<PAGE>
As filed with the Securities and Exchange
Commission on August 31, 1999
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. 33 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF l940
Amendment No. 31 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)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 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, 1999 was filed on
September __, 1999.
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ALLIANCE CAPITAL RESERVES
PROSPECTUS
OCTOBER ____, 1999
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
Prospectus.
Any representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
RISK/RETURN SUMMARY 2
FEES AND EXPENSES OF THE FUND 4
OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS 5
Investment Objectives and Strategies 5
Risk Considerations 6
MANAGEMENT OF THE FUND 11
PURCHASE AND SALE OF SHARES 12
How The Fund Values Its Shares 12
How To Buy Shares 12
How To Sell Shares 13
Other 13
DIVIDENDS, DISTRIBUTIONS, AND TAXES 14
DISTRIBUTION ARRANGEMENTS 14
GENERAL INFORMATION 14
FINANCIAL HIGHLIGHTS 15
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The Fund's investment adviser is Alliance Capital Management
L.P., a global investment manager providing diversified services
to institutions and individuals through a broad line of
investments including more than 100 mutual funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the
Fund. You will find additional information about the Fund,
including a detailed description of the risks of an investment in
the Fund, after this summary.
OBJECTIVES: The investment objectives of the Fund 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.
PRINCIPAL INVESTMENT STRATEGY: The Fund is a "money market fund"
that seeks to maintain a stable net asset value of $1.00 per
share. The Fund pursues its objectives by maintaining a
portfolio of high-quality, U.S. dollar-denominated money market
securities.
PRINCIPAL RISKS: The principal risks of investing in the Fund
are:
-- INTEREST RATE RISK. This is the risk that changes in
interest rates will adversely affect the yield or value
of the Fund's investments in debt securities.
-- CREDIT RISK. This is the risk that the issuer or
guarantor of a debt security will be unable or unwilling
to make timely interest or principal payments, or to
otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit
rating. Credit risk includes the possibility that any
of the Fund's investments will have its credit ratings
downgraded.
ANOTHER IMPORTANT THING FOR YOU TO NOTE:
An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
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PERFORMANCE AND BAR CHART INFORMATION
The performance table shows the Fund's average annual total
returns and the bar chart shows the Fund's annual total returns.
The table and the bar chart provide an indication of the
historical risk of an investment in the Fund by showing:
-- the Fund's average annual total returns for one, five,
and 10 years; and
-- changes in the Fund's performance from year to year over
10 years.
The Fund's past performance does not necessarily indicate how it
will perform in the future.
You may obtain current seven-day yield information for the Fund
by calling (800) 221-9513 or your financial intermediary.
PERFORMANCE TABLE
[Insert Table]
BAR CHART
[Insert Chart]
During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
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FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS) AND EXAMPLE
The example is to help you compare the cost of investing in the
Fund with the cost of investing in other funds. It assumes that
you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. It
also assumes that your investment has a 5% return each year, the
Fund's operating expenses stay the same, and all dividends and
distributions are reinvested. Your actual costs may be higher or
lower.
ANNUAL FUND OPERATING EXPENSES EXAMPLE
Management Fees 1 Year
Rule 12b-1 Fees 3 Years
Other Expenses 5 Years
Total Operating Expenses 10 Years
Waiver and/or Expense Reimbursement*
Net Expenses
_______________
* Reflects Alliance's contractual waiver of a portion of its
advisory fee and/or reimbursement of a portion of the
Fund's operating expenses so that the Fund's expense
ratio does not exceed 1.00%.
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OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS
This section of the Prospectus provides a more complete
description of the investment objectives and principal strategies
and risks of the Fund.
Please note:
-- Additional descriptions of the Fund's strategies and
investments, as well as other strategies and investments
not described below, may be found in the Fund's
Statement of Additional Information or SAI.
-- There can be no assurance that the Fund will achieve its
investment objectives.
INVESTMENT OBJECTIVES AND STRATEGIES
As a money market fund, the Fund must meet the requirements of
Securities and Exchange Commission Rule 2a-7. The Rule imposes
strict requirements on the investment quality, maturity and
diversification of the Fund's investments. Under that Rule, the
Fund's investments must each have a remaining maturity of no more
than 397 days and the Fund must maintain an average weighted
maturity that does not exceed 90 days.
The Fund's investments may include:
-- marketable obligations issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities;
-- certificates of deposit, bankers' acceptances, and
interest-bearing savings deposits that are issued or
guaranteed by (i) banks or savings and loans
associations that are members of the Federal Deposit
Insurance Corporation and have total assets of more than
$1 billion, or (ii) foreign branches of U.S. banks and
U.S. branches of foreign banks that have total assets of
more than $1 billion (or, if not rated, determined by
Alliance to be of comparable quality);
-- high-quality commercial paper (or, if not rated,
determined by Alliance to be of comparable quality)
issued by U.S. or foreign companies and participation
interests in loans made to companies that issue such
commercial paper;
-- variable rate obligations;
-- asset-backed securities;
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-- restricted securities (I.E., securities subject to legal
or contractual restrictions on resale); and
-- repurchase agreements that are fully collateralized.
The Fund does not invest more than 25% of its assets in
securities of issuers whose principal business activities are in
the same industry. This limitation does not apply to investments
in securities issued or guaranteed by the U.S. Government, its
agencies, or instrumentalities, or to bank obligations, including
certificates of deposit, bankers' acceptances, and interest
bearing savings deposits, issued by U.S. banks (including their
foreign branches) and U.S. branches of foreign banks subject to
the same regulation as U.S. banks. For the purposes of this
investment policy, neither all financial companies as a group nor
all utility companies as a group are considered a single
industry.
RISK CONSIDERATIONS
The Fund's principal risks are interest rate risk and credit
risk. Because the Fund invests in short-term securities, a
decline in interest rates will affect the Fund's yields as these
securities mature or are sold and the Fund purchases new short-
term securities with lower yields. Generally, an increase in
interest rates causes the value of a debt instrument to decrease.
The change in value for shorter-term securities is usually
smaller than for securities with longer maturities. Because the
Fund invests in securities with short maturities and seeks to
maintain a stable net asset value of $1.00 per share, it is
possible, though unlikely, that an increase in interest rates
would change the value of your investment.
Credit risk is the possibility that a security's credit rating
will be downgraded or that the issuer of the security will
default (fail to make scheduled interest and principal payments).
The Fund invests in highly-rated securities to minimize credit
risk.
The Fund may invest up to 10% of its net assets in illiquid
securities. Investments in illiquid securities may be subject to
liquidity risk, which is the risk that, under certain
circumstances, particular investments may be difficult to sell at
an advantageous price. Illiquid restricted securities also are
subject to the risk that the Fund may be unable to sell the
security due to legal or contractual restrictions on resale.
The Fund's investments in U.S. dollar-denominated obligations (or
credit and liquidity enhancements) of foreign branches of U.S.
banks, U.S. branches of foreign banks, and commercial paper of
foreign companies may be subject to foreign risk. Foreign
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securities issuers are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting, and auditing
standards of foreign countries differ, in some cases,
significantly from U.S. standards. Foreign risk includes
nationalization, expropriation, or confiscatory taxation,
political changes, or diplomatic developments that could
adversely affect a Fund's investments.
The Fund also is subject to management risk because it is an
actively managed portfolio. Alliance will apply its investment
techniques and risk analyses in making investment decisions for
the Fund, but there is no guarantee that its techniques will
produce the intended result.
YEAR 2000: Many computer systems and applications that process
transactions use two-digit date fields for the year of a
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 inoperability at or after the year
2000. The Fund and its major service providers, including
Alliance, utilize a number of computer systems and applications
that have been either developed internally or licensed from
third-party suppliers. In addition, the Fund and its major
service providers, including Alliance, are dependent on third-
party suppliers for certain systems applications and for
electronic receipt of information critical to their business.
Should any of the computer systems employed by the Fund or its
major service providers, including Alliance, fail to process Year
2000 related information properly, that could have a significant
negative impact on the Fund's operations and the services that
are provided to the Fund's shareholders. To the extent that the
operations of issuers of securities held by the Fund are impaired
by the Year 2000 problem, the value of the Fund's shares may be
materially affected. In addition, for the Fund's investments in
foreign markets, it is possible that foreign companies and
markets will not be as prepared for Year 2000 as domestic
companies and markets.
The Year 2000 issue is a high priority for the Fund and Alliance.
During 1997, Alliance began a formal Year 2000 initiative which
established a structured and coordinated process to deal with the
Year 2000 issue. As part of its initiative, Alliance established
a Year 2000 project office to manage the Year 2000 initiative,
focusing on both information technology and non-information
technology systems. The Year 2000 project office meets
periodically with the audit committee of the board of directors
of Alliance Capital Management Corporation, Alliance's general
partner, and with Alliance's executive management to review the
status of the Year 2000 efforts. Alliance has also retained the
services of a number of consulting firms which have expertise in
8
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advising and assisting with regard to Year 2000 issues. Alliance
reports that by June 30, 1998 it had completed its inventory and
assessment of its domestic and international computer systems and
applications, identified mission critical systems (those systems
where loss of their function would result in immediate stoppage
or significant impairment to core business units) and nonmission
critical systems and determined which of these systems were not
Year 2000 compliant. All third-party suppliers of mission
critical computer systems and nonmission critical systems
applications have been contacted to verify whether their systems
and applications will be Year 2000 compliant and their responses
are being evaluated. Substantially all of those contacted have
responded and approximately 90% have informed Alliance that their
systems and applications are or will be Year 2000 compliant. All
mission and nonmission critical systems supplied by third parties
have been tested with the exception of those third parties not
able to comply with Alliance's testing schedule. Alliance
reports that it expects that all testing will be completed before
the end of 1999.
Alliance has remediated, replaced or retired all of its non-
compliant mission critical systems and applications that can
affect the Fund. Nonmission critical systems have been
remediated. After each system has been remediated, it is tested
with 19XX dates to determine if it still performs its intended
business function correctly. Next, each system undergoes a
simulation test using dates occurring after December 31, 1999.
Inclusive of the replacement and retirement of some of its
systems, Alliance has completed these testing phases for 98% of
mission critical systems and 100% of nonmission critical systems.
Integrated systems tests were conducted to verify that the
systems would continue to work together. Full integration
testing of all mission critical and nonmission critical systems
is completed. Testing of interfaces with third-party suppliers
has begun and will continue throughout 1999. Alliance reports
that it has completed an inventory of its facilities and related
technology applications and has begun to evaluate and test these
systems. Alliance reports that it anticipates that these systems
will be fully operable in the year 2000. Alliance has deferred
certain other planned information technology projects until after
the year 2000 initiative is completed. Such delay is not
expected to have a material adverse effect on Alliance's
financial condition or results of operations. Alliance, with the
assistance of a consulting firm, is developing Year 2000 specific
contingency plans with emphasis on mission critical functions.
These plans seek to provide alternative methods of processing in
the event of a failure that is outside Alliance's control.
The estimated current cost to Alliance of the Year 2000
initiative ranges from approximately $40 million to $45 million.
These costs consist principally of modification and testing and
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costs to develop formal Year 2000 specific contingency plans.
These costs, which will generally be expensed as incurred, will
be funded from Alliance's operations and the issuance of debt.
Through June 30, 1999, Alliance had incurred approximately $36.0
million of costs related to the Year 2000 initiative. At this
time, management of Alliance believes that the costs associated
with resolving the Year 2000 issue will not have a material
adverse effect on Alliance's results of operations, liquidity or
capital resources.
There are many risks associated with Year 2000 issues, including
the risks that the computer systems and applications used by the
Fund and its major service providers, will not operate as
intended and that the systems and applications of third-party
suppliers to the Fund and its service providers will not be Year
2000 compliant. Likewise there can be no assurance the
compliance schedules outlined above will be met or that the
actual cost incurred will not exceed cost estimates. Should the
significant computer systems and applications used by the Fund or
its major service providers, or the systems of their important
third-party suppliers, be unable to process date-sensitive
information accurately after 1999, the Fund and its service
providers may be unable to conduct their normal business
operations and to provide shareholders with required services.
In addition, the Fund and its service providers may incur
unanticipated expenses, regulatory actions and legal liabilities.
