ALLIANCE PORTFOLIOS
485BPOS, 1996-08-29
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<PAGE>
 
             As filed with the Securities and Exchange Commission
                              on August 29, 1996
                                                               File No. 33-12988
                                                                       811-05088

                      Securities and Exchange Commission
                            Washington, D.C.  20549
                   -----------------------------------------

                                   FORM N-1A

            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                          Pre-Effective Amendment No.

                        Post-Effective Amendment No. 21

                                    and/or

        REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

                               Amendment No. 23
                                             --
               ------------------------------------------------

                            THE ALLIANCE PORTFOLIOS
              (Exact Name of Registrant as Specified in Charter)
               1345 Avenue of the Americas, New York, N.Y. 10105
                                (800) 221-5672
             (Registrant's Telephone Number, including Area Code)

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

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

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

It is proposed that this filing will become effective (check appropriate box):


              immediately upon filing pursuant to paragraph (b)
           ---
            X on September 1, 1996 pursuant to paragraph (b)
           ---                                              
              60 days after filing pursuant to paragraph (a)(i)
           ---                                                 
              on (date) pursuant to paragraph (a)(i)
           ---                                      
              75 days after filing pursuant to paragraph (a)(2)
           ---                                                 
              on (date) pursuant to paragraph (a)(2) of Rule 485.
           ---                                                   
    
     The Registrant has previously registered an indefinite number or amount of
its shares of beneficial interest pursuant to Rule 24f-2. The Registrant filed a
Rule 24f-2 Notice with respect to Alliance Short-Term U.S. Government Fund's
fiscal year ended August 31, 1995 on October 27, 1995, Alliance Strategic
Balanced Fund's fiscal year ended July 31, 1995 on August 28, 1995, Alliance
Conservative Investors Fund's fiscal year ended April 30, 1996 on June 28, 1996,
Alliance Growth Investors Fund's fiscal year ended April 30, 1996 on June 28,
1996 and Alliance Growth Fund's fiscal year ended October 31, 1995 on December
27, 1995.      
<PAGE>
 
                             Cross Reference Sheet
    
                         (as required by Rule 481(a))     


  ITEM NUMBER OF FORM N-1A                     PROSPECTUS LOCATION
  PART A                                       OR CAPTION

  1.    Cover Page...........................  Front Cover Page

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

  3.    Condensed Financial Information......  Financial Highlights

  4.    General Description of Registrant....  General Information; 
                                               Description of the
                                               Funds

  5.    Management of the Trust..............  Management of the  
                                               Funds
 
  5A.   Management's Discussion of
        Fund's Performance...................  Not Applicable

  6.    Capital Stock and Other Securities...  General Information; 
                                               Dividends,
                                               Distributions and Taxes

  7.    Purchase of Securities                 Purchase and Sale of  
        Being Offered........................  Shares; Management  
                                               of the Funds

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

  9.    Pending Legal Proceedings............  Not Applicable
<PAGE>
 
                                               STATEMENT OF    
                                               ADDITIONAL
  ITEM NUMBER IN PART B                        INFORMATION CAPTION
 
  10.   Cover Page...........................  Cover Page
        
  11.   Table of Contents....................  Table of Contents
        
  12.   General Information
        and History..........................  Not Applicable
        
  13.   Investment Objectives
        and Policies.........................  Investment 
                                               Objectives and 
                                               Policies; Investment 
                                               Techniques;
                                               Investment
        
  14.   Management of the Fund...............  Management of the        
                                               Trust
        
  15.   Control Persons and
        Principal
        Holders of Securities................  General Information
        
  16.   Investment Advisory                    Management of the
        and Other Services...................  Trust; Expenses of  
                                               the Funds
        
  17.   Brokerage Allocation                   Portfolio
        and Other Practices..................  Transactions;            
                                               Expenses of the         
                                               Funds
  18.   Capital Stock and
        Other Securities.....................  General Information
        
  19.   Purchase, Redemption and Pricing       Purchase and
        of Securities Being Offered..........  Redemption of            
                                               Shares; Net Asset       
                                               Value

  20.   Tax Status...........................  Dividends,               
                                               Distribution and        
                                               Taxes
        
  21.   Underwriters.........................  Expenses of the Funds; Purchase 
                                               and Redemption of Shares
        
  22.   Calculation of
        Performance Data.....................  General Information
        
  23.   Financial Statements.................  Financial Statements
 
<PAGE>
 
  -------------------
  The following documents are incorporated herein by reference:
    
  1. The Trust's Prospectus Supplement filed pursuant to Rule 497 (File Nos. 33-
     12988, 811-05088) on June 28, 1996;

  2. The Trust's Statement of Additional Information Supplement filed pursuant
     to Rule 497 (File Nos. 33-12988, 811-05088) on June 28, 1996;

  3. The Trust's Prospectus relating to Class A, Class B and Class C shares of
     the Alliance Short-Term U.S. Government Fund, filed pursuant to Rule 497
     (File Nos. 33-12988, 811-05088) on March 14, 1996;

  4. The Trust's Statement of Additional Information (including the reports of
     independent accountants and financial statements contained therein),
     relating to Class A, Class B and Class C shares of the Alliance Short-Term
     U.S. Government Fund, filed pursuant to Rule 497 (File Nos. 33-12988, 811-
     05088) on November 13, 1996;

  5. The Trust's Prospectus relating to Advisor Class Shares of the Alliance
     Short-Term U.S. Government Fund, contained in Post-Effective Amendment No.
     20 to the Trust's Registration Statement (File Nos. 33-12988, 811-05088)
     filed on April 23, 1996;

  6. The Trust's Statement of Additional Information (including the reports of
     independent accountants and financial statements contained therein)
     relating to Advisor Class Shares of the Alliance Short-Term U.S. Government
     Fund, contained in Post-Effective No. 20 to the Trust's Registration
     Statement (File Nos. 33-12988, 811-05088) filed on April 23, 1996;

  7. The Trust's Prospectus relating to Class A, Class B and Class C shares of
     the Alliance Strategic Balanced Fund and the Alliance Growth Fund, filed
     pursuant to Rule 497 (File Nos. 33-12988, 811-05088) on February 13, 1996;

  8. The Trust's Prospectus Supplement relating to the Alliance Strategic
     Balanced Fund and the Alliance Growth Fund, filed pursuant to Rule 497
     (File Nos. 33-12988, 811-05088) on July 25, 1996;

  9. The Trust's Prospectus Supplement relating to the Alliance Strategic
     Balanced Fund and the Alliance Growth Fund, filed pursuant to Rule 497
     (File Nos. 33-12988, 811-05088) on February 27, 1996;

  10. The Trust's Statement of Additional Information (including the reports of
      independent accountants and financial statements contained therein),
      relating Class A, Class B and Class C shares of the Alliance Strategic
      Balanced Fund and       
<PAGE>
 
    
      the Alliance Growth Fund, contained in Post-Effective No. 19 to the
      Trust's Registration Statement (File Nos. 33-12988, 811-05088) filed on
      January 31, 1996.

  11. The Trust's Prospectus relating to Advisor Class Shares of the Alliance
      Strategic Balanced Fund and the Alliance Growth Fund, contained in Post-
      Effective Amendment No. 20 to the Trust's Registration Statement (File
      Nos. 33-12988, 811-05088) filed on April 23, 1996;

  12. The Trust's Statement of Additional Information (including the reports of
      independent accountants and financial statements contained therein)
      relating to Advisor Class Shares of the Alliance Strategic Balanced Fund
      and the Alliance Growth Fund, contained in Post-Effective No. 20 to the
      Trust's Registration Statement (File Nos. 33-12988, 811-05088) filed on
      April 23, 1996.      
<PAGE>
 



                                    Alliance
               ------------------------------------------------
                                     Asset
               ------------------------------------------------
                                Allocation Funds
               ------------------------------------------------

                 P.O. Box 1520, Secaucus, New Jersey 07096-1520
                            Toll Free (800) 221-5672
                    For Literature: Toll Free (800) 227-4618


                           Prospectus and Application
    
                               September 3, 1996      

                         Alliance Growth Investors Fund
                      Alliance Conservative Investors Fund
    
                Table of Contents                             Page

                The Funds at a Glance.......................     2
                Expense Information.........................     3
                Financial Highlights........................     5
                Description of the Funds....................     7
                Purchase and Sale of Shares.................    11
                Management of the Funds.....................    13
                Dividends, Distributions and Taxes..........    15
                General Information.........................    15
                Appendix A..................................   A-1      

                               Investment Adviser
                        Alliance Capital Management L.P.
                          1345 Avenue Of The Americas
                            New York, New York 10105


Alliance Growth Investors Fund ("Growth Investors Fund") and Alliance
Conservative Investors Fund ("Conservative Investors Fund") use asset allocation
strategies, and each Fund is designed with a view toward a particular "investor
profile." The Growth Investors Fund seeks the highest total return consistent
with Alliance's determination of reasonable risk by investing in a diversified
mix of publicly traded equity and fixed-income securities. The Conservative
Investors Fund seeks a high total return without, in the view of Alliance, undue
risk to principal by investing in a diversified mix of publicly traded equity
and fixed-income securities.
    
Each Fund is a series of The Alliance Portfolios (the "Trust"), and is a
diversified, open-end management investment company. This Prospectus offers only
shares of Alliance Growth Investors Fund and Alliance Conservative Investors
Fund. Shares of the Trust's other series, each of which has its own investment
objective and policies, are offered by separate Prospectuses. This Prospectus
sets forth concisely the information which a prospective investor should know
about the Funds before investing. A "Statement of Additional Information" dated
September 3, 1996, which provides further information regarding certain matters
discussed in this Prospectus and other matters which may be of interest to some
investors, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, call or write Alliance Fund
Services, Inc. at the address or the "Literature" telephone number shown above.
         
This Prospectus offers three classes of shares which may be purchased at the
investor's choice at a price equal to their net asset value (i) plus an initial
sales charge imposed at the time of purchase (the "Class A shares"), (ii) with a
contingent deferred sales charge imposed on most redemptions made within four
years of purchase (the "Class B shares"), or (iii) without any initial or
contingent deferred sales charge, as long as the shares are held for one year or
more (the "Class C shares"). See "Purchase and Sale of Shares" and "Management
of the Funds--Distribution Plans."     

An investment in the Funds is not a deposit or obligation of, or guaranteed or
endorsed by, any bank and is not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.

Investors are advised to read this Prospectus carefully and to retain it for
future reference.

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

                                                              [LOGO] Alliance(R)
                                              Investing without the Mystery.(SM)

(R)/SM These are registered marks used under licenses from the owner, Alliance 
Capital Management L.P.
<PAGE>
 
The Funds At A Glance
    
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.     

The Funds Seek to Provide . . .

Growth Investors Fund: Highest total return with reasonable risk through
investment in a mix of equity and fixed-income securities. Normally the Fund
will hold approximately 70% of its total assets in equity securities.
Conservative Investors Fund: High total return without undue risk to principal
through investment in a mix of equity and fixed-income securities. Normally the
Fund will hold approximately 70% of its total assets in fixed-income securities.

The Funds Will Invest . . .
Principally in publicly traded equity and fixed-income securities.
    
The Trust's Investment Manager Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment adviser
providing diversified services to institutions and individuals through a broad
line of investments including more than 100 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world, with over $168
billion in assets under management as of June 30, 1996. Alliance provides
investment management services to 33 of the FORTUNE 100 companies.     


Getting Started . . .

Shares of the Funds are available through your financial representative and most
banks, insurance companies and brokerage firms nationwide. Shares can be
purchased for a minimum initial investment of $250, and subsequent investments
can be made for as little as $50. In addition, Alliance offers several time and
money saving services to investors. Be sure to ask your financial representative
about:
    
- --------------------------------------------------------------------------------
                             Automatic Reinvestment
- --------------------------------------------------------------------------------
                          Automatic Investment Program
- --------------------------------------------------------------------------------
                                Retirement Plans
- --------------------------------------------------------------------------------
                            Dividend Direction Plans
- --------------------------------------------------------------------------------
                                 Auto Exchange
- --------------------------------------------------------------------------------
                             Systematic Withdrawals
- --------------------------------------------------------------------------------
                           A Choice of Purchase Plans
- --------------------------------------------------------------------------------
                             Telephone Transactions
- --------------------------------------------------------------------------------
                              24 Hour Information
- --------------------------------------------------------------------------------
     

                                                              [LOGO] Alliance(R)
                                              Investing without the Mystery.(SM)

(R)/SM These are registered marks used under licenses from the owner, Alliance 
Capital Management L.P.

                                       2
<PAGE>
 
- --------------------------------------------------------------------------------
                              Expense Information
- --------------------------------------------------------------------------------

Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following tables summarize your maximum transaction costs
from investing in a Fund and estimated annual expenses for each class of shares.
The examples following the tables show the cumulative expenses attributable to a
hypothetical $1,000 investment in each class for the periods specified. 


Growth Investors Fund

<TABLE>    
<CAPTION> 
                                                             Class A Shares    Class B Shares    Class C Shares 
                                                             --------------    --------------    -------------- 
<S>                                                          <C>               <C>               <C>            
Shareholder Transaction Expenses
  Maximum sales charge imposed on purchases
    (as a percentage of offering price)..................       4.25%(a)         None               None
  Sales charge imposed on dividend reinvestments.........       None             None               None
  Deferred sales charge (as a percentage of
    original purchase price or redemption proceeds,
    whichever is lower)..................................       None          4.0% during        1.0% during
                                                                             the first year,   the first year,
                                                                               decreasing       0% thereafter
                                                                              1.0% annually
                                                                               to 0% after
                                                                               the fourth
                                                                                 year(b)

  Exchange fee...........................................       None             None               None
Annual Fund Operating Expenses
(as a percentage of average net assets)
  Management fees (after waiver)(c)......................       0.50%           0.50%              0.50%
  Rule 12b-1 fees........................................       0.30%(d)        1.00%              1.00%
  Other expenses(e)......................................       0.60%           0.60%              0.60%
                                                                ----            ----               ----
Total Fund operating expenses (after waiver
  and expense reimbursement)(f)..........................       1.40%           2.10%              2.10%
                                                                ====            ====               ====
</TABLE>

- --------------------------------------------------------------------------------
(a)  Reduced  for larger  purchases.  Purchases  of  $1,000,000  or more are not
     subject to an initial  sales  charge but may be subject to a 1.0%  deferred
     sales charge if redeemed  within one year of purchase.  See  "Purchase  and
     Sale of Shares--How to Buy Shares"--page 11.
(b)  As described herein,  Class B shares will automatically  convert to Class A
     shares after eight years.  See  "Purchase  and Sale of  Shares--How  to Buy
     Shares--Class B Shares--Deferred Sales Charge Alternative"--page 11.
(c)  Reflects the agreement of Alliance to waive  management  fees to the extent
     necessary  to ensure that total Fund  operating  expenses do not exceed the
     amounts  shown  in the  table  above.  In the  absence  of such  agreement,
     management fees would have been .75%.
(d)  Reflects  the  amount  to which the  Principal  Underwriter  has  currently
     undertaken  to the  Trustees  to limit  payments  under the Fund's  Class A
     Distribution Plan.
(e)  These  expenses  include a transfer  agency fee  payable to  Alliance  Fund
     Services,   Inc.,  an  affiliate  of  Alliance,  based  on  the  number  of
     shareholder accounts maintained for the Fund.
(f)  Reflects the agreement of Alliance to limit total Fund operating  expenses.
     In the absence of such agreement,  total Fund operating expenses would have
     been  1.65%,  2.35% and 2.36%,  respectively,  for the Class A, Class B and
     Class C shares.      


Example
<TABLE>     
<CAPTION> 
                                                    Cumulative Expenses Paid for the Period of: 
                                                    ------------------------------------------- 
                                                       1 Year  3 Years   5 Years   10 Years     
                                                       ------  -------   -------   --------     
<S>                                                    <C>     <C>       <C>       <C>          
An investor would pay the following                                                             
  expenses on a $1,000 investment,                                                              
  assuming (i) a 5% annual return                                                               
  throughout the period and (ii)                                                                
  redemption at the end of the period:                                                          
    Class A...................................         $56      $85      $116      $203         
    Class B...................................         $61      $86      $113      $225(a)      
    Class C...................................         $31      $66      $113      $243         
                                                                                                
An investor would pay the                                                                       
  following expenses on the                                                                     
  same $1,000 investment                                                                        
  assuming no redemption at                                                                     
  the end of the period:                                                                        
    Class A...................................         $56      $85      $116      $203         
    Class B...................................         $21      $66      $113      $225(a)      
    Class C...................................         $21      $66      $113      $243          
</TABLE>      
- --------------------------------------------------------------------------------
(a)  Assumes the Class B shares  converted  to Class A shares after eight years.
     See note (b) above.

