ALLIANCE CAPITAL RESERVES, 485BPOS, 1998-10-28

ALLIANCE CAPITAL RESERVES
485BPOS, 1998-10-28

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<PAGE>

As filed with the Securities and Exchange
Commission on October 28, 1998

File Nos. 2-61564
811-2835

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. 32 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF l940

Amendment No. 30 X

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

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

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

It is proposed that this filing will become effective (Check
appropriate line)

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

Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant's Rule 24f-2 notice for
its fiscal year ended June 30, 1998 was filed on
September 21, 1998.

<PAGE>

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

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

PART A

Item 1. Cover Page................... Cover Page

Item 2. Synopsis..................... Expense Information

Item 3. Financial Highlights......... Financial Highlights

Item 4. General Description.......... Investment Objectives
of Registrant and Policies

Item 5. Management of the Fund....... Additional Information

Item 6. Capital Stock and Other...... Additional Information
Securities

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

Item 8. Redemption or Repurchase..... Purchase and Redemption
of Shares

Item 9. Pending Legal Proceedings.... Not Applicable

PART B Location in Statement
Of Additional Information
(Caption)

Item 10. Cover Page................... Cover Page

Item 11. Table of Contents............ Cover Page

Item 12. General Information.......... Management; General
and History Information

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

Item 14. Management of the Fund....... Management

<PAGE>

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

N-1A Item No. Location in Statement of
Additional
Information
(Caption)

PART B (continued)

Item 15. Control Persons and
Principal Holders of
Securities................... Management

Item 16. Investment Advisory and...... Management
Other Services

Item 17. Brokerage Allocation......... General Information

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

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

Item 20. Tax Status................... Taxes

Item 21. Underwriters................. General Information

Item 22. Calculation of Performance
Data......................... General Information

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

<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 October 30, 1998, 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 7.

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
Investment Objectives and Policies........................................ 3
Purchase and Redemption of Shares......................................... 5
Additional Information.................................................... 5
</TABLE>

ALLIANCE CAPITAL RESERVES

[LOGO OF ALLIANCE CAPITAL APPEARS HERE]

PROSPECTUS OCTOBER 30, 1998

ALC39PRO8
<PAGE>

EXPENSE INFORMATION

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

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

EXAMPLE

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

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,
----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. .0471 .0452 .0471 .0447 .0255 .0266 .0438 .0662 .0782 .0788
Net realized gain on
investments........... -0- -0- -0- -0- -0- .0003 .0013 -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase in net
assets from
operations............ .0471 .0452 .0471 .0447 .0255 .0269 .0451 .0662 .0782 .0788
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income..... (.0471) (.0452) (.0471) (.0447) (.0255) (.0266) (.0438) (.0662) (.0782) (.0788)
Distributions from net
realized gains........ -0- -0- -0- -0- -0- (.0003) (.0013) -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions......... (.0471) (.0452) (.0471) (.0447) (.0255) (.0269) (.0451) (.0662) (.0782) (.0788)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN
Total investment return
based on
net asset value(a).... 4.83% 4.63% 4.82% 4.57% 2.58% 2.73% 4.61% 6.84% 8.14% 8.20%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of year
(in millions)......... $ 8,015 $ 5,733 $ 4,804 $ 3,024 $ 2,417 $ 2,112 $ 1,947 $ 1,937 $ 1,891 $ 1,536
Ratio to average net
assets of:
Expenses, net of
waivers and
reimbursements....... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% .97% .88% .95%
Expenses, before
waivers and
reimbursements....... 1.00% 1.00% 1.00% 1.03% 1.03% 1.00% 1.00% .97% .98% 1.05%
Net investment
income(b)............ 4.71% 4.53% 4.69% 4.51% 2.57% 2.65% 4.37% 6.62% 7.82% 7.87%
</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. Further informa-
tion about the Fund's performance is contained in the annual report to share-
holders and Statement of Additional Information which may be obtained without
charge by contacting Alliance Fund Services, Inc. at the address shown in this
prospectus.

2
<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 or denominated in U.S. dollars and issued by U.S. branches of for-
eign banks having total assets of at least $1 billion that are believed by the
Adviser to be of quality equivalent to that of other such instruments in which
the Fund may invest; (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 fully as that term is defined in
Rule 2a-7 ("Rule 2a-7") under the Investment Company Act of 1940, as amended
(the "Act"). These agreements are entered into with "primary dealers" (as des-
ignated 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 the types of instruments described in (2) above issued or maintained
at foreign branches of U.S. banks described in such clause 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. 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 and accrued interest at anytime, or at
specified intervals. The Fund follows Rule 2a-7 with respect to the diversifi-
cation, quality, and maturity of variable rate obligations.

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

tion 4(2) of the Securities 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 Securi-
ties 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 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 illiquid se-
curities, 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 representa-
tive of their value, the value of the Fund's net assets could be adversely af-
fected.

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, the Fund may invest no more than 5% of its
total assets in the securities of any one issuer (as determined pursuant to
Rule 2a-7), except that the Fund may invest up to 25% of its total assets in
the first tier securities (as defined in Rule 2a-7) of a single issuer for a
period of up to three business days. 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 future.

4
<PAGE>

PURCHASE AND REDEMPTION OF SHARES

OPENING ACCOUNTS

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

SUBSEQUENT INVESTMENTS

A. BY CHECK THROUGH YOUR BROKERAGE FIRM

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

B. BY SWEEP

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

REDEMPTIONS

A. BY CHECKWRITING

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

B. BY SWEEP

If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer from your Fund account sufficient cash to cover any debit
balance that may occur in your cash account for any reason.

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

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

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

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

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. (Eastern
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. (Eastern 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.

5
<PAGE>

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

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. (Eastern time) and is paid immedi-
ately thereafter pro rata to shareholders of record via automatic investment
in additional full and fractional shares in each shareholder's account. As
such additional shares are entitled to dividends on following days, a com-
pounding growth of income occurs.

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

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

THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue
of the Americas, New York, NY 10105, under an Advisory Agree- ment to provide
investment advice and, in general, to conduct the Fund's management and in-
vestment program, subject to the general supervision and control of the Trust-
ees of the Fund. For the fiscal year ended June 30, 1998, the Fund paid the
Adviser a fee equal to .46 of 1% of the average daily value of the Fund's net
assets.

6
<PAGE>

Alliance Capital Management Corporation, the sole general partner of, and the
owner of a 1% general partnership interest in, the Adviser, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies in the
United States, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA-UAP ("AXA"), a French insur-
ance holding company. Certain information concerning the ownership and control
of Equitable by AXA is set forth in the Fund's Statement of Additional Infor-
mation under "Management of the Fund."

Under a Distribution Services Agreement (the "Agreement"), the Fund makes
payments to Alliance Fund Distributors, Inc. (the "Distributor") 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, 1998, the Fund paid the Distributor at an an-
nual 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 Ad-
viser's own resources) are paid by the Distributor to broker-dealers and other
financial intermediaries for their distribution assistance and to banks and
other depository institutions for administrative and accounting services pro-
vided to the Fund, with any remaining amounts being used to partially defray
other expenses incurred by the Distributor in distributing Fund shares. The
Fund believes that the administrative services provided by depository institu-
tions are permissible activities under present banking laws and regulations
and will take appropriate actions (which should not adversely 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.

YEAR 2000. Many computer systems and applications in use today process trans-
actions using two digit date fields for the year of the transaction, rather
than the full four digits. If these systems are not modified or replaced,
transactions occurring after 1999 could be processed as year "1900," which
could result in processing inaccuracies and computer system failures. This is
commonly known as the Year 2000 problem. Should any of the computer systems
employed by the Fund's major service providers fail to process Year 2000 in-
formation properly, that could have a significant negative impact on the
Fund's operations and the services that are provided to the Fund's sharehold-
ers.

With respect to the Year 2000, the Fund has been advised that the Adviser,
Distributor and Transfer Agent (collectively, "Alliance") began to address the
Year 2000 issue several years ago in connection with the replacement or up-
grading of certain computer systems and applications. During 1997, Alliance
began a formal Year 2000 initiative, which established a structured and coor-
dinated process to deal with the Year 2000 issue. Alliance reports that it has
completed its assessment of the Year 2000 issues on its domestic and interna-
tional computer systems and applications. Currently, management of Alliance
expects that the required modifications for the majority of its significant
systems and applications that will be in use on January 1, 2000, will be com-
pleted and tested by the end of 1998. Full integration testing of these sys-
tems and testing of interfaces with third-party suppliers will continue
through 1999. At this time, management of Alliance believes that the costs as-
sociated with resolving this issue will not have a material adverse effect on
its operations or on its ability to provide the level of services it currently
provides to the Fund.

7
<PAGE>

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

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

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

<PAGE>

YIELD MESSAGES

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

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

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

A "Statement of Additional Information," dated October 30, 1998, 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 7.

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
Investment Objective and Policies......................................... 3
Purchase and Redemption of Shares......................................... 4
Additional Information.................................................... 5
</TABLE>

ALLIANCE
MONEY
RESERVES

[LOGO OF ALLIANCE CAPITAL(R) APPEARS HERE]

PROSPECTUS OCTOBER 30, 1998

ALC36PRO8
<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>
<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--.48%, 12b-1 Fees--.25%, Other Expenses--.29% 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)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FEBRUARY 16,
YEAR ENDED JUNE 30, 1989(A)
---------------------------------------------------------------------- THROUGH
1998 1997 1996 1995 1994 1993 1992 1991 1990 JUNE 30, 1989
------ ------ ------ ------ ------ ------ ------ ------ ------ -------------
<S> <C> <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 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(b)................... .047 .045 .047 .045 .025 .027 .044 .066 .079 .033
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS: DIVIDENDS
Dividends from net in-
vestment income....... (.047) (.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 $ 1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
Total investment return
based on:
Net asset value(c)..... 4.83% 4.64% 4.81% 4.50% 2.57% 2.71% 4.47% 6.87% 8.26% 9.18%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of pe-
riod (in millions)..... $1,166 $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% 1.00% .97% .89% .99%(d)
Expenses, before waiv-
ers and reimburse-
ments................. 1.02% 1.06% 1.00% 1.04% 1.09% 1.04% 1.04% 1.03% .99% 1.09%(d)
Net investment
income(b)............. 4.72% 4.55% 4.80% 4.53% 2.55% 2.67% 4.33% 6.56% 7.92% 9.16%(d)
</TABLE>
- -------------
(a) Commencement of operations.

(b) Net of expenses reimbursed or waived by the Adviser.

(c) 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.

(d) Annualized.

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

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. Further informa-
tion about the Fund's performance is contained in the annual report to share-
holders and Statement of Additional Information which may be obtained without
charge by contacting Alliance Fund Services, Inc. at the address shown in this
prospectus.