The Fund and Alliance cannot determine which risks, if any, are
most reasonably likely to occur or the effects of any particular
failure to be Year 2000 compliant. Certain statements provided
by Alliance in this section entitled "Year 2000", as such
statements relate to Alliance, are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. To the fullest extent permitted by law, the
foregoing Year 2000 discussion is a "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
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MANAGEMENT OF THE FUND
The Fund's investment adviser is Alliance Capital Management
L.P., 1345 Avenue of the Americas, New York, New York 10105.
Alliance is a leading international investment adviser
supervising client accounts with assets as of June 30, 1999
totaling more than $321 billion (of which more than $140 billion
represented assets of investment companies). As of June 30,
1999, Alliance managed retirement assets for many of the largest
public and private employee benefit plans (including 29 of the
nation's FORTUNE 100 companies), for public employee retirement
funds in 32 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide.
The 54 registered investment companies managed by Alliance,
comprising 120 separate portfolios, currently have more than 4.5
million shareholder accounts.
Alliance provides investment advisory services and order
placement facilities for the Fund. For the fiscal year ended June
30, 1999, the Fund paid Alliance ____% as a percentage of average
daily net assets, net of any waivers. (See the "Annual Fund
Operating Expenses" at the beginning of the Prospectus for more
information about fee waivers.)
Alliance makes significant payments from its own resources, which
include the management fees paid by the Fund, to compensate
broker-dealers, depository institutions, or other persons for
providing distribution assistance and administrative services and
to otherwise promote the sale of Fund shares, including paying
for the preparation, printing, and distribution of prospectuses
and sales literature or other promotional activities.
11
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PURCHASE AND SALE OF SHARES
HOW THE FUND VALUES ITS SHARES
The Fund's net asset value or NAV is expected to be constant at
$1.00 per share, although this price is not guaranteed. The NAV
is calculated at 12:00 Noon and 4:00 p.m., Eastern time, on each
Fund business day (I.E., each weekday exclusive of days the New
York Stock Exchange or the banks in Massachusetts are closed).
To calculate NAV, the Fund's assets are valued and totaled,
liabilities subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. The Fund values its
securities at their amortized cost. This 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 investment.
HOW TO BUY SHARES
-- INITIAL INVESTMENT
You may purchase the Fund's shares by instructing your Account
Executive to invest in the Fund in connection with your brokerage
account.
You also may purchase the Fund's shares directly from Alliance
Fund Services, Inc., or AFS. To obtain an Application Form,
please telephone AFS toll-free at (800) 237-5822. In addition,
you may obtain information about the Form, purchasing shares, or
other Fund procedures by calling this number.
- Minimum Investment Amounts
-- Initial $1,000
-- Subsequent $100
-- Minimum Maintenance Amount $500
These minimums do not apply to shareholder accounts maintained
through financial intermediaries, which may maintain their own
minimums.
-- SUBSEQUENT INVESTMENTS
- By Check:
Mail or deliver your check or negotiable draft made
payable to your brokerage firm to your Account
Executive, who will deposit it into the Fund.
Please indicate your brokerage account number.
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- By Sweep:
Your brokerage firm may offer an automatic "sweep"
for the Fund in the operation of brokerage cash
accounts for its customers. Contact your Account
Executive to determine if a sweep is available and
what the sweep requirements are.
HOW TO SELL SHARES
You may "redeem" your shares (I.E., sell your shares) on any Fund
business day by contacting your Account Executive. If you do not
maintain your shares through a financial intermediary and
recently purchased shares by check or electronic funds transfer,
you cannot redeem your investment until the Fund is reasonably
satisfied the check or electric funds transfer has cleared (which
may take up to 15 days).
You also may redeem your shares:
- By Sweep:
If your brokerage firm offers an automatic sweep
arrangement, the sweep will automatically transfer from
your Fund account sufficient amounts to cover a debit
balance that occurs in your brokerage account for any
reason.
- By Checkwriting:
With this service, you may write checks made payable to
any payee. First, you must fill out a signature card,
which you may obtain from your Account Executive. There
is a charge for check reorders. The checkwriting
service enables you to receive the daily dividends
declared on the shares to be redeemed until the day that
your check is presented for payment. You cannot write
checks for more than the principal balance (not
including any accrued dividends) in your account.
OTHER
The Fund has two transaction times each Fund business day, 12:00
Noon and 4:00 p.m., Eastern time. Investments receive the full
dividend for a day if Federal funds or bank wire monies are
received by State Street Bank before 4:00 p.m., Eastern time, on
that day.
Redemption proceeds are normally wired the same business day if a
redemption request is received prior to 12:00 p.m., Eastern time.
Redemption proceeds are wired or mailed the same day or the next
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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. Shares do not
earn dividends on the day a redemption is effected.
The Fund offers a variety of shareholder services. For more
information about these services, telephone AFS at (800) 221-
5672.
A transaction, service, administrative or other similar fee may
be charged by your financial broker-dealer, agent, financial
representative or other financial intermediary with respect to
the purchase, sale or exchange of shares made through these
financial intermediaries. These financial intermediaries may
also impose requirements with respect to the purchase, sale or
exchange of shares that are different from, or in addition to,
those imposed by the Fund.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund's net income is calculated at 4:00 p.m., Eastern time,
each business day and paid as dividends to shareholders. The
dividends are automatically invested in additional shares in your
account. These additional shares are entitled to dividends on
following days resulting in compounding growth of income. The
Fund expects that its distributions will primarily consist of net
income, or, if any, short-term capital gains as opposed to long-
term capital gains. For Federal income tax purposes, the Fund's
dividend distributions of net income (or short-term capital
gains) will be taxable to you as ordinary income. Any capital
gains distributions may be taxable to you as capital gains. The
Fund's distributions also may 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 of its
distributions for the year.
DISTRIBUTION ARRANGEMENTS
The Fund has adopted a plan under Securities and Exchange
Commission Rule 12b-1 that allows it to pay asset-based sales
charges or distribution and service fees in connection with the
distribution of its shares. The amount of these fees is .25% as
a percentage of aggregate average daily net assets. Because
these fees are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales
fees.
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GENERAL INFORMATION
During drastic economic or market developments, you might have
difficulty in reaching AFS by telephone, in which event you
should issue written instructions to AFS. AFS is not responsible
for the authenticity of telephone requests to purchase or sell
shares. AFS will employ reasonable procedures to verify that
telephone requests are genuine and could be liable for losses
resulting from unauthorized transactions if it failed to do so.
Dealers and agents may charge a commission for handling telephone
requests. The telephone service may be suspended or terminated
at any time without notice.
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FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
the Fund's financial performance for the past five years.
Certain information reflects financial information for a single
Fund share. The total return in the table represents the rate
that an investor would have earned (or lost) on an investment in
the Fund (assuming investment of all dividends and
distributions). The information has been audited by McGladrey &
Pullen LLP, the Fund's independent auditors, whose report, along
with the Fund's financial statements, appears in the SAI, which
is available upon request.
Year Ended June 30
----------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value,
beginning of period
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)
Net gains or losses on securities
Total from investment operations
LESS: DISTRIBUTIONS
Dividends
Distributions
Total distributions
Net asset value, end of period
TOTAL RETURN
Total investment return based
on net asset value (b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements
Expenses, before waivers
and reimbursements
Net investment income (a)
- ------------------------------------------------------------------------------
(a) Net of expenses reimbursed or waived by Alliance.
(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.
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For more information about the Fund, the following documents are
available upon request:
- -- ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Fund's annual and semi-annual reports to shareholders contain
additional information on the Fund's investments.
- -- STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Fund has an SAI, which contains more detailed information
about the Fund, including its operations and investment policies.
The Fund's SAI is incorporated by reference into (and is legally
part of) this Prospectus.
You may request a free copy of a current annual/semi-annual
report or the SAI, or make inquiries concerning the Fund, by
contacting your broker or other financial intermediary, or by
contacting Alliance:
BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096
BY PHONE: For Information: (800) 824-1916
For Literature: (800) 824-1916
Or you may view or obtain these documents from the Securities and
Exchange Commission:
IN PERSON: at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C.
BY PHONE: (800) SEC-0330 (for information)
BY MAIL: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET: www.sec.gov
You also may find more information about Alliance on the Internet
at: www.Alliancecapital.com.
File No. 811-2835
17
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(LOGO) ALLIANCE CAPITAL RESERVES
________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
October , 1999
________________________________________________________________
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 , 1999. 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
2
<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 and funding agreements, 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
3
<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.
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
____________________
1. As used throughout the Prospectus and Statement of Additional
Information, the term assets shall refer to the Funds total
assets.
4
<PAGE>
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.
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.
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
5
<PAGE>
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.
In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Commission
6
<PAGE>
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
7
<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.
8
<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.
9
<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
____________________
2. Which 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 first
tier (as defined in Rule 2a-7) securities of any one issuer
except that under Rule 2a-7, a Fund may invest up to 25% of
its total assets in the first tier securities of a single
issuer or a period of up to three business days. Fundamental
policy number (3) would give the Portfolio 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.
10
<PAGE>
guaranteed by the United States Government, its agencies or
instrumentalities), except that up to 25% of the value of the
Fund's total assets may be invested without regard to such 5%
limitation;
4. May not invest in more than 10% of any one class of
an issuer's outstanding securities (exclusive of securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities);
5. May not borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements in aggregate amounts not to exceed 15% of the Fund's
assets and to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of
abnormally heavy redemption requests, if they should occur; such
borrowings may not be used to purchase investments and the Fund
will not purchase any investment while any such borrowings exist;
6. May not pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned or
held by the Fund except as may be necessary in connection with
any borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 15% of the
Fund's assets;
7. May not make loans, provided that the Fund may
purchase money market securities and enter into repurchase
agreements;
8. May not enter into repurchase agreements if, as a
result thereof, more than 10% of the Fund's assets would be
subject to repurchase agreements not terminable within seven days
(which may be considered to be illiquid); or
9. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
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
11
<PAGE>
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of the
Adviser who own individually more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer; or (h) act as an underwriter of
securities.
_______________________________________________________________
MANAGEMENT
_______________________________________________________________
Trustees and Officers
The Trustees and principal officers of the Trust and
their principal occupations during the past five years are set
forth below. Unless otherwise specified, the address of each
such person is 1345 Avenue of the Americas, New York, N.Y.
10105. Those Trustees whose names are preceded by an asterisk
are "interested persons" of the Trust as determined under the
Act. Each Trustee and officer is also a director, trustee or
officer of other registered investment companies sponsored by the
Adviser.
Trustees
DAVE H. WILLIAMS4 , 67, 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 1994.
JOHN D. CARIFA****, 54, is the President, Chief
Operating Officer and a Director of ACMC with which he has been
associated since prior to 1994.
SAM Y. CROSS, 72, 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.
____________________
4. An "interested person" of the Fund as defined in the Act.
5. For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.
12
<PAGE>
CHARLES H. P. DUELL, 61, is President of Middleton Place
Foundation with which he has been associated since prior to 1994.
He is also a Director of GRC International, Inc., a Trustee
Emeritus of the National Trust for Historic Preservation and
serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.
WILLIAM H. FOULK, JR., 67, 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 1994. His address is
2 Greenwich Plaza, Suite 100, Greenwich, CT 06830.
DAVID K. STORRS, 55, 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 1994. His address is 65 South Gate
Road, Southport, Connecticut 06490.
SHELBY WHITE, 61, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.
Officers
RONALD M. WHITEHILL - President, 61, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since prior to
1994.
KATHLEEN A. CORBET - Senior Vice President, 39, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1994.
DREW BIEGEL - Senior Vice President, 48, is a Vice
President of ACMC which he has been associated with since prior
to 1994.
JOHN R. BONCZEK - Senior Vice President, 39, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
ROBERT I. KURZWEIL - Senior Vice President, 48, is a
Vice President of ACMC with which he has been associated since
prior to 1994.
WAYNE D. LYSKI - Senior Vice President, 58, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1994.
13
<PAGE>
PATRICIA NETTER - Senior Vice President, 48, is a Vice
President of ACMC with which she has been associated since prior
to 1994.