                                       3
<PAGE>
 
Conservative Investors Fund
<TABLE>     

<CAPTION> 
                                                Class A Shares      Class B Shares      Class C Shares
                                                --------------      --------------      --------------
<S>                                             <C>                 <C>                 <C> 
Shareholder Transaction Expenses
  Maximum sales charge imposed on purchases
    (as a percentage of offering price)........... 4.25%(a)             None                 None
  Sales charge imposed on dividend reinvestments.. None                 None                 None
  Deferred sales charge (as a percentage of
    original purchase price or redemption
    proceeds, whichever is lower)................. None              4.0% during            1.0% during
                                                              the first year, decreasing  the first year,
                                                                    1.0% annually          0% thereafter
                                                                     to 0% after
                                                                  the fourth year(b)

  Exchange fee....................................  None                None                 None
Annual Fund Operating Expenses
(as a percentage of average net assets)
  Management fees (after waiver)(c)...............  0.41%               0.41%               0.41%
  Rule 12b-1 fees.................................  0.30%(d)            1.00%               1.00%
  Other expenses(e)...............................  0.69%               0.69%               0.69%
                                                    ----                ----                ----
Total Fund operating expenses (after waiver)(f)...  1.40%               2.10%               2.10%
                                                    ====                ====                ====
</TABLE> 
- --------------------------------------------------------------------------------
(a)  Reduced  for larger  purchases.  Purchases  of  $1,000,000  or more are not
     subject to an initial  sales  charge but may be subject to a 1.0%  deferred
     sales charge if redeemed  within one year of purchase.  See  "Purchase  and
     Sale of Shares--How to Buy Shares"--page 11.
(b)  Class B shares  automatically  convert to Class A shares after eight years.
     See   "Purchase   and  Sale  of   Shares--How   to  Buy   Shares--Class   B
     Shares--Deferred Sales Charge Alternative"--page 11.
(c)  Reflects the agreement of Alliance to waive  management  fees to the extent
     necessary  to ensure that total Fund  operating  expenses do not exceed the
     amounts  shown  in the  table  above.  In the  absence  of such  agreement,
     management fees would have been .75%.
(d)  Reflects  the  amount  to which the  Principal  Underwriter  has  currently
     undertaken  to the  Trustees  to limit  payments  under the Fund's  Class A
     Distribution Plan.
(e)  These  expenses  include a transfer  agency fee  payable to  Alliance  Fund
     Services,   Inc.,  an  affiliate  of  Alliance,  based  on  the  number  of
     shareholder accounts maintained for the Fund.
(f)  Reflects the agreement of Alliance to limit total Fund operating  expenses.
     In the absence of such agreement,  total Fund operating expenses would have
     been  1.73%,  2.44% and 2.45%,  respectively,  for the Class A, Class B and
     Class C shares.      

Example

<TABLE>     
<CAPTION> 
                                  Cumulative Expenses Paid for the Period of:
                                  -------------------------------------------
                                    1 Year    3 Years    5 Years   10 Years
                                    ------    -------    -------   --------
<S>                                 <C>       <C>        <C>       <C> 
An investor would pay the 
  following expenses on a 
  $1,000 investment assuming 
  (i) a 5% annual return throughout 
  the period and (ii) redemption 
  at the end of the period:

     Class A.......................  $ 56      $ 85       $116      $203
     Class B.......................  $ 61      $ 86       $113      $225(a)
     Class C.......................  $ 31      $ 66       $113      $243


An investor would pay the
  following expenses on the
  same $1,000 investment
  assuming no redemption at
  the end of the period:

     Class A.......................  $ 56      $ 85       $116     $203
     Class B.......................  $ 21      $ 66       $113     $225(a)
     Class C.......................  $ 21      $ 66       $113     $243
</TABLE> 
- --------------------------------------------------------------------------------
(a)  Assumes the Class B shares  converted  to Class A shares after eight years.
     See note (b) above.      
    
The purpose of the foregoing tables is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. Long-term shareholders of a Fund may pay aggregate sales charges
totalling more than the economic equivalent of the maximum initial sales charges
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. See "Management of the Funds--Distribution Plans." The
examples set forth above assume reinvestment of all dividends and distributions
and utilize a 5% annual rate of return, as mandated by regulations of the
Securities and Exchange Commission (the "Commission"). The examples should not
be considered a representation of future expenses; actual expenses may be
greater or less than those shown. Actual return will vary.     

                                       4
<PAGE>
 
- --------------------------------------------------------------------------------
                              Financial Highlights
- --------------------------------------------------------------------------------

  Selected Data For a Share of Beneficial Interest Outstanding Throughout Each
                                     Period

The information in the following tables, which pertains to the fiscal
years indicated, has been audited by Price Waterhouse LLP, the Trust's
independent accountants, whose report thereon appears in the Statement of
Additional Information. The following information should be read in conjunction
with the financial statements and related notes which are included in the
Statement of Additional Information. Further information about a Fund's
performance is contained in the Trust's annual report to shareholders which may
be obtained without charge by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover of this
Prospectus. Prior to July 22, 1993, Equitable Capital Management Corporation
("Equitable Capital") served as the investment adviser to the Trust. On July 22,
1993, Alliance Capital Management L.P. acquired the business and substantially
all of the assets of Equitable Capital and became the investment adviser to the
Trust.

<TABLE>     
<CAPTION> 
                                                                                      Growth Investors Fund
                                                                                             Class A
                                                                     --------------------------------------------------------
                                                                                                                   May 4,
                                                                     Year Ended     Year Ended     Year Ended      1992(a)
                                                                      April 30,      April 30,      April 30,    To April 30,
                                                                         1996           1995          1994           1993
                                                                     ----------     ----------     ----------    ------------
<S>                                                                  <C>            <C>            <C>           <C> 
Net asset value, beginning of period...............................   $   12.08      $   11.61      $   11.35      $   10.00
                                                                      ---------      ---------      ---------      ---------
Income from Investment Operations:
Net investment income..............................................         .10*           .25*           .12*           .20*
Net realized and unrealized gain on investments....................        2.75            .38            .39           1.43
                                                                      ---------      ---------      ---------      ---------
Net increase in net asset value from operations....................        2.85            .63            .51           1.63
                                                                      ---------      ---------      ---------      ---------
Less: Distributions
Dividends from net investment income...............................        (.26)          (.15)          (.11)          (.16)
Distributions from net realized gains..............................        (.59)          (.01)          (.14)          (.12)
                                                                      ---------      ---------      ---------      ---------
Total dividends and distributions..................................        (.85)          (.16)          (.25)          (.28)
                                                                      ---------      ---------      ---------      ---------
Net asset value, end of period.....................................   $   14.08      $   12.08      $   11.61      $   11.35
                                                                      =========      =========      =========      =========

Total Return
Total investment return based on net asset value(b)................       23.87%          5.57%          4.46%         16.32
                                                                      =========      =========      =========      =========
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............................  $   30,608      $  22,189        $16,759        $ 3,503

Ratios to average net assets of:
  Expenses, net of waivers/reimbursements..........................        1.40%           1.40%           1.40%        1.40%(c)
  Expenses, before waivers/reimbursements..........................        1.65%           1.97%           2.33%        4.27%(c)
  Net investment income............................................        2.02%           2.32%           1.67%        1.91%(c)
Portfolio turnover rate............................................         209%            134%             96%         114%

<CAPTION> 

                                                                 Growth Investors Fund                 Growth Investors Fund
                                                                         Class B                              Class C
                                                       ------------------------------------------  ---------------------------------
                                                         Year      Year     Year       May 4,       Year       Year      August 2,
                                                         Ended     Ended    Ended     1992(a)       Ended      Ended      1993(d)
                                                       April 30, April 30, April 30, To April 30,  April 30, April 30,  To April 30,
                                                         1996      1995      1994        1993        1996       1995        1994
                                                       --------- --------- --------- ------------  --------- ---------  ------------
<S>                                                   <C>       <C>        <C>       <C>          <C>        <C>        <C> 
Net asset value, beginning of period.................  $  12.09  $  11.65   $  11.41 $  10.00      $  12.10  $  11.65   $  11.88
                                                       --------  --------   -------- --------      --------  --------   --------
Income from Investment Operations:
Net investment income................................       .06*      .17*       .07*     .07*          .06*      .18*       .08*
Net realized and unrealized gain (loss) on
    investments......................................      2.70       .38        .37     1.45          2.70       .38       (.11)
                                                       --------  --------   -------- --------      --------  --------   --------
Net increase (decrease) in net asset value from
    operations.......................................      2.76       .55        .44     1.52          2.76       .56       (.03)
                                                       --------  --------   -------- --------      --------  --------   --------
Less: Distributions
Dividends from net investment income.................      (.18)     (.10)      (.06)    (.05)         (.18)     (.10)      (.06)
Distributions from net realized gains................      (.59)     (.01)      (.14)    (.06)         (.59)     (.01)      (.14)
                                                       --------  --------   -------- --------      --------  --------   --------
Total dividends and distributions....................      (.77)     (.11)      (.20)    (.11)         (.77)     (.11)      (.20)
                                                       --------  --------   -------- --------      --------  --------   --------
Net asset value, end of period.......................  $  14.08  $  12.09   $  11.65  $ 11.41      $  14.09  $  12.10   $  11.65
                                                       ========  ========   ======== ========      ========  ========   ========
Total Return
Total investment return based on net asset value(b)..     23.06%     4.83%      3.84%   15.23%       23.04%      4.91%      (.26)%
                                                       ========  ========   ======== ========      ========  ========   ========
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)..............  $ 59,978  $ 43,328   $ 30,871  $ 7,999      $ 5,915   $  4,247   $  3,280
Ratios to average net assets of:
    Expenses, net of waivers/reimbursements..........      2.10%     2.10%      2.11     2.15%(c)     2.10%      2.10%      2.10%(c)
    Expenses, before waivers/reimbursements..........      2.35%     2.67%      3.00     4.48%(c)     2.36%      2.66%      3.02%(c)
  Net investment income..............................      1.15%     1.62%       .95     1.07%(c)     .13%       1.62%      1.04%(c)
Portfolio turnover rate..............................       209%      134%        96%     114%        209%        134%        96%
</TABLE> 
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 6.     

                                       5
<PAGE>
 
<TABLE>     
<CAPTION> 
 
                                                                                   Conservative Investors Fund
                                                                                           Class A
                                                                      ---------------------------------------------------------  
                                                                                                                      May 4,
                                                                      Year Ended      Year Ended     Year Ended      1992(a)
                                                                        April 30,       April 30,     April 30,   To April 30,
                                                                          1996           1995           1994           1993
                                                                       -----------     ----------     ---------   -------------
<S>                                                                   <C>             <C>            <C>           <C> 
Net asset value, beginning of period..............................       $10.38         $ 10.37        $ 10.79        $10.00
                                                                        -------        --------       --------       -------
Income from Investment Operations:
Net investment income.............................................          .51*            .48*           .31*          .39*
Net realized and unrealized (loss) gain on investments............          .80            (.02)          (.26)          .82
                                                                        -------        --------       --------       -------
Net increase in net asset value from operations...................         1.31             .46            .05          1.21
                                                                        -------        --------       --------       -------
Less: Distributions
Dividends from net investment income..............................         (.55)           (.45)          (.29)         (.36)
Distributions from net realized gains.............................          -0-             -0-           (.18)         (.06)
                                                                        -------        --------       --------       -------
Total dividends and distributions.................................         (.55)           (.45)          (.47)         (.42)
                                                                        -------        --------       --------       -------
Net asset value, end of period....................................       $11.14         $ 10.38        $ 10.37        $10.79
                                                                        =======        ========       ========       =======
Total Return
Total investment return based on net asset value(b)...............        12.69%           4.65%           .35%        12.25%
                                                                        =======        ========       ========       =======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)...........................      $14,161         $16,105        $15,595        $5,339
Ratios to average net assets of:
     Expenses, net of waivers/reimbursements......................         1.40%           1.40%          1.40%         1.40%(c)
     Expenses, before waivers/reimbursements......................         1.73%           1.83%          2.03%         3.45%(c)
     Net investment income........................................         4.43%           4.66%          3.43%         3.92%(c)
Portfolio turnover rate...........................................          267%            248%           133%           84%

<CAPTION> 
                                                                     Conservative                            Conservative
                                                                    Investors Fund                          Investors Fund
                                                                       Class B                                  Class C
                                                          ------------------------------------------------------------------------
                                                                                            May 4,                         August 2,
                                                          Year      Year        Year      1992(a)      Year       Year     1993(d)
                                                          Ended      Ended      Ended                  Ended      Ended 
                                                                                             To                              To   
                                                          April 30,  April 30,  April 30,  April 30,  April 30,  April 30, April 30,
                                                            1996       1995       1994       1993       1996       1995     1994
                                                         ----------  ---------  ---------- ---------  ---------  --------- ---------
<S>                                                      <C>       <C>         <C>       <C>         <C>        <C>     <C>
Net asset value, beginning of period.................... $ 10.51   $ 10.47     $ 10.8     $ 10.00    $ 10.52    $ 10.47  $ 11.12
                                                         -------   -------     -------    -------    -------    -------  ------- 
Income from Investment Operations:
Net investment income...................................     .43*      .46*       .24*        .24*       .41*       .46*     .18*
Net realized and unrealized gain
(loss) on investments...................................     .82      (.02)      (.26)        .89        .83       (.01)    (.50)
                                                         -------   -------     -------    -------    -------    -------  -------
Net increase (decrease) in net
asset value from operations.............................    1.25       .44       (.02)       1.13       1.24        .45     (.32)
                                                                         
Less: Distributions
Dividends from net investment income....................    (.45)     (.40)      (.21)       (.22)      (.45)      (.40)    (.15)
Distributions from net realized gains...................      -0-       -0-      (.18)       (.03)       -0-        -0-     (.18)
                                                         -------   -------     -------    -------    -------    -------  -------
Total dividends and distributions.......................    (.45)     (.40)      (.39)       (.25)      (.45)      (.40)    (.33)
                                                         -------   -------     -------    -------    -------    -------  -------
Net asset value, end of period.......................... $ 11.31   $ 10.51     $ 10.47    $ 10.88    $ 11.31    $ 10.52  $ 10.47
                                                         =======   =======     =======    =======    =======    =======  ======= 
Total Return
Total investment return based on net asset value(b).....   11.95%     3.91%       (.31)%    11.39%     11.84%      4.01%   (2.98)%
                                                         =======   =======     =======    =======    =======    =======  ======= 
Ratios/Supplemental Data:
Net assets, end of year (000's omitted).................  31,979   $30,542     $ 29,697   $ 9,210    $ 5,326    $ 4,419  $ 4,375
Ratios to average net assets of:
     Expenses, net of waivers/reimbursements............    2.10%     2.10%        2.11%     2.15%(c)   2.10%      2.10%    2.10%(c)
     Expenses, before waivers/reimbursements............    2.44%     2.52%        2.73%     3.95%(c)   2.45%      2.52%    2.69%(c)
     Net investment income..............................    3.72%     3.96%        2.72%     3.06%(c)   3.71%      3.97     2.94%(c)
Portfolio turnover rate.................................     267%      248          133%       84%       267%       248%     133%
</TABLE>      
- --------------------------------------------------------------------------------
*    Net of fee waived and expenses reimbursed by Alliance.
(a)  Commencement of operations.
(b)  Total investment return is calculated  assuming an initial  investment made
     at the net asset value at the beginning of the period,  reinvestment of all
     dividends  and  distributions  at net asset value  during the  period,  and
     redemption  on the  last  day of  the  period.  Initial  sales  charges  or
     contingent  deferred sales charges are not reflected in the  calculation of
     total investment return. Total investment return calculated for a period of
     less than one year is not annualized.
(c)  Annualized.
(d)  Commencement of distribution.

                                       6
<PAGE>
 
- --------------------------------------------------------------------------------
                            Description of The Funds
- --------------------------------------------------------------------------------

Except for certain investment restrictions designated as fundamental in this
Prospectus and the Statement of Additional Information, the investment
objectives and policies of the Funds are not fundamental policies and may be
changed by the Trustees without shareholder approval. However, the Trust will
give shareholders contemporaneous notice of any change in a Fund's investment
objective. There can be, of course, no assurance that the Funds will achieve
their investment objectives.

    
INVESTMENT OBJECTIVES AND POLICIES 
General. The Conservative Investors and Growth Investors Funds invest in a
variety of fixed-income securities, money market instruments and equity
securities, each pursuant to a different asset allocation strategy, as described
below. The term "asset allocation" is used to describe the process of shifting
assets among discrete categories of investments in an effort to adjust risk
while producing desired return objectives. Portfolio management, therefore, will
consist not only of selecting specific securities but also of setting,
monitoring and changing, when necessary, the asset mix.     
    
Each Fund has been designed with a view toward a particular "investor profile."
The "conservative investor" has a relatively short-term investment bias, either
because of a limited tolerance for market volatility or a short investment
horizon. This investor is averse to taking risks that may result in principal
loss, even though such aversion may reduce the potential for higher long-term
gains and result in lower performance during periods of equity market strength.
Consequently, the asset mix for the Conservative Investors Fund attempts to
reduce volatility while providing modest upside potential. The "growth investor"
has a longer-term investment horizon and is therefore willing to take more risks
in an attempt to achieve long-term growth of principal. This investor wishes, in
effect, to be risk conscious without being risk averse. The asset mix for the
Growth Investors Fund is therefore intended to provide for upside potential
without excessive volatility.     
    
