement or
Prospectus or for additional information,
(b) In the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
effectiveness of our Registration Statement or Prospectus or the
initiation of any proceedings for that purpose,
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<PAGE>
(c) of the happening of any material event which makes
untrue any statement made in our Registration Statement or
Prospectus or which requires the making of a change in either
thereof in order to make the statements therein not misleading,
and
(d) of all action of the Securities and Exchange
Commission with respect to any amendments to our Registration
Statement or Prospectus which may from time to time be filed with
the Securities and Exchange Commission under the Act.
10. (a) This agreement shall become effective in
respect of each Portfolio of the Trust on the date hereof, shall
remain in effect until June 30, 1998, and shall continue in
effect thereafter for successive twelve-month periods (computed
from each July 1); provided, however, that such continuance is
specifically approved at least annually by the Trustees of the
Trust or by majority vote of the holders of the outstanding
voting securities (as defined in the 1940 Act) of the relevant
Portfolio of the Trust, and, in either case, by a majority of the
Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party
(other than as Trustees of the Trust) and who have no direct or
indirect financial interest in the operation of the Plan or any
agreement related thereto. Upon the effectiveness of this
Agreement, it shall supersede all previous agreements between the
parties hereto covering the subject matter hereof. This
Agreement may be terminated in respect of a Portfolio of the
Trust (i) by the Trust at any time, without the payment of any
penalty, by the vote of a majority of the outstanding voting
securities (as so defined) of such Portfolio, or by a vote of a
majority of the Trustees of the Trust who are not interested
persons (as defined in the 1940 Act) of the Trust and have no
direct or indirect financial interest in the operation of the
Plan or any agreement related thereto, in either event on sixty
days written notice to you; provided, however, that no such
notice shall be required if such termination is stated by the
Trust to relate only to paragraphs 5 and 13 hereof (in which
event paragraphs 5 and 13 shall be deemed to have been severed
herefrom and all other provisions of this Agreement shall
continue in full force and effect), or (ii) by you on sixty days
written notice to the Trust.
(b) This Agreement may be amended at any time with the
approval of the Trustees of the Trust; provided, however, that
(i) any material amendments of the terms hereof will become
effective with respect to a Portfolio only upon approval as
provided in the first proviso of paragraph 10(a) hereof, and
(ii) any amendment to increase materially the amount to be
expended by a Portfolio for distribution assistance,
administrative and accounting services and other activities
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<PAGE>
designed to promote the sale of shares of such Portfolio
hereunder will be effective with respect to a Portfolio only upon
the additional approval by a vote of a majority of the
outstanding voting securities of such Portfolio as defined in the
1940 Act.
11. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
Agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission thereunder.
12. Except to the extent necessary to perform your
obligation hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your officers,
directors or employees who may also be a trustee, officer or
employee of ours, to engage in any other business or to devote
time and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm,
individual or association.
13. While the Plan is in effect, the selection and
nomination of the trustees who are not "interested persons" of
the Trust (as defined in the 1940 Act) will be committed to the
discretion of such disinterested trustees.
14. Notice is hereby given that this Agreement is
entered into on our behalf by an officer of our Trust in his
capacity as an officer and not individually and that the
obligations of or arising out of this Agreement are not binding
upon any of our Trustees, officers, shareholders, employees or
agents individually but are binding only upon the assets and
property of our Trust.
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<PAGE>
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
Alliance Capital Reserves
By /s/ Ronald M. Whitehill
__________________________
Ronald M. Whitehill
President
Accepted: July 22, 1992, as amended
as of June 16, 1997
Alliance Fund Distributors, Inc.
By /s/Edmund P. Bergan, Jr.
____________________________
Edmund P. Bergan, Jr.
Senior Vice President
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
general partner
By /s/John D. Carifa
___________________________
John D. Carifa
President & Chief Operating Officer
9
00250122.AH1
<PAGE>
CUSTODIAN CONTRACT
Between
ALLIANCE CAPITAL RESERVES
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held
by It 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 8
2.4 Bank Accounts 8
2.5 Payments for Shares 9
2.6 Availability of Federal Funds 10
2.7 Collection of Income 10
2.8 Payment of Fund Monies 11
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased 14
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund 15
2.11 Appointment of Agents 15
2.12 Deposit of Fund Assets in Securities System 16
2.12A Fund Assets Held in the Custodian's Direct
Paper System 19
2.13 Segregated Account 21
2.14 Ownership Certificates for Tax Purposes 23
2.15 Proxies 23
2.16 Communications Relating to Portfolio
Securities 23
2.17 Proper Instructions 24
2.18 Actions Permitted Without Express Authority 25
2.19 Evidence of Authority 26
3. Duties of Custodian With Respect to the Books
of Account and Calculations of Net Asset Value
and Net Income 27
4. Records 27
5. Opinion of Fund's Independent Accountants 28
6. Reports to Fund by Independent Public Accountants 29
7. Compensation of Custodian 29
8. Responsibility of Custodian 29
9. Effective Period, Termination and Amendment 31
10. Successor Custodian 33
<PAGE>
11. Interpretive and Additional Provisions 35
12. Additional Funds 35
13. Massachusetts Law to Apply 36
14. Prior Contracts 36
<PAGE>
CUSTODIAN CONTRACT
This Contact between Alliance Capital Reserves, a
business trust organized and existing under the laws of
Massachusetts, having its principal place of business at
1345 Avenue of the Americas, New York 10105 hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at
225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue shares in
separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to offer shares in two series,
the Alliance Capital Reserves and the Alliance Money Reserves
(such series together with all other series subsequently
established by the Fund and made subject to this Contract in
accordance with paragraph 12, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
<PAGE>
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
the assets of the Portfolios of the Fund pursuant to the provision
of the Declaration of Trust. The Fund on behalf of the
Portfolio(s) agrees to deliver to the Custodian all securities and
cash of the Portfolios, and all payments of income, payments of
principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and
the cash consideration received by it for such new or treasury
shares of beneficial interest of the Fund representing interests
in the Portfolios, ("Shares") as may be issued or sold from time
to time. The Custodian shall not be responsible for any property
of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning
of Section 2.17), the Custodian shall on behalf of the applicable
Portfolio(s) from time to time employ one or more sub-custodians,
but only in accordance with an applicable vote by the Board of
Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less
responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.