RAYMOND J. PAPERA - Senior Vice President, 43, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1994.
KENNETH T. CARTY - Vice President, 38, is Vice President
of ACMC with which he has been associated since prior to
1994.
JOHN F. CHIODI, Jr. - Vice President, 33, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
DORIS T. CILIBERTI - Vice President, 35, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1994.
MARIA R. CONA - Vice President, 44, is an Assistant Vice
President of ACMC with which she has been associated since prior
1994.
WILLIAM J. FAGAN - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1994.
JOSEPH R. LASPINA -Vice President, 39, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1994.
LINDA N. KELLEY - Vice President, 39, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1994.
EDMUND P. BERGAN, Jr. - Secretary, 49, 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 1994.
MARK D. GERSTEN - Treasurer and Chief Financial Officer,
49, is a Senior Vice President of AFS and a Vice President of AFD
with which he has been associated since prior to 1994.
14
<PAGE>
VINCENT S. NOTO - Controller, 34, is an Assistant Vice
President of AFS with which he has been associated since prior to
1994.
ANDREW L. GANGOLF - Assistant Secretary, 45, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since December 1994.
DOMENICK PUGLIESE - Assistant Secretary, 38, 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
.
EMILIE D. WRAPP - Assistant Secretary, 43, is a Vice
President and Assistant General Counsel of AFD with which she has
been associated since prior to 1994.
As of October 15, 1999, 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, 1999, the
aggregate compensation paid to each of the Trustees during
calendar year 1998 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.
15
<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- 50 116
Sam Y. Cross $ $ 12,000 3 12
Charles H.P. Duell $ $ 12,000 3 12
William H. Foulk, Jr. $ $241,002.50 45 111
David K. Storrs $ $ 12,000 3 12
Shelby White $ $ 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
adviser managing client accounts with assets as of June 30, 1999
totalling more than $321 billion (of which approximately $140
billion represented assets of investment companies). As of June
30, 1999, the Adviser managed retirement assets for many of the
largest public and private employee benefit plans (including 29
of the nation's Fortune 100 companies), for public employee
retirement funds in 32 out of the 50 states, for investment
companies, and for foundations, endowments, banks and insurance
companies worldwide. The 54 registered investment companies,
with more than 120 separate portfolios, managed by the Adviser
currently have over 4.5 million shareholder accounts.
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
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Companies Incorporated ("ECI"). ECI is a holding company
controlled by AXA, a French insurance holding company. As of
March 1, 1999, AXA and certain of its subsidiaries beneficially
owned approximately 58.4% of ECI's outstanding common stock. ECI
is a public company with shares traded on the New York Stock
Exchange.
AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically, with activities
principally in Western Europe, North America, the Asia/Pacific
area and, to a lesser extent, in Africa and South America. 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.
For insurance regulatory purposes the shares of capital
stock of ECI beneficially owned by AXA and its subsidiaries have
been deposited into a voting trust which has an initial term of
10 years commencing in 1992. The trustees of the voting trust
(the "Voting Trustees") have agreed to protect the legitimate
economic interests of AXA, but with a view of ensuring that
certain minority shareholders of AXA do not exercise control over
ECI or certain of its insurance subsidiaries. As of March 1,
1999, AXA, ECI, Equitable and certain subsidiaries of Equitable
were the beneficial owners of approximately 56.6% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests ("Units") in the
Adviser.
Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares (representing
32.7% of the voting power) of AXA were owned directly and
indirectly by Finaxa, a French holding company. As of March 1,
1999, 61.7% of the shares (representing 72.3% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXN") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 35.4% of the shares, representing 41.5%
of the voting power of Finaxa, and 22.7% of the shares of Finaxa
(representing 13.7% of the voting power) were owned by Paribas, a
French Bank. Including the ordinary shares owned by Finaxa, on
March 1, 1999, the Mutuelles AXA directly and indirectly owned
approximately 23.9% of the issued ordinary shares (representing
37.6% of the voting power) of AXA. The Voting Trustees may be
deemed to be beneficial owners of all Units beneficially owned by
AXA and its subsidiaries. By virtue of the provisions of the
voting trust agreement, AXA may be deemed to have shared voting
17
<PAGE>
power with respect to the Units. In addition, the Mutuelles AXA,
as a group, and Finaxa may be deemed to be beneficial owners of
all Units beneficially owned by AXA and its subsidiaries. AXA and
its subsidiaries have the power to dispose or direct the
disposition of all shares of the capital stock of ECI deposited
in the voting trust. The Mutuelles AXA, as a group, and Finaxa
may be deemed to share the power to vote or to direct the vote
and to dispose or to direct the disposition of all the Units of
the Advise beneficially owned by AXA and its subsidiaries. By
reason of their relationship, AXA, the Voting Trustees, the
Mutuelles AXA, Finaxa, ECI, Equitable, Equitable Holdings,
L.L.C., Equitable Investment Corporation, Alliance Capital
Management Corporation and Equitable Capital Management
Corporation may be deemed to share the power to vote or to direct
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
By reason of their relationship, AXA, the Voting
Trustees, the Mutuelles AXA, Finaxa, ECI, Equitable, Equitable
Holdings, L.L.C., Equitable Investment Corporation, Alliance
Capital Management Corporation and Equitable Capital Management
Corporation may be deemed to share the power to vote or to direct
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees of the Trust who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual
rate of .50 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .49 of 1% of the next $.25
billion of such assets, .48 of 1% of the next $.25 billion of
such assets, .47 of 1% of the next $.25 billion of such assets,
.46 of 1% of the next $1 billion of such assets and .45 of 1% of
the average daily value of the Fund's net assets in excess of $3
billion. The fee is accrued daily and paid monthly. The Adviser
will reimburse the Fund to the extent that its net expenses
(excluding taxes, brokerage, interest and extraordinary expenses)
exceed 1% of its average daily net assets for any fiscal year.
For the fiscal years ended June 30, 1997, 1998 and 1999, the
Adviser received from the Fund advisory fees (net of
reimbursement for the fiscal year ended June 30, 1997) of
$25,922,659, $31,190,832 and $____________, 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
18
<PAGE>
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 $172,000,
$176,500 and $__________ in respect of such services for the
fiscal years ended June 30, 1997, 1998 and 1999,
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, 1997, 1998 and
1999, the Fund paid such broker-dealers a total of $1,840,626,
$6,980,273 and $______________, respectively.
The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 2000
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 21, 1999.
The Advisory Agreement remains in effect from year to
year provided that such continuance is specifically approved at
19
<PAGE>
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
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, 1999, the Fund made payments to
the Distributor for expenditures under the Agreement in amounts
aggregating $________ which constituted .__% 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 $________. Of the $_________ paid by the Adviser and
the Fund under the Agreement, $________ was paid for advertising,
20
<PAGE>
printing and mailing of prospectuses to persons other than
current shareholders; and $_________ 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, 2000 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 21, 1999.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested
persons of the Fund nor have any direct or indirect financial
interest in the Agreement or in any related agreement, cast in
person at a meeting called for that purpose.
All material amendments to the Agreement must be
approved by a vote of the Trustees, including a majority of the
disinterested Trustees, cast in person at a meeting called for
that purpose, and the Agreement may not be amended in order to
increase materially the costs which the Fund may bear pursuant to
the Agreement without the approval of a majority of the
21
<PAGE>
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.
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<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.
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<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) 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.
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
24
<PAGE>
genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine,
including among others, recording such telephone instructions and
causing written confirmations of the resulting transactions to be
sent to shareholders. If the Fund did not employ such
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.
B. By Checkwriting
With this service, you may write checks made payable to
any payee. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account.
First, you must fill out the Signature Card which is with the
Application Form. If you wish to establish this checkwriting
service, subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate charge for
the checkwriting service, except that State Street Bank may
impose charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a
stop order. There is currently a $7.50 charge for check
reorders.
The checkwriting service enables you to receive the
daily dividends declared on the shares to be redeemed until the
day that your check is presented to State Street Bank for
payment.
C. By Mail
You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by duly
endorsed certificates, if issued, should be mailed to Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-
1520. Such orders must include the account name as registered
with the Fund and the account number. All written orders for
redemption, and accompanying certificates, if any, must be signed
by all owners of the account with the signatures guaranteed by an
institution which is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.
_______________________________________________________________
ADDITIONAL INFORMATION
_______________________________________________________________
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
25
<PAGE>
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
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,
26
<PAGE>
Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520, with your
signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.
Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or 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.
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.
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<PAGE>
The Fund has the right to close out an account if it has
a zero balance on December 31 and no account activity for the
first six months of the subsequent year. Therefore, unless this
has occurred, a shareholder with a zero balance, when
reinvesting, should continue to use his account number.
Otherwise, the account should be re-opened pursuant to procedures
described above or through instructions given to a financial
intermediary.
A "business day," during which purchases and redemptions
of Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday, exclusive of New 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
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
28
<PAGE>
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 maintains procedures designed to maintain, 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. 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
29
<PAGE>
of its net income and capital gains, the Fund itself should
thereby avoid all Federal income and excise taxes.
For shareholders' Federal income tax purposes, all
distributions by the Fund out of interest income and net realized
short-term capital gains are treated as ordinary income, and
distributions of long-term capital gains, if any, are treated as
long-term capital gains irrespective of the length of time the
shareholder held shares in the Fund. Since the Fund derives
nearly all of its gross income in the form of interest and the
balance in the form of short-term capital gains, it is expected
that for corporate shareholders, none of the Fund's distributions
will be eligible for the dividends-received deduction under
current law.
_______________________________________________________________
GENERAL INFORMATION
_______________________________________________________________
Portfolio Transactions. Subject to the general
supervision of the Trustees of the Fund, the Adviser is
responsible for the investment decisions and the placing of the
orders for portfolio transactions for the Fund. Because the Fund
invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Fund's shares since the Fund's portfolio
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which does not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.
The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
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
30
<PAGE>
years ended June 30, 1997, 1998 and 1999, the Fund paid no
brokerage commissions.
Capitalization. All shares of the Fund, when issued,
are fully paid and non-assessable. The Trustees are authorized
to reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of additional classes would be governed by the Act and the
law of the Commonwealth of Massachusetts. Shares of each
portfolio are normally entitled to one vote for all purposes.
Generally, shares of all portfolios vote as a single series for
the election of Trustees and on any other matter affecting all
portfolios in substantially the same manner. As to matters
affecting each portfolio differently, such as approval of the
Advisory Agreement and changes in investment policy, shares of
each portfolio vote as separate classes. Certain procedures for
the removal by shareholders of trustees of investment trusts,
such as the Fund, are set forth in Section 16(c) of the Act.
At October 15, 1999, there were 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 15, 1999:
No. of % of
Shares Class
Pershing As Agent (update) 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
31
<PAGE>
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 LLP, 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. Effective
September 25, 1999, the Fund's auditors for the fiscal year
ending June 30, 2000 are PricewaterhouseCoopers LLP.
Yield Quotations. Advertisements containing yield
quotations for the Fund may from time to time be sent to
investors or placed in newspapers, magazines or other media on
behalf of the Fund. These advertisements may quote performance
rankings, ratings or data from independent organizations or
financial publications such as Lipper Analytical Services, Inc.,
Morningstar, Inc., IBC's Money Fund Report, IBC's Money Market
Insight or Bank Rate Monitor or compare the Fund's performance to
bank money market deposit accounts, certificates of deposit or
various indices. Such yield quotations are calculated in
accordance with the standardized method referred to in Rule 482
under the Securities Act of 1933. Yield quotations are thus
determined by (i) computing the net changes over a seven-day
period, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share
at the beginning of such period, (ii) dividing the net change in
account value by the value of the account at the beginning of
such period, and (iii) multiplying such base period return by
(365/7) with the resulting yield figure carried to the nearest
hundredth of one percent. The Fund's effective annual yield
represents a compounding of the annualized yield according to the
following formula:
effective yield = [(base period return + 1) 365/7] - 1.
The Fund's yield for the seven-day period ended June 30,
1999 was ___% which is the equivalent of a ___% 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
32
<PAGE>
Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.
33
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS.
(To be filed at a later date.)