Alliance has established an asset allocation  committee (the  "Committee"),  all
the members of which are employees of Alliance, which is responsible for setting
and  continually  reviewing  the asset mix  ranges of each Fund.  The  Committee
generally meets at least twice each month. Under normal market  conditions,  the
Committee is expected to change  allocation ranges  approximately  three to five
times per year.  However,  the  Committee  has broad  latitude to establish  the
frequency, as well as the magnitude, of allocation changes within the guidelines
established  for  each  Fund.  During  periods  of  severe  market   disruption,
allocation ranges may change frequently.  It is also possible that in periods of
stable and consistent outlook no change will be made. The Committee's  decisions
are based on and may be limited by a variety of  factors,  including  liquidity,
portfolio size, tax  consequences and general market  conditions,  always within
the context of the  appropriate  investor  profile for each Fund.  Consequently,
asset mix decisions for the Conservative  Investors Fund  principally  emphasize
risk  assessment  of each  asset  class  viewed  over the  shorter  term,  while
decisions for the Growth  Investors Fund are principally  based on an assessment
of the longer term total return potential for each asset class.     

The Funds are permitted to use a variety of hedging techniques to attempt to
reduce market, interest rate and currency risks.
    
INVESTMENT POLICIES OF THE CONSERVATIVE INVESTORS FUND 
The investment objective of the Conservative Investors Fund is to achieve a high
total return without, in the view of Alliance, undue risk to principal. The
Conservative Investors Fund attempts to achieve its investment objective by
allocating varying portions of its assets among investment grade, publicly
traded fixed-income securities, money market instruments and publicly traded
common stocks and other equity securities of U.S. and non-U.S. issuers.     
    
All fixed-income securities owned by the Fund will be of investment grade at the
time of purchase. This means that they will be in one of the top four rating
categories assigned by Standard & Poor's ("S&P") or Moody's Investors Service,
Inc. ("Moody's") or will be unrated securities of comparable quality as
determined by Alliance. Securities in the fourth such rating category (rated by
S&P or Baa by Moody's) have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such obligations than in the case of
higher-rated securities. In the event that the rating of any security held by
the Conservative Investors Fund falls below investment grade (or, in the case of
an unrated security, Alliance determines that it is no longer of investment
grade), the Fund will not be obligated to dispose of such security and may
continue to hold the obligation if, in the opinion of Alliance, such investment
is appropriate under the circumstances. For a description of the ratings
referred to above, see Appendix A.     
    
Equity securities invested in by the Conservative Investors Fund will consist of
common stocks and securities convertible into common stocks, such as convertible
bonds, convertible preferred stocks and warrants, issued by companies with a
favorable outlook for earnings and whose rate of growth is expected to exceed
that of the U.S. economy over time.     

The Conservative Investors Fund will at all times hold at least 40% of its total
assets in investment grade fixed-income securities, each having a duration less
than that of a 10-year Treasury bond (the "Fixed Income Core"). The duration of
a fixed-income security is the weighted average maturity, expressed in years, of
the present value of all future cash flows, including coupon payments and
principal repayments.

                                       7
<PAGE>
 
The Conservative Investors Fund is generally expected to hold approximately 70%
of its total assets in fixed-income securities (including the Fixed Income Core,
cash and money market instruments) and 30% in equity securities. Actual asset
mixes will be adjusted in response to economic and credit market cycles. The
fixed-income asset class will always comprise at least 50%, but never more than
90%, of the Fund's total assets. The equity class will always comprise at least
10%, but never more than 50%, of the Fund's total assets. For temporary
defensive purposes, the Fund may invest in money market instruments.
    
INVESTMENT POLICIES OF THE GROWTH INVESTORS FUND 
The investment objective of the Growth Investors Fund is to achieve the highest
total return consistent with Alliance's determination of reasonable risk. The
Fund attempts to achieve its investment objective by allocating varying portions
of its assets among a number of asset classes. Equity investments will include
publicly traded common stocks and other equity securities of the type in which
the Conservative Investors Fund may invest, but may also include equity
securities issued by intermediate- and small-sized companies with favorable
growth prospects, companies in cyclical industries, companies whose securities
are, in the opinion of Alliance, temporarily undervalued, companies in special
situations and less widely known companies. Fixed-income investments will
include investment grade fixed-income securities (including cash and money
market instruments) and may include securities that are rated in the lower
rating categories by recognized ratings agencies (i.e., BB or lower by S&P or Ba
or lower by Moody's) or that are unrated but determined by Alliance to be of
comparable quality. Lower rated fixed-income securities generally provide
greater current income than higher rated fixed-income securities, but are
subject to greater credit and market risk. The Fund will not invest more than
25% of its total assets in securities rated at the time of purchase below
investment grade, that is, securities rated BB or lower by S&P or Ba or lower by
Moody's, or in unrated securities deemed to be of comparable quality at the time
of purchase by Alliance. For a description of the ratings referred to above, see
Appendix A. For more information about the risks associated with investment in
lower rated securities, see "High-Yield Securities" below.     

The Growth Investors Fund will at all times hold at least 40% of its total
assets in publicly traded common stocks and other equity securities of the type
purchased by the Conservative Investors Fund (the "Equity Core"). The Growth
Investors Fund is generally expected to hold approximately 70% of its total
assets in equity securities (including the Equity Core) and 30% in fixed-income
securities (including cash and money market instruments). Actual asset mixes
will be adjusted in response to economic and credit market cycles. The fixed-
income asset class will always comprise at least 10%, but never more than 60%,
of the Fund's total assets. The equity class will always comprise at least 40%,
but never more than 90%, of the Fund's total assets. For temporary defensive
purposes, the Fund may invest in money market instruments.
    
ADDITIONAL INVESTMENT POLICIES AND TECHNIQUES APPLICABLE TO THE FUNDS 
Foreign Securities. Each Fund may invest without limit in securities of foreign
issuers and securities which are not publicly traded in the United States,
although the Conservative Investors Fund generally will not invest more than 15%
of its total assets, and the Growth Investors Fund generally will not invest
more than 30% of its total assets, in such securities. Such securities may
involve certain special risks due to foreign economic, political, diplomatic and
legal developments, including favorable or unfavorable changes in currency
exchange rates, exchange control regulations (including currency blockage and
costs), expropriation or nationalization of assets, confiscatory taxation,
imposition of withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers. The securities of some foreign companies and foreign securities markets
are less liquid and at times more volatile than securities of comparable U.S.
companies and U.S. securities markets, and foreign securities markets may be
subject to less regulation than U.S. securities markets. The laws of some
foreign countries may limit the Funds' ability to invest in certain issuers
located in those countries. Foreign brokerage commissions and other fees are
also generally higher than in the United States. There are also special tax
considerations which apply to securities of foreign issuers and securities
principally traded overseas. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Funds' assets held abroad) and expenses not present in
the settlement of domestic investments.     
    
The Growth Investors Fund may invest a portion of its assets in developing
countries or in countries with new or developing capital markets. The risks
noted above are generally increased with respect to these investments. These
countries may have relatively unstable governments, economies based on only a
few industries or securities markets that trade a small number of securities.
Securities of issuers located in these countries tend to have volatile prices
and may offer significant potential for loss.     

The value of foreign investments measured in U.S. dollars will rise or fall
because of decreases or increases, respectively, in the value of the U.S. dollar
in comparison to the value of the currency in which the foreign investment is
denominated. The Funds may buy or sell foreign currencies, options on foreign
currencies, foreign currency futures contracts (and related options) and deal in
forward foreign currency exchange contracts in connection with the purchase and
sale of foreign investments. See the Statement of Additional Information.
    
Non-Publicly Traded Securities. Each Fund may invest in securities that are not
publicly traded, including securities sold pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). The sale of these securities is
usually      

                                       8
<PAGE>
 
restricted under Federal securities laws, and market quotations may not be
readily available. As a result, a Fund may not be able to sell these securities
(other than Rule 144A Securities) unless they are registered under applicable
Federal and state securities laws, or may have to sell them at less than fair
market value. Investment in these securities is restricted to 5% of a Fund's
total assets (not including for these purposes Rule 144A Securities, to the
extent permitted by applicable law) and is also subject to the Funds'
restriction against investing more than 15% of total assets in "illiquid"
securities. To the extent permitted by applicable law, Rule 144A Securities will
not be treated as "illiquid" for purposes of the foregoing restriction so long
as such securities meet liquidity guidelines established by the Trust's Board of
Trustees. For additional information see the Statement of Additional
Information.

Mortgage-Backed Securities. Each Fund may invest in mortgage-backed securities,
including collateralized mortgage obligations or "CMOs." Interest and principal
payments (including prepayments) on the mortgages underlying mortgage-backed
securities are passed through to the holders of the mortgage-backed security.
Prepayments occur when the mortgagor on an individual mortgage prepays the
remaining principal before the mortgage's scheduled maturity date. As a result
of the pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the prepayment
characteristics of the underlying mortgages vary, it is not possible to predict
accurately the realized yield or average life of a particular issue of pass-
through certificates. During periods of declining interest rates, such
prepayments can be expected to accelerate and the Funds would be required to
reinvest the proceeds at the lower interest rates then available. In addition,
prepayments of mortgages which underlie securities purchased at a premium could
result in capital losses.

The Funds may also invest in derivative instruments, including certificates
representing rights to receive payments of the interest only or principal only
of mortgage-backed securities ("IO/PO Strips"). These securities may be more
volatile than other types of securities. IO Strips involve the additional risk
of loss of the entire remaining value of the investment if the underlying
mortgages are prepaid.


Adjustable Rate Securities. Each Fund may invest in adjustable rate securities.
Adjustable rate securities are securities that have interest rates that are
reset at periodic intervals, usually by reference to some interest rate index or
market interest rate. Some adjustable rate securities are backed by pools of
mortgage loans. Although the rate adjustment feature may act as a buffer to
reduce sharp changes in the value of adjustable rate securities, these
securities are still subject to changes in value based on changes in market
interest rates or changes in the issuer's creditworthiness. Because the interest
rate is reset only periodically, changes in the interest rate on adjustable rate
securities may lag behind changes in prevailing market interest rates. Also,
some adjustable rate securities (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in the interest rate during a
specified period or over the life of the security.

Asset-Backed Securities. Each Fund may invest in asset-backed securities, which
represent fractional interests in pools of leases, retail installment loans or
revolving credit receivables, both secured and unsecured. These assets are
generally held by a trust. Payments of principal and interest or interest only
are passed through to certificate holders and may be guaranteed up to certain
amounts by letters of credit issued by a financial institution affiliated or
unaffiliated with the trustee or originator of the trust.

Underlying automobile sales contracts or credit card receivables are subject to
prepayment, which may reduce the overall return to certificate holders.
Certificate holders may also experience delays in payment on the certificates if
the full amounts due on underlying sales contracts or receivables are not
realized by the trust because of unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the collateral
(usually automobiles) securing certain contracts, or other factors. If
consistent with its investment objective and policies, each of the Funds may
invest in other asset-backed securities that may be developed in the future.

High-Yield Securities. The Growth Investors Fund may invest in high-yield, high-
risk, fixed-income and convertible securities rated at the time of purchase Ba
or lower by Moody's or BB or lower by S&P, or, if unrated, judged by Alliance to
be of comparable quality ("High-Yield Securities"). The Growth Investors Fund
will generally invest in securities rated at the time of purchase at least Caa-
by Moody's or CCC- by S&P or in unrated securities judged by Alliance to be of
comparable quality at the time of purchase. However, from time to time, the Fund
may invest in securities rated in the lowest grades of Moody's (C) or S&P (D) or
in unrated securities judged by Alliance to be of comparable quality, if
Alliance determines that there are prospects for an upgrade or a favorable
conversion into equity securities (in the case of convertible securities).
Securities rated Ba or BB or lower (and comparable unrated securities) are
commonly referred to as "junk bonds." Securities rated D by S&P are in default.
For the fiscal year ended April 30, 1996, neither Fund invested in High-Yield
Securities.

As with other fixed-income securities, High-Yield Securities are subject to
credit risk and market risk and their yields may fluctuate. Market risk relates
to changes in a security's value as a result of changes in interest rates.
Credit risk relates to the ability of the issuer to make payments of principal
and interest. High-Yield Securities are subject to greater credit risk (and
potentially greater incidence of default) than comparable higher-rated
securities because issuers are more vulnerable to economic downturns, higher
interest rates or adverse issuer-specific developments. In addition, the prices
of High-Yield Securities are generally subject to greater market risk, and
therefore react more sharply to changes in interest

                                       9
<PAGE>
 
rates. The value and liquidity of High-Yield Securities may be diminished by
adverse publicity or investor perceptions.

Because High-Yield Securities are frequently traded only in markets where the
number of potential purchasers and sellers, if any, is limited, the ability of
the Growth Investors Fund to sell High-Yield Securities at their fair value
either to meet redemption requests or to respond to changes in the financial
markets may be limited. Thinly traded High-Yield Securities may be more
difficult to value accurately for the purpose of determining the Fund's net
asset value. In addition, the values of such securities may be more volatile.

Some High-Yield Securities in which the Growth Investors Fund may invest may be
subject to redemption or call provisions that may limit increases in market
value that might otherwise result from lower interest rates while increasing the
risk that the Fund may be required to reinvest redemption or call proceeds
during a period of relatively low interest rates.

The credit ratings issued by Moody's and S&P, a description of which is included
as Appendix A, are subject to various limitations. For example, while such
ratings evaluate credit risk, they ordinarily do not evaluate the market risk of
High-Yield Securities. In certain circumstances, the ratings may not reflect in
a timely fashion adverse developments affecting an issuer. For these reasons,
Alliance conducts its own independent credit analysis of High-Yield Securities.
When the Growth Investors Fund invests in securities in the lower rating
categories, the achievement of the Fund's goals is more dependent on Alliance's
ability than would be the case if the Fund were investing in higher-rated
securities. 

In the event that the credit rating of a High-Yield Security held by the Growth
Investors Fund falls below its rating at the time of purchase (or, in the case
of unrated securities, Alliance determines that the quality of such security has
deteriorated since purchased by the Fund), the Fund will not be obligated to
dispose of such security and may continue to hold the obligation if, in the
opinion of Alliance, such investment is appropriate under the circumstances.

Convertible Securities. Each Fund may invest in convertible securities. These
securities normally provide a higher yield than the underlying stock but lower
than a fixed-income security without the conversion feature. Also, the price of
the convertible security will normally vary to some degree with changes in the
price of the underlying stock although under some market conditions the higher
yield tends to make the convertible security less volatile than the underlying
common stock. In addition, the price of the convertible security will also
generally vary to some degree inversely with interest rates. Convertible debt
securities that are rated below (S&P) or Baa (Moody's) or comparable unrated
securities as determined by Alliance may share some or all of the risks of High-
Yield Securities. For a description of these risks, see "High-Yield Securities"
above. 

Equity-Linked Debt Securities. Equity-linked debt securities are securities with
respect to which the amount of interest and/or principal that the issuer thereof
is obligated to pay is linked to the performance of a specified index of equity
securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. Furthermore, as with any debt securities, the values
of equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
As with other securities, a Fund could lose its entire investment in equity-
linked debt securities.

Zero-Coupon and Payment-in-Kind Bonds. The Funds may at times invest in so-
called "zero-coupon" bonds and "payment-in-kind" bonds. Zero-coupon bonds are
issued at a significant discount from their principal amount in lieu of paying
interest periodically. Payment-in-kind bonds allow the issuer, at its option, to
make current interest payments on the bonds either in cash or in additional
bonds. Because zero-coupon and payment-in-kind bonds do not pay current interest
in cash, their value is generally subject to greater fluctuation in response to
changes in market interest rates than bonds which pay interest currently in
cash. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid the
need to generate cash to meet current interest payments. Accordingly, such bonds
may involve greater credit risks than bonds paying interest currently in cash.
Even though such bonds do not pay current interest in cash, a Fund is
nonetheless required to accrue interest income on such investments and to
distribute such amounts at least annually to shareholders. Thus, a Fund could be
required to liquidate other investments in order to satisfy its dividend
requirements at times when Alliance would not otherwise deem it advisable to do
so.

Futures and Related Options. Each Fund may buy and sell stock index futures
contracts ("index futures") and may buy options on index futures for hedging
purposes and may buy and sell options on stock indices for hedging purposes or
to earn additional income. The Funds may also, for hedging purposes, purchase
and sell futures contracts, options thereon and options with respect to U.S.
Treasury securities, including U.S. Treasury bills, notes and bonds.

The use of futures and options involves certain special risks. Futures and
options transactions involve costs and may result in losses. Certain risks arise
because of the possibility of imperfect correlations between movements in the
prices of futures and options and movements in the prices of the underlying
stock index or security or of the securities in a Fund's portfolio that are the
subject of a hedge. The successful use of the strategies described above further
depends on Alliance's ability to forecast market movements correctly. Other
risks arise from a Fund's potential inability to close out its futures or
options positions. In addition there can be no assurance that a liquid secondary
market will exist for any future or option at any particular time. Certain
provisions

                                       10
<PAGE>
 
of the Internal Revenue Code and certain regulatory requirements may limit the
Funds' ability to engage in futures and options transactions. A more detailed
explanation of futures and options transactions, including the risks associated
with them, is included in the Statement of Additional Information. 