2
<PAGE>

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

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

MONEY MARKET SECURITIES

The money market securities in which the Fund invests include: (1) marketable
obligations of, or guaranteed by, the United States Government, its agencies
or instrumentalities (collectively, the "U.S. Government"); (2) certificates
of deposit and bankers' acceptances issued or guaranteed by, or time deposits
maintained at, banks or savings and loan associations (including foreign
branches of U.S. banks or U.S. or foreign branches of foreign banks) having
total assets of more than $500 million; (3) commercial paper, including vari-
able amount master demand notes, of high quality [i.e., rated A-1 or A-2 by
Standard & Poor's Corporation ("Standard & Poor's"), Prime-1 or Prime-2 by
Moody's Investors Service, Inc. ("Moody's"), Fitch-1 or Fitch-2 by Fitch In-
vestors Service, Inc., or Duff 1 or Duff 2 by Duff & Phelps Inc. or, if not
rated, issued by U.S. or foreign companies having outstanding debt securities
rated AAA, AA or A by Standard & Poor's, or Aaa, Aa or A by Moody's] and par-
ticipation interests in loans extended by banks to such companies; and (4) re-
purchase agreements that are collateralized fully as that term is defined in
Rule 2a-7 ("Rule 2a-7") under the Investment Company Act of 1940, as amended
(the "Act"). Repurchase agreements may be entered into only with those banks
(including State Street Bank and Trust Company, the Fund's Custodian) or bro-
ker-dealers ("vendors") that are eligible under the procedures adopted by the
Trustees for evaluating and monitoring the creditworthiness of such vendors. A
repurchase agreement would create a loss to the Fund if, in the event of a
vendor default, the proceeds from the sale of the collateral were less than
the repurchase price. The money market securities in which the Fund invests
may have variable or floating rates of interest ("variable rate obligations")
as permitted by Rule 2a-7. 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 and accrued interest at any time, or at specified inter-
vals. 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
3
<PAGE>

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 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 illiquid 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.

The Fund will comply with Rule 2a-7, including the diversification, quality
and maturity limitations imposed by the Rule. A more detailed description of
Rule 2a-7 is set forth in the Fund's Statement of Additional Information under
"Investment Objective and Policies." To the extent that the Fund's limitations
are more permissive than Rule 2a-7, the Fund will comply with the more re-
strictive provisions of the Rule.

OTHER FUNDAMENTAL INVESTMENT POLICIES

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

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

OPENING ACCOUNTS

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

SUBSEQUENT INVESTMENTS

A. BY CHECK THROUGH YOUR BROKERAGE FIRM

Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will

4
<PAGE>

deposit it into your brokerage account. Please indicate your account number on
the check.

B. BY SWEEP

REDEMPTIONS

A. BY CHECKWRITING

B. BY SWEEP

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

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

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

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

5
<PAGE>

Alliance Fund Services, Inc. is not responsible for the authenticity of tele-
phone requests to purchase or sell shares. Alliance Fund Services, Inc. will
employ reasonable procedures to verify that telephone requests are genuine and
could be liable for losses arising from unauthorized transactions if it failed
to do so. Dealers or agents may charge a commission for handling telephone re-
quests. The telephone service may be suspended or terminated at any time with-
out notice.

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, 1998, the Fund paid the
Adviser a fee (net of reimbursement) at an annual rate of .48 of 1% of the av-
erage daily value of the Fund's net assets.

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

6
<PAGE>

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, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA--UAP ("AXA"), a French in-
surance holding company. Certain information concerning the ownership and con-
trol of Equitable by AXA is set forth in the Fund's Statement of Additional
Information under "Management of the Fund."

The Fund and Alliance have been advised by the Fund's Custodian that it is
also in the process of reviewing its systems with the same goals. As of the

7
<PAGE>

date of this prospectus, the Fund and Alliance have no reason to believe that
the Custodian will be unable to achieve these goals.

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

<PAGE>

(LOGO) ALLIANCE CAPITAL RESERVES
________________________________________________________________

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

STATEMENT OF ADDITIONAL INFORMATION
October 30, 1998
________________________________________________________________

TABLE OF CONTENTS
Page

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

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

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

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

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

Additional Information...................................... 22

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

Taxes....................................................... 26

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

Appendix-Commercial Paper and Bond Ratings..................30-31

Financial Statements........................................

Independent Auditor's Report................................
_______________________________________________________________

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated October 30, 1998. 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, or such
greater length of time as may be permitted from time to time
pursuant to Rule 2a-7). 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

<PAGE>

Corporation or denominated in U.S. dollars and issued by U.S.
branches of foreign banks and foreign branches of U.S. banks, in
each case 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. To the extent that the Fund invests in such
instruments, including commercial paper issued by foreign
companies meeting the rating criteria specified above,
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

<PAGE>

contractual obligations and lack of uniform accounting
standards.

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
counterparty at an agreed-upon future date. The resale price is
greater than the purchase price, reflecting an agreed-upon market
rate which is effective for the period of time the buyer's money
is invested in the security and which is not related to the
coupon rate on the purchased security. Repurchase agreements may
be entered into with member banks of the Federal Reserve System
or "primary dealers" (as designated by the Federal Reserve Bank
of New York) in U.S. Government securities or with State Street
Bank and Trust Company ("State Street Bank"), the Fund's
Custodian. It is the 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 397 days, the term of the repurchase agreement is always
less than 397 days. In the event that a counterparty 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 counterparty became
bankrupt, the Fund might be delayed in selling the collateral.
Repurchase agreements often are for short periods such as one day
or a week, but may be longer. Repurchase agreements not
terminable within seven days will be limited to no more than 10%
of the Fund's assets.1 Pursuant to Rule 2a-7, a repurchase
agreement is deemed to be an acquisition of the underlying
securities provided that the obligation of the seller to
repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
counterparty of a fully collateralized repurchase agreement is
deemed to be the issuer of the underlying securities.

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

<PAGE>

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 put 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 Funds 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. These securities must generally be rated.
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. Generally, the
special purpose entity is deemed to be the issuer of the asset-
backed security. However, the Fund is required to treat any
person whose obligations constitute ten percent or more of the
assets of the asset-backed security as the issuer of the portion
of the asset-backed security such obligations represent. 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

<PAGE>

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 illiquid 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 Funds net assets could be adversely affected.

Liquid Restricted Securities. The Fund may also
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").

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
(the "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.

<PAGE>

In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Commission
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
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

<PAGE>

(vi) any applicable 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, the Adviser 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.

General. 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. As even the safest of securities involve some
risk, there can be no assurance, as is true with all investment
companies, that the Fund's objectives will be achieved. The
market value of the Fund's investments tends to decrease during
periods of rising interest rates and to increase during intervals
of falling rates.

Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets. The Fund's investment objectives may not
be changed without the affirmative vote of a majority of the
Fund's outstanding shares as defined below.

Except as otherwise provided, the Fund's investment
policies are not designated "fundamental policies" within the
meaning of the Act and may, therefore, be changed by the Trustees
of the Trust without a shareholder vote. However, the Fund will
not change its investment policies without contemporaneous
written notice to shareholders.

<PAGE>

Rule 2a-7 under the Act. The Fund will comply with Rule
2a-7 under the Act, as amended from time to time, including the
diversification, quality and maturity limitations imposed by the
Rule. 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 (the "requisite NRSROs"). An unrated
security may also be an Eligible Security if the Adviser
determines that it is 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 Appendix A
attached hereto. Securities in which the Fund invests may be
subject to liquidity or credit enhancements. These securities
are generally considered to be Eligible Securities if the
enhancement or the issuer of the enhancement has received the
appropriate rating from the requisite NRSROs.

Under Rule 2a-7 the Fund may not invest more than five
percent of its assets in the first tier securities of any one
issuer other than the United States Government, its agencies and
instrumentalities. A first tier security is an Eligible Security
that has received a short-term rating from the requisite NRSROs
in the highest short-term rating category for debt obligations,
or is an unrated security deemed to be of comparable quality.
Government securities are also considered to be first tier
securities. 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.

<PAGE>

_______________________________________________________________

INVESTMENT RESTRICTIONS
_______________________________________________________________

The following restrictions may not be changed without
the affirmative vote of a majority of the Fund's outstanding
shares, which means the vote of (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less. If a percentage
restriction is adhered to at the time of an investment, a later
increase or decrease in percentage resulting from a change in
value of portfolio securities or in amount of the Funds assets
will not constitute a violation of that restriction.

The Fund:

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

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

3. May not invest more than 5% of its assets in the
securities of any one issuer3 (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;

_________________________

2Which maturity, pursuant to Rule 2a-7, may extend to 397
days, or such greater length of time as may be permitted
from time to time pursuant to Rule 2a-7.
3
As a matter of operating policy, pursuant to Rule 2a-7, the
Fund will invest no more than 5% of its assets in the
securities of any one issuer unless permitted by Rule 2a-7.
The issuer of a security is determined pursuant to Rule 2a-
7.

<PAGE>

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
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%

<PAGE>

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. WILLIAMS4 , 66, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC")5 , sole general partner of the Adviser with which he has
been associated since prior to 1993.

JOHN D. CARIFA****, 53, is the President, Chief
Operating Officer and a Director of ACMC with which he has been
associated since prior to 1993.

SAM Y. CROSS, 71, was, since prior to December 1993,
Executive Vice President of The Federal Reserve Bank of New York
and manager for foreign operations for The Federal Reserve
System. He is Executive-In-Residence at the School of
International and Public Affairs, Columbia University. 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, 60, is President of Middleton Place
Foundation with which he has been associated since prior to 1993.
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.
_________________________

4An "interested person" of the Fund as defined in the Act.
5For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.

<PAGE>

His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.

WILLIAM H. FOULK, JR., 66, is an Investment Adviser and
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 1993. His address is
2 Greenwich Plaza, Suite 100, Greenwich, CT 06830.

DAVID K. STORRS, 54, is President and Chief Executive
Officer of Alternative Investment Group, LLC (an investment
firm). He was formerly President of The Common Fund (investment
management for educational institutions) with which he had been
associated since prior to 1993. His address is 65 South Gate
Road, Southport, Connecticut 06490.

SHELBY WHITE, 60, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

Officers

RONALD M. WHITEHILL - President, 60, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since 1993.

KATHLEEN A. CORBET - Senior Vice President, 38, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1993.

DREW BIEGEL - Senior Vice President, 47, is a Vice
President of ACMC which he has been associated with since prior
to 1993.

JOHN R. BONCZEK - Senior Vice President, 38, is a Vice
President of ACMC with which he has been associated since prior
to 1993.

ROBERT I. KURZWEIL - Senior Vice President, 47, 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
1993.

WAYNE D. LYSKI - Senior Vice President, 57, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1993.

PATRICIA NETTER - Senior Vice President, 47, is a Vice
President of ACMC with which she has been associated since prior
to 1993.

<PAGE>

RAYMOND J. PAPERA - Senior Vice President, 42, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1993.

KENNETH T. CARTY - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

JOHN F. CHIODI, Jr. - Vice President, 32, is a Vice
President of ACMC with which he has been associated since prior
to 1993.