<PAGE>
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of each Portfolio
all non-cash property, including all securities owned by
such Portfolio, other than (a) securities which are
maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System"
and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Portfolio held by the
Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of
the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and
only in the following cases:
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<PAGE>
1) Upon sale of such securities for the account of
the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such
securities entered into by the Portfolio;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.12 hereof;
4) To the depository agent in connection with
tender or other similar offers for securities
of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in any
such case, the cash or other consideration is
to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Portfolio or in
the name of any nominee or nominees of the
Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.11 or
into the name or nominee name of any sub-
custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds,
certificates or other evidence representing the
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<PAGE>
same aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the
account of the Portfolio, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such securities
except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization,
reorganization or readjustment of the
securities of the issuer of such securities, or
pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the
new securities and cash, if any, are to be
delivered to the Custodian;
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<PAGE>
9) In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim receipts
or temporary securities for definitive
securities; provided that, in any such case,
the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only
against receipt of adequate collateral as
agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which
may be in the form of cash or obligations
issued by the United States government, its
agencies or instrumentalities, except that in
connection with any loans for which collateral
is to be credited to the Custodian's account in
the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will
not be held liable or responsible for the
delivery of securities owned by the Portfolio
prior to the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the
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Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-
dealer registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and a member
of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing
Corporation and of any registered national
securities exchange, or of any similar
organization or organizations, regarding escrow
or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the
Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any
similar organization or organizations,
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regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for
delivery to such Transfer Agent or to the
holders of shares in connection with
distributions in kind, as may be described from
time to time in the currently effective
prospectus and statement of additional
information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a
resolution of the Board of Trustees or of the
Executive Committee signed by an Officer of the
Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities
of the Portfolio to be delivered, setting forth
the purpose for which such delivery is to be
made, declaring such purpose to be a proper
corporate purpose, and naming the person or
7
<PAGE>
persons to whom delivery of such securities
shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of the Portfolio or in the name of
any nominee of the Fund on behalf of the Portfolio or of
any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund
has authorized in writing the appointment of a nominee to
be used in common with other registered investment
companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent
appointed pursuant to Section 2.11 or in the name or
nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on
behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each
Portfolio of the Fund, subject only to draft or order by
the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash
maintained by the Portfolio in a bank account established
8
<PAGE>
and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it
may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each
such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of
the Board of Trustees of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian
and shall be withdrawable by the Custodian only in that
capacity.
2.5 Payments for Shares. The Custodian shall receive from
the distributor for the Shares or from the Transfer Agent
of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for
Shares of that Portfolio issued or sold from time to time
by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio
and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.
9
<PAGE>
2.6 Availability of Federal Funds. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio
and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio
as of specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks
received in payment for Shares of such Portfolio which
are deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a
timely basis all income and other payments with respect
to registered securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a
timely basis all income and other payments with respect
to bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected,
to such Portfolio's custodian account. Without limiting
the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other
income items requiring presentation as and when they
become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on
securities loaned pursuant to the provisions of Section
10
<PAGE>
2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in
connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is
properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of securities, options,
futures contracts or options on futures
contracts for the account of the Portfolio but
only (a) against the delivery of such
securities or evidence of title to such
options, futures contracts or options on
futures contracts to the Custodian (or any
bank, banking firm or trust company doing
business in the United States or abroad which
is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian and
has been designated by the Custodian as its
11
<PAGE>
agent for this purpose) registered in the name
of the Portfolio or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case
of a purchase effected through a Securities
System, in accordance with the conditions set
forth in Section 2.12 hereof; (c) in the case
of a purchase involving the Direct Paper
System, in accordance with the conditions set
forth in Section 2.12A; (d) in the case of
repurchase agreements entered into between the
Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery
of the securities either in certificate form or
through an entry crediting the Custodian's
account at the Federal Reserve Bank with such
securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with
written evidence of the agreement by the
Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may
12
<PAGE>
be effected prior to receipt of a confirmation
from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund
as defined in Section 2.17;
2) In connection with conversion, exchange or
surrender of securities owned by the Portfolio
as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Portfolio as set forth in Section
2.10 hereof;
4) For the payment of any expense or liability
incurred by the Portfolio, including but not
limited to the following payments for the
account of the Portfolio: interest, taxes,
management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole
or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares of
the Portfolio declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received
in respect of securities sold short;
13
<PAGE>
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions
from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant
Secretary, specifying the amount of such
payment, setting forth the purpose for which
such payment is to be made, declaring such
purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in
this Contract, in any and every case where payment for
purchase of securities for the account of a Portfolio is
made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to
so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent
as if the securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the
Fund. From such funds as may be available for the
14
<PAGE>
purpose but subject to the limitations of the Declaration
of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer
Agent, make funds available for payment to holders of
Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of
a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian shall
honor checks drawn on the Custodian by a holder of
Shares, which checks have been furnished by the Fund to
the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are
mutually agreed upon from time to time between the Fund
and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian
15
<PAGE>
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian
of its responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain securities owned by
a Portfolio in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein
as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to
the following provisions:
1) The Custodian may keep securities of the
Portfolio in a Securities System provided that
such securities are represented in an account
("Account") of the Custodian in the Securities
System which shall not include any assets of
the Custodian other than assets held as a
fiduciary, custodial or otherwise for
customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are
16
<PAGE>
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Portfolio;
3) The Custodian shall pay for securities
purchased for the account of the Portfolio upon
(i) receipt of advice from the Securities
System that such securities have been
transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to
reflect such payment and transfer for the
account of the Portfolio. The Custodian shall
transfer securities sold from the account of
the Portfolio upon (i) receipt of advice from
the Securities System that payment for such
securities has been transferred to the Account,
and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and
payment for the account of the Portfolio.
Copies of all advices from the Securities
System of transfers of securities for the
account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by
the Custodian and be provided to the Fund at
its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio
17
<PAGE>
confirmation of each transfer to or from the
account of the Portfolio in the form of a
written advice or notice and shall furnish to
the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Portfolio.
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the
Custodian on the Securities System's accounting
system, internal accounting control and
procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received from the Fund
on behalf of the Portfolio the initial or
annual certificate, as the case may be,
required by Article 9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable
to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio
resulting from use of the Securities System by
reason of any negligence, misfeasance or
misconduct of the Custodian or any of its
agents or of any of its or their employees or
18
<PAGE>
from failure of the Custodian or any such agent
to enforce effectively such rights as it may
have against the Securities System; at the
election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian
with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such
loss or damage of and to the extent that the
Portfolio has not been made whole for any such
loss or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities
owned by a Portfolio in the Direct Paper System of the
Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the
Portfolio in the Direct Paper System only if
such securities are represented in an account
("Account") of the Custodian in the Direct
Paper System which shall not include any assets
of the Custodian other than assets held as a
19
<PAGE>
fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are
maintained in the Direct Paper System shall
identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities
purchased for the account of the Portfolio upon
the making of an entry on the records of the
Custodian to reflect such payment and transfer
of securities to the account of the Portfolio.