Options. A Fund may seek to increase current return by writing covered call and
put options on securities it owns or in which it may invest. The Fund receives a
premium from writing a call or put option, which increases the Fund's return if
the option expires unexercised or is closed out at a net profit. When the Fund
writes a call option, it gives up the opportunity to profit from any increase in
the price of a security above the exercise price of the option; when it writes a
put option, the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current market price of the
security. The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. A Fund may also buy and
sell put and call options for hedging purposes. A Fund may also from time to
time buy and sell combinations of put and call options on the same underlying
security to earn additional income. A Fund's use of these strategies may be
limited by applicable law.

Securities Loans, Repurchase Agreements and Forward Commitments. Each Fund may
lend portfolio securities amounting to not more than 25% of its total assets and
may enter into repurchase agreements on up to 25% of its total assets. These
transactions must be fully collateralized at all times, but involve some risk to
a Fund if the other party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral. Each Fund may also purchase
securities for future delivery, which may increase its overall investment
exposure and involves a risk of loss if the value of the securities declines
prior to the settlement date.

Portfolio Management. Alliance manages each Fund's portfolio by buying and
selling securities to help attain its investment objective. The portfolio
turnover rate for each Fund is included under "Financial Highlights." A high
portfolio turnover rate will involve greater costs to a Fund (including
brokerage commissions and transaction costs) and may also result in the
realization of taxable capital gains, including short-term capital gains taxable
at ordinary income rates. See "Dividends, Distributions and Taxes" below and
"Portfolio Transactions" in the Statement of Additional Information.

Certain Fundamental Investment Policies. The Funds have adopted certain
fundamental investment policies which may not be changed without shareholder
approval, including policies which provide that each Fund may not: (i) invest
more than 5% of its total assets in the securities of any one issuer (other than
U.S. Government securities and repurchase agreements relating thereto), although
up to 25% of a Fund's total assets may be invested without regard to this
restriction; or (ii) invest 25% or more of its total assets in the securities of
any one industry.

- ----------------------------
Purchase And Sale 
- ----------------------------
   Of Shares 
- ----------------------------

HOW TO BUY SHARES
You can purchase shares through broker-dealers, banks or other financial
intermediaries, or directly through Alliance. The minimum initial investment is
$250. The minimum for subsequent investments is $50. Investments of $25 or more
are allowed under the automatic investment program and a 403(b)(7) retirement
plan. Share certificates are issued only upon request. See the Statement of
Additional Information and the Application for more information. 

Existing shareholders may make subsequent purchases by electronic funds transfer
if they have completed the Telephone Transactions section of the Subscription
Application or the Shareholder Options form obtained from Alliance Fund
Services, Inc. ("AFS"). Telephone purchase orders can be made by calling (800)
221-5672, may not exceed $500,000, must be received by the Fund by 3:00 p.m.
Eastern time on a Fund business day and will be made at the next day's net asset
value (less any applicable sales charge).

The Funds offer the following classes of shares:

Class A Shares--Initial Sales Charge Alternative 
You can purchase Class A shares at net asset value plus an initial sales charge,
as follows:

                                        Initial Sales Charge
                                as % of                         Commission to 
                             Net Amount     as % of           Dealer/Agent as %
Amount Purchased              Invested    Offering Price      of Offering Price 

Less than $100,000             4.44%         4.25%                  4.00% 
$100,000 to less 
than $250,000                  3.36          3.25                   3.00 
$250,000 to less
than $500,000                  2.30          2.25                   2.00 
$500,000 to less 
than $1,000,000                1.78          1.75                   1.50 

On purchases of $1,000,000 or more, you pay no initial sales charge but may pay
a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of net
asset value at the time of redemption or original cost if you redeem within one
year; Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced or
eliminated sales charges in accordance with the Funds' Combined Purchase
Privilege, Cumulative Quantity Discount, Statement of Intention, Privilege for
Certain Retirement Plans, Reinstatement Privilege and Sales at Net Asset Value
programs. Consult the Application and the Statement of Additional Information.

Class B Shares--Deferred Sales Charge Alternative 
You can purchase Class B shares at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within

                                       11
<PAGE>
     
four years after purchase. The amount of the CDSC (expressed as a percentage of
the lesser of the current net asset value or original cost) will vary according
to the number of years from the purchase of the Class B shares until the
redemption of those shares, as follows:
     

                                 CDSC
                            Shares Purchased
                              On or After
     Year Since Purchase    November 19, 1993
- -----------------------------------------------
     First                         4%
     Second                        3%
     Third                         2%
     Fourth                        1%
     Thereafter                   None

Shares purchased before November 19, 1993 are subject to a different CDSC
schedule.
    
Class B shares are subject to higher distribution fees than Class A shares for a
period of eight years (at which time they convert to Class A shares). Because of
these higher fees, Class B shares pay correspondingly lower dividends and may
have a lower net asset value than Class A shares.
         
Class C Shares--Asset-Based Sales Charge Alternative
You can purchase Class C shares at net asset value without any initial sales
charge. The Fund will thus receive the full amount of your purchase, and, if you
hold your shares for one year or more, you will receive the entire net asset
value of your shares upon redemption. Class C shares incur higher distribution
fees than Class A shares and do not convert to any other class of shares of the
Fund. Because of these higher fees, Class C shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares.
         
Class C shares redeemed within one year of purchase will be subject to a CDSC
equal to 1.0% of the lesser of their original cost or net asset value at the
time of redemption.
         
Application of the CDSC
Shares obtained from dividend or distribution reinvestment are not subject to
any CDSC. The CDSC is deducted from the amount of the redemption and is paid to
AFD. The CDSC will be waived on redemptions of shares following the death or
disability of a shareholder, to meet the requirements of certain qualified
retirement plans or, with respect to Class B or Class C shares, pursuant to a
monthly, bimonthly or quarterly systematic withdrawal plan. See the Statement of
Additional Information.
    
How The Funds Value Their Shares
The net asset value of each Class of shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to that Class by the outstanding
shares of that Class. Shares are valued each day the New York Stock Exchange
("Exchange") is open as of the close of regular trading (currently 4:00 p.m.
Eastern time). The portfolio securities of a Fund are valued at their current
market value determined on the basis of market quotations or, if such quotations
are not readily available, by such other methods as the Trustees believe would
accurately reflect fair market value.
    
General
The decision as to which Class is most beneficial to you depends on the amount
and intended length of your investment. If you are making a large investment,
thus qualifying for a reduced sales charge, you might consider Class A shares.
If you are making a smaller investment, you might consider Class B shares
because 100% of your purchase is invested immediately. If you are unsure of the
length of your investment, you might consider Class C shares because there is no
initial or, after one year, contingent deferred sales charge. Consult your
financial agent. There is no size limit on purchases of Class A shares. The
maximum purchase of Class B shares is $250,000. The maximum purchase of Class C
shares is $5,000,000. A Fund may refuse any order to purchase shares.
         
The Funds offer a fourth class of shares, Advisor Class shares, by means of a
separate Prospectus. Advisor Class shares may be purchased and held principally
through (i) accounts established under a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial intermediary and
approved by AFD, pursuant to which each investor pays an asset-based fee at an
annual rate of at least .50% of the assets in the investor's account, to the
broker-dealer or other financial intermediary, or its affiliate or agent, or
(ii) a self-directed defined contribution employee benefit plan (e.g., a 401(k)
plan) that has at least 1,000 participants or $25 million in assets. Because
Advisor Class shares are offered without any initial sales charge or CDSC and
without ongoing distribution expenses, the performance of Advisor Class shares
will exceed that of Class A, Class B or Class C shares. You may obtain more
Information about Advisor Class shares by contacting AFS at 800-221-5672 or by
contacting your financial representative.
         
In addition to the discount or commission paid to dealers, AFD will from time to
time pay to dealers additional cash or other incentives that are conditioned
upon the sale of a specified minimum dollar amount of shares of a Fund and/or
other Alliance Mutual Funds. Such incentives may take the form of payment for
attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.
    
HOW TO SELL SHARES
You may "redeem," i.e., sell your shares to a Fund on any day the Exchange is
open, either directly or though your financial intermediary. The price you will
receive is the net asset value (less any applicable CDSC for Class B shares)
next calculated after a Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares recently
purchased by check, a Fund will not send proceeds until it is reasonably
satisfied that the check has been collected (which may take up to 15 days).

                                       12
<PAGE>
     
Selling Shares Through Your Broker
Your broker must receive your request before 4:00 p.m. Eastern time and your
broker must transmit your request to the Fund by 5:00 p.m. Eastern time to
receive that day's net asset value (less any applicable CDSC). Your broker is
responsible for furnishing all necessary documentation to the Fund and may
charge you for this service.
         
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to AFS along with
certificates, if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member firm of a national
stock exchange or other eligible guarantor institution. Stock power forms are
available from your financial intermediary, AFS, and many commercial banks.
Additional documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For details contact:
     
                            Alliance Fund Services
                                 P.O. Box 1520
                            Secaucus, NJ 07096-1520
                                1-800-221-5672
    
Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to (800) 221-5672.
Telephone redemption requests must be made by 4:00 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value, and may be made 
only once in any 30-day period. A shareholder who has completed the Telephone 
Transactions section of the Subscription Application, or the Shareholder Options
form obtained from AFS, can elect to have the proceeds of his or her redemption 
sent to his or her bank via an electronic funds transfer. Proceeds of telephone 
redemptions also may be sent by check to a shareholder's address of record. 
Redemption requests by electronic funds transfer may not exceed $100,000 and 
redemption requests by check may not exceed $50,000. Telephone redemption is not
available for shares held in nominee or street name accounts or retirement plan 
accounts or shares held by a shareholder who has changed his or her address of 
record within the previous 30 calendar days.
     
General
The sale of shares is a taxable transaction for Federal tax purposes. Under
unusual circumstances, the Funds may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by Federal securities law. The Funds
reserve the right to close an account that through redemption has remained below
$200 for 90 days. Shareholders will receive 60 days' written notice to increase
the account value before the account is closed.

SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672. Some
services are described in the attached Application. A shareholder's manual
explaining all available services will be provided upon request. To request a
shareholder's manual, call 800-227-4618.

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 telephonic requests to
purchase, sell or exchange 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 telephonic requests. The telephone
service may be suspended or terminated at any time without notice.
    
HOW TO EXCHANGE SHARES
You may exchange your investment in any Fund for shares of the same class of
other Alliance Mutual Funds (which include AFD Exchange Reserves, a money market
fund managed by Alliance). Exchanges of shares are made at the net asset values
next determined, without sales or service charges. Exchanges may be made by
telephone or written request. Telephone exchange requests must be received by 
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that 
day's net asset value.
         
Shares will continue to age without regard to exchanges for purposes of
determining the CDSC, if any, upon redemption and, in the case of Class B
shares, conversion to Class A shares. After an exchange, your Class B shares
will automatically convert to Class A shares in accordance with the conversion
schedule applicable to the Class B shares of the Alliance Mutual Fund you
originally purchased for cash ("original shares"). When redemption occurs, the
CDSC applicable to the original shares is applied.
     
Please read carefully the prospectus of the fund into which you are exchanging
before submitting the request. Call AFS at 800-221-5672 to exchange by telephone
shares not in certificate form. An exchange is a taxable capital transaction for
Federal tax purposes. The exchange service may be changed, suspended, or
terminated on 60 days' written notice.

- ------------------------------
Management Of The Funds
- ------------------------------
    
ADVISER
Alliance, which is 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 contract (the "Investment Advisory Contract") to provide
investment advice and, in general, to conduct the management and investment
programs of each Fund subject to the general supervision and control of the
Trustees of the Trust. The employee of Alliance principally responsible for the
Funds' investment program is Robert G. Heisterberg, who has had such
responsibility since February 1996. Mr. Heisterberg is a Senior Vice President
and Global Economic Policy Analyst of Alliance and has been associated with
Alliance since 1977.     
    
Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1996 totalling more than $168 billion (of
which more than $55 billion represents the assets of investment companies).
Alliance's clients are primarily major corporate employee benefit funds, public
employee retirement systems, investment companies, foundations and endowment
funds. The 51 registered      

                                       13
<PAGE>
     
investment companies managed by Alliance comprising more than 100 separate
investment portfolios currently have over two million shareholders. As of June
30, 1996, Alliance was retained as an investment manager of employee benefit
fund assets for 33 of the Fortune 100 companies.     

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

Alliance provides investment advisory, administrative and clerical services,
office space, and order placement facilities for each Fund and pays all
compensation of the Trustees and officers of the Trust who are affiliated
persons of Alliance. For its services, Alliance is entitled to receive a monthly
fee from each Fund at an annual rate of 0.75% of such Fund's average daily net
assets. However, Alliance has voluntarily agreed to waive its fees and bear
certain expenses so that total expenses of each Fund do not exceed on an annual
basis 1.40%, 2.10% and 2.10% of average net assets, respectively, for the Class
A, Class B and Class C shares.

DISTRIBUTION PLANS
Rule 12b-1 adopted by the Commission under the Investment Company Act of 1940,
as amended (the "1940 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 Trust has adopted a plan
for each class of shares pursuant to Rule 12b-1 (each a "Plan" and collectively
the "Plans"). Pursuant to the Plans, each Fund pays AFD a Rule 12b-1
distribution services fee, which may not exceed an annual rate of .50% of the
Fund's aggregate average daily net assets attributable to the Class A shares,
1.00% of the Fund's aggregate average daily net assets attributable to the Class
B shares and 1.00% of the Fund's aggregate average daily net assets attributable
to the Class C shares, to compensate AFD for distribution services. The Trustees
currently limit payments under the Class A Plan to .30% of each Fund's aggregate
average daily net assets attributable to Class A shares. The Plans provide that
a portion of the distribution services fee, in an amount not to exceed .25%,
constitutes a service fee that AFD will use for personal service and/or the
maintenance of shareholder accounts.

Each Plan provides that AFD will use the distribution services fee received from
a Fund for payments (i) to compensate broker-dealers or other persons for
providing distribution assistance, (ii) to otherwise promote the sale of shares
of that Fund and (iii) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative, accounting and
other services with respect to that Fund's shareholders. In this regard, some
payments under the Plans are used to compensate financial intermediaries with
trail or maintenance commissions in an amount equal to .25%, annualized, with
respect to Class A shares and Class B shares, and 1.00%, annualized, with
respect to Class C shares, of the assets maintained in a Fund by their
customers. Distribution services fees are accrued daily and paid monthly, and
are charged as expenses of the Fund when accrued. The Plans also provide that
Alliance may use its own resources to finance the distribution of the Funds'
shares.

The Funds are not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. The purpose of the payments to AFD
under the Plans is to compensate AFD for its distribution services with respect
to the sale of the Funds' shares. Since AFD's compensation is not directly tied
to its expenses, the amount of compensation received by it under the Plans
during any year may be more or less than its actual expenses. For this reason,
the Plans are characterized by the staff of the Commission as being of the
"compensation" variety.
    
In the event that a Plan is terminated or not continued, (i) no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Funds to AFD with respect to the relevant class and (ii) the Funds
would not be obligated to pay AFD for any amounts expended by AFD not previously
recovered by AFD from distribution services fees in respect of shares of such
class or, in the case of Class B shares, recovered through deferred sales
charges. Unreimbursed distribution expenses incurred as of April 30, 1996 with
respect to the Class B shares of the Conservative Investors Fund amounted to
approximately $220,460, or approximately 1.56% of the net assets represented by
Class B shares on that date. Unreimbursed distribution expenses incurred as of
April 30, 1996 with respect to the Class C shares of the Conservative Investors
Fund amounted to approximately $100,992, or approximately 0.32% of the net
assets represented by Class C shares on that date. Unreimbursed distribution
expenses incurred as of April 30, 1996 with respect to the Class B shares of the
Growth Investors Fund amounted to approximately $452,949, or approximately 0.76%
of the net assets represented by Class B shares on that date. Unreimbursed
distribution expenses incurred as of April 30, 1996 with respect to the Class C
shares of the Growth Investors Fund amounted to approximately $62,756, or
approximately 1.06% of the net assets represented by Class C shares on that
date.     

The Plans are in compliance with rules of the National Association of Securities
Dealers, Inc. which effectively limit the annual asset-based sales charges and
service fees that a mutual fund may impose on a class of shares to .75% and
 .25%, respectively, of the average annual net assets attributable to that class.
The rules also limit the aggregate of all initial, deferred and asset-based
sales charges imposed with respect to a class of shares by a mutual fund that
also charges a service fee to 6.25% of cumulative gross sales of shares of that
class, plus interest at the prime rate plus 1% per annum.

                                       14
<PAGE>
 
The Glass-Steagall Act and other applicable laws may 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 do not prohibit such depository institutions from
providing services for investment companies such as the administrative,
accounting and other services referred to above. In the event that a change in
these laws prevented a bank from providing such services, it is expected that
other service arrangements would be made and that shareholders would not be
adversely affected. The State of Texas requires that shares of the Funds may be
sold in that state only by dealers or other financial institutions that are
registered there as broker-dealers.