DORIS T. CILIBERTI - Vice President, 34, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1993.

MARIA R. CONA - Vice President, 43, is an Assistant Vice
President of ACMC with which she has been associated since prior
1993.

WILLIAM J. FAGAN - Vice President, 36, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

JOSEPH R. LASPINA -Vice President, 38, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

LINDA D. NEIL - Vice President, 38, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1993.

EDMUND P. BERGAN, Jr. - Secretary, 48, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS") with which
he has been associated since prior to 1993.

MARK D. GERSTEN - Treasurer and Chief Financial Officer,
48, is a Senior Vice President of AFS with which he has been
associated since prior to 1993.

VINCENT S. NOTO - Controller, 33, is an Assistant Vice
President of AFS with which he has been associated since prior to
1993.

ANDREW L. GANGOLF - Assistant Secretary, 44, is a Vice
President and Assistant General Counsel of AFD with which he has

<PAGE>

been associated since December 1994. Prior thereto, he was Vice
President and Assistant Secretary of Delaware Management Co.,
Inc.

DOMENICK PUGLIESE - Assistant Secretary, 37, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since May 1995. Prior thereto, he was Vice
President and Counsel of Concord Holding Corporation since 1994
and Vice President and Associate General Counsel of Prudential
Securities since 1992.

EMILIE D. WRAPP - Assistant Secretary, 42, is a Vice
President and Assistant General Counsel of AFD with which she has
been associated since prior to 1993.

As of October 9, 1998, the Trustees and officers as a
group owned more 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, 1998, the
aggregate compensation paid to each of the Trustees during
calendar year 1997 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies (and separate investment portfolios within
those companies) in the Alliance Fund Complex with respect to
which each of the Trustees serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees.

<PAGE>

Total Number Total Number
of Funds in of Investment
the Alliance Portfolios
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- 53 118
Sam Y. Cross $2,804 $ 12,000 3 12
Charles H.P. Duell $2,804 $ 12,000 3 12
William H. Foulk, Jr. $2,915 $144,250 48 113
David K. Storrs $2,804 $ 12,000 3 12
Shelby White $2,804 $ 12,000 3 12

The Adviser

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

The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1998 of more than $262 billion (of which more than $107 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 June 30, 1998, the
Adviser was retained as an investment manager for employee
benefit plan assets for 32 of the FORTUNE 100 companies. As of
July 31, 1998, the Adviser and its subsidiaries employed
approximately 2,000 employees who operate out of domestic offices
and the offices of subsidiaries in Bahrain, Bangalore, Chennai,
Istanbul, London, Madrid, Mumbai, Paris, Singapore, Tokyo and
Toronto and affiliate offices located in Vienna, Warsaw, Hong
Kong, Sao Paulo and Moscow. The 58 registered investment
companies comprising more than 12316 separate investment
portfolios managed by the Adviser currently have more than 3.5
million shareholders.

<PAGE>

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"). ECI is a holding company
controlled by AXA-UAP ("AXA"), a French insurance holding company
which at March 31, 1998, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1998, ACMC,
Inc. and Equitable Capital Management Corporation, each a wholly-
owned direct or indirect subsidiary of Equitable, together with
Equitable, owned in the aggregate approximately 57% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser.

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

Based on information provided by AXA, as of March 31,
1998 more than 30% of the voting power of AXA was controlled
directly and indirectly by FINAXA, a French holding company. As
of March 31, 1998 more than 74% of the voting power of FINAXA was
controlled directly and indirectly by four French mutual
insurance companies (the Mutuelles AXA), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and
indirectly more than 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA and FINAXA.

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

<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, 1996, 1997 and 1998, the
Adviser received from the Fund advisory fees (net of
reimbursement for the fiscal year ended June 30, 1997) of
$19,411,685, $25,922,659 and $31,190,832, 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 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 $162,000,
$172,000 and $176,500 in respect of such services for the fiscal
years ended June 30, 1996, 1997 and 1998, respectively.

The Fund has made arrangements with certain broker-
dealers, including Pershing, Division of Donaldson, Lufkin &
Jenrette Securities Corporation (Pershing), an affiliate of the
Adviser, whose customers are Fund shareholders pursuant to which
payments are made to such broker-dealers performing recordkeeping
and shareholder servicing functions. Such functions may include
opening new shareholder accounts, processing purchase and
redemption transactions, and responding to inquiries regarding
the Funds current yield and the status of shareholder accounts.
The Fund pays fully disclosed and omnibus broker dealers
(including Pershing) for such services. The Fund may also pay
for the electronic communications equipment maintained at the
broker-dealers offices that permits access to the Funds computer
files and, in addition, reimburses fully-disclosed broker-dealers
at cost for personnel expenses involved in providing such
services. All such payments must be approved or ratified by the
Trustees. For the fiscal years ended June 30, 1996, 1997 and
1998, the Fund paid such broker-dealers a total of $928,072,
$1,840,626 and $6,980,273, respectively.

<PAGE>

The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1999
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 9, 1998.

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

Payments under the Agreement are used in their entirety
for (i) payments to broker-dealers and other financial
intermediaries, including the Distributor and Donaldson, Lufkin &
Jenrette Securities Corporation and its Pershing Division,
affiliates of the Adviser, for distribution assistance and to
banks and other depository institutions for administrative and
accounting services, and (ii) otherwise promoting the sale of
shares of the Fund such as by paying for the preparation,
printing and distribution of prospectuses and other promotional
materials sent to existing and prospective shareholders and by
directly or indirectly purchasing radio, television, newspaper

<PAGE>

and other advertising. In approving the Agreement the Trustees
determined that there was a reasonable likelihood that the
Agreement would benefit the Trust and its shareholders. During
the fiscal year ended June 30, 1998, the Fund made payments to
the Distributor for expenditures under the Agreement in amounts
aggregating $16,800,462 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 $19,408,100. Of the $36,208,562 paid by the Adviser
and the Fund under the Agreement, $831,000 was paid for
advertising, printing and mailing of prospectuses to persons
other than current shareholders; and $35,377,562 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, 1999 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 9, 1998.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested

<PAGE>

persons of the Fund nor have any direct or indirect financial
interest in the Agreement or in any related agreement, cast in
person at a meeting called for that purpose.

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

The Agreement is in compliance with rules of the
National Association of Securities Dealers, Inc. (the "NASD")
which became effective July 7, 1993 and which limit the annual
asset-based sales charges and service fees that a mutual fund may
impose to .75% and .25%, respectively, of average annual net
assets.

_______________________________________________________________

PURCHASE AND REDEMPTION OF SHARES
_______________________________________________________________

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

Accounts Not Maintained Through Financial Intermediaries

Opening Accounts -- New Investments

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

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

<PAGE>

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

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

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

3) Mail a completed Application Form to:

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

B. When Funds are Sent by Check

1) Fill out an Application Form.

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

Subsequent Investments

A. Investments by Wire (to obtain immediate credit)

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

B. Investments by Check

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

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

<PAGE>

Investments Made by Check

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

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

Redemptions

A. By Telephone

You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed)
between 9:00 a.m. and 5:00 p.m. (Eastern time) via orders given
to AFS 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 AFS
prior to 12:00 Noon (Eastern 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 AFS 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.

<PAGE>

requests for redemptions that the Fund reasonably believes to be
genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine,
including among others, recording such telephone instructions and
causing written confirmations of the resulting transactions to be
sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.

B. By Checkwriting

With this service, you may write checks made payable to
any payee. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account.
First, you must fill out the Signature Card which is with the
Application Form. If you wish to establish this checkwriting
service, subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate charge for
the checkwriting service, except that State Street Bank may
impose charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a
stop order. There is currently a $7.50 charge for check
reorders.

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

C. By Mail

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

<PAGE>

_______________________________________________________________

ADDITIONAL INFORMATION
_______________________________________________________________

Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
the Fund's Distributor accepts purchase orders from its customers
up to 2:15 p.m. (Eastern time) for issuance at the 4:00 p.m.
(Eastern time) 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

<PAGE>

procedures. The Fund reserves the right to reject any purchase
order.

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

Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or AFS 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.

<PAGE>

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.

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 Years Day, Martin Luther King, Jr.
Day, Presidents Day (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 a
redemption payment postponed for any period during which the New
York Stock Exchange is closed (other than customary weekend and
holiday closings), when trading on the New York Stock Exchange is
restricted, or an emergency (as determined by the Commission)
exists, or the Commission has ordered such a suspension for the
protection of shareholders. The value of a shareholder's
investment at the time of redemption may be more or less than his
or her cost, depending on the market value of the securities held
by 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. Eastern time (and at
such other times as the Trustees may determine) and is paid

<PAGE>

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 having
remaining maturities of no more than 397 days or such greater
length of time as may be permitted from time to time pursuant to
Rule 2a-7. The Fund maintains procedures designed to stabilize,
to the extent reasonably possible, the price per share as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Fund's portfolio holdings by the
Trustees to the extent required by Rule 2a-7 under the Act at
such intervals as they deem appropriate to determine whether and
to what extent the net asset value of the Fund calculated by
using available market quotations or market equivalents deviates
from net asset value based on amortized cost. If such deviation
exceeds 1/2 of 1%, the Trustees will promptly consider what
action, if any, should be initiated. In the event the Trustees
determine that such a deviation may result in material dilution
or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments prior to maturity to realize

<PAGE>

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. (Eastern time). The net
asset value per share is calculated by taking the sum of the
value of the Fund's investments and any cash or other assets,
subtracting liabilities, and dividing by the total number of
shares outstanding. All expenses, including the fees payable to
the Adviser, are accrued daily.

_______________________________________________________________

TAXES
_______________________________________________________________

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

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
_______________________________________________________________

<PAGE>

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, 1996, 1997 and 1998, 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 9, 1998, there were 8,738,233,150 shares of
beneficial interest of the Fund outstanding. To the knowledge of

<PAGE>

the Fund the following persons owned of record and no person
owned beneficially, 5% or more of the outstanding shares of the
Portfolio as of October 9, 1998:

No. of % of
Shares Class

Pershing As Agent 6,402,031,876 73%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0022

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 Fund and the Adviser. Seward & Kissel has
relied upon the opinion of Sullivan & Worcester, Boston,
Massachusetts, for matters relating to Massachusetts law.

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

<PAGE>

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,
1998 was 4.66% which is the equivalent of a 4.77% 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 Commission
under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.