34
<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>
ALLIANCE MONEY RESERVES
PROSPECTUS
OCTOBER ____, 1999
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
Prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY 2
FEES AND EXPENSES OF THE FUND 4
OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS 5
Investment Objectives and Strategies 5
Risk Considerations 6
MANAGEMENT OF THE FUND 11
PURCHASE AND SALE OF SHARES 12
How The Fund Values Its Shares 12
How To Buy Shares 12
How To Sell Shares 13
Other 13
DIVIDENDS, DISTRIBUTIONS, AND TAXES 14
DISTRIBUTION ARRANGEMENTS 14
GENERAL INFORMATION 14
FINANCIAL HIGHLIGHTS 15
2
<PAGE>
The Fund's investment adviser is Alliance Capital Management
L.P., a global investment manager providing diversified services
to institutions and individuals through a broad line of
investments including more than 100 mutual funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the
Fund. You will find additional information about the Fund,
including a detailed description of the risks of an investment in
the Fund, after this summary.
OBJECTIVES: The Fund's investment objective is maximum current
income to the extent consistent with safety of principal and
liquidity.
PRINCIPAL INVESTMENT STRATEGY: The Fund is a "money market fund"
that seeks to maintain a stable net asset value of $1.00 per
share. The Fund pursues its objectives by maintaining a
portfolio of high-quality, U.S. dollar-denominated money market
securities.
PRINCIPAL RISKS: The principal risks of investing in the Fund
are:
-- INTEREST RATE RISK. This is the risk that changes in
interest rates will adversely affect the yield or value
of the Fund's investments in debt securities.
-- CREDIT RISK. This is the risk that the issuer or
guarantor of a debt security will be unable or unwilling
to make timely interest or principal payments, or to
otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit
rating. Credit risk includes the possibility that any
of the Fund's investments will have its credit ratings
downgraded.
ANOTHER IMPORTANT THING FOR YOU TO NOTE:
An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
3
<PAGE>
PERFORMANCE AND BAR CHART INFORMATION
The performance table shows the Fund's average annual total
returns and the bar chart shows the Fund's annual total returns.
The table and the bar chart provide an indication of the
historical risk of an investment in the Fund by showing:
-- the Fund's average annual total returns for one and five
years and the life of the Fund; and
-- changes in the Fund's performance from year to year over
the life of the Fund.
The Fund's past performance does not necessarily indicate how it
will perform in the future.
You may obtain current seven-day yield information for the Fund
by calling (800) 221-9513 or your financial intermediary.
PERFORMANCE TABLE
[Insert Table]
BAR CHART
[Insert Chart]
During the period shown in the bar chart, the highest return for
a quarter was ____% (quarter ending ________) and the lowest
return for a quarter was ____% (quarter ending _________).
4
<PAGE>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS) AND EXAMPLE
The example is to help you compare the cost of investing in the
Fund with the cost of investing in other funds. It assumes that
you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. It
also assumes that your investment has a 5% return each year, the
Fund's operating expenses stay the same, and all dividends and
distributions are reinvested. Your actual costs may be higher or
lower.
ANNUAL FUND OPERATING EXPENSES EXAMPLE
Management Fees 1 Year
Rule 12b-1 Fees 3 Years
Other Expenses 5 Years
Total Operating Expenses 10 Years
Waiver and/or Expense Reimbursement*
Net Expenses
_______________
* Reflects Alliance's contractual waiver of a portion of its
advisory fee and/or reimbursement of a portion of the
Fund's operating expenses so that the Fund's expense
ratio does not exceed 1.00%.
5
<PAGE>
OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS
This section of the Prospectus provides a more complete
description of the investment objectives and principal strategies
and risks of the Fund.
Please note:
-- Additional descriptions of the Fund's strategies and
investments, as well as other strategies and investments
not described below, may be found in the Fund's
Statement of Additional Information or SAI.
-- There can be no assurance that the Fund will achieve its
investment objectives.
INVESTMENT OBJECTIVES AND STRATEGIES
As a money market fund, the Fund must meet the requirements of
Securities and Exchange Commission Rule 2a-7. The Rule imposes
strict requirements on the investment quality, maturity and
diversification of the Fund's investments. Under that Rule, the
Fund's investments must each have a remaining maturity of no more
than 397 days and the Fund must maintain an average weighted
maturity that does not exceed 90 days.
The Fund's investments may include:
-- marketable obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;
-- certificates of deposit and bankers' acceptances issued
or guaranteed by, or time deposits maintained, at banks
or savings and loans 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;
-- high-quality commercial paper (or, if not rated,
determined by Alliance to be of comparable quality)
issued by U.S. or foreign companies and participation
interests in loans made to companies that issue such
commercial paper;
-- variable rate obligations;
-- asset-backed securities;
-- restricted securities (i.e., securities subject to legal
or contractual restrictions on resale); and
6
<PAGE>
-- repurchase agreements that are fully collateralized.
The Fund does not invest more than 25% of its assets in
securities of issuers whose principal business activities are in
the same industry. This limitation does not apply to investments
in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, or to bank obligations, including
certificates of deposit, bankers' acceptances, and interest
bearing savings deposits, issued by U.S. banks (including their
foreign branches) and U.S. branches of foreign banks subject to
the same regulation as U.S. banks. For the purposes of this
investment policy, neither all financial companies as a group nor
all utility companies as a group are considered a single
industry.
RISK CONSIDERATIONS
The Fund's principal risks are interest rate risk and credit
risk. Because the Fund invests in short-term securities, a
decline in interest rates will affect the Fund's yields as these
securities mature or are sold and the Fund purchases new short-
term securities with lower yields. Generally, an increase in
interest rates causes the value of a debt instrument to decrease.
The change in value for shorter-term securities is usually
smaller than for securities with longer maturities. Because the
Fund invests in securities with short maturities and seeks to
maintain a stable net asset value of $1.00 per share, it is
possible, though unlikely, that an increase in interest rates
would change the value of your investment.
Credit risk is the possibility that a security's credit rating
will be downgraded or that the issuer of the security will
default (fail to make scheduled interest and principal payments).
The Fund invests in highly-rated securities to minimize credit
risk.
The Fund may invest up to 10% of its net assets in illiquid
securities. Investments in illiquid securities may be subject to
liquidity risk, which is the risk that, under certain
circumstances, particular investments may be difficult to sell at
an advantageous price. Illiquid restricted securities also are
subject to the risk that the Fund may be unable to sell the
security due to legal or contractual restrictions on resale.
The Fund's investments in U.S. dollar-denominated obligations (or
credit and liquidity enhancements) of foreign banks, foreign
branches of U.S. banks, U.S. branches of foreign banks, and
commercial paper of foreign companies may be subject to foreign
risk. Foreign securities issuers are usually not subject to the
same degree of regulation as U.S. issuers. Reporting,
accounting, and auditing standards of foreign countries differ,
7
<PAGE>
in some cases, significantly from U.S. standards. Foreign risk
includes nationalization, expropriation, or confiscatory
taxation, political changes, or diplomatic developments that
could adversely affect a Fund's investments.
The Fund also is subject to management risk because it is an
actively managed portfolio. Alliance will apply its investment
techniques and risk analyses in making investment decisions for
the Fund, but there is no guarantee that its techniques will
produce the intended result.
YEAR 2000: Many computer systems and applications that process
transactions use two-digit date fields for the year of a
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 inoperability at or after the year
2000. The Fund and its major service providers, including
Alliance, utilize a number of computer systems and applications
that have been either developed internally or licensed from
third-party suppliers. In addition, the Fund and its major
service providers, including Alliance, are dependent on third-
party suppliers for certain systems applications and for
electronic receipt of information critical to their business.
Should any of the computer systems employed by the Fund or its
major service providers, including Alliance, fail to process Year
2000 related information properly, that could have a significant
negative impact on the Fund's operations and the services that
are provided to the Fund's shareholders. To the extent that the
operations of issuers of securities held by the Fund are impaired
by the Year 2000 problem, the value of the Fund's shares may be
materially affected. In addition, for the Fund's investments in
foreign markets, it is possible that foreign companies and
markets will not be as prepared for Year 2000 as domestic
companies and markets.
The Year 2000 issue is a high priority for the Fund and Alliance.
During 1997, Alliance began a formal Year 2000 initiative which
established a structured and coordinated process to deal with the
Year 2000 issue. As part of its initiative, Alliance established
a Year 2000 project office to manage the Year 2000 initiative,
focusing on both information technology and non-information
technology systems. The Year 2000 project office meets
periodically with the audit committee of the board of directors
of Alliance Capital Management Corporation, Alliance's general
partner, and with Alliance's executive management to review the
status of the Year 2000 efforts. Alliance has also retained the
services of a number of consulting firms which have expertise in
advising and assisting with regard to Year 2000 issues. Alliance
reports that by June 30, 1998 it had completed its inventory and
assessment of its domestic and international computer systems and
8
<PAGE>
applications, identified mission critical systems (those systems
where loss of their function would result in immediate stoppage
or significant impairment to core business units) and nonmission
critical systems and determined which of these systems were not
Year 2000 compliant. All third-party suppliers of mission
critical computer systems and nonmission critical systems
applications have been contacted to verify whether their systems
and applications will be Year 2000 compliant and their responses
are being evaluated. Substantially all of those contacted have
responded and approximately 90% have informed Alliance that their
systems and applications are or will be Year 2000 compliant. All
mission and nonmission critical systems supplied by third parties
have been tested with the exception of those third parties not
able to comply with Alliance's testing schedule. Alliance
reports that it expects that all testing will be completed before
the end of 1999.
Alliance has remediated, replaced or retired all of its non-
compliant mission critical systems and applications that can
affect the Fund. Nonmission critical systems have been
remediated. After each system has been remediated, it is tested
with 19XX dates to determine if it still performs its intended
business function correctly. Next, each system undergoes a
simulation test using dates occurring after December 31, 1999.
Inclusive of the replacement and retirement of some of its
systems, Alliance has completed these testing phases for 98% of
mission critical systems and 100% of nonmission critical systems.
Integrated systems tests were conducted to verify that the
systems would continue to work together. Full integration
testing of all mission critical and nonmission critical systems
is completed. Testing of interfaces with third-party suppliers
has begun and will continue throughout 1999. Alliance reports
that it has completed an inventory of its facilities and related
technology applications and has begun to evaluate and test these
systems. Alliance reports that it anticipates that these systems
will be fully operable in the year 2000. Alliance has deferred
certain other planned information technology projects until after
the year 2000 initiative is completed. Such delay is not
expected to have a material adverse effect on Alliance's
financial condition or results of operations. Alliance, with the
assistance of a consulting firm, is developing Year 2000 specific
contingency plans with emphasis on mission critical functions.
These plans seek to provide alternative methods of processing in
the event of a failure that is outside Alliance's control.
The estimated current cost to Alliance of the Year 2000
initiative ranges from approximately $40 million to $45 million.
These costs consist principally of modification and testing and
costs to develop formal Year 2000 specific contingency plans.
These costs, which will generally be expensed as incurred, will
be funded from Alliance's operations and the issuance of debt.
9
<PAGE>
Through June 30, 1999, Alliance had incurred approximately $36.0
million of costs related to the Year 2000 initiative. At this
time, management of Alliance believes that the costs associated
with resolving the Year 2000 issue will not have a material
adverse effect on Alliance's results of operations, liquidity or
capital resources.
There are many risks associated with Year 2000 issues, including
the risks that the computer systems and applications used by the
Fund and its major service providers, will not operate as
intended and that the systems and applications of third-party
suppliers to the Fund and its service providers will not be Year
2000 compliant. Likewise there can be no assurance the
compliance schedules outlined above will be met or that the
actual cost incurred will not exceed cost estimates. Should the
significant computer systems and applications used by the Fund or
its major service providers, or the systems of their important
third-party suppliers, be unable to process date-sensitive
information accurately after 1999, the Fund and its service
providers may be unable to conduct their normal business
operations and to provide shareholders with required services.
In addition, the Fund and its service providers may incur
unanticipated expenses, regulatory actions and legal liabilities.