- ------------------------------
Dividends, Distributions
- ------------------------------
        And Taxes
- ------------------------------
    
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains distribution in cash from a
Fund, you may, within 120 days following the date of its payment, reinvest the
dividend or distribution in additional shares of the Fund without charge by
returning to Alliance, with appropriate instructions, the check representing
such dividend or distribution. Thereafter, unless you otherwise specify, you
will be deemed to have elected to reinvest all subsequent dividends and
distributions in shares of the Fund.     

It is the intention of the Conservative Investors Fund to distribute net
investment income quarterly and any net realized capital gains at least
annually. It is the intention of the Growth Investors Fund to distribute any net
investment income and any net realized capital gains at least annually.
Distributions from net investment income, if any, are expected to be small.
Distributions from net capital gains are made after applying any available loss
carryovers.

TAXES
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Internal Revenue Code. So long as a Fund distributes at least 90% of
its income, qualification as a regulated investment company relieves that Fund
of Federal income and excise taxes on that part of its taxable income including
net capital gains which it pays out to its shareholders. Dividends out of net
ordinary income and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of corporate
shareholders, such dividends may be eligible for the dividends-received
deduction, except that the amount eligible for the deduction is limited to the
amount of qualifying dividends received by the Fund. A corporation's dividends-
received deduction will be disallowed unless the corporation holds shares in the
Fund at least 46 days. Furthermore, the dividends-received deduction will be
disallowed to the extent that a corporation's investment in shares of a Fund is
financed with indebtedness.

The excess of net long-term capital gains over the net short-term capital losses
realized and distributed by each Fund to its shareholders as capital gains
distributions is taxable to the shareholders as long-term capital gains,
irrespective of the length of time a shareholder may have held his or her Fund
shares. Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.

Under current federal tax law, the amount of an income dividend or capital gains
distribution declared by a Fund during October, November or December of a year
to shareholders of record as of a specified date in such a month that is paid
during January of the following year is includable in the prior year's taxable
income of shareholders that are calendar year taxpayers.

Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of such shares by the amount of
such dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to him or her
as described above. Any loss realized on the sale of shares held six months or
less will be a long-term capital loss to the extent of distribution with respect
to such shares of net capital gain.

A dividend or capital gains distribution with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual retirement account,
403(b)(7) retirement plan or corporate pension or profit-sharing plan, will not
be taxable to the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard to the
character of the income earned by the qualified plan.

- ------------------------------
General Information
- ------------------------------

PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Trust may consider sales of shares of the Funds as a factor in the selection of
dealers to enter into portfolio transactions with the Funds.

ORGANIZATION
The Trust is a Massachusetts business trust organized on March 26, 1987. Prior
to August 2, 1993, the Trust was known as The Equitable Funds, and the Growth
Investors Fund and the Conservative Investors Fund were known as The Equitable
Growth Investors Fund and The Equitable Conservative Investors Fund,
respectively.
    
The Trust is an open-end management investment company with an unlimited number
of authorized shares of beneficial interest, which may, without shareholder
approval, be divided into an unlimited number of series of such shares which, in
turn, may be subdivided into an unlimited number of classes of shares. The Trust
currently consists of five series of shares, two of which represent the Funds.
Each Fund is divided into      

                                       15
<PAGE>
     
four classes of shares, three of which, designated Class A shares, Class B
shares and Class C shares, are offered by this Prospectus and one of which,
designated Adviser Class shares, is offered by another prospectus. The Trustees
may, subject to any required approvals by the Commission, further divide each
series into additional classes of shares which may be sold under conditions or
with charges varying from those of the present classes of shares of each series.
In addition, upon approval by the Commission, fees and expenses other than those
described above may be allocated to any class of a series' shares.     

Shareholders are entitled to one vote for each share held and to vote in the
election of Trustees and the termination of the Trust and on other matters
submitted to meetings of shareholders. Shareholders of a series or a class
thereof are entitled to vote only on matters which affect that series or that
class, and shareholders of the series or a particular class of shares of the
series which are affected generally vote together as a single class. The Trust
is not required and does not presently intend to hold annual meetings of its
shareholders for election of Trustees and ratification of the selection of
auditors. Shareholders may remove Trustees from office by votes cast in person
or by proxy at a meeting of shareholders or by written consent. The shares of
each Fund are freely transferable, are entitled to distributions from the assets
of the relevant Fund as declared by the Trustees, and, if a Fund were
liquidated, would receive the net assets of the Fund attributable to the
relevant class. The Trust may suspend the sale of shares of any Fund or class
thereof at any time and may refuse any order to purchase shares.

Shareholders could, under certain circumstances, be held personally liable for
obligations of the Trust. However, the risk of a shareholder incurring financial
loss on account of such liability is considered remote since it may arise only
in very limited circumstances. See "Shareholder and Trustee Liability" under
"General Information" in the Statement of Additional Information.

    
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, is the Trust's registrar, transfer agent and
dividend-disbursing agent for a fee based upon a dollar amount (determined by
reference to the total number of shareholder accounts for all Alliance funds in
the Fund's broad investment category) charged to the Fund for each shareholder
account. The transfer agency fee with respect to the Class B and Class C shares
will be higher than the transfer agency fee with respect to the Class A shares,
reflecting the differential costs associated with the Class B and Class C
contingent deferred sales charge.     

PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the Principal Underwriter of the
shares of the Trust.

PERFORMANCE INFORMATION
From time to time the Funds advertise their "yield" and "total return." Yield
and total return are computed separately for Class A, Class B and Class C shares
of each Fund. A Fund's yield for any 30-day (or one-month) period is computed by
dividing the net investment income per share earned during such period by the
maximum public offering price per share on the last day of the period, and then
annualizing such 30-day (or one-month) yield in accordance with a formula
prescribed by the Commission which provides for compounding on a semi-annual
basis. The Funds may also state in sales literature an "actual distribution
rate" for each class which is computed in the same manner as yield except that
actual income dividends declared per share during the period in question are
substituted for net investment income per share. The actual distribution rate is
computed separately for Class A, Class B and Class C shares of each Fund.
Advertisements of total return disclose the average annual compounded total
return for the recent one-year period and the life of the class. Total return
for each such period is computed by finding, through the use of a formula
prescribed by the Commission, the average annual compounded rate of return over
the period that would equate an assumed initial amount invested to the value of
the investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Funds are
assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases and redemptions of Fund shares are assumed to have been
paid. Each Fund will include performance data for each of its Class A, Class B
and Class C shares in any advertisement or information including performance
data of the Funds. These advertisements may quote performance rankings or
ratings of the Funds as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and Morningstar, Inc. or
compare the Funds' performance to various indices.

ADDITIONAL INFORMATION
This Prospectus and the Statement of Additional Information, which has been
incorporated by reference herein, do 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 offices of the Commission in Washington, D.C.

This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.

                                       16
<PAGE>
 
Appendix A

RATINGS OF CORPORATE BONDS
    
Descriptions of the bond ratings of Standard & Poor's are:      

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
   Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
   and differs from the higher rated issues only in small degree.
 
A--Debt rated A has a strong capacity to pay interest and repay principal
   although it is somewhat more susceptible to the adverse effects of changes in
   circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
   and repay principal. Whereas it normally exhibits adequate protection
   parameters, adverse economic conditions or changing circumstances are more
   likely to lead to a weakened capacity to pay interest and repay principal for
   debt in this category than for debt in higher rated categories. 

BB, B, CCC, CC or C--Debt rated BB, B, CCC, CC or C is regarded, on balance, as
   predominantly speculative with respect to the issuer's capacity to pay
   interest and repay principal in accordance with the terms of the obligation.
   While such debt will likely have some quality and protective characteristics,
   these are outweighed by large uncertainties or major risk exposures to
   adverse debt conditions.

C1--The rating C1 is reserved for income bonds on which no interest is being
   paid.

D--Debt rated D is in default and payment of interest and/or repayment of
   principal is in arrears.

The ratings from AA to CC may be modified by the addition of a plus (+) or minus
   (-) sign to show relative standing within the major rating categories.

Descriptions of the bond ratings of Moody's Investors Service, Inc. are as
follows:

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
   the smallest degree of investment risk and are generally referred to as "gilt
   edge." Interest payments are protected by a large or by an exceptionally
   stable margin, and principal is secure. While the various protective elements
   are likely to change, such changes as can be visualized are most unlikely to
   impair the fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
   Together with the Aaa group they comprise what are generally known as high
   grade bonds. They are rated lower than the best bonds because margins of
   protection may not be as large as in Aaa securities or fluctuation of
   protective elements may be of greater amplitude or there may be other
   elements present which make the long-term risks appear somewhat greater than
   the Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are
   to be considered as upper-medium-grade obligations. Factors giving security
   to principal and interest are considered adequate, but elements may be
   present which suggest a susceptibility to impairment some time in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
   they are neither highly protected nor poorly secured. Interest payments and
   principal security appear adequate for the present, but certain protective
   elements may be lacking or may be characteristically unreliable over any
   great length of time. Such bonds lack outstanding investment characteristics
   and in fact have speculative characteristics as well.

Ba--Bonds which are rated Ba are judged to have speculative elements; their
   future cannot be considered as well assured. Often the protection of interest
   and principal payments may be very moderate and thereby not well safeguarded
   during both good and bad times over the future. Uncertainty of position
   characterizes bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
   investment. Assurance of interest and principal payments or of maintenance of
   other terms of the contract over any long period of time may be small.

Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
   default or there may be present elements of danger with respect to principal
   or interest.

Ca--Bonds which are rated Ca represent obligations which are speculative to a
   high degree. Such issues are often in default or have other marked
   shortcomings.

C--Bonds which are rated C are the lowest class of bonds and issues so rated can
  be regarded as having extremely poor prospects of ever attaining any real
  investment standing.

Moody's applies modifiers to each rating classification from Aa through B to
indicate relative ranking within its rating categories. The modifier "1"
indicates that a security ranks in the higher end of its rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates that
the issue ranks in the lower end of its rating category.

                                      A-1
<PAGE>
 
                       ALLIANCE SUBSCRIPTION APPLICATION
- ------------------------------------------------------------------------------
                     ALLIANCE ASSET ALLOCATION FUNDS
Conservative Investors Fund                              Growth Investors Fund
- ------------------------------------------------------------------------------
                         INFORMATION AND INSTRUCTIONS
- ------------------------------------------------------------------------------

To Open Your New Alliance Account...

Please complete the application           For certified or overnight
and mail it to:                           deliveries, send to:
     Alliance Fund Services, Inc.         Alliance Fund Services, Inc.
     P.O. Box 1520                        500 Plaza Drive
     Secaucus, New Jersey 07096-1520      Secaucus, New Jersey 07094

- ---------
Section 1   Your Account Registration (Required)
- ---------
Complete one of the available choices.  To ensure proper tax reporting to the
IRS:
     Individuals, Joint Tenants and Gift/Transfer to a Minor:
         .  Indicate your name(s) exactly as it appears on your social 
            security card.

     Trust/Other:
         .  Indicate the name of the entity exactly as it appeared on the notice
            you received from the IRS when your Employer Identification number
            was assigned.
- ---------
Section 2   Your Address (Required)
- ---------
Complete in full.

- ---------
Section 3   Your Initial Investment (Required)
- ---------
1) Write the dollar amount of your initial purchase in the column corresponding
to the class of shares you have chosen  (If you are eligible for a reduced sales
charge, you must also complete Section 4F) 2) Circle a distribution option for
your dividends  3) Circle a distribution option for your capital gains.  All
distributions (dividends and capital gains) will be reinvested into your fund
account unless you direct otherwise.  If you want distributions sent directly 
to your bank account, then you must complete Section 4D and attach a voided 
check for that account.  If you want your distributions sent to a third party 
you must complete Section 4E.

- ---------
Section 4   Your Shareholder Options (Complete only those options you want)
- ---------
A. Automatic Investment Plans (AIP) - You can make periodic investments into any
   of your Alliance Funds in one of three ways. First, by a periodic withdrawal
   ($25 minimum) directly from your bank account and invested into an Alliance
   Fund. Second, you can direct your distributions (dividends and capital gains)
   from one Alliance Fund into another Fund. Or third, you can automatically
   exchange monthly ($25 minimum) shares of one Alliance Fund for shares of
   another Fund. To elect one of these options, complete the appropriate portion
   of Section 4A.
B. Systematic Withdrawal Plans (SWP) - Complete this option if you wish to
   periodically redeem dollars from one of your fund accounts. Payments can be
   made via Electronic Funds Transfer (EFT) to your bank account (currently
   Classes A and C only) or by check.
C. Telephone Transactions via EFT - Complete this option if you would like to
   be able to transact via telephone between your fund account and your bank
   account.
D. Bank Information - If you have elected any options that involve transactions
   between your bank account and your fund account or have elected cash
   distribution options and would like the payments sent to your bank account,
   please tape a voided check of the account you wish to use to this section of
   the application.
E. Third Party Payment Details - If you have chosen cash distributions and/or a
   Systematic Withdrawal Plan and would like the payments sent to a person
   and/or address other than those provided in section 1 or 2, complete this
   option.
F. Reduced Charges (Class A only) - Complete if you would like to link fund
   accounts that have combined balances that might exceed $100,000 so that
   future purchases will receive discounts. Complete if you intend to purchase
   over $100,000 within 13 months.

- ---------
Section 5   Shareholder Authorization (Required)
- ---------
All owners must sign.  If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.

If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At:  (800)
221-5672.
<PAGE>
 
                           SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
                     ALLIANCE ASSET ALLOCATION FUNDS

              (see instructions at the front of the application)



                 1. YOUR ACCOUNT REGISTRATION   (Please Print)


[_] INDIVIDUAL OR JOINT ACCOUNT

    ---------------------------------------------------------------------------
     Owner's Name (First Name)                  (MI)   (Last Name)

            -          -
    -----------------------------
     Social Security Number (Required to open account)

    ---------------------------------------------------------------------------
     Joint Owner's Name* (First Name)           (MI)   (Last Name)

    *Joint Tenants with right of survivorship unless Alliance Fund Services is
     informed otherwise.

[_]  GIFT/TRANSFER TO A MINOR

     ---------------------------------------------------------------------------
     Custodian - One Name Only  (First Name)    (MI)   (Last Name)

     ---------------------------------------------------------------------------
     Minor (First Name)                         (MI)   (Last Name)

         -       -
     ------------------------           
     Minor's Social Security    Under the State of ______ (Minor's Residence)
     Number (Required to open                              Uniform Gifts/ 
     account)                                              Transfer to Minor's 
                                                           Act

[_]  TRUST ACCOUNT
     
     -------------------------------------------------------------------------
       Name of Trustee

     -------------------------------------------------------------------------
       Name of Trust

     -------------------------------------------------------------------------
       Name of Trust (cont'd)
 
     ----------------------------------   ------------------------------------
       Trust Dated                        Tax ID or Social Security Number 
                                          (Required to open account)

[_]  OTHER

     ------------------------------------------------------------------------- 
     Name of Corporation, Partnership, Investment Only Retirement Plan or other
     Entity

     ------------------------------------
     Trustee Name (Retirement Plans Only)

     -----------------------
     Tax ID Number

                                2. YOUR ADDRESS


     -------------------------------------------------------------------------
     Street

     -------------------------------------------------------------------------
      City                          State                 Zip Code

     -------------------------------------------------------------------------
     If Non-U.S., Specify Country

             -    -                      -      -
     ----------------------      ----------------------
     Daytime Phone               Evening Phone

I am a:  [_] U.S. Citizen  [_] Non-Resident Alien [_] Resident Alien  [_] Other



                            [ For Alliance Use Only ]
<PAGE>
 
                          3. YOUR INITIAL INVESTMENT


The minimum investment is $250 per fund.  The maximum investment in Class B is
$250,000; Class C is $5,000,000.

I hereby subscribe for shares of Alliance Real Estate Investment Fund and elect
distribution options as indicated.

Dividend and Capital Gain 
Distribution Options:           

- ---------------------------
BROKER/DEALER USE ONLY 
WIRE CONFIRM #
- ---------------------------

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


R  Reinvest distributions into my fund account.
- -- ----------------------     
                                           
C  Send my distributions in cash to the address I have provided in
- -- -----------------------------
   Section 2.  (Complete Section 4D for direct deposit to your bank 
   account.  Complete Section 4E for payment to a third party)

D  Direct my distributions to another Alliance fund.  Complete the
- -- -------------------------------------------------               
   appropriate portion of Section 4A to direct your distributions
   (dividends and capital gains) to another Alliance Fund (the $250
   minimum investment requirement applies to Funds into which
   distributions are directed).