<PAGE>

ALLIANCE CAPITAL RESERVES

ALLIANCE CAPITAL

ANNUAL REPORT
JUNE 30, 1998

STATEMENT OF NET ASSETS
JUNE 30, 1998 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------

COMMERCIAL PAPER-51.9%
AKZO NOBEL, INC.
$ 20,000 7/21/98 5.50% $ 19,938,889
20,000 7/23/98 5.50 19,932,778
ALLIANZ OF AMERICA FINANCE CORP.
14,600 9/18/98 (a) 5.51 14,423,466
31,516 8/27/98 (a) 5.52 31,240,550
ASSOCIATES CORP. OF NORTH AMERICA
90,000 9/11/98 5.51 89,008,200
46,400 8/26/98 5.56 45,998,741
100,000 8/27/98 5.56 99,119,667
BAA PLC
24,584 12/07/98 5.48 23,988,985
36,493 7/22/98 5.50 36,375,918
BANK OF AMERICA
70,000 9/23/98 5.52 69,098,400
BANKERS TRUST NEW YORK
153,700 9/15/98 5.52 151,908,883
161,000 9/23/98 5.52 158,926,320
17,000 8/12/98 5.58 16,889,330
BANQUE CAISSE D'EPARGNE
95,000 9/23/98 5.51 93,778,617
20,100 9/08/98 5.52 19,887,342
20,000 10/14/98 5.52 19,678,000
BAVARIA TRUST CORP.
80,000 9/29/98 (a) 5.54 78,892,000
BIL NORTH AMERICA, INC.
16,500 8/11/98 5.55 16,395,706
25,000 8/04/98 5.56 24,868,722
20,000 7/28/98 5.57 19,916,450
CAISSE D'AMORTISSEMENT
14,600 7/10/98 5.60 14,579,560
COMMONWEALTH BANK OF AUSTRALIA
62,000 9/28/98 5.44 61,166,169
CREGEM NORTH AMERICA, INC.
42,000 12/28/98 5.48 40,849,200
CS FIRST BOSTON
23,000 8/07/98 5.52 22,869,513
10,600 8/24/98 5.53 10,512,073
9,000 8/26/98 5.53 8,922,580
30,000 9/22/98 5.53 29,617,509
DEN NORSKE BANK
50,000 9/21/98 5.52 49,371,903
DIAGEO CAPITAL PLC
53,000 9/23/98 5.52% 52,317,360
35,000 7/01/98 6.10 35,000,000
FIRST CHICAGO FINANCIAL CORP.
33,000 9/15/98 5.51 32,616,136
22,700 8/21/98 5.52 22,522,486
14,000 9/09/98 5.54 13,849,189
GENERAL ELECTRIC CAPITAL CORP.
120,000 9/08/98 5.51 118,732,700
120,000 9/09/98 5.53 118,709,667
100,000 9/15/98 5.53 98,832,556
50,000 8/19/98 5.57 49,620,930
25,000 5.62%, 11/17/98 FRN 5.62 25,000,000
GENERAL MOTORS ACCEPTANCE CORP.
175,000 9/15/98 5.52 172,960,667
220,000 9/02/98 5.53 217,870,950
GENERAL RE CORP.
27,060 9/15/98 5.52 26,744,661
16,357 9/22/98 5.52 16,148,830
GENERALE BANK
20,000 9/04/98 5.44 19,803,555
40,000 12/04/98 5.49 39,048,400
HENKEL CORP.
16,500 9/10/98 5.53 16,320,045
IMI FUNDING CORP. (USA)
21,157 8/05/98 5.40 21,045,926
36,022 11/06/98 5.52 35,315,008
46,300 9/30/98 5.54 45,651,620
20,590 8/28/98 5.56 20,405,559
65,320 7/20/98 5.70 65,123,496
ING AMERICA INSURANCE HL
27,000 12/21/98 5.52 26,283,780
28,000 8/04/98 5.54 27,853,498
25,000 7/06/98 5.55 24,980,729
J.P. MORGAN & CO., INC.
200,000 8/28/98 5.54 198,214,889
KOCH INDUSTRIES
16,000 7/01/98 (a) 6.30 16,000,000
MORGAN STANLEY GROUP, INC.
40,000 8/26/98 5.52 39,656,533
NORWEST CORP.
77,000 8/31/98 5.54 76,277,184
81,000 7/01/98 6.20 81,000,000

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------

PRUDENTIAL FUNDING CORP.
$175,000 9/14/98 5.53% $ 172,983,854
173,000 7/01/98 6.45 173,000,000
SALOMON SMITH BARNEY
55,000 9/09/98 5.51 54,410,736
45,000 9/14/98 5.51 44,483,438
55,000 8/26/98 5.52 54,527,733
110,000 9/01/98 5.52 108,954,267
100,000 9/02/98 5.52 99,034,000
30,000 9/08/98 5.52 29,682,600
SCOTIA BANC, INC.
35,000 8/24/98 5.55 34,708,625
SIGMA FINANCE, INC.
50,000 10/21/98 (a) 5.54 49,138,222
SPECIAL PURPOSE ACCOUNTS
RECEIVABLE COOPERATIVE CORP.
33,100 8/26/98 (a) 5.58 32,812,692
6,000 9/02/98 (a) 5.60 5,941,200
SVENSKA HANDELSBANKEN
50,000 8/28/98 5.52 49,555,333
THAMES ASSET GLOBAL SECURITIZATION
91,148 9/11/98 (a) 5.54 90,138,080
UBS FINANCE DELAWARE, INC.
10,000 8/10/98 5.53 9,938,555
UNI FUNDING, INC.
80,000 9/11/98 5.51 79,118,400
VATTENFALL TREASURY, INC.
26,000 8/24/98 5.52 25,784,720

Total Commercial Paper
(amortized cost $4,156,274,280) 4,156,274,280

CERTIFICATES OF DEPOSIT-20.3%
BAYERISCHE VEREINSBANK
155,000 5.64%, 2/25/99 5.64 155,000,000
BAYERISCHE LANDESBANK
150,000 5.53%, 2/25/99 FRN 5.61 149,924,795
CANADIAN IMPERIAL
BANK OF COMMERCE
180,000 5.58%, 9/23/98 5.58 180,000,000
CREDIT AGRICOLE
15,000 5.87%, 8/10/98 5.90 14,998,136
DEUTSCHE BANK
42,000 5.67%, 2/26/99 6.02 41,991,820
40,000 5.70%, 3/05/99 5.75 39,988,625
75,000 5.95%, 10/21/98 6.33 74,989,003
DRESDNER BANK
90,000 5.51%, 1/15/99 5.67 89,910,254
GENERALE BANK
30,000 5.94%, 8/28/98 5.96 29,998,686
HESSISCHE LANDESBANK
160,000 5.60%, 9/30/98 5.60 160,000,000
NATIONAL WESTMINSTER BANK
135,000 5.65%, 3/03/99 5.70 134,955,785
NORDEUTSCHE LANDESBANK
65,000 5.72%, 4/16/99 5.77 64,975,352
ROYAL BANK OF CANADA
20,000 5.53%, 2/12/99 5.70 19,967,478
25,000 5.55%, 2/11/99 5.70 24,962,341
SWISS BANK
71,000 5.66%, 3/04/99 5.71 70,981,653
TORONTO DOMINION BANK
200,000 5.58%, 9/23/98 5.58 200,000,000
175,000 5.59%, 9/30/98 5.59 175,000,000

Total Certificates of Deposit
(amortized cost $1,627,643,928) 1,627,643,928

BANK OBLIGATIONS-11.2%
ABBEY NATIONAL
250,000 5.54%, 2/17/99 FRN 5.60 249,908,470
BANK OF MONTREAL
75,000 5.64%, 10/01/98 FRN 5.64 75,000,000
BAYERISCHE LANDESBANK
160,000 5.63%, 10/02/98 FRN 5.63 160,000,000
DEUTSCHE BANK
160,000 5.52%, 7/01/98 FRN 5.52 160,000,000
LASALLE NATIONAL BANK
30,000 5.60%, 12/10/98 5.60 30,000,000
25,000 5.62%, 12/21/98 5.62 25,000,000
60,000 5.70%, 3/10/99 5.70 60,000,000
SMM TRUST
50,000 5.66%, 12/14/98 FRN (a) 5.66 50,000,000
40,000 5.66%, 5/28/99 FRN (a) 5.66 40,000,000
50,000 5.69%, 12/16/98 FRN (a) 5.69 50,000,000

Total Bank Obligations
(amortized cost $899,908,470) 899,908,470

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------

CORPORATE OBLIGATIONS-7.6%
GENERAL AMERICAN FUNDING CORP.
$157,000 5.85%, 7/10/98 FRN 5.85% $ 157,000,000
MERRILL LYNCH & CO., INC.
57,000 5.61%, 1/29/99 FRN 5.61 57,000,000
65,000 5.61%, 2/16/99 FRN 5.61 65,000,000
100,000 5.61%, 6/01/99 FRN 5.61 100,000,000
135,000 5.62%, 1/20/99 FRN 5.62 135,000,000
35,000 5.875%, 8/26/98 5.875 35,000,000
TRAVELERS LIFE FUNDING AGREEMENT
10,000 5.67%, 10/21/98 FRN (b) 5.67 10,000,000
50,000 5.67%, 11/03/98 FRN (b) 5.67 50,000,000

Total Corporate Obligations
(amortized cost $609,000,000) 609,000,000

PROMISSORY NOTES-4.8%
GOLDMAN SACHS GROUP LP
160,000 5.63%, 10/13/98 (a) 5.63 160,000,000
170,000 5.66%, 11/24/98 (a) 5.66 170,000,000
50,000 5.69%, 8/07/98 (a) 5.69 50,000,000

Total Promissory Notes
(amortized cost $380,000,000) 380,000,000

U.S. GOVERNMENT & AGENCY
OBLIGATIONS-3.6%
AID HOUSING GUARANTY
PROJECT PORTUGAL
11,563 5.83%, 12/01/16 FRN 5.83 11,562,500
FEDERAL FARM CREDIT BANK
66,000 5.41%, 8/03/98 FRN 5.43 65,997,200
FEDERAL NATIONAL MORTGAGE ASSN.
135,000 5.54%, 5/21/99 FRN 5.62 134,907,007
78,000 5.65%, 11/04/98 5.74 77,977,859

Total U.S. Government &
Agency Obligations
(amortized cost $290,444,566) 290,444,566

TIME DEPOSIT-0.3%
SOCIETE GENERALE BANK
25,000 7/01/98
(amortized cost $25,000,000)5.75 25,000,000

TOTAL INVESTMENTS-99.7%
(amortized cost $7,988,271,244) 7,988,271,244
Other assets less liabilities-0.3 26,295,748

NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
8,015,285,129 shares outstanding) $8,014,566,992

# 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 and Exchange Act of 1933. Rule 144A securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At June 30, 1998, these securities amounted to $838,586,210,
representing 10.5% of net assets.

(b) Funding agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $60,000,000, representing .75% of net
assets.