The Fund and Alliance cannot determine which risks, if any, are
most reasonably likely to occur or the effects of any particular
failure to be Year 2000 compliant. Certain statements provided
by Alliance in this section entitled "Year 2000", as such
statements relate to Alliance, are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. To the fullest extent permitted by law, the
foregoing Year 2000 discussion is a "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
10
<PAGE>
MANAGEMENT OF THE FUND
The Fund's investment adviser is Alliance Capital Management
L.P., 1345 Avenue of the Americas, New York, New York 10105.
Alliance is a leading international investment adviser
supervising client accounts with assets as of June 30, 1999
totaling more than $321 billion (of which more than $140 billion
represented assets of investment companies). As of June 30,
1999, Alliance managed retirement assets for many of the largest
public and private employee benefit plans (including 29 of the
nation's FORTUNE 100 companies), for public employee retirement
funds in 32 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide.
The 54 registered investment companies managed by Alliance,
comprising 120 separate investment portfolios, currently have
more than 4.5 million shareholder accounts.
Alliance provides investment advisory services and order
placement facilities for the Fund. For the fiscal year ended June
30, 1999, the Fund paid Alliance ____% as a percentage of average
daily net assets, net of any waivers. (See the "Annual Fund
Operating Expenses" at the beginning of the Prospectus for more
information about fee waivers.)
Alliance makes significant payments from its own resources, which
include the management fees paid by the Fund, to compensate
broker-dealers, depository institutions, or other persons for
providing distribution assistance and administrative services and
to otherwise promote the sale of Fund shares, including paying
for the preparation, printing, and distribution of prospectuses
and sales literature or other promotional activities.
11
<PAGE>
PURCHASE AND SALE OF SHARES
HOW THE FUND VALUES ITS SHARES
The Fund's net asset value or NAV is expected to be constant at
$1.00 per share, although this price is not guaranteed. The NAV
is calculated at 12:00 Noon and 4:00 p.m., Eastern time, on each
Fund business day (I.E., each weekday exclusive of days the New
York Stock Exchange or the banks in Massachusetts are closed).
To calculate NAV, the Fund's assets are valued and totaled,
liabilities subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. The Fund values its
securities at their amortized cost. This 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 investment.
HOW TO BUY SHARES
-- INITIAL INVESTMENT
You may purchase the Fund's shares by instructing your Account
Executive to invest in the Fund in connection with your brokerage
account.
You also may purchase the Fund's shares directly from Alliance
Fund Services, Inc., or AFS. To obtain an Application Form,
please telephone AFS toll-free at (800) 237-5822. In addition,
you may obtain information about the Form, purchasing shares, or
other Fund procedures by calling this number.
- Minimum Investment Amounts
-- Initial $1,000
-- Subsequent $100
-- Minimum Maintenance Amount $500
These minimums do not apply to shareholder accounts maintained
through financial intermediaries, which may maintain their own
minimums.
-- SUBSEQUENT INVESTMENTS
- By Check:
Mail or deliver your check or negotiable draft made
payable to your brokerage firm to your Account
Executive, who will deposit it into the Fund.
Please indicate your brokerage account number.
12
<PAGE>
- By Sweep:
Your brokerage firm may offer an automatic "sweep"
for the Fund in the operation of brokerage cash
accounts for its customers. Contact your Account
Executive to determine if a sweep is available and
what the sweep requirements are.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares) on any Fund
business day by contacting your Account Executive. If you do not
maintain your shares through a financial intermediary and
recently purchased shares by check or electronic funds transfer,
you cannot redeem your investment until the Fund is reasonably
satisfied the check or electric funds transfer has cleared (which
may take up to 15 days).
You also may redeem your shares:
- By Sweep:
If your brokerage firm offers an automatic sweep
arrangement, the sweep will automatically transfer from
your Fund account sufficient amounts to cover a debit
balance that occurs in your brokerage account for any
reason.
- By Checkwriting:
With this service, you may write checks made payable to
any payee. First, you must fill out a signature card,
which you may obtain from your Account Executive. There
is a charge for check reorders. The checkwriting
service enables you to receive the daily dividends
declared on the shares to be redeemed until the day that
your check is presented for payment. You cannot write
checks for more than the principal balance (not
including any accrued dividends) in your account.
OTHER
The Fund has two transaction times each Fund business day, 12:00
Noon and 4:00 p.m., Eastern time. Investments receive the full
dividend for a day if Federal funds or bank wire monies are
received by State Street Bank before 4:00 p.m., Eastern time, on
that day.
Redemption proceeds are normally wired the same business day if a
redemption request is received prior to 12:00 p.m., Eastern time.
Redemption proceeds are wired or mailed the same day or the next
13
<PAGE>
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. Shares do not
earn dividends on the day a redemption is effected.
The Fund offers a variety of shareholder services. For more
information about these services, telephone AFS at (800) 221-
5672.
A transaction, service, administrative or other similar fee may
be charged by your financial broker-dealer, agent, financial
representative or other financial intermediary with respect to
the purchase, sale or exchange of shares made through these
financial intermediaries. These financial intermediaries may
also impose requirements with respect to the purchase, sale or
exchange of shares that are different from, or in addition to,
those imposed by the Fund.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Fund's net income is calculated at 4:00 p.m., Eastern time,
each business day and paid as dividends to shareholders. The
dividends are automatically invested in additional shares in your
account. These additional shares are entitled to dividends on
following days resulting in compounding growth of income. The
Fund expects that its distributions will primarily consist of net
income, or, if any, short-term capital gains as opposed to long-
term capital gains. For Federal income tax purposes, the Fund's
dividend distributions of net income (or short-term capital
gains) will be taxable to you as ordinary income. Any capital
gains distributions may be taxable to you as capital gains. The
Fund's distributions also may 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 of its
distributions for the year.
DISTRIBUTION ARRANGEMENTS
The Fund has adopted a plan under Securities and Exchange
Commission Rule 12b-1 that allows it to pay asset-based sales
charges or distribution and service fees in connection with the
distribution of its shares. The amount of these fees is .25% as
a percentage of aggregate average daily net assets. Because
these fees are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales
fees.
14
<PAGE>
GENERAL INFORMATION
During drastic economic or market developments, you might have
difficulty in reaching AFS by telephone, in which event you
should issue written instructions to AFS. AFS is not responsible
for the authenticity of telephone requests to purchase or sell
shares. AFS will employ reasonable procedures to verify that
telephone requests are genuine and could be liable for losses
resulting from unauthorized transactions if it failed to do so.
Dealers and agents may charge a commission for handling telephone
requests. The telephone service may be suspended or terminated
at any time without notice.
15
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
the Fund's financial performance for the past five years.
Certain information reflects financial information for a single
Fund share. The total return in the table represents the rate
that an investor would have earned (or lost) on an investment in
the Fund (assuming investment of all dividends and
distributions). The information has been audited by McGladrey &
Pullen LLP, the Fund's independent auditors, whose report, along
with the Fund's financial statements, appears in the SAI, which
is available upon request.
Year Ended June 30
----------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
Net asset value, beginning of period
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)
Net gains or losses on securities
Total from investment operations
LESS: DISTRIBUTIONS
Dividends
Distributions
Total distributions
Net asset value, end of period
TOTAL RETURN
Total investment return based on
net asset value (b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions)
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements
Expenses, before waivers
and reimbursements
Net investment income (a)
- ------------------------------------------------------------------------------
(a) Net of expenses reimbursed or waived by Alliance.
(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.
16
<PAGE>
For more information about the Fund, the following documents are
available upon request:
ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Fund's annual and semi-annual reports to shareholders contain
additional information on the Fund's investments.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Fund has an SAI, which contains more detailed information
about the Fund, including its operations and investment policies.
The Fund's SAI is incorporated by reference into (and is legally
part of) this Prospectus.
You may request a free copy of a current annual/semi-annual
report or the SAI, or make inquiries concerning the Fund, by
contacting your broker or other financial intermediary, or by
contacting Alliance:
BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096
BY PHONE: For Information: (800) 824-1916
For Literature: (800) 824-1916
Or you may view or obtain these documents from the Securities and
Exchange Commission:
IN PERSON: at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C.
BY PHONE: (800) SEC-0330 (for information)
BY MAIL: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET: www.sec.gov
You also may find more information about Alliance on the Internet
at: www.Alliancecapital.com.
File No. 811-2835
17
<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 , 1999
________________________________________________________________
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................................
________________________________________________________________
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 , 1999. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
_______________________________________________________________
THE FUND
________________________________________________________________
Alliance Money Reserves (the "Fund") is one of two portfolios
of Alliance Capital Reserves (the "Trust"), a diversified, open-
end investment company. The other portfolio, also named Alliance
Capital Reserves, is described in a separate Prospectus and
Statement of Additional Information, which may be obtained from
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey
07096-1520, toll free (800) 221-5672.
________________________________________________________________
INVESTMENT OBJECTIVE AND POLICIES
________________________________________________________________
The Fund's objective is maximum current income, to the extent
it is consistent with safety of principal and liquidity. As a
matter of fundamental policy, the Fund pursues its objective by
maintaining a portfolio of high-quality U.S. dollar-denominated
money market securities, all of which at the time of investment
have remaining maturities not exceeding one year or less (which
maturities pursuant to Rule 2a-7 under the Investment Company Act
of 1940 as amended, (the "Act"), may extend to 397 days, 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 and bankers' acceptances issued
or guaranteed by, or time deposits maintained at, banks or
savings and loan associations (including foreign branches of U.S.
banks or U.S. or foreign branches of foreign banks) having total
assets of more than $500 million. Certificates of deposit are
receipts issued by a depository institution in exchange for the
2
<PAGE>
deposit of funds. The issuer agrees to pay the amount deposited
plus interest to the bearer of the receipt on the date specified
on the certificate. The certificate usually can be traded in the
secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to
enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on
a bank by an exporter or an importer to obtain a stated amount of
funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date.
The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the
going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most
acceptances have maturities of six months or less.
3. Commercial paper, including funding agreements and
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.
3
<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.
____________________
6. As used throughout the Prospectus and Statement of Additional
Information, the term "assets" shall refer to the Funds total
assets.
4
<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.
Illiquid Securities. The Fund may also invest up to 10% of
the value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are
consistent with the Fund's investment objectives. Such
securities may include securities that are not readily
marketable, such as certain securities that are subject to legal
or contractual restrictions on resale (other than those
restricted securities determined to be liquid as described below)
and repurchase agreements not terminable within seven days. As
to illiquid securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available
5
<PAGE>
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").
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.
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
6
<PAGE>
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
(vi) any applicable Commission interpretation or
position with respect to such types of securities.
7
<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.
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
There can be no assurance, as is true with all
investment companies, that the Fund's objective will be achieved.
The market value of the Fund's investments tends to decrease
during periods of rising interest rates and to increase during
intervals of falling rates.
Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets.
The Fund's investment objective may not be changed
without the affirmative vote of a majority of the Fund's
outstanding shares as defined below. Except as otherwise
provided, the Fund's investment policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed by the Trustees of the Trust without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.
Rule 2a-7 under the Act. The Fund will comply with
Rule 2a-7 under the Act, as amended from time to time, including
the diversification, quality and maturity limitations imposed by
the Rule. To the extent that the Fund's limitations are more
8
<PAGE>
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 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
represented at a meeting at which more than 50% of the
9
<PAGE>
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;
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 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;
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);
____________________
7. Which 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
first tier (as defined in Rule 2a-7) securities of any one
issuer except that under Rule 2a-7, a Fund may invest up to
25% of its total assets in the first tier securities of a
single issuer for a period of up to three business days.
Fundamental policy number (3) would give the Portfolio 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.
10
<PAGE>
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%
of the securities of such issuer; or (h) act as an underwriter of
securities.
11
<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, 67, Chairman, is Chairman ofThe Bank
of Bermuda Limited
6 Front Street
Hamilton HM I I
Bermuda
Attention: M 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 1994.
****JOHN D. CARIFA, 54, is the President, Chief
Operating Officer and a Director of ACMC with which he has been
associated since prior to 1994.
SAM Y. CROSS, 72, 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.
____________________
9. An "interested person" of the Fund as defined in the Act.1
10. For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.
12
<PAGE>
CHARLES H. P. DUELL, 61, is President of Middleton Place
Foundation with which he has been associated since prior to 1994.