<TABLE> 
<CAPTION> 

<S>                              <C>                                                 <C> 
- ------------------------------- ---------------------------------------------------- -----------------------
                                 CLASS OF SHARES              
                                ---------------------------------------------------- 
                                ----------------- --------------- ------------------ DISTRIBUTION OPTIONS
Make all checks payable to:                          CONTINGENT                           CIRCLE         
Alliance Fund Services           INITIAL SALES        DEFERRED      ASSET-BASED      ------------ --------- 
- -------------------------------      CHARGE         SALES CHARGE    SALES CHARGE                   CAPITAL
ALLIANCE FUND NAME                     A                 B               C           DIVIDENDS      GAINS
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
Alliance Real Estate 
 Investment Fund                $                 $               $                    R   C   D  R   C   D  
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
                                                                                       R   C   D  R   C   D  
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
                                                                                       R   C   D  R   C   D  
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
                                                                                       R   C   D  R   C   D  
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
                                                                                       R   C   D  R   C   D  
- ------------------------------- ----------------- --------------- ------------------ ------------ --------- 
 TOTAL INVESTMENT               $                 $               $                
- ------------------------------- ----------------- --------------- ------------------ 
</TABLE> 
                                
<PAGE>
 
MY SOCIAL SECURITY (TAX IDENTIFICATION ) NUMBER IS:  [_][_][_][_][_][_][_][_][_]

- --------------------------------------------------------------------------------
4. Your Shareholder Options
- --------------------------------------------------------------------------------
- -------------------------------------
A.  AUTOMATIC INVESTMENT PLANS (AIP)
- -------------------------------------
 
[_] WITHDRAW FROM MY BANK ACCOUNT

I authorize Alliance to draw on my bank account for investment in my fund
account(s) as indicated below (Complete Section 4D also for the bank account you
wish to use).

<TABLE>
<CAPTION>
                              Monthly Dollar            
                              Amount                    Day of Withdrawal*
Fund Name                     ($25 minimum)             (1st thru 31st)                 Circle "all" or applicable months    
<S>                          <C>                        <C>                             <C>
                                                                                        All            J F M A M J J A S O N D
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
                                                                                        All            J F M A M J J A S O N D
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
                                                                                        All            J F M A M J J A S O N D
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
                                                                                        All            J F M A M J J A S O N D
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
</TABLE>
*Your bank must be a member of the National Automated Clearing House 
 Association (NACHA) 

[_] DIRECT MY DISTRIBUTIONS

As indicated in Section 3, I would like my dividends and/or capital gains
directed to another Alliance fund within the same class of shares.

<TABLE> 
<CAPTION> 

"From" Fund Name             "From" Fund Account #      "To" Fund Name                  "To" Fund Account # (if existing)
                               (if existing)
<S>                          <C>                        <C>                             <C>
                                                                                        [_] New
                                                                                        [_] Existing        
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
                                                                                        [_] New
                                                                                        [_] Existing        
- ---------------------------- -------------------------- ------------------------------- ----------------------------------------- 
                                                                                        [_] New
                                                                                        [_] Existing        
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
                                                                                        [_] New
                                                                                        [_] Existing        
- ---------------------------- -------------------------- ------------------------------- -----------------------------------------
</TABLE> 


[_] EXCHANGE SHARES MONTHLY

I authorize Alliance to transact monthly exchanges between my fund accounts as
listed below within the same class of shares.

<TABLE> 
<CAPTION> 


                   "From" Fund Account#    Dollar Amount     Day of Exchange**                    "To" Fund Account #
"From" Fund Name   (if existing)           ($25 minimum)     (1st thru 31st)     "To" Fund Name    (if existing)
 <S>               <C>                     <C>               <C>                 <C>               <C>
                                                                                                   [_] New
                                                                                                   [_] Existing   
 ----------------  ----------------------  ----------------  ------------------  ----------------  -----------------------------
                                                                                                   [_] New
                                                                                                   [_] Existing   
 ----------------  ----------------------  ----------------  ------------------  ----------------  -----------------------------
                                                                                                   [_] New
                                                                                                   [_] Existing   
 ----------------  ----------------------  ----------------  ------------------  ----------------  -----------------------------
                                                                                                   [_] New
                                                                                                   [_] Existing   
 ----------------  ----------------------  ----------------  ------------------  ----------------  -----------------------------
</TABLE> 

**Shares exchanged will be redeemed at the net asset value on the "Day of
  Exchange" (If the "Day of Exchange" is not a fund business day, the exchange
  transaction will be processed on the next fund business day). The exchange
  privilege is not available if stock certificates have been issued.

- ---------------------------------------
B.  SYSTEMATIC WITHDRAWAL PLANS (SWP)
- ---------------------------------------

In order to establish a SWP, you must reinvest all dividends and capital gains
and own or purchase shares of the Fund having a current net asset value of at
least:
 .$10,000 for monthly payments,          .$5,000 for bi-monthly payments,
 .$4,000 for quarterly or less frequent payments

SWPs on Class B shares of up to approximately 12% (annualized) of the current
market value of an account will be processed free of a contingent deferred sales
charge (CDSC). Under this plan, you may withdraw a maximum of 1% monthly, 2% bi-
monthly or 3% quarterly, of the value of your class B shares acquired after July
1, 1995, without the imposition of a CDSC. Withdrawals in excess of these
amounts will continue to be charged the applicable CDSC. Your bank must be a
member of the National Automated Clearing House Association (NACHA) in order for
you to receive SWP proceeds directly into your checking account.

[_]  I authorize Alliance to transact periodic redemptions from my fund account
     and send the proceeds to me as indicated below.

<TABLE>
<CAPTION>
 
Fund Name and Class of Shares                   Dollar Amount ($50 minimum)      Circle "all" or applicable months
<S>                                             <C>                              <C>
                                                                                 All          J F M A M J J A S O N D
- -------------------------------------------     -----------------------------    --------------------------------------
                                                                                 All          J F M A M J J A S O N D
- -------------------------------------------     -----------------------------    --------------------------------------
                                                                                 All          J F M A M J J A S O N D
- -------------------------------------------     -----------------------------    --------------------------------------
                                                                                 All          J F M A M J J A S O N D
- -------------------------------------------     -----------------------------    --------------------------------------

</TABLE>

PLEASE SEND MY PROCEEDS TO:
   [_] MY CHECKING ACCOUNT (via EFT) - Currently Class A and C only
       I would like to have these payments occur on or about the [____]    
       (1st-31st) of the months circled above.  (Complete Section 4D for the 
       bank account you wish to use.)
   [_] MY ADDRESS OF RECORD (via CHECK)
   [_] THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (via CHECK)
<PAGE>
 
- -------------------------------------
C.  PURCHASES AND REDEMPTIONS VIA EFT
- -------------------------------------

  You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
  Services, Inc. in a recorded conversation to purchase, redeem or exchange
  shares for your account. Purchase and redemption requests will be processed
  via electronic funds transfer (EFT) to and from your bank account.
  Instructions: . Review the information in the Prospectus about
                  telephone transaction services.
                .  If you select the telephone purchase or redemption privilege,
                   you must write "VOID" across the face of a check from the 
                   bank account you wish to use and attach it to Section 4D of
                   this application.

  Purchases and Redemptions via EFT
   [_]  I hereby authorize Alliance Fund Services, Inc. to effect the purchase
        and/or redemption of Fund shares for my account according to my
        telephone instructions or telephone instructions from my Broker/Agent,
        and to withdraw money or credit money for such shares via EFT from the
        bank account I have selected.

- -----------------------
D.  BANK INFORMATION
- -----------------------

This bank account information will be used for:
    [_]  Distributions (Section 3)          [_]Automatic Investments 
                                               (Section 4A)

    [_]  Systematic Withdrawals             [_]Telephone Transactions 
         (Section 4B)                          (Section 4C)

Please attach a voided check:
- ----------------------------------------------------------------------------


                      Tape Pre-Printed Voided Check Here.

                We Cannot Establish These Services Without it.


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

Your bank must be a member of the National Automated Clearing House
Association (NACHA) in order to have EFT transactions processed to your fund
account.
For EFT transactions, the fund requires signatures of bank account owners
exactly as they appear on bank records.

- --------------------------------
E.  THIRD PARTY PAYMENT DETAILS
- --------------------------------
   This third party payee information will be used for:
   [_]  Distributions (Section 3)   [_]  Systematic Withdrawals (Section 4B)

- ----------------------------------------------------------------------------
Name

- ----------------------------------------------------------------------------
Address - Line 1

- ---------------------------------------------------------------------------
Address - Line 2

- ---------------------------------------------------------------------------
Address - Line 3

- ----------------------------------
F.  REDUCED CHARGES (CLASS A ONLY)
- ----------------------------------
   If you, your spouse or minor children own shares in other Alliance funds, you
   may be eligible for a reduced sales charge. Please complete the Right of
   Accumulation section or the Statement of Intent section.

   A. Right of Accumulation

   [_]  Please link the tax identification numbers or account numbers listed
        below for Right of Accumulation privileges, so that this and future
        purchases will receive any discount for which they are eligible.

   B. Statement of Intent

   [_]  I want to reduce my sales charge by agreeing to invest the following
        amount over a 13-month period:
   [_]  $100,000         [_] $250,000   [_] $500,000     [_] $1,000,000

        If the full amount indicated is not purchased within 13 months, I
        understand that an additional sales charge must be paid from my account.


   --------------------------    -----------------------  ----------------------
   Tax ID or Account #           Tax ID or Account #      Tax ID or Account #


<PAGE>
 
- -------------------------------------------------------------------------------
          5. Shareholder Authorization This section MUST be completed
- -------------------------------------------------------------------------------

Telephone Exchanges and Redemptions by Check
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an authorized
employee of an investment dealer or agent requesting a redemption or exchange on
my behalf. (NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations.) Telephone redemption checks will only be
mailed to the name and address of record; and the address must have no change
within the last 30 days. The maximum telephone redemption amount is $50,000.
This service can be enacted once every 30 days.

[_]   I do not elect the telephone     [_] I do not elect the telephone
           ---                                  ---          
      exchange service.                    redemption by check service.


I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and that
I have not been notified that this account is subject to backup withholding.

By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf,
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the Fund
reserves the right to refuse any telephone instructions and that my investment
dealer or agent reserves the right to refuse to issue any telephone instructions
I may request.

For non-residents only:  Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.

I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.

- ------------------------------------    ------------
Signature                               Date

- ------------------------------------    ------------    ----------------------
Signature                               Date            Acceptance Date

- ------------------------------------------------------------------------------
        Dealer/Agent Authorization For selected Dealers or Agents ONLY.
- ------------------------------------------------------------------------------

We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.

- ----------------------------------------- -------------------------------------
Dealer/Agent Firm                          Authorized Signature

- ----------------------------------------- -------- ----------------------------
Representative First Name                  MI         Last Name

- -------------------------------------------------------------------------------
Representative Number

- -------------------------------------------------------------------------------
Branch Office Address

- -------------------------------------------------------------------------------
City                                       State       Zip Code
                                           (     )
- -------------------------------------------------------------------------------
Branch Number                              Branch Phone
<PAGE>
 
                                   ALLIANCE
- --------------------------------------------------------------------------------
                                     ASSET
- --------------------------------------------------------------------------------
                               ALLOCATION FUNDS
- --------------------------------------------------------------------------------

                P.O. Box 1520, Secaucus, New Jersey 07096-1520
                           Toll Free (800) 221-5672
                   For Literature: Toll Free (800) 227-4618

                                  Prospectus
                                (Advisor Class)
    
                               September 3, 1996
     
                        Alliance Growth Investors Fund
                     Alliance Conservative Investors Fund

<TABLE> 
<CAPTION> 
Table of Contents                                                    Page
<S>                                                                  <C> 
The Funds at a Glance...............................................    2
Expense Information.................................................    3
Description of the Funds............................................    5
Purchase and Sale of Shares.........................................    9
Management of the Funds.............................................   11
Dividends, Distributions and Taxes..................................   11
General Information.................................................   12
Appendix A..........................................................  A-1
</TABLE> 

                              Investment Adviser
                       Alliance Capital Management L.P.
                          1345 Avenue of the Americas
                           New York, New York 10105

Alliance Growth Investors Fund ("Growth Investors Fund") and Alliance
Conservative Investors Fund ("Conservative Investors Fund") use asset allocation
strategies, and each Fund is designed with a view toward a particular "investor
profile." The Growth Investors Fund seeks the highest total return consistent
with Alliance's determination of reasonable risk by investing in a diversified
mix of publicly traded equity and fixed-income securities. The Conservative
Investors Fund seeks a high total return without, in the view of Alliance, undue
risk to principal by investing in a diversified mix of publicly traded equity
and fixed-income securities.

Each Fund is a series of The Alliance Portfolios (the "Trust"), and is a
diversified, open-end management investment company. This Prospectus offers only
Advisor Class shares of Alliance Growth Investors Fund and Alliance Conservative
Investors Fund. Other classes of the Funds and shares of the Trust's other
series, each of which has its own investment objective and policies, are offered
by separate Prospectuses. This Prospectus sets forth concisely the information
which a prospective investor should know about the Funds before investing. A
"Statement of Additional Information" dated September 3, 1996, which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
For a free copy, call or write Alliance Fund Services, Inc. at the indicated
address or call the "For Literature" telephone number shown above.

This Prospectus offers the Advisor Class shares of each Fund which may be
purchased at net asset value without any initial or contingent deferred sales
charges and without ongoing distribution expenses. Advisor Class shares are
offered principally to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors, Inc., each Fund's
principal underwriter, (ii) participants in self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that meet certain minimum standards
and (iii) investment advisory clients of Alliance Capital Management L.P. See
"Purchase and Sales of Shares."

An investment in the Funds is not a deposit or obligation of, or guaranteed or
endorsed by, any bank and is not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.

Investors are advised to read this Prospectus carefully and to retain it for
future reference.

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

                                                            [LOGO] ALLIANCE/(R)/
                                              Investing without the Mystery./SM/

(R)/SM These are registered marks used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
 
The Funds At A Glance
    
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
     
The Funds Seek to Provide . . .

Growth Investors Fund: Highest total return with reasonable risk through
investment in a mix of equity and fixed-income securities. Normally the Fund
will hold approximately 70% of its total assets in equity securities.

Conservative Investors Fund: High total return without undue risk to principal
through investment in a mix of equity and fixed-income securities. Normally the
Fund will hold approximately 70% of its total assets in fixed-income securities.

The Funds Will Invest . . . 
Principally in publicly traded equity and fixed-income securities. 
    
The Trust's Investment Manager Is . . . 
Alliance Capital Management L.P. ("Alliance"), a global investment adviser
providing diversified services to institutions and individuals through a broad
line of investments including more than 100 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world, with over $168
billion in assets under management as of June 30, 1996. Alliance provides
investment management services to 33 of the FORTUNE 100 companies.
     
Getting Started . . .
Shares of the Funds are available through your financial representative. Each
Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares may be purchased at net asset
value without any initial or deferred sales charges and are not subject to
ongoing distribution expenses. Advisor Class shares may be purchased and held
solely (i) through accounts established under a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial intermediary and
approved by Alliance Fund Distributors, Inc. ("AFD"), each Fund's principal
underwriter, pursuant to which each investor pays an asset-based fee at an
annual rate of at least .50% of the assets in the investor's account, to the
broker-dealer or financial intermediary, or its affiliate or agent, (ii) through
a self-directed defined contribution employee benefit plan (e.g., a 401(k) plan)
that has at least 1,000 participants or $25 million in assets, (iii) by
investment advisory clients of Alliance or (iv) by present directors or trustees
of any registered investment company to which Alliance provides investment
advisory services (an "Alliance Mutual Fund"). Shares can be purchased for a
minimum initial investment of $250, and subsequent investments can be made for
as little as $50. Fee-based programs through which Advisor Class shares may be
purchased may impose different requirements with respect to minimum initial and
subsequent investment levels than described above. For detailed information
about purchasing and selling shares, see "Purchase and Sale of Shares."

                                                            [LOGO] ALLIANCE/(R)/
                                              Investing without the Mystery./SM/

(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.

                                       2
<PAGE>
 
- --------------------------------------------------------------------------------
                              EXPENSE INFORMATION
- --------------------------------------------------------------------------------

Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following tables summarize your maximum transaction costs
from investing in the Advisor Class shares of each Fund and estimated annual
expenses for Advisor Class shares. The Examples following the tables show the
cumulative expenses attributable to a hypothetical $1,000 investment in Advisor
Class shares for the periods specified. 


CONSERVATIVE INVESTORS FUND 
<TABLE>     
<CAPTION> 
                                                            Advisor Class Shares
                                                            --------------------
<S>                                                         <C> 
   Shareholder Transaction Expenses
     Maximum sales charge imposed on purchases.......               None
     Sales charge imposed on dividend reinvestments..               None
     Deferred sales charge...........................               None
     Exchange fee....................................               None
                                                               
     Annual Fund Operating Expenses                            
     (as a percentage of average net assets)                   
     Management fees (after waiver)(a)...............               0.51%
     Other expenses(b)...............................               0.59%
                                                                    ----
     Total Fund operating expenses...................               1.10%
                                                                    ====
</TABLE>      
- --------------------------------------------------------------------------------
(a)  Reflects the agreement of Alliance to waive management fees to the extent
     necessary to ensure that total Fund operating expenses do not exceed the
     amounts shown in the table above. In the absence of such agreement,
     management fees would have been .75%.
(b)  These expenses include a transfer agency fee payable to Alliance Fund
     Services, Inc., an affiliate of Alliance, based on the number of
     shareholder accounts maintained for the Fund.