Glossary:
FRN - Floating Rate Note

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $383,932,689

EXPENSES
Advisory fee (Note B) $ 31,190,832
Distribution assistance and administrative
service (Note C) 23,957,235
Transfer agency (Note B) 9,681,735
Registration fees 1,018,800
Printing 637,413
Custodian fees 595,434
Audit and legal fees 71,773
Trustees' fees 16,742
Miscellaneous 31,885
Total expenses 67,201,849
Net investment income 316,730,840

REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (10,016)

NET INCREASE IN NET ASSETS FROM OPERATIONS $316,720,824

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 316,730,840 $ 251,419,428
Net realized loss on investment transactions (10,016) (887)
Net increase in net assets from operations 316,720,824 251,418,541

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (316,730,840) (251,419,428)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 2,281,771,645 928,726,972
Total increase 2,281,761,629 928,726,085

NET ASSETS
Beginning of year 5,732,805,363 4,804,079,278
End of year $8,014,566,992 $5,732,805,363

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 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 of which is considered to be a separate entity for
financial reporting and tax purposes. 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
financial statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. 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. Certain illiquid securities containing
unconditional par puts are also valued at amortized cost.

2. TAXES
It is the Portfolio's policy to meet 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 any, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.

3. DIVIDENDS
The Portfolio declares dividends daily from net investment income 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% on the first $1.25 billion of average daily net
assets; .49% on the next $.25 billion; .48% on the next $.25 billion; .47% on
the next $.25 billion; .46% on the next $1 billion; and .45% in excess of $3
billion. The Adviser has agreed, pursuant to the advisory agreement, 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, 1998.

The Portfolio compensates Alliance Fund Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $5,255,330 for the year ended June 30, 1998.

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 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, 1998, the distribution fee amounted to $16,800,462. 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, 1998, such payments by the Portfolio amounted to
$7,156,773, of which $176,500 was paid to the Adviser.

ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1998, the
Portfolio had a capital loss carryforward of $718,137, of which $85,995 expires
in 2001, $49,939 expires in 2002, $464,313 expires in 2003, $106,987 expires in
2004, $887 expires in 2005 and $10,016 expires in the year 2006.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1998, capital paid-in aggregated $8,015,285,129. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1998 1997
-------------- --------------
Shares sold 24,542,949,413 26,431,373,115
Shares issued on reinvestments
of dividends 316,730,840 251,419,428
Shares redeemed (22,577,908,608) (25,754,065,571)
Net increase 2,281,771,645 928,726,972

FINANCIAL HIGHLIGHTS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .0471 .0452 .0471 .0447 .0255

LESS: DIVIDENDS
Dividends from net investment income (.0471) (.0452) (.0471) (.0447) (.0255)

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 (a) 4.83% 4.63% 4.82% 4.57% 2.58%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $8,015 $5,733 $4,804 $3,024 $2,417
Ratios 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% 1.00% 1.03% 1.03%
Net investment income 4.71% 4.53% 4.69% 4.51%(b) 2.57%(b)
</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 Advisor.

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 Juneb30, 1998 and the related statements of
operations, changes in net assets, and financial highlights for thebperiods
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 thatbwe 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, 1998, by correspondence with the custodian.

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

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Capital Reserves Portfolio as of June 30, 1998, 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 YorkJuly 24, 1998

<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.

A-1

<PAGE>

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 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

<PAGE>

(LOGO) ALLIANCE CAPITAL RESERVES
- Alliance Money Reserves

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

STATEMENT OF ADDITIONAL INFORMATION
October 30, 1998
________________________________________________________________

TABLE OF CONTENTS
Page

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

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

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

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

Purchase and Redemption of Shares........................... 21

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

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

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

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

Appendix-Commercial Paper and Bond Ratings.................. 33

Financial Statements........................................

Independent Auditor's Report................................
________________________________________________________________

(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, or such greater length of time as may be permitted from
time to time pursuant to Rule 2a-7). Accordingly, the Fund may
make the following investments diversified by maturities and
issuers:

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

<PAGE>

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. 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. 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 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.

<PAGE>

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 counterparty 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 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
collateral in amounts equal to, or in excess of, the agreement
amount. While the maturities of the underlying collateral may
exceed 397 days, the term of the repurchase agreement is always
less than 397 days. In the event that a counterparty 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 counterparty 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.6 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
counterparty 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 397
days, but which permit the holder to demand payment of principal
at any time, or at specified intervals not exceeding 397 days, in
each case upon not more than 30 days' notice.
_________________________

6As used throughout the Prospectus and Statement of
Additional Information, the term "assets" shall refer to
the Funds total assets.

<PAGE>

The Fund also invests in variable amount master demand
notes (which may have put 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.

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.These securities must generally be rated.
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. Generally, the
special purpose entity is deemed to be the issuer of the asset-
backed security. However, the Fund is required to treat any
person whose obligations constitute ten percent or more of the
assets of the asset-backed security as the issuer of the portion
of the asset-backed security such obligations represent. 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

<PAGE>

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

<PAGE>

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.

(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 Commission interpretation or
position with respect to such types of
securities.

<PAGE>

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, the
Adviser 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.

General

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.

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

<PAGE>

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.

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. A first tier security is an Eligible Security
that has received a short-term rating from the requisite NRSROs
in the highest short-term rating category for debt obligations,
or is an unrated security deemed to be of comparable quality.
Government securities are also considered to be first tier
securities. 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

<PAGE>

represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less. If a percentage
restriction is adhered to at the time of an investment, a later
increase or decrease in percentage resulting from a change in
value of portfolio securities or in amount of the Fund's assets
will not constitute a violation of that restriction.

The Fund:

1. May not purchase any security which has a maturity
date more than one year7 from the date of the Fund's
purchase;

3. May not invest more than 5% of its assets in the
securities of any one issuer8 (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;

7Which maturity, pursuant to Rule 2a-7, may extend to 397
days, or such greater length of time as may be permitted
from time to time pursuant to Rule 2a-7.
8 As a matter of operating policy, pursuant to Rule 2a-7,
the Fund will invest no more than 5% of its assets in the
securities of any one issuer unless permitted by Rule 2a-7.
The issuer of a security is determined pursuant to Rule 2a-
7.

<PAGE>

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;

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

<PAGE>

________________________________________________________________

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

9 DAVE H. WILLIAMS, 66, Chairman, is Chairman of the
Board of Directors of Alliance Capital Management Corporation
("ACMC")10 , sole general partner of the Adviser with which he
has been associated since prior to 1993.

****JOHN D. CARIFA, 53, is the President, Chief
Operating Officer and a Director of ACMC with which he has been
associated since prior to 1993.

SAM Y. CROSS, 71, was, since prior to December 1993,
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. He is
Executive-In-Residence at the School of International and Public
Affairs, Columbia University. His address is 200 East 66th
Street, New York, New York 10021.

9An "interested person" of the Fund as defined in the Act.1
10For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation,
the sole general partner of the Adviser, and to the
predecessor general partner of the Adviser of the same
name.

<PAGE>

serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.

SHELBY WHITE, 60, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York
10022.

Officers

RONALD M. WHITEHILL - President, 60, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since 1993.

KATHLEEN A. CORBET - Senior Vice President, 38, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1993.

DREW BIEGEL - Senior Vice President, 47, is a Vice
President of ACMC with which he has been associated since prior
to 1993.

JOHN R. BONCZEK - Senior Vice President, 38, is a Vice
President of ACMC with which he has been associated since prior
to 1993.

WAYNE D. LYSKI - Senior Vice President, 57, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1993.

<PAGE>

PATRICIA NETTER - Senior Vice President, 47, is a Vice
President of ACMC with which she has been associated since prior
to 1993.

RAYMOND J. PAPERA - Senior Vice President, 42, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1993.

KENNETH T. CARTY - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

JOHN F. CHIODI, Jr. - Vice President, 32, is a Vice
President of ACMC with which he has been associated since prior
to 1993.

DORIS T. CILIBERTI - Vice President, 34, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1993.

MARIA R. CONA - Vice President, 43, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1993.

WILLIAM J. FAGAN - Vice President, 36, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

JOSEPH R. LASPINA - Vice President, 38, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1993.

LINDA D. NEIL - Vice President, 38, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1993.

MARK D. GERSTEN - Treasurer and Chief Financial Officer,
48, is a Senior Vice President of AFS with which he has been
associated since prior to 1993.

VINCENT S. NOTO - Controller, 33 is an Assistant Vice
President of AFS with which he has been associated since prior to
1993.

<PAGE>

ANDREW L. GANGOLF - Assistant Secretary, 44, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since December 1994. Prior thereto, he was Vice
President and Assistant Secretary of Delaware Management Co.,
Inc.

EMILIE D. WRAPP - Assistant Secretary, 42, is a Vice
President and Assistant General Counsel of AFD with which she has
been associated since prior to 1993.

As of October 9, 1998 the Trustees and officers as a
group owned less than 1% of the shares of the Fund.

<PAGE>

Dave H. Williams $-0- $-0- 6 15
John D. Carifa $-0- $-0- 53 118
Sam Y. Cross $1,720 $ 12,000 3 12
Charles H.P. Duell $1,720 $ 12,000 3 12
William H. Foulk, Jr. $2,357 $144,250 48 113
Elizabeth J. McCormack $-0- $ 9,750 3 12
David K. Storrs $1,720 $ 12,000 3 12
Shelby White $1,720 $ 12,000 3 12

The Adviser

The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1998 of more than $262 billion (of which more than $107 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 June 30, 1998
September 30, 1997, the Adviser was retained as an investment
manager for employee benefit plan assets of 32 of the FORTUNE 100
companies. As of July 31, 1998, the Adviser and its subsidiaries
employed approximately 2,000 employees who operate out of
domestic offices and the offices of subsidiaries in Bahrain,
Bangalore, Chennai, Istanbul, London, Madrid, Mumbai, Paris,
Singapore, Tokyo and Toronto and affiliate offices located in
Vienna, Warsaw, Hong Kong, Sao Paulo and Moscow. The 58
registered investment companies comprising more than 123 separate
investment portfolios managed by the Adviser currently have more
than 3.5 million shareholders.

<PAGE>

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"). ECI is a holding company
controlled by AXA-UAP ("AXA"), a French insurance holding company
which at March 31, 1998, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1998, ACMC,
Inc. and Equitable Capital Management Corporation, each a wholly-
owned direct or indirect subsidiary of Equitable, together with
Equitable, owned in the aggregate approximately 57% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser.

Based on information provided by AXA, as of March 31,
1998 more than 30% of the voting power of AXA was controlled
directly and indirectly by FINAXA, a French holding company. As
of March 31, 1998 approximately 74% of the voting power of FINAXA
was controlled directly and indirectly by four French mutual
insurance companies (the "Mutuelles AXA"), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and
indirectly more than 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA and FINAXA.

<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, 1996, 1997 and 1998, the
Adviser received from the Fund advisory fees (net of
reimbursement for the fiscal years ended June 30, 1997 and 1998)
of $9,368,272, $4,003,676 and $5,418,833, 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 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, 1996, 1997 and 1998, the Fund paid to the Adviser a
total of $139,000, $134,000 and $137,000, respectively.