He is also a Director of GRC International, Inc., a Trustee
Emeritus of the National Trust for Historic Preservation and
serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.
WILLIAM H. FOULK, JR., 67, 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 1994. His address is
2 Greenwich Plaza, Suite 100, Greenwich, CT 06830.
DAVID K. STORRS, 55, 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 1994. His address is 65 South Gate
Road, Southport, Connecticut 06490.
SHELBY WHITE, 61, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.
Officers
RONALD M. WHITEHILL - President, 61, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since prior to 1994.
KATHLEEN A. CORBET - Senior Vice President, 39, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1994.
DREW BIEGEL - Senior Vice President, 48, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
JOHN R. BONCZEK - Senior Vice President, 39, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
ROBERT I. KURZWEIL - Senior Vice President, 48, is a
Vice President of ACMC with which he has been associated since
prior to May 1994.
WAYNE D. LYSKI - Senior Vice President, 58, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1994.
13
<PAGE>
PATRICIA NETTER - Senior Vice President, 48, is a Vice
President of ACMC with which she has been associated since prior
to 1994.
RAYMOND J. PAPERA - Senior Vice President, 43, is a
Senior Vice President of ACMC with which he has been associated
since prior to 1994.
KENNETH T. CARTY - Vice President, 38, is Vice President
of ACMC with which he has been associated since prior to 1994.
JOHN F. CHIODI, Jr. - Vice President, 33, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
DORIS T. CILIBERTI - Vice President, 35, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1994.
MARIA R. CONA - Vice President, 44, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1994.
WILLIAM J. FAGAN - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1994.
JOSEPH R. LASPINA - Vice President, 39, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1994.
LINDA N. KELLEY - Vice President, 39, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1994.
EDMUND P. BERGAN, Jr. - Secretary, 49, 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 1994.
MARK D. GERSTEN - Treasurer and Chief Financial Officer,
44, is a Senior Vice President of AFS and a Vice President of AFD
with which he has been associated since prior to 1994.
VINCENT S. NOTO - Controller, 34 is an Assistant Vice
President of AFS with which he has been associated since prior to
1994.
ANDREW L. GANGOLF - Assistant Secretary, 45, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since December 1994.
14
<PAGE>
DOMENICK PUGLIESE - Assistant Secretary, 38, 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 .
EMILIE D. WRAPP - Assistant Secretary, 43, is a Vice
President and Assistant General Counsel of AFD with which she has
been associated since prior to 1994.
As of October16, 1999 the Trustees and officers as a
group owned less than 1% of the shares of the Fund.
The Fund does not pay any fees to, or reimburse expenses
of, its Trustees who are considered "interested persons" of the
Fund. The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal year ended June 30, 1999, the
aggregate compensation paid to each of the Trustees during
calendar year 1998 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.
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- 50 116
Sam Y. Cross $ $ 12,000 3 12
Charles H.P. Duell $ $ 12,000 3 12
William H. Foulk, Jr. $ $241,002.50 46 111
Elizabeth J. McCormack $- $ 9,750 3 12
David K. Storrs $ $ 12,000 3 12
Shelby White $1,720 $ 12,000 3 12
15
<PAGE>
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
adviser managing client accounts with assets as of June 30, 1999
totaling more than $321 billion (of which approximately $140
billion represented assets of investment companies). As of
June 30, 1999, the Adviser managed retirement assets for many of
the largest public and private employee benefit plans (including
29 of the nation's Fotune 100 companies), for public employee
retirement funds in 32 out of the 50 states, for investment
companies, and for foundations, endowments, banks and insurance
companies worldwide. The 54 registered investment companies,
with more than 120 separate portfolios, managed by the Adviser
currently have over 4.5 million shareholder accounts.
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, a French insurance holding company. As of
March 1, 1999, AXA and certain of its subsidiaries beneficially
owned approximately 58.4% of ECI's outstanding common stock. ECI
is a public company with shares traded on the New York Stock
Exchange.
AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically, with activities
principally in Western Europe, North America, the Asia/Pacific
area and, to a lesser extent, in Africa and South America. 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.
For insurance regulatory purposes the shares of capital
stock of ECI beneficially owned by AXA and its subsidiaries have
been deposited into a voting trust which has an initial term of
16
<PAGE>
10 years commencing in 1992. The trustees of the voting trust
(the "Voting Trustees") have agreed to protect the legitimate
economic interests of AXA, but with a view of ensuring that
certain minority shareholders of AXA do not exercise control over
ECI or certain of its insurance subsidiaries. As of March 1,
1999, AXA, ECI, Equitable and certain subsidiaries of Equitable
were the beneficial owners of approximately 56.6% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests ("Units") in the
Adviser.
Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares (representing
32.7% of the voting power) of AXA were owned directly and
indirectly by Finaxa, a French holding company. As of March 1,
1999, 61.7% of the shares (representing 72.3% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXN') (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 35.4% of the shares, representing 41.5%
of the voting power of Finaxa, and 22.7% of the shares of Finaxa
(representing 13.7% of the voting power) were owned by Paribas, a
French Bank. Including the ordinary shares owned by Finaxa, on
March 1, 1999, the Mutuelles AXA directly and indirectly owned
approximately 23.9% of the issued ordinary shares (representing
37.6% of the voting power) of AXA. The Voting Trustees may be
deemed to be beneficial owners of all Units beneficially owned by
AXA and its subsidiaries. By virtue of the provisions of the
voting trust agreement, AXA may be deemed to have shared voting
power with respect to the Units. In addition, the Mutuelles AXA,
as a group, and Finaxa may be deemed to be beneficial owners of
all Units beneficially owned by AXA and its subsidiaries. AXA and
its subsidiaries have the power to dispose or direct the
disposition of all shares of the capital stock of ECI deposited
in the voting trust. The Mutuelles AXA, as a group, and Finaxa
may be deemed to share the power to vote or to direct the vote
and to dispose or to direct the disposition of all the Units of
the Advise beneficially owned by AXA and its subsidiaries. By
reason of their relationship, AXA, the Voting Trustees, the
Mutuelles AXA, Finaxa, ECI, Equitable, Equitable Holdings,
L.L.C., Equitable Investment Corporation, Alliance Capital
Management Corporation and Equitable Capital Management
Corporation may be deemed to share the power to vote or to direct
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
By reason of their relationship, AXA, the Voting
Trustees, the Mutuelles AXA, Finaxa, ECI, Equitable, Equitable
Holdings, L.L.C., Equitable Investment Corporation, Alliance
Capital Management Corporation and Equitable Capital Management
Corporation may be deemed to share the power to vote or to direct
17
<PAGE>
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees of the Trust who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual
rate of .50 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .49 of 1% of the next $.25
billion of such assets, .48 of 1% of the next $.25 billion of
such assets, .47 of 1% of the next $.25 billion of such assets,
.46 of 1% of the next $1 billion of such assets and .45 of 1% of
the average daily value of the Fund's net assets in excess of $3
billion. The fee is accrued daily and paid monthly. The Adviser
will reimburse the Fund to the extent that its net expenses
(excluding taxes, brokerage, interest and extraordinary expenses)
exceed 1% of its average daily net assets for any fiscal year.
For the fiscal years ended June 30, 1997, 1998 and 1999, the
Adviser received from the Fund advisory fees (net of
reimbursement for the fiscal years ended June 30, 1997 and 1998)
of $4,003,676, $5,418,833 and $__________, 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, 1997, 1998 and 1999, the Fund paid to the Adviser a
total of $134,000, $137,000 and $__________, respectively.
The Fund has made arrangements with certain broker-
dealers, including Pershing, Division of Donaldson, Lufkin &
Jenrette Securities Corporation ("Pershing"), an affiliate of the
18
<PAGE>
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,
1997, 1998 and 1999, the Fund reimbursed such broker-dealers a
total of $558,619, $1,033,468 and $________, respectively.
The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 2000
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 21, 1999.
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
19
<PAGE>
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
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, 1999, the Fund made payments to
the Distributor for expenditures under the Agreement in amounts
aggregating $__________ which constituted .__ 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
$________Of the $________ paid by the Adviser and the Fund under
the Agreement, $________ was paid for advertising, printing and
mailing of prospectuses to persons other than current
shareholders; and $________ 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.
20
<PAGE>
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, 2000 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 21, 1999.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested of the
Trust nor have any direct or indirect financial interest in the
Agreement or in any related agreement, cast in person at a
meeting called for that purpose.
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.
21
<PAGE>
Accounts Not Maintained Through Financial Intermediaries
Opening Accounts -- New Investments
A. When Funds are Sent by Wire (the wire method permits
immediate credit)
1) Telephone the Fund toll-free at (800) 824-1916.
The Fund will ask for the name of the account as
you wish it to be registered, address of the
account, and taxpayer identification number,
social security number for an individual. The Fund
will then provide you with an account number.
2) Instruct your bank to wire Federal funds (minimum
$1,000) exactly as follows:
ABA 0110 0002 8
State Street Bank and Trust Company
Boston, MA 02101
Alliance 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.
22
<PAGE>
B. Investments by Check
Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Money Reserves," to Alliance Fund Services,
Inc. as in A(3) above.
Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.
Investments Made by Check
Money transmitted by a check drawn on a member of the
Federal Reserve System is converted to Federal funds in one
business day following receipt and, thus, is then invested in the
Fund. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted and invested. All
payments must be in United States dollars.
PROCEEDS FROM ANY SUBSEQUENT REDEMPTION BY YOU OF FUND
SHARES THAT WERE PURCHASED BY CHECK OR ELECTRONIC FUNDS TRANSFER
WILL NOT BE FORWARDED TO YOU UNTIL THE FUND IS REASONABLY ASSURED
THAT YOUR CHECK OR ELECTRONIC FUNDS TRANSFER HAS CLEARED, UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE. If the redemption
request during such period is in the form of a Fund check, the
check will be marked "insufficient funds" and be returned unpaid
to the presenting bank.
Redemptions
C. By Telephone
You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed) 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.
During periods of drastic economic or market
developments, such as the market break of October 1987, it is
23
<PAGE>
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
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
24
<PAGE>
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.
________________________________________________________________
Additional Information
________________________________________________________________
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
the Fund's Distributor accepts purchase orders from its customers
up to 2:15 p.m. (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
25
<PAGE>
eligible for any of the optional methods of withdrawal; namely,
the telephone, telegraph, checkwriting or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.
Arrangements for Telephone Redemptions. If you wish to
use the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Fund Services,
Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520, with your
signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.
Automatic Investment Program. A shareholder may
purchase shares of the Fund through an automatic investment
program through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
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.
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
26
<PAGE>
account, with payments forwarded by check or electronically via
the Automated Clearing House ("ACH") network shortly after the
close of the month. Under the Systematic Withdrawal Plan, you
may request payments by check or electronically via the ACH
network in any specified amount of $50 or more each month or in
any intermittent pattern of months. If desired, you can order,
via a signature-guaranteed letter to the Fund, such periodic
payments to be sent to another person. Shareholders wishing
either of the above plans electronically through the ACH network
should write or telephone the Fund or AFS at (800) 221-5672.
The Fund has the right to close out an account if it has
a zero balance on December 31 and no account activity for the
first six months of the subsequent year. Therefore, unless this
has occurred, a shareholder with a zero balance, when
reinvesting, should continue to use his account number.
Otherwise, the account should be re-opened pursuant to procedures
described above or through instructions given to a financial
intermediary.
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.
27
<PAGE>
________________________________________________________________
DAILY DIVIDENDS-DETERMINATION OF NET ASSET VALUE
________________________________________________________________
All net income of the Fund is determined after the close
of each business day, currently 4:00 p.m. (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
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 maintains procedures designed to maintain 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. 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
28
<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.
For shareholders' Federal income tax purposes, all
distributions by the Fund out of interest income and net realized
short-term capital gains are treated as ordinary income, and
distributions of long-term capital gains, if any, are treated as
long-term capital gains irrespective of the length of time the
shareholder held shares in the Fund. Since the Fund derives
nearly all of its gross income in the form of interest and the
balance in the form of short-term capital gains, it is expected
that for corporate shareholders, none of the Fund's distributions
will be eligible for the dividends-received deduction under
current law.