Example

<TABLE> 
<CAPTION> 
                                                           Cumulative Expenses
                                                         Paid for the Period of:
                                                         -----------------------
                                                          1 Year        3 Years
                                                         -------        --------
<S>                                                      <C>           <C> 
An investor would pay the following expenses 
 on a $1,000 investment assuming a 5% annual 
 return throughout the periods:
    Advisor Class ....................................       $11          $35
</TABLE> 
- --------------------------------------------------------------------------------
                                       3
<PAGE>
 
GROWTH INVESTORS FUND
<TABLE> 
<CAPTION> 
                                                                Advisor Class Shares
                                                                --------------------
<S>                                                             <C> 
Shareholder Transaction Expenses
   Maximum sales charge imposed on purchases
     (as a percentage of offering price).......................          None
   Sales charge imposed on dividend reinvestments..............          None
   Deferred sales charge (as a percentage of original purchase 
     price or redemption proceeds, whichever is lower).........          None
   Exchange fee................................................          None
                                                               
Annual Fund Operating Expenses                                 
   (as a percentage of average net assets)                     
     Management fees (after waiver)(a).........................          0.38%
     Other expenses(b).........................................           .72%
                                                                         ----
                                                               
Total Fund operating expenses(c)...............................          1.10%
                                                                         ====
</TABLE> 
- --------------------------------------------------------------------------------
(a)  Reflects the agreement of Alliance to waive  management  fees to the extent
     necessary  to ensure that total Fund  operating  expenses do not exceed the
     amounts  shown  in the  table  above.  In the  absence  of such  agreement,
     management fees would have been .75%.
(b)  These  expenses  include a transfer  agency fee  payable to  Alliance  Fund
     Services,  Inc.,  an affiliate of Alliance,  based on a fixed dollar amount
     charged to the Fund for each shareholder's account.
(c)  The expense information does not reflect any charges or expenses imposed by
     your financial representative or your employee benefit plan.

Example

<TABLE> 
<CAPTION> 
                                                           Cumulative Expenses
                                                         Paid for the Period of:
                                                         ----------------------
                                                           1 Year      3 Years
                                                           ------      -------
<S>                                                      <C>           <C> 
An investor would pay the following expenses on 
  a $1,000 investment, assuming a
  5% annual return throughout the periods:                  
      Advisor Class..................................        $11          $35
</TABLE> 
    
- --------------------------------------------------------------------------------
The purpose of the foregoing tables is to assist the investor in understanding
the various costs and expenses that an investor in Advisor Class shares of a
Fund will bear directly or indirectly. The Examples set forth above assume
reinvestment of all dividends and distributions and utilize a 5% annual rate of
return, as mandated by regulations of the Securities and Exchange Commission
(the "Commission"). The Examples should not be considered a representation of
future expenses; actual expenses may be greater or less than those shown. Actual
return will vary.
     

                                       4
<PAGE>
 
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
Except for certain investment restrictions designated as fundamental in this
Prospectus and the Statement of Additional Information, the investment
objectives and policies of the Funds are not fundamental policies and may be
changed by the Trustees without shareholder approval. However, the Trust will
give shareholders contemporaneous notice of any change in a Fund's investment
objective. There can be, of course, no assurance that the Funds will achieve
their investment objectives. 

INVESTMENT OBJECTIVES AND POLICIES 
    
General.  The  Conservative  Investors  and  Growth  Investors Funds invest in a
variety  of  fixed-income  securities,  money  market  instruments  and   equity
securities, each pursuant to a different asset allocation strategy, as described
below.  The  term "asset allocation" is used to describe the process of shifting
assets among  discrete  categories  of  investments  in an effort to adjust risk
while producing desired return objectives. Portfolio management, therefore, will
consist  not  only  of  selecting  specific  securities  but  also  of  setting,
monitoring and changing, when necessary, the asset mix.
         
Each Fund has been designed with a view toward a particular "investor profile."
The "conservative investor" has a relatively short-term investment bias, either
because of a limited tolerance for market volatility or a short investment
horizon. This investor is averse to taking risks that may result in principal
loss, even though such aversion may reduce the potential for higher long-term
gains and result in lower performance during periods of equity market strength.
Consequently, the asset mix for the Conservative Investors Fund attempts to
reduce volatility while providing modest upside potential. The "growth investor"
has a longer-term investment horizon and is therefore willing to take more risks
in an attempt to achieve long-term growth of principal. This investor wishes, in
effect, to be risk conscious without being risk averse. The asset mix for the
Growth Investors Fund is therefore intended to provide for upside potential
without excessive volatility.
         
Alliance has established an  asset  allocation  committee (the "Committee"), all
the members of which are employees of Alliance, which is responsible for setting
and continually reviewing  the  asset  mix  ranges  of  each Fund. The Committee
generally meets at least twice each month.  Under  normal market conditions, the
Committee  is  expected  to change allocation ranges approximately three to five
times  per  year.  However,  the  Committee  has broad latitude to establish the
frequency, as well as the magnitude, of allocation changes within the guidelines
established  for  each  Fund.  During  periods  of   severe  market  disruption,
allocation ranges may change frequently.  It is also possible that in periods of
stable and consistent outlook no change will be made.  The Committee's decisions
are based on and may be  limited  by  a variety of factors, including liquidity,
portfolio size, tax  consequences  and general market  conditions, always within
the context  of  the  appropriate investor profile for each Fund.  Consequently,
asset mix decisions for  the  Conservative Investors Fund  principally emphasize
risk  assessment  of  each  asset  class  viewed  over  the  shorter term, while
decisions for the Growth Investors Fund are principally based on an assessment
of the longer term total return potential for each asset class.
         
The Funds are  permitted  to use a variety of hedging  techniques  to attempt to
reduce market, interest rate and currency risks.
    
INVESTMENT POLICIES OF THE CONSERVATIVE  INVESTORS FUND
    
The investment objective of the Conservative Investors Fund is to achieve a high
total return without, in the view of Alliance, undue risk to principal. The
Conservative Investors Fund attempts to achieve its investment objective by
allocating varying portions of its assets among investment grade, publicly
traded fixed-income securities, money market instruments and publicly traded
common stocks and other equity securities of U.S. and non-U.S. issuers.
         
All fixed-income securities owned by the Fund will be of investment grade at the
time of  purchase.  This means  that they will be in one of the top four  rating
categories  assigned by Standard & Poor's ("S&P") or Moody's Investors  Service,
Inc.  ("Moody's")  or  will be  unrated  securities  of  comparable  quality  as
determined by Alliance. Securities in the fourth such rating category (rated BBB
by S&P or Baa by  Moody's)  have  speculative  characteristics,  and  changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments on such obligations than in the
case of  higher-rated  securities.  In the event that the rating of any security
held by the Conservative Investors Fund falls below investment grade (or, in the
case  of an  unrated  security,  Alliance  determines  that it is no  longer  of
investment  grade),  the Fund will not be obligated to dispose of such  security
and may continue to hold the  obligation  if, in the opinion of  Alliance,  such
investment is  appropriate  under the  circumstances.  For a description  of the
ratings referred to above, see Appendix A.
         
Equity securities invested in by the Conservative Investors Fund will consist of
common stocks and securities convertible into common stocks, such as convertible
bonds,  convertible  preferred  stocks and warrants,  issued by companies with a
favorable  outlook for  earnings  and whose rate of growth is expected to exceed
that of the U.S. economy over time.
    
The Conservative Investors Fund will at all times hold at least 40% of its total
assets in investment grade fixed-income securities,  each having a duration less
than that of a 10-year Treasury bond (the "Fixed Income Core").  The duration of
a fixed-income security is the weighted average maturity, expressed in years, of
the present  value of all future  cash  flows,  including  coupon  payments  and
principal repayments.

                                       5
<PAGE>
 
The Conservative  Investors Fund is generally expected to hold approximately 70%
of its total assets in fixed-income securities (including the Fixed Income Core,
cash and money market  instruments) and 30% in equity  securities.  Actual asset
mixes will be adjusted in response to economic  and credit  market  cycles.  The
fixed-income  asset class will always comprise at least 50%, but never more than
90%, of the Fund's total assets.  The equity class will always comprise at least
10%,  but  never  more than 50%,  of the  Fund's  total  assets.  For  temporary
defensive purposes, the Fund may invest in money market instruments.

INVESTMENT POLICIES OF THE GROWTH INVESTORS FUND 
    
The investment objective of the Growth Investors Fund is to achieve the highest
total return consistent with Alliance's determination of reasonable risk. The
Fund attempts to achieve its investment objective by allocating varying portions
of its assets among a number of asset classes. Equity investments will include
publicly traded common stocks and other equity securities of the type in which
the Conservative Investors Fund may invest, but may also include equity
securities issued by intermediate- and small-sized companies with favorable
growth prospects, companies in cyclical industries, companies whose securities
are, in the opinion of Alliance, temporarily undervalued, companies in special
situations and less widely known companies. Fixed-income investments will
include investment grade fixed-income securities (including cash and money
market instruments) and may include securities that are rated in the lower
rating categories by recognized ratings agencies (i.e., BB or lower by S&P or Ba
or lower by Moody's) or that are unrated but determined by Alliance to be of
comparable quality. Lower rated fixed-income securities generally provide
greater current income than higher rated fixed-income securities, but are
subject to greater credit and market risk. The Fund will not invest more than
25% of its total assets in securities rated at the time of purchase below
investment grade, that is, securities rated BB or lower by S&P or Ba or lower by
Moody's, or in unrated securities deemed to be of comparable quality at the time
of purchase by Alliance. For a description of the ratings referred to above, 
see Appendix A. For more information about the risks associated with investment
in lower rated securities, see "High-Yield Securities" below.
     
The  Growth  Investors  Fund  will at all  times  hold at least 40% of its total
assets in publicly traded common stocks and other equity  securities of the type
purchased by the  Conservative  Investors Fund (the "Equity  Core").  The Growth
Investors  Fund is  generally  expected to hold  approximately  70% of its total
assets in equity securities  (including the Equity Core) and 30% in fixed-income
securities  (including  cash and money market  instruments).  Actual asset mixes
will be  adjusted  in  response  to  economic  and  credit  market  cycles.  The
fixed-income  asset class will always comprise at least 10%, but never more than
60%, of the Fund's total assets.  The equity class will always comprise at least
40%,  but  never  more than 90%,  of the  Fund's  total  assets.  For  temporary
defensive purposes, the Fund may invest in money market instruments.
    
ADDITIONAL  INVESTMENT  POLICIES AND TECHNIQUES  
APPLICABLE TO THE FUNDS 
Foreign Securities.  Each Fund may invest without limit in securities of foreign
issuers  and  securities  which are not  publicly  traded in the United  States,
although the Conservative Investors Fund generally will not invest more than 15%
of its total assets,  and the Growth  Investors  Fund  generally will not invest
more than 30% of its total  assets,  in such  securities.  Such  securities  may
involve certain special risks due to foreign economic, political, diplomatic and
legal  developments,  including  favorable  or  unfavorable  changes in currency
exchange rates,  exchange control  regulations  (including currency blockage and
costs),  expropriation  or  nationalization  of assets,  confiscatory  taxation,
imposition of withholding taxes on dividend or interest  payments,  and possible
difficulty  in obtaining  and  enforcing  judgments  against  foreign  entities.
Furthermore,  issuers of foreign securities are subject to different, often less
comprehensive,  accounting,  reporting and disclosure requirements than domestic
issuers. The securities of some foreign companies and foreign securities markets
are less liquid and at times more  volatile than  securities of comparable  U.S.
companies and U.S.  securities  markets,  and foreign  securities markets may be
subject  to less  regulation  than  U.S.  securities  markets.  The laws of some
foreign  countries  may limit the Funds'  ability  to invest in certain  issuers
located in those  countries.  Foreign  brokerage  commissions and other fees are
also  generally  higher than in the United  States.  There are also  special tax
considerations  which apply to  securities  of foreign  issuers  and  securities
principally traded overseas. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery of securities or
in the  recovery of the Funds'  assets held  abroad) and expenses not present in
the settlement of domestic investments.
         
The Growth  Investors  Fund may  invest a portion  of its  assets in  developing
countries or in countries  with new or  developing  capital  markets.  The risks
noted above are generally  increased  with respect to these  investments.  These
countries may have relatively  unstable  governments,  economies based on only a
few  industries or securities  markets that trade a small number of  securities.
Securities of issuers  located in these  countries tend to have volatile  prices
and may offer significant potential for loss.
     
The value of foreign  investments  measured  in U.S.  dollars  will rise or fall
because of decreases or increases, respectively, in the value of the U.S. dollar
in  comparison  to the value of the currency in which the foreign  investment is
denominated.  The Funds may buy or sell foreign  currencies,  options on foreign
currencies, foreign currency futures contracts (and related options) and deal in
forward foreign currency exchange  contracts in connection with the purchase and
sale of foreign investments. See the Statement of Additional Information.
    
Non-Publicly Traded Securities.  Each Fund may invest in securities that are not
publicly  traded,  including  securities  sold  pursuant  to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). The sale of these securities is
usually
     

                                       6
<PAGE>
 
    
restricted  under Federal  securities  laws,  and market  quotations  may not be
readily available.  As a result, a Fund may not be able to sell these securities
(other than Rule 144A  Securities)  unless they are registered  under applicable
Federal and state  securities  laws,  or may have to sell them at less than fair
market  value.  Investment  in these  securities is restricted to 5% of a Fund's
total assets (not  including  for these  purposes Rule 144A  Securities,  to the
extent  permitted  by  applicable  law)  and  is  also  subject  to  the  Funds'
restriction  against  investing  more  than 15% of total  assets  in  "illiquid"
securities. To the extent permitted by applicable law, Rule 144A Securities will
not be treated as "illiquid"  for purposes of the foregoing  restriction so long
as such securities meet liquidity guidelines established by the Trust's Board of
Trustees.   For   additional   information   see  the  Statement  of  Additional
Information.
         
Mortgage-Backed  Securities. Each Fund may invest in mortgage-backed securities,
including  collateralized mortgage obligations or "CMOs." Interest and principal
payments  (including  prepayments) on the mortgages  underlying  mortgage-backed
securities  are passed through to the holders of the  mortgage-backed  security.
Prepayments  occur when the  mortgagor  on an  individual  mortgage  prepays the
remaining  principal before the mortgage's  scheduled maturity date. As a result
of the  pass-through  of prepayments of principal on the underlying  securities,
mortgage-backed  securities  are  often  subject  to more  rapid  prepayment  of
principal  than their stated  maturity  would  indicate.  Because the prepayment
characteristics of the underlying  mortgages vary, it is not possible to predict
accurately  the  realized  yield  or  average  life  of a  particular  issue  of
pass-through  certificates.  During periods of declining  interest  rates,  such
prepayments  can be  expected to  accelerate  and the Funds would be required to
reinvest the proceeds at the lower interest rates then  available.  In addition,
prepayments of mortgages which underlie securities  purchased at a premium could
result in capital losses.
    
The Funds may also  invest in  derivative  instruments,  including  certificates
representing  rights to receive  payments of the interest only or principal only
of  mortgage-backed  securities  ("IO/PO Strips").  These securities may be more
volatile than other types of securities.  IO Strips involve the additional  risk
of loss of the  entire  remaining  value  of the  investment  if the  underlying
mortgages are prepaid.
    
Adjustable Rate Securities.  Each Fund may invest in adjustable rate securities.
Adjustable  rate  securities  are  securities  that have interest rates that are
reset at periodic intervals, usually by reference to some interest rate index or
market  interest rate.  Some  adjustable  rate securities are backed by pools of
mortgage  loans.  Although  the rate  adjustment  feature may act as a buffer to
reduce  sharp  changes  in  the  value  of  adjustable  rate  securities,  these
securities  are still  subject to  changes  in value  based on changes in market
interest rates or changes in the issuer's creditworthiness. Because the interest
rate is reset only periodically, changes in the interest rate on adjustable rate
securities may lag behind changes in prevailing  market  interest  rates.  Also,
some  adjustable  rate  securities (or the underlying  mortgages) are subject to
caps or floors  that limit the  maximum  change in the  interest  rate  during a
specified period or over the life of the security.
         
Asset-Backed Securities. Each Fund may invest in asset- backed securities, which
represent fractional  interests in pools of leases,  retail installment loans or
revolving  credit  receivables,  both  secured and  unsecured.  These assets are
generally  held by a trust.  Payments of principal and interest or interest only
are passed  through to  certificate  holders and may be guaranteed up to certain
amounts by letters of credit  issued by a financial  institution  affiliated  or
unaffiliated with the trustee or originator of the trust.
         
Underlying  automobile sales contracts or credit card receivables are subject to
prepayment,  which  may  reduce  the  overall  return  to  certificate  holders.
Certificate holders may also experience delays in payment on the certificates if
the full  amounts due on  underlying  sales  contracts  or  receivables  are not
realized by the trust because of unanticipated legal or administrative  costs of
enforcing the contracts or because of  depreciation  or damage to the collateral
(usually  automobiles)   securing  certain  contracts,   or  other  factors.  If
consistent  with its  investment  objective and policies,  each of the Funds may
invest in other asset-backed securities that may be developed in the future.
         