The Fund has made arrangements with certain broker-
dealers, including Pershing, Division of Donaldson, Lufkin &
Jenrette Securities Corporation ("Pershing"), an affiliate of the
Adviser, whose customers are Fund shareholders pursuant to which
payments are made to such broker-dealers performing recordkeeping
and shareholder servicing functions. Such functions may include
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 fully disclosed and omnibus broker dealers
(including Pershing) for such services. The Fund may also pay
for the electronic communications equipment maintained at the
broker-dealers' offices that permits access to the Fund's
computer files and, in addition, reimburses fully-disclosed
broker-dealers at cost for personnel expenses involved in
providing such services. All such payments must be approved or
ratified by the Trustees. For the fiscal years ended June 30,
1996, 1997 and 1998, the Fund reimbursed such broker-dealers a
total of $1,657,812, $558,619 and $1,033,468, respectively.

<PAGE>

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 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 AFD (the "Distributor")
which applies to both series of the Trust. Pursuant to the Plan,
the Fund pays to the Distributor 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.

<PAGE>

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, 1998, the Fund made payments to
the Distributor for expenditures under the Agreement in amounts
aggregating $2,843,635 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
$3,446,107. Of the $6,289,742 paid by the Adviser and the Fund
under the Agreement, $413,000 was paid for advertising, printing
and mailing of prospectuses to persons other than current
shareholders; and $5,876,742 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 Agreement became effective on July 22, 1992.
Continuance of the Agreement until June 30, 1999 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 9, 1998. 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

<PAGE>

interest in the Agreement or in any related agreement, cast in
person at a meeting called for that purpose.

________________________________________________________________

PURCHASE AND REDEMPTION OF SHARES
________________________________________________________________

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.

<PAGE>

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

ABA 0110 0002 8
State Street Bank and Trust Company
Boston, MA 02101
Alliance 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.

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

<PAGE>

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.

Redemptions

C. By Telephone

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 AFS
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 AFS 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
AFS 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

<PAGE>

sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.

D. By Checkwriting

With this service, you may write checks made payable to
any payee. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account.
First, you must fill out the Signature Card which is with the
Application Form. If you wish to establish this checkwriting
service subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate charge for
the checkwriting service, except that State Street Bank may
impose charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a
stop order. There is currently a $7.50 charge for check
reorders.

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

E. By Mail

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

________________________________________________________________

Additional Information
________________________________________________________________

<PAGE>

Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
the Fund's Distributor accepts purchase orders from its customers
up to 2:15 p.m. (Eastern time) for issuance at the 4:00 p.m.
(Eastern time) 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.

<PAGE>

guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.

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

<PAGE>

first six months of the subsequent year. Therefore, unless this
has occurred, a shareholder with a zero balance, when
reinvesting, should continue to use his account number.
Otherwise, the account should be re-opened pursuant to procedures
described above or through instructions given to a financial
intermediary.

A "business day," during which purchases and redemptions
of Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday exclusive of New Year's Day, Martin Luther King, Jr.
Day, President's Day (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
Commission) exists, or the Commission has ordered such a
suspension for the protection of shareholders. The value of a
shareholder's investment at the time of redemption may be more or
less than his or her cost, depending on the market value of the
securities held by 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. (Eastern 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

<PAGE>

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 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 397 days or such greater
length of time as may be permitted from time to time pursuant to
Rule 2a-7. The Fund maintains procedures designed to stabilize,
to the extent reasonably possible, the price per share as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Fund's portfolio holdings by the
Trustees to the extent required by Rule 2a-7 under the Act at
such intervals as they deem appropriate to determine whether and
to what extent the net asset value of the Fund calculated by
using available market quotations or market equivalents deviates
from net asset value based on amortized cost. If such deviation
exceeds 1/2 of 1%, the Trustees will promptly consider what
action, if any, should be initiated. In the event the Trustees
determine that such a deviation may result in material dilution
or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
(2) withholding dividends of net income on shares; or
(3) establishing a net asset value per share using available
market quotations or equivalents. There can be no assurance,
however, that the Fund's net asset value per share will remain
constant at $1.00.

The net asset value of the shares is determined each
business day at 12:00 Noon and 4:00 p.m. (Eastern time). The net
asset value per share is calculated by taking the sum of the

<PAGE>

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.

________________________________________________________________

General Information
________________________________________________________________

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

<PAGE>

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
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 9, 1998, there were 1,282,446,104 shares of
beneficial interest of the Fund outstanding. To the knowledge of
the Fund the following persons owned of record and no person
owned beneficially, 5% or more of the outstanding shares of the
Portfolio as of October 9, 1998:

<PAGE>

No. of % of
Name and Address Shares Class

Bidwell & Co. 231,090,582 18%
Omnibus Account
209 Southwest Oak Street
Portland, OR 97204-2714

National Financial Services Corp 92,165,990 7%
FBO Our Customers
PO Box 3752
Church Street Station
New York, NY 10008-3752

Ragen Mackenzie Inc. 272,286,405 21%
As Agent Omnibus A/C For
Exclusive Benefit of Customers
999 3rd Ave Suite 4300
Seattle, WA 98104-4081

Robertson Stephens & Co. 95,917,061 7.5%
555 California St #2600
San Francisco, CA 94104-1502
Pershing As Agent 463,765,085 36%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0022

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.

<PAGE>

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
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, 1998, after
expense reimbursement, amounted to an annualized yield of 4.66%
equivalent to an effective yield of 4.77%. Absent such
reimbursement, the annualized yield for such period would have
been 4.64%, equivalent to an effective yield of 4.75%. 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 Commission
under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.

<PAGE>

ALLIANCE MONEY RESERVES

ALLIANCE CAPITAL

ANNUAL REPORT
JUNE 30, 1998

STATEMENT OF NET ASSETS
JUNE 30, 1998 ALLIANCE MONEY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------------------------------
COMMERCIAL PAPER-47.0%
ALLIANZ OF AMERICA FINANCE CORP.
$11,300 9/09/98 (a) 5.52% $11,178,713
19,950 9/28/98 (a) 5.54 19,676,763
8,500 8/14/98 (a) 5.58 8,442,030
ASSOCIATES CORP. OF NORTH AMERICA
10,000 9/11/98 5.51 9,889,800
13,600 8/26/98 5.56 13,482,375
BAA PLC
26,797 10/06/98 5.52 26,398,440
9,351 9/08/98 5.53 9,251,887
BANKERS TRUST NEW YORK
6,000 9/15/98 5.52 5,930,080
6,000 9/23/98 5.52 5,922,720
BANQUE CAISSE D'EPARGNE
25,000 9/11/98 5.51 24,724,500
5,000 10/14/98 5.52 4,919,500
25,000 11/30/98 5.52 24,417,333
CAISSE D'AMORTISSEMENT
3,000 7/10/98 5.60 2,995,800
COMMONWEALTH BANK OF AUSTRALIA
10,200 9/28/98 5.44 10,062,821
CREGEM NORTH AMERICA, INC.
8,000 12/28/98 5.48 7,780,800
CS FIRST BOSTON
25,000 9/22/98 5.53 24,681,257
7,000 7/29/98 5.54 6,969,838
FIRST CHICAGO FINANCIAL CORP.
5,000 9/22/98 5.51 4,936,482
50,000 9/23/98 5.51 49,357,167
GE FINANCIAL ASSURANCE HOLDINGS
15,000 9/08/98 5.52 14,841,300
GENERAL ELECTRIC CAPITAL CORP.
25,000 9/15/98 5.53 24,708,139
15,000 5.62%, 11/17/98 FRN 5.62 15,000,000
GENERAL MOTORS ACCEPTANCE CORP.
30,000 9/15/98 5.52 29,650,400
20,000 9/02/98 5.53 19,806,450
GENERALE BANK
5,000 9/04/98 5.44 4,950,889
GOVERNMENT DEVELOPMENT BANK OF
PUERTO RICO
8,000 7/22/98 5.52 7,974,240
IMI FUNDING CORP. (USA)
10,000 8/05/98 5.40 9,947,500
1,081 9/04/98 5.47 1,070,324
8,000 8/28/98 5.52 7,928,853
5,000 7/20/98 5.70 4,984,958
ING AMERICA INSURANCE HL
5,000 12/21/98 5.52 4,867,367
4,100 8/04/98 5.54 4,078,548
NORWEST CORP.
10,000 8/31/98 5.54 9,906,128
SALOMON SMITH BARNEY
10,000 8/26/98 5.52 9,914,133
22,000 9/01/98 5.52 21,790,854
10,000 9/08/98 5.52 9,894,200
5,000 8/07/98 5.60 4,971,222
SPECIAL PURPOSE ACCOUNTS RECEIVABLE
COOPERATIVE CORP.
5,000 9/02/98 (a) 5.60 4,951,000
SVENSKA HANDELSBANKEN
5,000 8/28/98 5.52 4,955,533
THAMES ASSET GLOBAL SECURITIZATION
28,532 9/15/98 (a) 5.54 28,198,302
UNI FUNDING, INC.
15,000 9/11/98 5.51 14,834,700
VATTENFALL TREASURY, INC.
17,737 8/31/98 5.52 17,571,100

Total Commercial Paper
(amortized cost $547,814,446) 547,814,446

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE MONEY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------------------------------
BANK OBLIGATIONS-13.8%
ABBEY NATIONAL
$35,000 5.54%, 2/17/99 FRN 5.60% $34,987,186
BAYERISCHE LANDESBANK
10,000 5.53%, 3/23/99 FRN 5.61 9,994,301
25,000 5.63%, 10/02/98 FRN 5.63 25,000,000
DEUTSCHE BANK
28,000 5.52%, 7/01/98 FRN 5.52 28,000,000
LASALLE NATIONAL BANK
10,000 5.60%, 9/18/98 5.60 10,000,000
10,000 5.60%, 12/10/98 5.60 10,000,000
5,000 5.62%, 12/21/98 5.62 5,000,000
ROYAL BANK OF CANADA
13,000 5.71%, 9/30/98 FRN 5.71 13,000,000
SMM TRUST
15,000 5.66%, 12/14/98 FRN (a) 5.66 15,000,000
10,000 5.69%, 12/16/98 FRN (a) 5.69 10,000,000

Total Bank Obligations
(amortized cost $160,981,487) 160,981,487

CERTIFICATES OF DEPOSIT-20.5%
BANK OF MONTREAL
19,000 5.87%, 8/31/98 5.95 18,997,031
BAYERISCHE LANDESBANK
20,000 5.53%, 2/25/99 FRN 5.61 19,989,972
BAYERISCHE VEREINSBANK
20,000 5.64%, 2/25/99 5.64 20,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
20,000 5.58%, 9/23/98 5.58 20,000,000
DEUTSCHE BANK
8,000 5.67%, 2/26/99 6.02 7,998,442
10,000 5.70%, 3/05/99 5.75 9,996,758
13,000 5.95%, 10/21/98 6.33 12,998,094
DRESDNER BANK
15,000 5.51%, 1/15/99 5.67 14,985,042
HESSISCHE LANDESBANK
17,000 5.60%, 9/30/98 5.60 17,000,000
NATIONAL WESTMINSTER BANK
23,000 5.65%, 3/03/99 5.70 22,992,467
NORDEUTSCHE LANDESBANK
10,000 5.72%, 4/16/99 5.77 9,996,208
ROYAL BANK OF CANADA
5,000 5.53%, 2/12/99 5.70 4,991,870
SWISS BANK
12,000 5.66%, 3/04/99 5.71 11,996,899
TORONTO DOMINION BANK
23,000 5.58%, 9/23/98 5.58 23,000,000
25,000 5.59%, 9/30/98 5.59 25,000,000