________________________________________________________________
General Information
________________________________________________________________
Portfolio Transactions. Subject to the general
supervision of the Trustees of the Fund, the Adviser is
responsible for the investment decisions and the placing of the
orders for portfolio transactions for the Fund. Because the Fund
invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Fund's shares since the Fund's portfolio
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which does not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.
29
<PAGE>
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, 1997, 1998 and 1999, the Fund paid no
brokerage commissions.
Capitalization. All shares of the Fund, when issued,
are fully paid and non-assessable. The Trustees are authorized
to reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees in the future, for reasons such as the
desire to establish additional portfolios with different
investment objectives, policies or restrictions may create
additional classes or series of shares. Any issuance of shares
of additional classes would be governed by the Act and the law of
the Commonwealth of Massachusetts. Shares of each portfolio are
normally entitled to one vote for all purposes. Generally,
shares of all portfolios vote as a single series for the election
of Trustees and on any other matter affecting all portfolios in
substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Advisory Agreement
and changes in investment policy, shares of each portfolio vote
as separate classes. Certain procedures for the removal by
shareholders of trustees of investment trusts, such as the Trust,
are set forth in Section 16(c) of the Act.
At October 15, 1999, there were 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 15, 1999:
30
<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
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 LLP, New York, New
York, counsel for the Trust and the Adviser. Seward & Kissel LLP
has relied upon the opinion of Sullivan & Worcester, Boston,
Massachusetts, for matters relating to Massachusetts law.
31
<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.
Effective September 25, 1999, the Fund's auditors for the fiscal
year ending June 30, 2000 are Pricewaterhouse Coopers LLP.
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, 1999, after
expense reimbursement, amounted to an annualized yield of ____%
equivalent to an effective yield of ____%. Absent such
reimbursement, the annualized yield for such period would have
been ____%, equivalent to an effective yield of ____%. 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.
32
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS.
(To be filed at a later date.)
33
<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 23. Exhibits
(a) (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) Certificate of Designation, dated February 13,
1989 - Filed herewith.
(b) 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.
(c) Not applicable.
(d) 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-
2835) filed with the Securities and Exchange
Commission on October 30, 1997.
(e) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc., as
amended January 1, 1998 - Incorporated by reference
to Exhibit No. 6 to Post-Effective Amendment No. 32
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,
1998.
(f) Not applicable.
(g) 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.
C-1
<PAGE>
(h) 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.
(i) Not applicable.
(j) Consent of Independent Auditors - Not applicable.
(k) Not applicable.
(l) Not applicable.
(m) Rule 12b-1 Plan - See Exhibit (e) hereto.
(n) Financial Data Schedule - Not Applicable.
(o) Not applicable.
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 -
Incorporated by reference to Other Exhibits to
Post-Effective Amendment No. 32 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, 1998.
ITEM 24. Persons Controlled by or Under Common Control with
Registrant.
None.
ITEM 25. 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 (a) in response to Item 23 and
Section 7 of the Distribution Agreement filed as Exhibit
(e) in response to Item 23, 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
C-2
<PAGE>
set forth in Section 4 of the Advisory Agreement filed
as Exhibit (d) in response to Item 23, 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
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
C-3
<PAGE>
without limitation the failure to compel in any way any
former or acting Trustee to redress any breach of trust)
except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
Section 5.3 - Indemnification.
(a) The Trustees shall provide for indemnification by
the Trust (or by the appropriate series thereof) of
every person who is, or has been, a Trustee or officer
of the Trust against all liability and against all
expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the
settlement thereof, in such manner as the Trustees may
provide from time to time in the By-Laws.
(b) The words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other
liabilities.
Section 5.4 - No Bond Required of Trustees. No Trustee
shall be obligated to give any bond or other security
for performance of any of his duties hereunder.
Section 5.5 - No Duty of Investigation; Notice in Trust
Instruments, Insurance. No purchaser, lender, transfer
agent or other Person dealing with the Trustees or any
officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by
said officer, employee or agent or be liable for the
application of money or property paid, loaned, or
delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract,
instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing
whatsoever executed in connection with the Trust shall
be conclusively presumed to have been 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
C-4
<PAGE>
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
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
C-5
<PAGE>
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
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
C-6
<PAGE>
"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
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 26. 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.
C-7
<PAGE>
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
ITEM 27. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant. Alliance Fund Distributors,
Inc. also acts as Principal Underwriter or Distributor
for the following investment companies:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Health Care 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.
C-8
<PAGE>
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.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
Michael J. Laughlin Director and Chairman
John D. Carifa Director
Robert L. Errico Director and President
Geoffrey L. Hyde Director and Senior
Vice President
Dave H. Williams Director
David Conine Executive Vice President
Richard K. Saccullo Executive Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary
Richard A. Davies Senior Vice President
and Managing Director
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial Officer
Anne S. Drennan Senior Vice President
and Treasurer
Benji A. Baer Senior Vice President
Karen J. Bullot Senior Vice President
John R. Carl Senior Vice President
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
C-9
<PAGE>
Byron M. Davis Senior Vice President
Mark J. Dunbar Senior Vice President
Donald N. Fritts Senior Vice President
Bradley F. Hanson Senior Vice President
George H. Keith Senior Vice President
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Susan L. Matteson-King Senior Vice President
Daniel D. McGinley Senior Vice President
Antonios G. Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Kevin A. Rowell Senior Vice President
Raymond S. Sclafani Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
William C. White Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Gerard J. Friscia Vice President and
Controller
Ricardo Arreola Vice President
Kenneth F. Barkoff Vice President
Charles M. Barrett Vice President
Gregory P. Best Vice President
Casimir F. Bolanowski Vice President
C-10
<PAGE>
Robert F. Brendli Vice President
Christopher L. Butts Vice President
Timothy W. Call Vice President
Jonathan W. Cangalosi Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Russell R. Corby Vice President
John W. Cronin Vice President
William J. Crouch Vice President
Robert J. Cruz Vice President
Richard W. Dabney Vice President
Stephen J. Demetrovits Vice President
John F. Dolan Vice President
Richard P. Dyson Vice President
John C. Endahl Vice President
John E. English Vice President
Sohaila S. Farsheed Vice President
Duff C. Ferguson Vice President
Daniel J. Frank Vice President
Shawn C. Gage Vice President
Joseph C. Gallagher Vice President
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel
Alex G. Garcia Vice President
Michael J. Germain Vice President
C-11
<PAGE>
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
John Grambone Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Michael S. Hart Vice President
Scott F. Heyer Vice President
Timothy A. Hill Vice President
Brian R. Hoegee Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Michael J. Hutten Vice President
Scott Hutton Vice President
Oscar J. Isoba Vice President
Richard D. Keppler Vice President
Richard D. Kozlowski Vice President
Daniel W. Krause Vice President
Donna M. Lamback Vice President
P. Dean Lampe Vice President
Nicholas J. Lapi Vice President
Henry Michael Lesmeister Vice President
Eric L. Levinson Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
C-12
<PAGE>
Jerry W. Lynn Vice President
Michael F. Mahoney Vice President
Shawn P. McClain Vice President
David L. McGuire Vice President
Jeffrey P. Mellas Vice President
Michael V. Miller Vice President
Thomas F. Monnerat Vice President
Timothy S. Mulloy Vice President
Joanna D. Murray Vice President
Michael F. Nash, Jr. Vice President
Nicole Nolan-Koester Vice President
Daniel A. Notto Vice President
Peter J. O'Brien Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
Christopher W. Olson Vice President
Richard J. Olszewski Vice President
Catherine N. Peterson Vice President
James J. Posch Vice President
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Karen C. Satterberg Vice President
John P. Schmidt Vice President
Robert C. Schultz Vice President
Richard J. Sidell Vice President
C-13
<PAGE>
Clara Sierra Vice President
Teris A. Sinclair Vice President
Scott C. Sipple Vice President
Martine H. Stansbery, Jr. Vice President
Vincent T. Strangio Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Benjamin H. Travers Vice President
David R. Turnbough Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
Mark E. Westmoreland Vice President
David E. Willis Vice President
Stephen P. Wood Vice President
Emilie D. Wrapp Vice President and Assistant
Assistant General Secretary
Counsel
Michael W. Alexander Assistant Vice
President
Richard J. Appaluccio Assistant Vice
President
Paul G. Bishop Assistant Vice
President
Mark S. Burns Assistant Vice
President
John M. Capeci Assistant Vice
President
C-14
<PAGE>
Maria L. Carreras Assistant Vice
President
John P. Chase Assistant Vice
President
William P. Condon Assistant Vice
President
Jean A. Coomber Assistant Vice
President
Terri J. Daly Assistant Vice
President
Ralph A. DiMeglio Assistant Vice
President
Faith C. Deutsch Assistant Vice
President
Timothy J. Donegan Assistant Vice
President
Adam E. Engelhardt Assistant Vice
President
Michele Grossman Assistant Vice
President
Arthur F. Hoyt, Jr. 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
Victor Kopelakis Assistant Vice
President
C-15
<PAGE>
Evamarie C. Lombardo Assistant Vice
President
Kristine J. Luisi Assistant Vice
President
Kathryn Austin Masters Assistant Vice
President
Richard F. Meier Assistant Vice
President
Rizwan A. Raja Assistant Vice
President
Carol H. Rappa Assistant Vice
President
Mark V. Spina Assistant Vice
President
Gayle S. Stamer Assistant Vice
President
Eileen Stauber Assistant Vice
President
Margaret M. Tompkins Assistant Vice
President
Marie R. Vogel Assistant Vice
President
John Wilkens Assistant Vice
President
Wesley S. Williams Assistant Vice
President
Matthew Witschel Assistant Vice
President
David M. Wolf Assistant Vice
President
Christopher J. Zingaro Assistant Vice
President
Mark R. Manley Assistant Secretary
(c) Not applicable.
C-16
<PAGE>
ITEM 28. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers, securities
records and other original records are maintained
principally at the offices of Alliance Fund Services,
Inc. 500 Plaza Drive, Secaucus, New Jersey 07094 and at
the offices of 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 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon request
and without charge.
C-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 has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of
New York on the 30th day of August, 1999.
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 August 30, 1999
_______________________
Ronald M. Whitehill
2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and August 30, 1999
___________________ 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 August 30, 1999
__________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-18
<PAGE>
Index to Exhibits
Page
(a)(2) Certificate of Designation
C-19
00250122.AL7
<PAGE>
ALLIANCE CAPITAL RESERVES
Certificate of Designation
The undersigned, being the Secretary of Alliance Capital
Reserves (hereinafter referred to as the "Trust"), a trust with
transferable shares of the type commonly called a Massachusetts
business trust, DOES HEREBY CERTIFY that, pursuant to the
authority conferred upon the Trustees of the Trust by Sections
6.9 and 9.3 of the Declaration of Trust, dated October 15, 1984
(hereinafter referred to as the "Declaration of Trust"), and by
the affirmative vote of a majority of the Trustees at a meeting
duly called and held on December 13, 1988, the following
resolution was adopted to establish a new series of shares of the
Trust, designated the "Alliance Money Reserves Portfolio":
RESOLVED: That there is hereby established and designated the
Alliance Money Reserves Portfolio (hereinafter
referred to as the "Money Reserves Portfolio").
The beneficial interest in the Money Reserves
Portfolio shall be divided into Shares having a
nominal or par value of one mill ($.001) per Share,
of which an unlimited number may be issued, which
Shares shall represent interests only in the Money
Reserves Portfolio. The Shares of the Money
Reserves Portfolio shall have the following rights
and preferences:
(a) Assets Belonging to the Money Reserves
Portfolio. Any portion of the Trust Property
allocated to the Money Reserves Portfolio, and all
consideration received by the Trust for the issue
or-sale of Shares of the Money Reserves Portfolio,
together with all assets in which such
consideration is invested or reinvested, all
interest, dividends, income, earnings, profits and
gains therefrom, and proceeds thereof, including
any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or
payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be
held by the Trustees in trust for the benefit of
the holders of Shares of the Money Reserves
Portfolio and shall irrevocably belong to the Money
Reserves Portfolio for all purposes, and shall be
so recorded upon the books of account of the Trust,
and the Shareholders of any other series of Shares
who are not Shareholders of the Money Reserves
Portfolio shall not have, and shall be conclusively
deemed to have waived, any claims to the assets of
the Money Reserves Portfolio. Such consideration,
<PAGE>
assets, interest, dividends, income, earnings,
profits, gains and proceeds, together with any
General Items allocated to the Money Reserves
Portfolio as provided in the following sentence,
are herein referred to collectively as "Portfolio
Assets" of the Money Reserves Portfolio, and as
assets "belonging to" the Money Reserves Portfolio.