The Custodian shall transfer securities sold
for the account of the Portfolio upon the
making of an entry on the records of the
Custodian to reflect such transfer and receipt
of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf
of the Portfolio confirmation of each transfer
to or from the account of the Portfolio, in the
form of a written advice or notice, of Direct
Paper on the next business day following such
transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily
transaction sheets reflecting each day's
20
<PAGE>
transaction in the Securities System for the
account of the Portfolio;
6) The Custodian shall provide the Fund on behalf
of the Portfolio with any report on its system
of internal accounting control as the Fund may
reasonably request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to
Section 2.12 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of
21
<PAGE>
segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio
or commodity futures contracts or options thereon
purchased or sold by the portfolio, (iii) for the
purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper
corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of each Portfolio held by it and in
connection with transfers of securities.
22
<PAGE>
2.15 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the
securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies
are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
2.16 Communications Relating to Portfolio Securities. The
Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without
limitation, pendency of calls and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the
maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the
securities being held for the Portfolio. With respect to
tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information
received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any
23
<PAGE>
tender offer, exchange offer or any other similar
transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the
Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used
throughout this Article 2 means a writing signed or
initialled by one or more person or persons as the Board
of Trustees shall have from time to time authorized.
Each such writing shall set forth the specific
transaction or type of transaction involved, including a
specific statement of the purpose for which such action
is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give
such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to
be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the
authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures
approved by the Board of Trustees, Proper Instructions
may include communications effected directly between
electro-mechanical or electronic devices provided that
the Board of Trustees and the Custodian are satisfied
that such procedures afford adequate safeguards for the
24
<PAGE>
Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with
Section 2.13.
2.18 Actions Permitted without Express Authority. The
Custodian may in its discretion, without express
authority from the Fund on behalf of each applicable
Portfolio:
1) make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under this
Contract, provided that all such payments shall
be accounted for to the Fund on behalf of the
Portfolio;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Portfolio, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of
25
<PAGE>
the Portfolio except as otherwise directed by
the Board of Trustees of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected
in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the
Board of Trustees of the Fund as conclusive evidence
(a) of the authority of any person to act in accordance
with such vote or (b) of any determination or of any
action by the Board of Trustees pursuant to the
Declaration of Trust as described in such vote, and such
vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Trustees of the Fund to keep the books of account of each
Portfolio and/or compute the net asset value per share of the
outstanding shares of each Portfolio or, if directed in writing
to do so by the Fund on behalf of the Portfolio, shall itself
keep such books of account and/or compute such net asset value
26
<PAGE>
per share. If so directed, the Custodian shall also calculate
daily the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and
shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share
and the daily income of each Portfolio shall be made at the time
or times described from time to time in the Fund's currently
effective prospectus related to such Portfolio.
4. Records
The Custodian shall with respect to each Portfolio
create and maintain all records relating to its activities and
obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1040,
with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder, applicable federal and state tax laws and
any other law or administrative rules or procedures which may be
applicable to the Fund. All such records shall be the property
of the Fund and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation
27
<PAGE>
of securities owned by each Portfolio and held by the Custodian
and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund on behalf of each applicable Portfolio may from time to time
request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form
N-1A and Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other requirements of
such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each
of the Portfolios at such times as the Fund may reasonably
require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be
required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination,
28
<PAGE>
and, if there are no such inadequacies, the reports shall so
state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund on behalf of each
applicable Portfolio and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
29
<PAGE>
foregoing, the responsibility of the Custodian with respect to
redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the
Fund.
If the Fund on behalf of a Portfolio requires the
Custodian to take any action with respect to securities, which
action involves the payment of money or which action may, in the
opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund or the Portfolio being liable for the
payment of money or incurring liability of some other form, the
Fund on behalf of the Portfolio, as a prerequisite to requiring
the Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose for the benefit of a Portfolio or in
the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of such Portfolio's assets
to the extent necessary to obtain reimbursement.
30
<PAGE>
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take
effect not sooner than thirty (30) days after the date of such
delivery or mailing; provided, however that the Custodian shall
not with respect to a Portfolio act under Section 2.12 hereof in
the absence of receipt of an initial certificate of the Secretary
or an Assistant Secretary that the Board of Trustees of the Fund
has approved the initial use of a particular Securities System by
such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees
has reviewed the use by such Portfolio of such Securities System,
as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not
with respect to a Portfolio act under Section 2.12A hereof in the
absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees has approved
the initial use of the Direct Paper System by such Portfolio and
the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has reviewed the
use by such Portfolio of the Direct Paper System; provided
31
<PAGE>
further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust, and
further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or
(ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of
each applicable Portfolio shall pay to the Custodian such
compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses
and disbursements.
10. Successor Custodian
If a successor custodian for the Fund, of one or more
of the Portfolios shall be appointed by the Board of Trustees of
the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed
and in the form for transfer, all securities of each applicable
Portfolio then held by it hereunder and shall transfer to an
32
<PAGE>
account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Trustees of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Board of
Trustees shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the
custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company
Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by
the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such
successor custodian all of the securities of each such Portfolio
held in any Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under this
Contract.
33
<PAGE>
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period
as the Custodian retains possession of such securities, funds and
other properties and the provisions of this Contract relating to
the duties and obligations of the Custodian shall remain in full
force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto,
provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any
provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Contract.
34
<PAGE>
12. Additional Funds
In the event that the Fund establishes one or more
series of Shares in addition to the Alliance Capital Reserves and
the Alliance Money Reserves with respect to which it desires to
have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such series
of Shares shall become a Portfolio hereunder.
13. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
14. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of
the Portfolios and the Custodian relating to the custody of the
Fund's assets.
35
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 13th day of February, 1989.
ATTEST ALLIANCE CAPITAL RESERVES
/s/ George Martinez /s/ James P. Syrett
___________________________ By_____________________________
Assistant Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ P. McClure /s/ Guy R. Sturgeon
___________________________ By_____________________________
Assistant Secretary Vice President
36
00250122.AG6
<PAGE>
ALLIANCE FUND SERVICES, INC.