Total Certificates of Deposit
(amortized cost $239,942,783) 239,942,783

CORPORATE OBLIGATIONS-9.8%
ALLSTATE LIFE INSURANCE FUNDING AGREEMENT
20,000 5.68%, 8/31/98 FRN (b) 5.68 20,000,000
GENERAL AMERICAN FUNDING CORP.
26,000 5.85%, 7/10/98 FRN 5.85 26,000,000
MERRILL LYNCH & CO., INC.
10,000 5.61%, 1/29/99 FRN 5.61 10,000,000
10,000 5.61%, 2/16/99 FRN 5.61 10,000,000
15,000 5.61%, 6/01/99 FRN 5.61 15,000,000
15,000 5.62%, 1/20/99 FRN 5.62 15,000,000
8,000 5.875%, 8/26/98 5.875 8,000,000
TRAVELERS LIFE FUNDING AGREEMENT
10,000 5.66%, 10/21/98 FRN (b) 5.66 10,000,000

Total Corporate Obligations
(amortized cost $114,000,000) 114,000,000

PROMISSORY NOTES-4.9%
GOLDMAN SACHS GROUP LP
27,000 5.63%, 10/13/98 (a) 5.63 27,000,000
23,000 5.66%, 11/24/98 (a) 5.66 23,000,000
7,000 5.67%, 8/07/98 (a) 5.67 7,000,000

Total Promissory Notes
(amortized cost $57,000,000) 57,000,000

ALLIANCE MONEY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS-3.4%
FEDERAL FARM CREDIT BANK
$10,000 5.41%, 8/03/98 FRN 5.43% $ 9,999,575
FEDERAL NATIONAL MORTGAGE ASSN.
20,000 5.54%, 5/21/99 FRN 5.62 19,986,223
10,000 5.65%, 11/04/98 5.74 9,997,162

Total U.S. Government & Agency
Obligations
(amortized cost $39,982,960) 39,982,960

TOTAL INVESTMENTS-99.4%
(amortized cost $1,159,721,676) $1,159,721,676
Other assets less liabilities-0.6% 6,625,262

NET ASSETS-100%
(offering and redemption price of $1.00 per
share; 1,167,535,015 shares outstanding) $1,166,346,938

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

(b) Funding agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $30,000,000, representing 2.6% of net
assets. (see Note A to the financial statements).

Glossary:
FRN - Floating Rate Note

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998 ALLIANCE MONEY RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $65,078,547

EXPENSES
Advisory fee (Note B) $ 5,687,271
Distribution assistance and administrative
service (Note C) 4,014,104
Transfer agency (Note B) 1,056,971
Registration fees 521,303
Custodian fees 208,464
Printing 109,959
Audit and legal fees 27,109
Trustees' fees 11,916
Miscellaneous 5,883
Total expenses 642,980
Less: expense reimbursement (268,438)
Net expenses 11,374,542
Net investment income 53,704,005

REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 1,898

NET INCREASE IN NET ASSETS FROM OPERATIONS $53,705,903

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE MONEY RESERVES
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997
-------------- --------------

INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $53,704,005 $40,995,145
Net realized gain on investment transactions 1,898 1,959
Net increase in net assets from operations 53,705,903 40,997,104

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (53,704,005) (40,995,145)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 155,581,838 256,174,217
Total increase 155,583,736 256,176,176

NET ASSETS
Beginning of year 1,010,763,202 754,587,026
End of year $1,166,346,938 $1,010,763,202

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 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 of which is considered to be a separate entity for financial
reporting and tax purposes. 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 financial
statements have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Portfolio.

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% on the first $1.25 billion of average daily net
assets; .49% on the next $.25 billion; .48% on the next $.25 billion; .47% on
the next $.25 billion; .46% on the next $1 billion; and .45% in excess of $3
billion. The Adviser has agreed, pursuant to the advisory agreement, 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. For
the year ended June 30, 1998, the reimbursement amounted to $268,438.

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 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, 1998, the distribution fee amounted to $2,843,635. 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, 1998, such payments by the Portfolio amounted to
$1,170,468, of which $137,000 was paid to the Adviser.

ALLIANCE MONEY RESERVES
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1998, the
Portfolio had a capital loss carryforward of $1,188,077, of which $570,762
expires in 1999, $72,812 expires in 2001, $64,655 expires in 2002 and $479,848
expires in the year 2003.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1998, capital paid-in aggregated $1,167,535,015. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1998 1997
-------------- -------------
Shares sold 3,468,843,260 2,835,564,705
Shares issued on reinvestments of dividends 53,704,005 40,995,145
Shares redeemed (3,366,965,427) (2,620,385,633)
Net increase 155,581,838 256,174,217

FINANCIAL HIGHLIGHTS ALLIANCE MONEY RESERVES
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<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) .047 .045 .047 .045 .025

LESS: DIVIDENDS
Dividends from net investment income (.047) (.045) (.047) (.045) (.025)
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) 4.83% 4.64% 4.81% 4.50% 2.57%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $1,166 $1,011 $755 $2,510 $1,795
Ratios 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 1.02% 1.06% 1.00% 1.04% 1.09%
Net investment income (a) 4.72% 4.55% 4.80% 4.53% 2.55%
</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.

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, 1998 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, 1998, by correspondence with the custodian.

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, 1998, 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 24, 1998

<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

<PAGE>

PART C
OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits for Each Portfolio of
the Fund

(a) Financial Statements

Included in the Prospectuses:
Financial Highlights

Included in the Statements of Additional Information:

Statement of Net Assets, June 30, 1998
Statement of Operations, June 30, 1998
Statement of Changes in Net Assets for the years ended
June 30, 1997 and June 30, 1998
Notes to Financial Highlights, June 30, 1998
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 of the Registrant -
Incorporated by reference to Exhibit No. 1 to Post-
Effective Amendment No. 31 of Registrant's
Registration Statement on Form N-1A (File Nos. 2-
61564 and 811-2835) filed with the Securities and
Exchange Commission on October 28, 1997.

(2) By-Laws of the Registrant - Incorporated by
reference to Exhibit No. 2 to Post-Effective
Amendment No. 31 of Registrant's Registration
Statement on Form N-1A (File Nos. 2-61564 and 811-
2835) filed with the Securities and Exchange
Commission on October 30, 1997.

(3) Not applicable.

(4) Not applicable.

(5) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Incorporated by
reference to Exhibit No. 5 to Post-Effective
Amendment No. 31 of Registrant's Registration
Statement on Form N-1A (File Nos. 2-61564 and 811-

C-1

<PAGE>

2835) filed with the Securities and Exchange
Commission on October 30, 1997.

(6) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc., as
amended January 1, 1998 - Filed herewith.

(7) Not applicable.

(8) Custodian Contract between the Registrant and State
Street Bank and Trust Company - Incorporated by
reference to Exhibit No. 8 to Post-Effective
Amendment No. 31 of Registrant's Registration
Statement on Form N-1A (File Nos. 2-61564 and 811-
2835) filed with the Securities and Exchange
Commission on October 30, 1997.

(9) Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc. - Incorporated by
reference to Exhibit No. 9 to Post-Effective
Amendment No. 31 of Registrant's Registration
Statement on Form N-1A (File Nos. 2-61564 and 811-
2835) filed with the Securities and Exchange
Commission on October 30, 1997.

(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) Not Applicable.

(17) Financial Data Schedule - Filed herewith.

Other Exhibits:

Powers of Attorney of: John D. Carifa, Sam Y.
Cross, Charles H.P. Duell, William H. Foulk, Jr.,
David K. Storrs, Shelby White, Dave H. Williams -
Filed herewith.

ITEM 25. Persons Controlled by or Under Common Control with
Registrant.

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<PAGE>

None.

ITEM 26. Number of Holders of Securities

Not Applicable

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
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

C-3

<PAGE>

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.

(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

C-4

<PAGE>

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
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

C-5

<PAGE>

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.

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

C-6

<PAGE>

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
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

C-7

<PAGE>

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.

C-8

<PAGE>

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:

AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China 97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance Institutional Reserves, Inc.
Alliance International Fund
Alliance International Premier Growth
Fund, Inc.
Alliance Limited Maturity Government
Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios

(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.

C-9

<PAGE>

Positions and Positions and
Offices With Offices with
Name Underwriter Registrant
Michael J. Laughlin Director & Chairman

John D. Carifa Director

Robert L. Errico Director & President

Geoffrey L. Hyde Director & Senior Vice
President

Dave H. Williams Director

David D. Conine Executive Vice President

Richard K. Saccullo Executive Vice President

Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
& Secretary

Richard A. Davies Senior Vice President &
Managing Director

Robert H. Joseph, Jr. Senior Vice President &
Chief Financial Officer

Anne S. Drennan Senior Vice President &
Treasurer

Karen J. Bullot Senior Vice President

James S. Comforti Senior Vice President

James L. Cronin Senior Vice President

Daniel J. Dart Senior Vice President

Byron M. Davis Senior Vice President

Mark J. Dunbar Senior Vice President

Donald N. Fritts Senior Vice President

Bradley F. Hanson Senior Vice President

Richard E. Khaleel Senior Vice President

Stephen R. Laut Senior Vice President

C-10

<PAGE>

Susan L. Matteson-King Senior Vice President

Daniel D. McGinley Senior Vice President

Ryne A. Nishimi Senior Vice President

Antonios G. Poleondakis Senior Vice President

Robert E. Powers Senior Vice President

Raymond S. Sclafani Senior Vice President

Gregory K. Shannahan Senior Vice President

Joseph F. Sumanski Senior Vice President

Peter J. Szabo Senior Vice President

Nicholas K. Willett Senior Vice President

Richard A. Winge Senior Vice President

Gerard J. Friscia Vice President & Controller

Jamie A. Atkinson Vice President

Benji A. Baer Vice President

Kenneth F. Barkoff Vice President

Casimir F. Bolanowski Vice President

Michael E. Brannan Vice President

Timothy W. Call Vice President

Kevin T. Cannon Vice President

John R. Carl Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Richard W. Dabney Vice President

Stephen J. Demetrovits Vice President

John F. Dolan Vice President

John C. Endahl Vice President

C-11

<PAGE>

Sohaila S. Farsheed Vice President

Shawn C. Gage Vice President

Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel

Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer

Joseph W. Gibson Vice President

John Grambone Vice President

George C. Grant Vice President

Charles M. Greenberg Vice President

Alan Halfenger Vice President

William B. Hanigan Vice President

Scott F. Heyer Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Scott Hutton Vice President