In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as
belonging to any particular series of the Trust
(collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or
more of the series of the Trust in such manner and
on such basis as they, in their sole discretion,
deem fair and equitable; and any General Items so
allocated to the Money Reserves Portfolio shall
belong to and be part of the Portfolio Assets of
the Money Reserves Portfolio.
(b) Liabilities of the Money Reserves
Portfolio. The assets belonging to the Money
Reserves Portfolio shall be charged with the
liabilities in respect of the Money Reserves
Portfolio and all expenses, costs, charges and
reserves attributable to the Money Reserves
Portfolio, and any general liabilities, expenses,
costs, charges or reserves of the Trust which are
not readily identifiable as pertaining to any
particular series of the Trust shall be allocated
and charged by the Trustees to and among any one or
more of the series of the Trust in such manner and
on such basis as the Trustees in their sole
discretion deem fair and equitable. The
indebtedness, expenses, costs, charges and reserves
allocated and so charged to the Money Reserves
Portfolio are herein referred to as "liabilities
of" the Money Reserves Portfolio. Each allocation
of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all series of the
Trust for all purposes. Any creditor of the Money
Reserves Portfolio may look only to the assets of
the Money Reserves Portfolio to satisfy such
creditor's debt.
(c) Dividends and Distributions. The
Trustees shall from time to time distribute ratably
among the Shareholders of the Money Reserves
Portfolio such proportion of the net profits,
surplus (including paid-in surplus), capital or
2
<PAGE>
assets of the Money Reserves Portfolio held by the
Trustees as they may deem proper. Such
distributions may be made in cash or property
(including without limitation any type of
obligations of the Money Reserves Portfolio or any
assets thereof), or pursuant to any program that
the Trustees may have in effect at the time for the
election by each Shareholder of the mode of the
making of such dividend or distribution to that
Shareholder, and the Trustees may distribute
ratably among the Shareholders additional Shares of
such series issuable hereunder in such manner, at
such times and on such terms as the Trustees may
deem proper. Any such dividend or distribution
paid in Shares will be paid at the net asset value
thereof as determined in accordance with Article
VIII of the Declaration of Trust. Such
distributions may be among the Shareholders of
record at the time of declaring a distribution or
among the Shareholders of record at such later date
as the Trustees shall determine, and in connection
with any dividend or distribution program or
procedure the Trustees may determine that no
dividend or distribution shall be payable on Shares
as to which the Shareholder's purchase order and/or
payment have not been received by the time or times
established by the Trustees under such program or
procedure, or that dividends or distributions shall
be payable on Shares which have been tendered by
the holder thereof for redemption or repurchase,
but the redemption or re-purchase proceeds of which
have not yet been paid to such Shareholder. The
Trustees may always retain from the net profits of
the Money Reserves Portfolio such. amount as they
may deem necessary to pay the debts or expenses of
the Money Reserve Portfolio or to meet obligations
of the Money Reserves Portfolio or as they may deem
desirable to use in the conduct of its affairs or
to retain for future requirements or extensions of
the business. The Trustees may adopt and offer to
Shareholders of the Money Reserves Portfolio such
dividend reinvestment plans, cash dividend payout
plans or related plans as the Trustees shall deem
appropriate.
Inasmuch as the computation of net income and
gains for Federal income tax purposes may vary from
the computation thereof on the books, the above
provisions shall be interpreted to give the
Trustees the power in their discretion to
distribute for any fiscal year as ordinary
3
<PAGE>
dividends and as capital gains distributions,
respectively, additional amounts sufficient to
enable the Trust or the series to avoid or reduce
liability for taxes.
(d) Liquidation. In the event of the
liquidation or dissolution of the Trust or of the
Money Reserves Portfolio pursuant to Section 9.2 of
the Declaration of Trust, the Shareholders of the
Money Reserves Portfolio shall be entitled to
receive, subject to the provisions of Section 9.2
of the Declaration of Trust when and as declared by
the Trustees, the excess of the Portfolio Assets
over the liabilities of the Money Reserves
Portfolio. The assets so distributable to the
Shareholders of the Money Reserves Portfolio shall
be distributed among such Shareholders in
proportion to the number of Shares of the Money
Reserves Portfolio held by them and recorded on the
books of the Trust.
(e) Voting. The Shareholders of the Money
Reserves Portfolio shall have the voting rights set
forth in or determined under 6.8 of the Declaration
of Trust.
(f) Redemption by Shareholder. Each holder
of Shares of the Money Reserves Portfolio shall
have the right, upon and subject to the terms and
conditions provided in Article VII of the
Declaration of Trust, to require the Trust to
redeem all or any part of such Shares. The Trust
shall, upon application of any Shareholder or
pursuant to authorization from any Shareholder,
redeem or repurchase from such Shareholder any such
outstanding Shares for an amount per share
determined by the Trustees in accordance with any
applicable laws and regulations; provided that (a)
such amount per share shall not exceed the cash
equivalent of the proportionate interest of each
share or of any class or series of shares in the
assets of the Trust at the time of the redemption
or repurchase and (b) if so authorized by the
Trustees, the Trust may, at any time and from time
to time, charge fees for effecting such redemption
or repurchase, at such rates as the Trustees may
establish, as and to the extent permitted under the
1940 Act, and may, at any time and from time to
time, pursuant to such Act, suspend such right of
redemption. The procedures for effecting and
suspending redemption shall be as set forth in the
4
<PAGE>
Prospectus from time to time. Payment shall be made
in such manner as described in the Prospectus.
(g) Redemption at the Option of the Trust.
If the Trustees shall, at any time and in good
faith, be of the opinion that direct or indirect
ownership of Shares or other securities of the
Money Reserves Portfolio has or may become
concentrated in any Person to an extent which would
disqualify the Trust or the Money Reserves
Portfolio as a regulated investment company under
the Internal Revenue Code of 1986, as amended from
time to time, then the Trustees shall have the
power by lot or other means deemed equitable by
them (i) to call for redemption by any such Person
of a number, or principal amount, of Shares or
other securities of the Money Reserves Portfolio
sufficient, in the opinion of the Trustees, to
maintain or bring the direct or indirect ownership
of Shares or other securities of the Money Reserves
Portfolio into conformity with the requirements for
such qualification and (ii) to refuse to transfer
or issue Shares or other securities of the Money
Reserves Portfolio to any Person whose acquisition
of such Shares or other securities would in the
opinion of the Trustees result in such
disqualification. The redemption shall be effected
at a redemption price determined in accordance with
Section 7.1 of the Declaration of Trust. Upon such
redemption the holders of the Shares so redeemed
shall have no further right with respect thereto
other than to receive payment of such redemption
price.
The holders of Shares or other securities of
the Money Reserves Portfolio shall upon demand
disclose to the Trustees in writing such
information with respect to direct and indirect
ownership of Shares or other securities of the
Money Reserves Portfolio as the Trustees deem
necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the
requirements of any other authority.
The Trustees shall have the power at any time
to redeem Shares of any Shareholder of the Money
Reserves Portfolio at a redemption price determined
in accordance with Section 7.1 of the Declaration
of Trust if at such time the aggregate net asset
value of the Shares in such Shareholder's account
is less than $500. A Shareholder will be notified
5
<PAGE>
that the value of his account is less than $500 and
allowed at least sixty (60) days to make an
additional investment before redemption is
processed.
(h) Net Asset Value. The net asset value per
Share of the Money Reserves Portfolio at any time
shall be determined in accordance with the
provisions of Article VIII of the Declaration of
Trust.
(i) Transfer. All Shares of the Money
Reserves Portfolio shall be transferable on the
records of the Trust only by the record holder
thereof or by his agent thereunto duly authorized
in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the
genuineness of each such execution and
authorization and of other matters as may
reasonably be required. Upon such delivery the
transfer shall be recorded on the register of the
Trust. Until such record is made, the Shareholder
of record shall be deemed to be the holder of such
Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor
any officer, employee or agent of the Trust shall
be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares of
the Money Reserves Portfolio in consequence of the
death, bankruptcy or incompetence of any
Shareholder, or incompetence of any Shareholder, or
otherwise by operation of law, shall be recorded on
the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to
the Trustees or the Transfer Agent, but until such
record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all
purposes hereunder and neither the Trustees nor any
Transfer Agent or registrar nor any officer or
agent of the Trust shall be affected by any notice
of such death, bankruptcy or incompetence, or other
operation of law, except as may otherwise be
provided by the laws of The Commonwealth of
Massachusetts.
(j) Equality. All Shares of the Money
Reserves Portfolio shall represent an equal
proportionate interest in the assets belonging to
the Money Reserves Portfolio (subject to the
6
<PAGE>
liabilities of the Money Reserves Portfolio), and
each Share of the Money Reserves Portfolio shall be
equal to each other Share thereof; but the
provisions of this sentence shall not restrict any
distinctions permissible under subsection (c)
hereof that may exist with respect to dividends and
distributions on Shares of the Money Reserves
Portfolio. The Trustees may from time to time
divide or combine the Shares of the Money Reserves
Portfolio into a greater or lesser number of Shares
of the Money Reserves Portfolio without thereby
changing the proportionate beneficial interest in
the assets belonging to the Money Reserves
Portfolio or in any way affecting the rights of the
holders of Shares of any other Fund.
(k) Rights of Fractional Shares. Any
fractional Share of the Money Reserves Portfolio
shall carry proportionately all the rights and
obligations of a whole Share of the Money Reserves
Portfolio, including rights and obligations with
respect to voting, receipt of dividends and
distributions, redemption of Shares, and
liquidation of the Trust or of the Money Reserves
Portfolio.
(l) Conversion Rights. Subject to compliance
with the requirements of the 1940 Act, the Trustees
shall have the authority to provide that holders of
Shares of the Money Reserves Portfolio shall have
the right to convert said Shares into Shares of one
or more other series of the Trust in accordance
with such requirements and procedures as the
Trustees may establish.
(m) Amendment, etc. Subject to the
provisions and limitations of Section 9.3 of the
Declaration of Trust and applicable law, this
Certificate of Designation may be amended by an
instrument signed in writing by a majority of the
Trustees (or by an officer of the Trust pursuant to
the vote of a majority of the Trustees), provided
that, if any amendment adversely affects the rights
of the Shareholders of the Money Reserves
Portfolio, such amendment may be adopted by an
instrument signed in writing by a majority of the
Trustees (or by an officer of the Trust pursuant to
the vote of a majority of the Trustees) when
authorized to do so by the vote in accordance with
Section 6.8 of the Declaration of Trust of the
holders of a majority of all the Shares of the
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Money Reserves Portfolio outstanding and entitled
to vote.
(n) Incorporation of Defined Terms. All
capitalized terms which are not defined herein
shall have the same meanings as are assigned to
those terms in the Declaration of Trust filed with
the Secretary of State of the Commonwealth of
Massachusetts.
The Trustees further direct that, upon the execution of
this Certificate of Designation, the officers of the Trust take
all necessary action to file a copy of this Certificate of
Designation with the Secretary of State of The Commonwealth of
Massachusetts and at any other place required by law or by the
Declaration of Trust.
IN WITNESS WHEREOF, the undersigned has set his hand
this 13th day of February, 1989.
/s/ Edmund P. Bergan, Jr.
______________________________
Edmund P. Bergan, Jr.,
Secretary
8
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
:
COUNTY OF NEW YORK ) February 13, 1989
Then personally appeared the above named Edmund P.
Bergan, Jr. and acknowledged the foregoing instrument to be his
free act and deed.
Before me,
/s/ Barbara L. Long
______________________________
Notary Public
My commission expires:
[NOTARIAL SEAL]
9
00250122.AL6