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of September 13, 1988, between
ALLIANCE CAPITAL RESERVES, a Massachusetts business trust
and an open-end investment company registered with the
Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 (the "Investment Company
Act"), having its principal place of business at 1345 Avenue
of Americas, New York, New York 10105 (the "Fund"), and
ALLIANCE FUND SERVICES, INC., a Delaware corporation
registered with the SEC as a transfer agent under the
Securities Exchange Act of 1934, having its principal place
of business at 500 Plaza Drive, Secaucus, New Jersey 07094
("Fund Services"), provides as follows:
WHEREAS, Fund Services has agreed to act as
transfer agent to the Fund for the purpose of recording the
transfer, issuance and redemption of shares of each series
of the common stock or shares of beneficial interest, as
applicable, of the Fund ("Shares" or "Shares of a Series"),
transferring the Shares, disbursing dividends and other
distributions to shareholders of the Fund, and performing
such other services as may be agreed to pursuant hereto;
NOW THEREFORE, for and in consideration of the
mutual covenants and agreements contained herein, the
parties do hereby agree as follows:
<PAGE>
SECTION 1. The Fund hereby appoints Fund Services
as its transfer agent, dividend disbursing agent and
shareholder servicing agent for the Shares, and Fund
Services agrees to act in such capacities upon the terms set
forth in this Agreement. Capitalized terms used in this
Agreement and not otherwise defined shall have the meanings
assigned to them in SECTION 30.
SECTION 2.
(a) The Fund shall provide Fund Services with
copies of the following documents:
(1) Specimens of all forms of certificates
for Shares;
(2) Specimens of all account application
forms and other documents relating to Shareholders'
accounts;
(3) Copies of each Prospectus;
(4) Specimens of all documents relating to
withdrawal plans instituted by the Fund, as described in
SECTION 16; and
(5) Specimens of all amendments to any of the
foregoing documents.
(b) The Fund shall furnish to Fund Services a
supply of blank Share Certificates for the Shares and, from
time to time, will renew such supply upon Fund Services'
request. Blank Share Certificates shall be signed manually
2
<PAGE>
or by facsimile signatures of officers of the Fund
authorized to sign by law or pursuant to the by-laws of the
Fund and, if required by Fund Services, shall bear the
Fund's seal or a facsimile thereof.
SECTION 3. Fund Services shall make original
issues of Shares in accordance with SECTIONS 13 and 14 and
the Prospectus upon receipt of (i) Written Instructions
requesting the issuance, (ii) a certified copy of a
resolution of the Fund's Board of Directors or Trustees
authorizing the issuance, (iii) necessary funds for the
payment of any original issue tax applicable to such Shares,
and (iv) an opinion of the Fund's counsel as to the legality
and validity of the issuance, which opinion may provide that
it is contingent upon the filing by the Fund of an
appropriate notice with the SEC, as required by Rule 24f-2
of the Investment Company Act, as amended from time to time.
SECTION 4. Transfers of Shares shall be registered
and, subject to the provisions of SECTION 10 in the case of
Shares evidenced by Share Certificates, new Share
Certificates shall be issued by Fund Services upon surrender
of outstanding Share Certificates in the form deemed by Fund
Services to be properly endorsed for transfer, which form
shall include (i) all necessary endorsers' signatures
guaranteed by a member firm of a national securities
exchange or a domestic commercial bank or through other
3
<PAGE>
procedures mutually agreed to between the Fund and Fund
Services, (ii) such assurances as Fund Services may deem
necessary to evidence the genuineness and effectiveness of
each endorsement and (iii) satisfactory evidence of
compliance with all applicable laws relating to the payment
or collection of taxes.
SECTION 5. Fund Services shall forward Share
Certificates in "non-negotiable" form by first-class or
registered mail, or by whatever means Fund Services deems
equally reliable and expeditious. While in transit to the
addressee, all deliveries of Share Certificates shall be
insured by Fund Services as it deems appropriate. Fund
Services shall not mail Share Certificates in "negotiable"
form, unless requested in writing by the Fund and fully
indemnified by the Fund to Fund Services' satisfaction.
SECTION 6. In registering transfers of Shares,
Fund Services may rely upon the Uniform Commercial Code as
in effect from time to time in the State in which the Fund
is incorporated or organized or, if appropriate, in the
State of New Jersey; provided, that Fund Services may rely
in addition or alternatively on any other statutes in effect
in the State of New Jersey or in the state under the laws of
which the Fund is incorporated or organized that, in the
opinion of Fund Services' counsel, protect Fund Services and
the Fund from liability arising from (i) not requiring
4
<PAGE>
complete documentation in connection with an issuance or
transfer, (ii) registering a transfer without an adverse
claim inquiry, (iii) delaying registration for purposes of
an adverse claim inquiry or (iv) refusing registration in
connection with an adverse claim.
SECTION 7. Fund Services may issue new Share
Certificates in place of those lost, destroyed or stolen,
upon receiving indemnity satisfactory to Fund Services; and
may issue new Share Certificates in exchange for, and upon
surrender of, mutilated Share Certificates as Fund Services
deems appropriate.
SECTION 8. Unless otherwise directed by the Fund,
Fund Services may issue or register Share Certificates
reflecting the signature, or facsimile thereof, of an
officer who has died, resigned or been removed by the Fund.
The Fund shall file promptly with Fund Services' approval,
adoption or ratification of such action as may be required
by law or by Fund Services.
SECTION 9. Fund Services shall maintain customary
stock registry records for Shares of each Series noting the
issuance, transfer or redemption of Shares and the issuance
and transfer of Share Certificates. Fund Services may also
maintain for Shares of each Series an account entitled
"Unissued Certificate Account," in which Fund Services will
record the Shares, and fractions thereof, issued and
5
<PAGE>
outstanding from time to time for which issuance of Share
Certificates has not been requested. Fund Services is
authorized to keep records for Shares of each Series
containing the names and addresses of record of
Shareholders, and the number of Shares, and fractions
thereof, from time to time owned by them for which no Share
Certificates are outstanding. Each Shareholder will be
assigned a single account number for Shares of each Series,
even though Shares for which Certificates have been issued
will be accounted for separately.
SECTION 10. Fund Services shall issue Share
Certificates for Shares only upon receipt of a written
request from a Shareholder and as authorized by the Fund.
If Shares are purchased or transferred without a request for
the issuance of a Share Certificate, Fund Services shall
merely note on its stock registry records the issuance or
transfer of the Shares and fractions thereof and credit or
debit, as appropriate, the Unissued Certificate Account and
the respective Shareholders' accounts with the Shares.
Whenever Shares, and fractions thereof, owned by
Shareholders are surrendered for redemption, Fund Services
may process the transactions by making appropriate entries
in the stock transfer records, and debiting the Unissued
Certificate Account and the record of issued Shares
6
<PAGE>
outstanding; it shall be unnecessary for Fund Services to
reissue Share Certificates in the name of the Fund.
SECTION 11. Fund Services shall also perform the
usual duties and function required of a stock transfer agent
for a corporation, including but not limited to (i) issuing
Share Certificates as treasury Shares, as directed by
Written Instructions, and (ii) transferring Share
Certificates from one Shareholder to another in the usual
manner. Fund Services may rely conclusively and act without
further investigation upon any list, instruction,
certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith
to be genuine and unaltered, and to have been signed,
countersigned or executed or authorized by a duly-authorized
person or persons, or by the Fund, or upon the advice of
counsel for the Fund or for Fund Services. Fund Services
may record any transfer of Share Certificates which it
reasonably believes in good faith to have been duly
authorized, or may refuse to record any transfer of Share
Certificates if, in good faith, it reasonably deems such
refusal necessary in order to avoid any liability on the
part of either the Fund or Fund Services.