Richard D. Keppler Vice President

Gwenn M. Kessler Vice President

Donna M. Lamback Vice President

Henry M. Lesmeister Vice President

James M. Liptrot Vice President

James P. Luisi Vice President

Jerry W. Lynn Vice President

Christopher J. MacDonald Vice President

Michael F. Mahoney Vice President

C-12

<PAGE>

Shawn P. McClain Vice President

Jeffrey P. Mellas Vice President

Thomas F. Monnerat Vice President

Christopher W. Moore Vice President

Timothy S. Mulloy Vice President

Joanna D. Murray Vice President

Nicole Nolan-Koester Vice President

John C. OConnell Vice President

John J. OConnor Vice President

James J. Posch Vice President

Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel

Bruce W. Reitz Vice President

Karen C. Satterberg Vice President

John P. Schmidt Vice President

Robert C. Schultz Vice President

Richard J. Sidell Vice President

Teris A. Sinclair Vice President

Scott C. Sipple Vice President

Elizabeth Smith Vice President

Martine H. Stansbery, Jr. Vice President

Andrew D. Strauss Vice President

Michael J. Tobin Vice President

Joseph T. Tocyloski Vice President

Thomas J. Vaughn Vice President

Martha D. Volcker Vice President

C-13

<PAGE>

Patrick E. Walsh Vice President

Mark E. Westmoreland Vice President

William C. White Vice President

David E. Willis Vice President

Emilie D. Wrapp Vice President and Assistant
Assistant General Secretary
Counsel

Patrick Look Assistant Vice
President &
Assistant Treasurer

Michael W. Alexander Assistant Vice
President

Richard J. Appaluccio Assistant Vice
President

Charles M. Barrett Assistant Vice
President

Robert F. Brendli Assistant Vice
President

Maria L. Carreras Assistant Vice
President

John P. Chase Assistant Vice
President

Russell R. Corby Assistant Vice
President

Jean A. Cronin Assistant Vice
President

John W. Cronin Assistant Vice
President

Terri J. Daly Assistant Vice
President

Ralph A. DiMeglio Assistant Vice
President

Faith C. Deutsch Assistant Vice
President

C-14

<PAGE>

John E. English Assistant Vice
President

Duff C. Ferguson Assistant Vice
President

James J. Hill Assistant Vice
President

Theresa Iosca Assistant Vice
President

Erik A. Jorgensen Assistant Vice
President

Eric G. Kalender Assistant Vice
President

Edward W. Kelly Assistant Vice
President

Michael Laino Assistant Vice
President

Nicholas J. Lapi Assistant Vice
President

Kristine J. Luisi Assistant Vice
President

Kathryn Austin Masters Assistant Vice
President

Richard F. Meier Assistant Vice
President

Mary K. Moore Assistant Vice
President

Richard J. Olszewski Assistant Vice
President

Catherine N. Peterson Assistant Vice
President

Rizwan A. Raja Assistant Vice
President

Carol H. Rappa Assistant Vice
President

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<PAGE>

Clara Sierra Assistant Vice
President

Gayle S. Stamer Assistant Vice
President

Eileen Stauber Assistant Vice
President

Vincent T. Strangio Assistant Vice
President

Marie R. Vogel Assistant Vice
President

Wesley S. Williams Assistant Vice
President

Matthew Witschel Assistant Vice
President

Christopher J. Zingaro Assistant Vice
President

Mark R. Manley Assistant Secretary

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
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

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<PAGE>

Registrant's latest report to shareholders, upon request
and without charge.

C-17

<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 28th day of
October 1998.

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 28, 1998
_______________________
Ronald M. Whitehill

2) Principal Financial and
Accounting Officer

/s/ Mark D. Gersten Treasurer and October 28, 1998
___________________ Chief Financial
Mark D. Gersten Officer

3) All of the Trustees
___________________

John D. Carifa David K. Stoors
Sam Y. Cross Shelby White
Charles H.P. Duell Dave H. Williams
William H. Foulk, Jr.

by/s/ Edmund P. Bergan, Jr October 28, 1998
__________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.

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<PAGE>

C-19

<PAGE>

Index to Exhibits

Page
(6) Amended Distribution Services Agreement

(11) Consent of Independent Auditors

(17) Financial Data Schedule

Powers of Attorney

C-20
00250053.AB3

<PAGE>

DISTRIBUTION SERVICES AGREEMENT

ALLIANCE CAPITAL RESERVES
1345 Avenue of the Americas
New York, New York 10105

July 22, 1992, as
amended as of January 1, 1998

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 Statement of
Additional Information) on any date requested by you and at such

<PAGE>

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 you 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. You will use the
entire amount so received from the Trust (i) 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 distribution of prospectuses and sales
literature or other promotional activities.

<PAGE>

(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 of 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 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) You are not 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 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, 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

<PAGE>

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
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

<PAGE>

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.

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

<PAGE>

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,

(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

<PAGE>

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 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

<PAGE>

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.

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 January 1, 1998

Alliance Fund Distributors, Inc.

<PAGE>

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.AK7

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use of our reports dated
July 24, 1998 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. 32 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."

/s/ McGladrey & Pullen, LLP

New York, New York
October 26, 1998

00250122.AF0

<PAGE>

[ARTICLE] 6
[CIK] 0000275017
[NAME] ALLIANCE CAPITAL RESERVES
[SERIES]
[NUMBER] 01
[NAME] ALLIANCE CAPITAL RESERVES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] JUN-30-1998
[PERIOD-START] JUL-01-1997
[PERIOD-END] JUN-30-1998
[INVESTMENTS-AT-COST] 7,988,271,244
[INVESTMENTS-AT-VALUE] 7,988,271,244
[RECEIVABLES] 36,078,213
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 8,024,349,457
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 9,782,465
[TOTAL-LIABILITIES] 9,782,465
[SENIOR-EQUITY] 8,015,285
[PAID-IN-CAPITAL-COMMON] 8,007,269,843
[SHARES-COMMON-STOCK] 8,015,285,129
[SHARES-COMMON-PRIOR] 5,733,513,484
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (718,136)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 8,014,566,992
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 383,932,689
[OTHER-INCOME] 0
[EXPENSES-NET] (67,201,849)
[NET-INVESTMENT-INCOME] 316,730,840
[REALIZED-GAINS-CURRENT] (10,016)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 316,720,824
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (316,730,840)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 24,542,949,413
[NUMBER-OF-SHARES-REDEEMED] (22,577,908,608)
[SHARES-REINVESTED] 316,730,840
[NET-CHANGE-IN-ASSETS] 2,281,761,629
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (708,121)
[OVERDISTRIB-NII-PRIOR] 0

<PAGE>

[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 31,191,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 67,202,000
[AVERAGE-NET-ASSETS] 6,720,184,888
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.047
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] (0.047)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

00250122.AK6

<PAGE>

[ARTICLE] 6
[CIK] 0000275017
[NAME] ALLIANCE CAPITAL RESERVES
[SERIES]
[NUMBER] 02
[NAME] ALLIANCE MONEY RESERVES
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] JUN-30-1998
[PERIOD-START] JUL-01-1997
[PERIOD-END] JUN-30-1998
[INVESTMENTS-AT-COST] 1,159,721,676
[INVESTMENTS-AT-VALUE] 1,159,721,676
[RECEIVABLES] 6,928,905
[ASSETS-OTHER] 839,220
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,167,489,801
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,142,863
[TOTAL-LIABILITIES] 1,142,863
[SENIOR-EQUITY] 1,167,535
[PAID-IN-CAPITAL-COMMON] 1,166,367,480
[SHARES-COMMON-STOCK] 1,167,535,015
[SHARES-COMMON-PRIOR] 1,011,953,177
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,188,077)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 1,166,346,938
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 65,078,547
[OTHER-INCOME] 0
[EXPENSES-NET] (11,374,542)
[NET-INVESTMENT-INCOME] 53,704,005
[REALIZED-GAINS-CURRENT] 1,898
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 53,705,903
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (53,704,005)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,468,843,260
[NUMBER-OF-SHARES-REDEEMED] (3,366,965,427)
[SHARES-REINVESTED] 53,704,005
[NET-CHANGE-IN-ASSETS] 155,583,736
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (1,189,975)
[OVERDISTRIB-NII-PRIOR] 0

<PAGE>

[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5,687,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 11,643,000
[AVERAGE-NET-ASSETS] 1,137,454,194
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.047
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] (0.047)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

00250053.AB2

<PAGE>

POWER OF ATTORNEY

KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all capacities, solely for the purpose of
signing the respective Registration Statements, and any
amendments thereto, on Form N-1A of AFD Exchange Reserves,
Alliance Bond Fund, Inc., Alliance Balanced Shares, Inc.,
Alliance Capital Reserves, Alliance Global Dollar Government
Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Government Reserves,
Alliance Greater China '97 Fund, Inc., Alliance Growth and Income
Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance Institutional Funds, Inc., Alliance
Institutional Reserves, Inc., Alliance International Premier
Growth Fund, Inc., Alliance Limited Maturity Government Fund,
Inc., Alliance Money Market Fund, Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust, Inc.,
Alliance Municipal Income Fund, Inc., Alliance Municipal Income
Fund II, Alliance Municipal Trust, Alliance 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 Select Investor Series, 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., The Alliance Fund, Inc., The Alliance
Portfolios and The Hudson River Trust, 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 8, 1998

<PAGE>

POWER OF ATTORNEY

/s/ Sam Y. Cross
________________________
Sam Y. Cross

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY

/s/ Charles H.P. Duell
___________________________
Charles H.P. Duell

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY

/s/ David K. Storrs
___________________________
David K. Storrs

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY

/s/ Shelby White
__________________________
Shelby White

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY

/s/ Dave H. Williams
_________________________
Dave H. Williams

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY

KNOW ALL PERSONS 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., Domenick Pugliese, Andrew L. Gangolf 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 in any and all capacities, solely for the purpose of
signing the respective Registration Statements, and any
amendments thereto, on Form N-1A of AFD Exchange Reserves,
Alliance All-Asia Investment Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital
Reserves, Alliance Global Dollar Government Fund, Inc., Alliance
Global Environment Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Global Strategic Income Trust, Inc., Alliance
Government Reserves, Alliance Greater China '97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield Fund,
Inc., Alliance Income Builder Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Fund, Alliance International Premier Growth Fund,
Inc., Alliance Limited Maturity Government Fund, Inc., Alliance
Money Market Fund, Alliance Mortgage Securities Income Fund,
Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund II,
Alliance Municipal Trust, Alliance New Europe Fund, Inc.,
Alliance North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance
Real Estate Investment Fund, Inc., Alliance/Regent Sector
Opportunity Fund, Inc., Alliance Select Investor Series, 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., The Alliance Fund,
Inc., The Alliance Portfolios, and The Hudson River Trust, 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 8, 1998

7
00250122.AK9