SECTION 12. Fund Services shall notify the Fund of
any request or demand for the inspection of the Fund's share
records. Fund Services shall abide by the Fund's
7
<PAGE>
instructions for granting or denying the inspection;
provided, however, Fund Services may grant the inspection
without such instructions if it is advised by its counsel
that failure to do so will result in liability to Fund
Services.
SECTION 13. Fund Services shall observe the
following procedures in handling funds received:
(a) Upon receipt at the office designated by the
Fund of any check or other order drawn or endorsed to the
Fund or otherwise identified as being for the account of the
Fund, and, in the case of a new account, accompanied by a
new account application or sufficient information to
establish an account as provided in the Prospectus, Fund
Services shall stamp the transmittal document accompanying
such check or other order with the name of the Fund and the
time and date of receipt and shall forthwith deposit the
proceeds thereof in the custodial account of the Fund.
(b) In the event that any check or other order for
the purchase of Shares is returned unpaid for any reason,
Fund Services shall, in the absence of other instructions
from the Fund, advise the Fund of the returned check and
prepare such documents and information as may be necessary
to cancel promptly any Shares purchased on the basis of such
returned check and any accumulated income dividends and
capital gains distributions paid on such Shares.
8
<PAGE>
(c) As soon as possible after 4:00 p.m., Eastern
time or at such other times as the Fund may specify in
Written or Oral Instructions for any Series (the "Valuation
Time") on each Business Day Fund Services shall obtain from
the Fund's Adviser a quotation (on which it may conclusively
rely) of the net asset value, determined as of the Valuation
Time on that day. On each Business Day Fund Services shall
use the net asset value(s) determined by the Fund's Adviser
to compute the number of Shares and fractional Shares to be
purchased and the aggregate purchase proceeds to be
deposited with the Custodian. As necessary but no more
frequently than daily (unless a more frequent basis is
agreed to by Fund Services), Fund Services shall place a
purchase order with the Custodian for the proper number of
Shares and fractional Shares to be purchased and promptly
thereafter shall send written confirmation of such purchase
to the Custodian and the Fund.
SECTION 14. Having made the calculations required
by SECTION 13, Fund Services shall thereupon pay the
Custodian the aggregate net asset value of the Shares
purchased. The aggregate number of Shares and fractional
Shares purchased shall then be issued daily and credited by
Fund Services to the Unissued Certificate Account. Fund
Services shall also credit each Shareholder's separate
account with the number of Shares purchased by such
9
<PAGE>
Shareholder. Fund Services shall mail written confirmation
of the purchase to each Shareholder or the Shareholder's
representative and to the Fund if requested. Each
confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are
outstanding (if any), the amount invested and the price paid
for the newly-purchased Shares.
SECTION 15. Prior to the Valuation Time on each
Business Day, as specified in accordance with SECTION 13,
Fund Services shall process all requests to redeem Shares
and, with respect to each Series, shall advise the Custodian
of (i) the total number of Shares available for redemption
and (ii) the number of Shares and fractional Shares
requested to be redeemed. Upon confirmation of the net
asset value by the Fund's Adviser, Fund Services shall
notify the Fund and the Custodian of the redemption, apply
the redemption proceeds in accordance with SECTION 16 and
the Prospectus, record the redemption in the stock registry
books, and debit the redeemed Shares from the Unissued
Certificates Account and the individual account of the
Shareholder.
In lieu of carrying out the redemption procedures
described in the preceding paragraph, Fund Services may, at
the request of the Fund, sell Shares to the Fund as
repurchases from Shareholders, provided that the sale price
10
<PAGE>
is not less than the applicable redemption price. The
redemption procedures shall then be appropriately modified.
SECTION 16. Fund Services will carry out the
following procedures with respect to Share redemptions:
(a) As to each request received by the Fund from
or on behalf of a Shareholder for the redemption of Shares,
and unless the right of redemption has been suspended as
contemplated by the Prospectus, Fund Services shall, within
seven days after receipt of such redemption request, either
(i) mail a check in the amount of the proceeds of such
redemption to the person designated by the Shareholder or
other person to receive such proceeds or, (ii) in the event
redemption proceeds are to be wired through the Federal
Reserve Wire System or by bank wire pursuant to procedures
described in the Prospectus, cause such proceeds to be wired
in Federal funds to the bank or trust company account
designated by the Shareholder to receive such proceeds.
Funds Services shall also prepare and send a confirmation of
such redemption to the Shareholder. Redemptions in kind
shall be made only in accordance with such Written
Instructions as Fund Services may receive from the Fund.
The requirements as to instruments of transfer and other
documentation, the determination of the appropriate
redemption price and the time of payment shall be as
provided in the Prospectus, subject to such additional
11
<PAGE>
requirements consistent therewith as may be established by
mutual agreement between the Fund and Fund Services. In the
case of a request for redemption that does not comply in all
respects with the requirements for redemption, Fund Services
shall promptly so notify the Shareholder and shall effect
such redemption at the price in effect at the time of
receipt of documents complying with such requirements. Fund
Services shall notify the Fund's Custodian and the Fund on
each Business Day of the amount of cash required to meet
payments made pursuant to the provisions of this paragraph
and thereupon the Fund shall instruct the Custodian to make
available to Fund Services in timely fashion sufficient
funds therefor.
(b) Procedures and standards for effecting and
accepting redemption orders from Shareholders by telephone
or by such check writing service as the Fund may institute
may be established by mutual agreement between Fund Services
and the Fund consistent with the Prospectus.
(c) For purposes of redemption of Shares that have
been purchased by check within fifteen (15) days prior to
receipt of the redemption request, the Fund shall provide
Fund Services with Written Instructions concerning the time
within which such requests may be honored.
(d) Fund Services shall process withdrawal orders
duly executed by Shareholders in accordance with the terms
12
<PAGE>
of any withdrawal plan instituted by the Fund and described
in the Prospectus. Payments upon such withdrawal orders and
redemptions of Shares held in withdrawal plan accounts in
connection with such payments shall be made at such times as
the Fund may determine in accordance with the Prospectus.
(e) The authority of Fund Services to perform its
responsibilities under SECTIONS 15 and 16 with respect to
the Shares of any Series shall be suspended if Fund Services
receives notice of the suspension of the determination of
the net asset value of the Series.
SECTION 17. Upon the declaration of each dividend
and each capital gains distribution by the Fund's Board of
Directors or Trustees, the Fund shall notify Fund Services
of the date of such declaration, the amount payable per
Share, the record date for determining the Shareholders
entitled to payment, the payment and the reinvestment date
price.
SECTION 18. Upon being advised by the Fund of the
declaration of any income dividend or capital gains
distribution on account of its Shares, Fund Services shall
compute and prepare for the Fund records crediting such
distributions to Shareholders. Fund Services shall, on or
before the payment date of any dividend or distribution,
notify the Fund and the Custodian of the estimated amount
required to pay any portion of a dividend or distribution
13
<PAGE>
which is payable in cash, and thereupon the Fund shall, on
or before the payment date of such dividend or distribution,
instruct the Custodian to make available to Fund Services
sufficient funds for the payment of such cash amount. Fund
Services will, on the designated payment date, reinvest all
dividends in additional shares and promptly mail to each
Shareholder at his address of record a statement showing the
number of full and fractional Shares (rounded to three
decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if a
Shareholder elects to receive dividends in cash, Fund
Services shall prepare a check in the appropriate amount and
mail it to the Shareholder at his address of record within
five (5) business days after the designated payment date, or
transmit the appropriate amount in Federal funds in
accordance with the Shareholder's agreement with the Fund.
SECTION 19. Fund Services shall prepare and
maintain for the Fund records showing for each Shareholder's
account the following:
A. The name, address and tax identification
number of the Shareholder;
B. The number of Shares of each Series held by
the Shareholder;
C. Historical information including dividends
paid and date and price for all transactions;
14
<PAGE>
D. Any stop or restraining order placed against
such account;
E. Information with respect to the withholding of
any portion of income dividends or capital gains
distributions as are required to be withheld under
applicable law;
F. Any dividend or distribution reinvestment
election, withdrawal plan application, and correspondence
relating to the current maintenance of the account;
G. The certificate numbers and denominations of
any Share Certificates issued to the Shareholder; and
H. Any additional information required by Fund
Services to perform the services contemplated by this
Agreement.
Fund Services agrees to make available upon request
by the Fund or the Fund's Adviser and to preserve for the
periods prescribed in Rule 31a-2 of the Investment Company
Act any records related to services provided under this
Agreement and required to be maintained by Rule 31a-1 of
that Act, including:
(i) Copies of the daily transaction register for each
Business Day of the Fund;
(ii) Copies of all dividend, distribution and
reinvestment blotters;
15
<PAGE>
(iii) Schedules of the quantities of Shares of each
Series distributed in each state for purposes of
any state's laws or regulations as specified in
Oral or Written Instructions given to Fund
Services from time to time by the Fund or its
agents; and
(iv) Such other information, including Shareholder
lists, and statistical information as may be
agreed upon from time to time by the Fund and Fund
Services.
SECTION 20. Fund Services shall maintain those
records necessary to enable the Fund to file, in a timely
manner, form N-SAR (Semi-Annual Report) or any successor
report required by the Investment Company Act or rules and
regulations thereunder.
SECTION 21. Fund Services shall cooperate with the
Fund's independent public accountants and shall take
reasonable action to make all necessary information
available to such accountants for the performance of their
duties.
SECTION 22. In addition to the services described
above, Fund Services will perform other services for the
Fund as may be mutually agreed upon in writing from time to
time, which may include preparing and filing Federal tax
forms with the Internal Revenue Service, and, subject to
16
<PAGE>
supervisory oversight by the Fund's Adviser, mailing Federal
tax information to Shareholders, mailing semi-annual
Shareholder reports, preparing the annual list of
Shareholders, mailing notices of Shareholders' meetings,
proxies and proxy statements and tabulating proxies. Fund
Services shall answer the inquiries of certain Shareholders
related to their share accounts and other correspondence
requiring an answer from the Fund. Fund Services shall
maintain dated copies of written communications from
Shareholders, and replies thereto.
SECTION 23. Nothing contained in this Agreement is
intended to or shall require Fund Services, in any capacity
hereunder, to perform any functions or duties on any day
other than a Business Day. Functions or duties normally
scheduled to be performed on any day which is not a Business
Day shall be performed on, and as of, the next Business Day,
unless otherwise required by law.
SECTION 24. For the services rendered by Fund
Services as described above, the Fund shall pay to Fund
Services an annualized fee at a rate to be mutually agreed
upon from time to time. Such fee shall be prorated for the
months in which this Agreement becomes effective or is
terminated. In addition, the Fund shall pay, or Fund
Services shall be reimbursed for, all out-of-pocket expenses
incurred in the performance of this Agreement, including but
17
<PAGE>
not limited to the cost of stationery, forms, supplies,
blank checks, stock certificates, proxies and proxy
solicitation and tabulation costs, all forms and statements
used by Fund Services in communicating with Shareholders of
the Fund or especially prepared for use in connection with
its services hereunder, specific software enhancements as
requested by the Fund, costs associated with maintaining
withholding accounts (including non-resident alien, Federal
government and state), postage, telephone, telegraph (or
similar electronic media) used in communicating with
Shareholders or their representatives, outside mailing
services, microfiche/microfilm, freight charges and off-site
record storage. It is agreed in this regard that Fund
Services, prior to ordering any form in such supply as it
estimates will be adequate for more than two years' use,
shall obtain the written consent of the Fund. All forms for
which Fund Services has received reimbursement from the Fund
shall be the property of the Fund.
SECTION 25. Fund Services shall not be liable for
any taxes, assessments or governmental charges that may be
levied or assessed on any basis whatsoever in connection
with the Fund or any Shareholder, excluding taxes assessed
against Fund Services for compensation received by it
hereunder.
18
<PAGE>
SECTION 26.
(a) Fund Services shall at all times act in good
faith and with reasonable care in performing the services to
be provided by it under this Agreement, but shall not be
liable for any loss or damage unless such loss or damage is
caused by the negligence, bad faith or willful misconduct of
Fund Services or its employees or agents.
(b) The Fund shall indemnify and hold Fund
Services harmless from all loss, cost, damage and expense,
including reasonable expenses for counsel, incurred by it
resulting from any claim, demand, action or suit in
connection with the performance of its duties hereunder, or
as a result of acting upon any instruction reasonably
believed by it to have been properly given by a duly
authorized officer of the Fund, or upon any information,
data, records or documents provided to Fund Services or its
agents by computer tape, telex, CRT data entry or other
similar means authorized by the Fund; provided that this
indemnification shall not apply to actions or omissions of
Fund Services in cases of its own bad faith, willful
misconduct or negligence, and provided further that if in
any case the Fund may be asked to indemnify or hold Fund
Services harmless pursuant to this Section, the Fund shall
have been fully and promptly advised by Fund Services of all
material facts concerning the situation in question. The
19
<PAGE>
Fund shall have the option to defend Fund Services against
any claim which may be the subject of this indemnification,
and in the event that the Fund so elects it will so notify
Fund Services, and thereupon the Fund shall retain competent
counsel to undertake defense of the claim, and Fund Services
shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
paragraph. Fund Services shall in no case confess any claim
or make any compromise in any case in which the Fund may be
asked to indemnify Fund Services except with the Fund's
prior written consent.
Without limiting the foregoing:
(i) Fund Services may rely upon the advice of the
Fund or counsel to the Fund or Fund Services, and upon
statements of accountants, brokers and other persons
believed by Fund Services in good faith to be expert in the
matters upon which they are consulted. Fund Services shall
not be liable for any action taken in good faith reliance
upon such advice or statements;
(ii) Fund Services shall not be liable for any
action reasonably taken in good faith reliance upon any
Written Instructions or certified copy of any resolution of
the Fund's Board of Directors or Trustees, including a
Written Instruction authorizing Fund Services to make
payment upon redemption of Shares without a signature
20
<PAGE>
guarantee; provided, however, that upon receipt of a Written
Instruction countermanding a prior Instruction that has not
been fully executed by Fund Services, Fund Services shall
verify the content of the second Instruction and honor it,
to the extent possible. Fund Services may rely upon the
genuineness of any such document, or copy thereof,
reasonably believed by Fund Services in good faith to have
been validly executed;
(iii) Fund Services may rely, and shall be protected
by the Fund in acting, upon any signature, instruction,
request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent,
order, or other paper or document reasonably believed by it
in good faith to be genuine and to have been signed or
presented by the purchaser, the Fund or other proper party
or parties; and
(d) Fund Services may, with the consent of the
Fund, subcontract the performance of any portion of any
service to be provided hereunder, including with respect to
any Shareholder or group of Shareholders, to any agent of
Fund Services and may reimburse the agent for the services
it performs at such rates as Fund Services may determine;
provided that no such reimbursement will increase the amount
payable by the Fund pursuant to this Agreement; and provided
21
<PAGE>
further, that Fund Services shall remain ultimately
responsible as transfer agent to the Fund.
SECTION 27. The Fund shall deliver or cause to be
delivered over to Fund Services (i) an accurate list of
Shareholders, showing each Shareholder's address of record,
number of Shares of each Series owned and whether such
Shares are represented by outstanding Share Certificates or
by non-certificated Share accounts and (ii) all Shareholder
records, files, and other materials necessary or appropriate
for proper performance of the functions assumed by the under
this Agreement (collectively referred to as the
"Materials"). The Fund shall indemnify Fund Services and
hold it harmless from any and all expenses, damages, claims,
suits, liabilities, actions, demands and losses arising out
of or in connection with any error, omission, inaccuracy or
other deficiency of such Materials, or out of the failure of
the Fund to provide any portion of the Materials or to
provide any information in the Fund's possession needed by
Fund Services to knowledgeably perform its functions;
provided the Fund shall have no obligation to indemnify Fund
Services or hold it harmless with respect to any expenses,
damages, claims, suits, liabilities, actions, demands or
losses caused directly or indirectly by acts or omissions of
Fund Services or the Fund's Adviser.
22
<PAGE>
SECTION 28. This Agreement may be amended from
time to time by a written supplemental agreement executed by
the Fund and Fund Services and without notice to or approval
of the Shareholders; provided this Agreement may not be
amended in any manner which would substantially increase the
Fund's obligations hereunder unless the amendment is first
approved by the Fund's Board of Directors or Trustees,
including a majority of the Directors or Trustees who are
not a party to this Agreement or interested persons of any
such party, at a meeting called for such purpose, and
thereafter is approved by the Fund's Shareholders if such
approval is required under the Investment Company Act or the
rules and regulations thereunder. The parties hereto may
adopt procedures as may be appropriate or practical under
the circumstances, and Fund Services may conclusively rely
on the determination of the Fund that any procedure that has
been approved by the Fund does not conflict with or violate
any requirement of its Articles of Incorporation or
Declaration of Trust, By-Laws or Prospectus, or any rule,
regulation or requirement of any regulatory body.
SECTION 29. The Fund shall file with Fund Services
a certified copy of each operative resolution of its Board
of Directors or Trustees authorizing the execution of
Written Instructions or the transmittal of Oral Instructions
and setting forth authentic signatures of all signatories
23
<PAGE>
authorized to sign on behalf of the Fund and specifying the
person or persons authorized to give Oral Instructions on
behalf of the Fund. Such resolution shall constitute
conclusive evidence of the authority of the person or
persons designated therein to act and shall be considered in
full force and effect, with Fund Services fully protected in
acting in reliance therein, until Fund Services receives a
certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Written or
Oral Instructions. If the officer certifying the resolution
is authorized to give Oral Instructions, the certification
shall also be signed by a second officer of the Fund.
SECTION 30. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or
supplement hereto, shall have the meanings specified below,
insofar as the context will allow.
(a) Business Day: Any day on which the Fund is
open for business as described in the Prospectus.
(b) Custodian: The term Custodian shall mean the
Fund's current custodian or any successor custodian acting
as such for the Fund.
(c) Fund's Adviser: The term Fund's Adviser shall
mean Alliance Capital Management L.P. or any successor
thereto who acts as the investment adviser or manager of the
Fund.
24
<PAGE>
(d) Oral Instructions: The term Oral Instructions
shall mean an authorization, instruction, approval, item or
set of data, or information of any kind transmitted to Fund
Services in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed
in good faith by Fund Services to be a person or persons
authorized by a resolution of the Board of Directors or
Trustees of the Fund to give Oral Instructions on behalf of
the Fund. Each Oral Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the
Fund.
(e) Prospectus: The term Prospectus shall mean a
prospectus and related statement of additional information
forming part of a currently effective registration statement
under the Investment Company Act and, as used with the
respect to Shares or Shares of a Series, shall mean the
prospectuses and related statements of additional
information covering the Shares or Shares of the Series.
(f) Securities: The term Securities shall mean
bonds, debentures, notes, stocks, shares, evidences of
indebtedness, and other securities and investments from time
to time owned by the Fund.
(g) Series: The term Series shall mean any series
of Shares of the common stock of the Fund that the Fund may
establish from time to time.
25
<PAGE>
(h) Share Certificates: The term Share
Certificates shall mean the stock certificates or
certificates representing shares of beneficial interest for
the Shares.
(i) Shareholders: The term Shareholders shall
mean the registered owners from time to time of the Shares,
as reflected on the stock registry records of the Fund.
(j) Written Instructions: The term Written
Instructions shall mean an authorization, instruction,
approval, item or set of data, or information of any kind
transmitted to Fund Services in original writing containing
original signatures, or a copy of such document transmitted
by telecopy, including transmission of such signature, or
other mechanical or documentary means, at the request of a
person or persons reasonably believed in good faith by Fund
Services to be a person or persons authorized by a
resolution of the Board of Directors or Trustees of the Fund
to give Written Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the
Fund.
SECTION 31. Fund Services shall not be liable for
the loss of all or part of any record maintained or
preserved by it pursuant to this Agreement or for any delays
or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or
26
<PAGE>
military authorities, national emergencies, fire, flood or
catastrophe, acts of God, insurrection, war, riot, or
failure of transportation, communication or power supply,
except to the extent that Fund Services shall have failed to
use its best efforts to minimize the likelihood of
occurrence of such circumstances or to mitigate any loss or
damage to the Fund caused by such circumstances.
SECTION 32. The Fund may give Fund Services sixty
(60) days and Fund Services may give the Fund (90) days
written notice of the termination of this Agreement, such
termination to take effect at the time specified in the
notice. Upon notice of termination, the Fund shall use its
best efforts to obtain a successor transfer agent. If a
successor transfer agent is not appointed within ninety (90)
days after the date of the notice of termination, the Board
of Directors or Trustees of the Fund shall, by resolution,
designate the Fund as its own transfer agent. Upon receipt
of written notice from the Fund of the appointment of the
successor transfer agent and upon receipt of Oral or Written
Instructions Fund Services shall, upon request of the Fund
and the successor transfer agent and upon payment of Fund
Services reasonable charges and disbursements, promptly
transfer to the successor transfer agent the original or
copies of all books and records maintained by Fund Services
hereunder and cooperate with, and provide reasonable
27
<PAGE>
assistance to, the successor transfer agent in the
establishment of the books and records necessary to carry
out its responsibilities hereunder.
SECTION 33. Any notice or other communication
required by or permitted to be given in connection with this
Agreement shall be in writing, and shall be delivered in
person or sent by first-class mail, postage prepaid, to the
respective parties.
Notice to the Fund shall be given as follows until
further notice:
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
Notice to Fund Services shall be given as follows
until further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 34. The Fund represents and warrants to
Fund Services that the execution and delivery of this
Agreement by the undersigned officer of the Fund has been
duly and validly authorized by resolution of the Fund's
Board of Directors or Trustees. Fund Services represents
and warrants to the Fund that the execution and delivery of
this Agreement by the undersigned officer of Fund Services
has also been duly and validly authorized.
28
<PAGE>
SECTION 35. This Agreement may be executed in more
than one counterpart, each of which shall be deemed to be an
original, and shall become effective on the last date of
signature below unless otherwise agreed by the parties.
Unless sooner terminated pursuant to SECTION 32, this
Agreement will continue until and will continue
in effect thereafter for successive 12 month periods only if
such continuance is specifically approved at least annually
by the Board of Directors or Trustees or by a vote of the
stockholders of the Fund and in either case by a majority of
the Directors or Trustees who are not parties to this
Agreement or interested persons of any such party, at a
meeting called for the purpose of voting on this Agreement.
SECTION 36. This Agreement shall extend to and
shall bind the parties hereto and their respective
successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the
written consent of Fund Services or by Fund Services without
the written consent of the Fund, authorized or approved by a
resolution of the Fund's Board of Directors or Trustees.
Notwithstanding the foregoing, either party may assign this
Agreement without the consent of the other party so long as
the assignee is an affiliate, parent or subsidiary of the
assigning party and is qualified to act under the Investment
Company Act, as amended from time to time.
29
<PAGE>
SECTION 38. This Agreement shall be governed by
the laws of the State of New Jersey.
WITNESS the following signatures:
ALLIANCE CAPITAL RESERVES
BY: /s/ James P. Syrett
___________________________
TITLE: President
________________________
ALLIANCE FUND SERVICES, INC.
BY: /s/ Edmund P. Bergan
___________________________
TITLE: Vice President,
Secretary and General
Counsel
________________________
30
00250122.AG0
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated July
29, 1997 on the financial statements of the Capital Reserves
Portfolio and the Money Reserves Portfolio, series of Alliance
Capital Reserves, referred to therein in Post- Effective
Amendment No. 31 to the Registration Statement on Form N-1A, File
No. 2-61564, as filed with the Securities and Exchange
Commission.
We also consent to the reference to our firm in the
Prospectus under the caption "Financial Highlights" and in the
Statement of Additional Information under the caption
"Accountants."
New York, New York
October 28, 1997
00250122.AH8
Exhibit 16
__________
Alliance Capital Reserves and Alliance Money Reserves
Hypothetical Yield Computation
1. Add last seven days of dividends.
Hypothetical
Date Daily Dividend
XX/YY/97 a
XX/YY/97 b
XX/YY/97 c
XX/YY/97 d
XX/YY/97 e
XX/YY/97 f
XX/YY/97 g
Total: h
2. Divide total of last 7 days of dividends by 7
to get average daily dividend.
h divided by 7 = i
3. Take average daily dividend and multiply by
365 to get 7-day yield.
i multiplied by 365 = A.AA%
4. Take 7-day yield and compound over a 365-day
period to obtain effective yield.
((A.AA% divided by 365)+1) compounded by
365 = B.BB%
00250122.AH6
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints Edmund P. Bergan, Jr. and Emilie D.
Wrapp, and each of them, to act severally as attorneys-in-fact
and agents, with power of substitution and resubstitution, for
the undersigned, solely for the purpose of signing on such
person's behalf any Registration Statement on Form N-1A, and any
amendments thereto, of Alliance Capital Reserves and filing the
same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact, or
their substitute or substitutes, may do or cause to be done by
virtue hereof.
/s/ John D. Carifa
___________________
John D. Carifa
Dated: October 29, 1997
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Sam Y. Cross
_________________
Sam Y. Cross
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Charles H.P. Duell
_______________________
Charles H.P. Duell
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ William H. Foulk, Jr.
__________________________
William H. Foulk, Jr.
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Donald J. Robinson
_______________________
Donald J. Robinson
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ David K. Storrs
____________________
David K. Storrs
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Shelby White
_________________
Shelby White
Dated: October 29, 1997
00250122.AH7
<PAGE>
Other Exhibit
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa, Edmund P. Bergan, Jr.
and Emilie D. Wrapp, and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned, solely for the purpose of
signing on such person's behalf any Registration Statement on
Form N-1A, and any amendments thereto, of Alliance Capital
Reserves and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Dave H. Williams
_____________________
Dave H. Williams
Dated: October 29, 1997
00250122.AH7