High-Yield  Securities.  The Growth  Investors  Fund may  invest in  high-yield,
high-risk, fixed-income and convertible securities rated at the time of purchase
Ba or lower by Moody's or BB or lower by S&P, or, if unrated, judged by Alliance
to be of comparable quality ("High-Yield Securities"). The Growth Investors Fund
will generally  invest in securities rated at the time of purchase at least Caa-
by Moody's or CCC- by S&P or in unrated  securities  judged by Alliance to be of
comparable quality at the time of purchase. However, from time to time, the Fund
may invest in securities rated in the lowest grades of Moody's (C) or S&P (D) or
in  unrated  securities  judged by  Alliance  to be of  comparable  quality,  if
Alliance  determines  that there are  prospects  for an  upgrade or a  favorable
conversion  into  equity  securities  (in the case of  convertible  securities).
Securities  rated Ba or BB or lower  (and  comparable  unrated  securities)  are
commonly referred to as "junk bonds."  Securities rated D by S&P are in default.
For the fiscal year ended April 30, 1996,  neither Fund  invested in  High-Yield
Securities.
         
As with other  fixed-income  securities,  High-Yield  Securities  are subject to
credit risk and market risk and their yields may fluctuate.  Market risk relates
to changes in a  security's  value as a result of  changes  in  interest  rates.
Credit risk  relates to the ability of the issuer to make  payments of principal
and  interest.  High-Yield  Securities  are subject to greater  credit risk (and
potentially   greater   incidence  of  default)  than  comparable   higher-rated
securities  because  issuers are more vulnerable to economic  downturns,  higher
interest rates or adverse issuer-specific  developments. In addition, the prices
of High-Yield  Securities  are  generally  subject to greater  market risk,  and
therefore  react  more  sharply  to changes  in  interest  rates.  The value and
liquidity of High-Yield  Securities  may be  diminished by adverse  publicity or
investor perceptions.
     

                                       7
<PAGE>
 
Because  High-Yield  Securities are frequently  traded only in markets where the
number of potential  purchasers and sellers, if any, is limited,  the ability of
the Growth  Investors  Fund to sell  High-Yield  Securities  at their fair value
either to meet  redemption  requests  or to respond to changes in the  financial
markets  may be  limited.  Thinly  traded  High-Yield  Securities  may  be  more
difficult  to value  accurately  for the purpose of  determining  the Fund's net
asset value. In addition, the values of such securities may be more volatile.

Some High-Yield  Securities in which the Growth Investors Fund may invest may be
subject to  redemption  or call  provisions  that may limit  increases in market
value that might otherwise result from lower interest rates while increasing the
risk that the Fund may be  required  to  reinvest  redemption  or call  proceeds
during a period of relatively low interest rates.
    
The credit ratings issued by Moody's and S&P, a description of which is included
as Appendix  A, are  subject to various  limitations.  For  example,  while such
ratings evaluate credit risk, they ordinarily do not evaluate the market risk of
High-Yield Securities. In certain circumstances,  the ratings may not reflect in
a timely fashion adverse  developments  affecting an issuer.  For these reasons,
Alliance conducts its own independent credit analysis of High-Yield  Securities.
When the  Growth  Investors  Fund  invests  in  securities  in the lower  rating
categories,  the achievement of the Fund's goals is more dependent on Alliance's
ability  than  would be the  case if the Fund  were  investing  in  higher-rated
securities.
         
In the event that the credit rating of a High-Yield  Security held by the Growth
Investors  Fund falls below its rating at the time of purchase  (or, in the case
of unrated securities, Alliance determines that the quality of such security has
deteriorated  since  purchased  by the Fund),  the Fund will not be obligated to
dispose of such  security  and may  continue to hold the  obligation  if, in the
opinion of Alliance, such investment is appropriate under the circumstances.
         
Convertible Securities.  Each Fund may invest in convertible  securities.  These
securities  normally  provide a higher yield than the underlying stock but lower
than a fixed-income security without the conversion feature.  Also, the price of
the  convertible  security will normally vary to some degree with changes in the
price of the underlying  stock although under some market  conditions the higher
yield tends to make the  convertible  security less volatile than the underlying
common stock. In addition,  the price of the convertible security will also vary
to some degree  inversely with interest rates.  Convertible debt securities that
are rated below BBB (S&P) or Baa (Moody's) or comparable  unrated  securities as
determined  by  Alliance  may  share  some  or all of the  risks  of  High-Yield
Securities. For a description of these risks, see "High-Yield Securities" above.
         

Equity-Linked Debt Securities.  Equity-linked debt securities are securities
with respect to which the amount of interest and/or principal that the issuer
thereof is obligated to pay is linked to the performance of a specified index of
equity securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. Furthermore, as with any securities, the values of
equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
As with other securities, a Fund could lose its entire investment in equity-
linked debt securities.
         
Zero-Coupon  and  Payment-in-Kind  Bonds.  The  Funds  may at  times  invest  in
so-called "zero-coupon" bonds and "payment-in-kind" bonds. Zero-coupon bonds are
issued at a significant  discount from their principal  amount in lieu of paying
interest periodically. Payment-in-kind bonds allow the issuer, at its option, to
make  current  interest  payments on the bonds  either in cash or in  additional
bonds. Because zero-coupon and payment-in-kind bonds do not pay current interest
in cash, their value is generally subject to greater  fluctuation in response to
changes in market  interest  rates than bonds which pay  interest  currently  in
cash. Both  zero-coupon and  payment-in-kind  bonds allow an issuer to avoid the
need to generate cash to meet current interest payments. Accordingly, such bonds
may involve greater credit risks than bonds paying  interest  currently in cash.
Even  though  such  bonds  do not  pay  current  interest  in  cash,  a Fund  is
nonetheless  required  to  accrue  interest  income on such  investments  and to
distribute such amounts at least annually to shareholders. Thus, a Fund could be
required  to  liquidate  other  investments  in order to  satisfy  its  dividend
requirements  at times when Alliance would not otherwise deem it advisable to do
so.
     
Futures and  Related  Options.  Each Fund may buy and sell stock  index  futures
contracts  ("index  futures")  and may buy options on index  futures for hedging
purposes and may buy and sell options on stock  indices for hedging  purposes or
to earn additional  income.  The Funds may also, for hedging purposes,  purchase
and sell  futures  contracts,  options  thereon and options with respect to U.S.
Treasury securities, including U.S. Treasury bills, notes and bonds.

The use of futures and  options  involves  certain  special  risks.  Futures and
options transactions involve costs and may result in losses. Certain risks arise
because of the possibility of imperfect  correlations  between  movements in the
prices of futures  and  options and  movements  in the prices of the  underlying
stock index or security or of the securities in a Fund's  portfolio that are the
subject of a hedge. The successful use of the strategies described above further
depends on Alliance's  ability to forecast  market  movements  correctly.  Other
risks  arise  from a Fund's  potential  inability  to close out its  futures  or
options positions. In addition there can be no assurance that a liquid secondary
market  will  exist for any  future or option at any  particular  time.  Certain
provisions of the Internal Revenue Code and certain regulatory  requirements may
limit the Funds' ability to engage in futures

                                       8
<PAGE>
 
and options  transactions.  A more detailed  explanation  of futures and options
transactions,  including  the risks  associated  with them,  is  included in the
Statement of Additional Information.

Options.  A Fund may seek to increase current return by writing covered call and
put options on securities it owns or in which it may invest. The Fund receives a
premium from writing a call or put option,  which increases the Fund's return if
the option expires  unexercised or is closed out at a net profit.  When the Fund
writes a call option, it gives up the opportunity to profit from any increase in
the price of a security above the exercise price of the option; when it writes a
put  option,  the Fund  takes the risk that it will be  required  to  purchase a
security from the option holder at a price above the current market price of the
security.  The Fund may  terminate  an option that it has  written  prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option  written.  A Fund may also buy and
sell put and call  options  for hedging  purposes.  A Fund may also from time to
time buy and sell  combinations  of put and call options on the same  underlying
security to earn  additional  income.  A Fund's use of these  strategies  may be
limited by applicable law.

Securities Loans,  Repurchase Agreements and Forward Commitments.  Each Fund may
lend portfolio securities amounting to not more than 25% of its total assets and
may enter into  repurchase  agreements on up to 25% of its total  assets.  These
transactions must be fully collateralized at all times, but involve some risk to
a Fund if the other  party  should  default  on its  obligation  and the Fund is
delayed or prevented from recovering the collateral. Each Fund may also purchase
securities  for future  delivery,  which may  increase  its  overall  investment
exposure  and  involves a risk of loss if the value of the  securities  declines
prior to the settlement date.

Portfolio  Management.  Alliance  manages  each Fund's  portfolio  by buying and
selling securities to help attain its investment objective. Alliance anticipates
that the annual turnover rate will not exceed 200% for Growth Investors Fund and
300% for Conservative Investors Fund. A 200% and 300% annual turnover rate would
occur,  for  example,  when  all of the  securities  in a Fund's  portfolio  are
replaced  twice and three times,  respectively,  in a period of one year.  These
portfolio  turnover  rates  are  greater  than  those of most  other  investment
companies.  A high portfolio  turnover rate will involve greater costs to a Fund
(including  brokerage  commissions and transaction costs) and may also result in
the realization of taxable  capital gains,  including  short-term  capital gains
taxable at ordinary income rates. See "Dividends, Distributions and Taxes" below
and "Portfolio Transactions" in the Statement of Additional Information.

Certain  Fundamental   Investment  Policies.  The  Funds  have  adopted  certain
fundamental  investment  policies which may not be changed  without  shareholder
approval,  including  policies  which provide that each Fund may not: (i) invest
more than 5% of its total assets in the securities of any one issuer (other than
U.S. Government securities and repurchase agreements relating thereto), although
up to 25% of a Fund's  total  assets  may be  invested  without  regard  to this
restriction; or (ii) invest 25% or more of its total assets in the securities of
any one industry.

- --------------------------------------------------------------------------------
                               PURCHASE AND SALES
- --------------------------------------------------------------------------------
                                   OF SHARES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES 
Each Fund offers multiple classes of shares,  of which only the Advisor Class is
offered by this  Prospectus.  Advisor Class shares of each Fund may be purchased
through your financial  representative at net asset value without any initial or
contingent  deferred  sales charges and are not subject to ongoing  distribution
expenses.  Advisor  Class  shares may be  purchased  and held solely (i) through
accounts  established under a fee-based  program,  sponsored and maintained by a
registered  broker-dealer  or other financial  intermediary and approved by AFD,
pursuant to which each investor pays an asset-based  fee at an annual rate of at
least  .50% of the assets in the  investor's  account  to the  broker-dealer  or
financial intermediary,  or its affiliate or agent, (ii) through a self-directed
defined  contribution  employee  benefit plan (e.g.,  a 401(k) plan) that has at
least 1,000 participants or $25 million in assets,  (iii) by investment advisory
clients of Alliance  or (iv) by present  directors  or trustees of any  Alliance
Mutual Fund. The minimum initial  investment is $250. The minimum for subsequent
investments  is $50.  Investments of $25 or more are allowed under the automatic
investment program and under a 403(b)(7) retirement plan. Share certificates are
issued only upon request.  See the Statement of Additional  Information for more
information.

The Funds may refuse any order to purchase Advisor Class shares. In this regard,
the Funds  reserve  the right to  restrict  purchases  of Advisor  Class  shares
(including exchanges) when there appears to be evidence of a pattern of frequent
purchases and sales made in response to short-term fluctuations in share price.

HOW THE FUNDS VALUE THEIR SHARES
The net asset value of Advisor  Class shares of a Fund is calculated by dividing
the  value of the  Fund's  net  assets  allocable  to the  Advisor  Class by the
outstanding  shares of Advisor  Class.  Shares are valued  each day the New York
Stock  Exchange  (the  "Exchange")  is open as of the close of  regular  trading
(currently 4:00 p.m. Eastern time). The securities in a Fund are valued at their
current  market value  determined on the basis of market  quotations or, if such
quotations are not readily available, such other methods as the Trustees believe
would accurately reflect fair market value.

HOW TO SELL SHARES
You may  "redeem,"  i.e.,  sell  your  shares in a Fund to a Fund on any day the
Exchange is open, either directly or through your financial representative.  The
price you will receive is the

                                       9
<PAGE>
 
net asset value next  calculated  after the Fund receives your request in proper
form.  Proceeds  generally will be sent to you within seven days.  However,  for
shares recently purchased by check or electronic funds transfer, a Fund will not
send  proceeds  until it is  reasonably  satisfied  that the check or electronic
funds transfer has been collected  (which may take up to 15 days). If you are in
doubt about what  documents are required by your  fee-based  program or employee
benefit plan, you should contact your financial representative.

SELLING SHARES THROUGH YOUR FINANCIAL REPRESENTATIVE 
Your financial representative must receive your request before 4:00 p.m. Eastern
time, and your financial  representative  must transmit your request to the Fund
by 5:00 p.m. Eastern time, to receive that day's net asset value. Your financial
representative is responsible for furnishing all necessary  documentation to the
Fund and may charge you for this service.

SELLING SHARES DIRECTLY TO A FUND 
Send a signed  letter  of  instruction  or stock  power  form to  Alliance  Fund
Services,  Inc.  ("AFS") along with  certificates,  if any,  that  represent the
shares you want to sell. For your protection, signatures must be guaranteed by a
bank, a member firm of a national  stock  exchange or other  eligible  guarantor
institution. Stock power forms are available from your financial representative,
AFS, and many commercial  banks.  Additional  documentation  is required for the
sale of shares by corporations, representatives, fiduciaries and surviving joint
owners. For details contact:

                             Alliance Fund Services
                                 P.O. Box 1520
                            Secaucus, NJ 07096-1520
                                 1-800-221-5672

Alternatively,   a  request  for   redemption  of  shares  for  which  no  stock
certificates  have been issued can also be made by  telephone  to  800-221-5672.
Telephone  redemption  requests must be made by 4:00 p.m. Eastern time on a Fund
business  day in order to receive that day's net asset  value,  and,  except for
certain  omnibus  accounts,  may be made  only  once  in any  30-day  period.  A
shareholder  who has completed the  Shareholder  Options form obtained from AFS,
can elect to have the proceeds of his or her redemption  sent to his or her bank
via an electronic funds transfer.  Proceeds of telephone redemptions also may be
sent by check to a shareholder's  address of record.  Except for certain omnibus
accounts,  redemption  requests  by  electronic  funds  transfer  may not exceed
$100,000  and  redemption  requests by check may not exceed  $50,000.  Telephone
redemption is not available for shares held in nominee or "street name" accounts
or retirement  plan accounts or shares held by a shareholder who has changed his
or her address of record within the previous 30 calendar days.

GENERAL 
The sale of shares is a taxable  transaction  for  Federal tax  purposes.  Under
unusual circumstances, the Funds may suspend redemptions or postpone payment for
up to seven days or longer,  as permitted by Federal  securities  law. The Funds
reserve the right to close an account that through redemption has remained below
$200 for 90 days.  Shareholders will receive 60 days' written notice to increase
the account value before the account is closed.

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 telephonic  requests to
purchase,  sell or exchange  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 telephonic  requests.  The telephone
service may be suspended or terminated at any time without notice.

SHAREHOLDER SERVICES 
AFS offers a variety of shareholder  services.  For more information about these
services or your account, call AFS's toll-free number, 800-221-5672.

HOW TO EXCHANGE SHARES 
You may exchange  your Advisor Class shares of any Fund for Advisor Class shares
of other Alliance Mutual Funds (including AFD Exchange Reserves,  a money market
fund managed by  Alliance).  Exchanges of shares are made at the net asset value
next determined and without sales or service  charges.  Exchanges may be made by
telephone or written request.  Telephone  exchange  requests must be received by
AFS by 4:00 p.m.  Eastern  time on a Fund  business day in order to receive that
day's net asset value.

Please  read  carefully  the  prospectus  of the mutual  fund into which you are
exchanging before  submitting the request.  Call AFS at 800-221-5672 to exchange
by telephone uncertificated shares. An exchange is a taxable capital transaction
for Federal tax purposes.  The exchange  service may be changed,  suspended,  or
terminated on 60 days' written notice.

GENERAL 
If you are a Fund shareholder  through an account  established under a fee-based
program,  your  fee-based  program may impose  requirements  with respect to the
purchase,  sale or exchange of Advisor Class shares of a Fund that are different
from those  described in this  Prospectus.  A transaction  fee may be charged by
your financial  representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.

Each Fund offers three classes of shares other than the Advisor Class, which are
Class A, Class B and C. All classes of shares of a Fund have a common investment
objective and investment  portfolio.  Class A shares are offered with an initial
sales  charge  and  pay a  distribution  services  fee.  Class B  shares  have a
contingent deferred sales charge (a "CDSC") and also pay a distribution services
fee. Class C shares have no initial sales charge or CDSC as long as they are not
redeemed within one year of purchase, but pay a distribution

                                       10
<PAGE>
 
services fee.  Because Advisor Class shares have no initial sales charge or CDSC
and pay no distribution  services fee, Advisor Class shares are expected to have
different  performance  from Class A, Class B or Class C shares.  You may obtain
more  information  about  Class A,  Class B and  Class C  shares,  which are not
offered by this Prospectus,  by contacting AFS by telephone at 1-800-221-5672 or
by contacting your financial representative.

- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS 
- --------------------------------------------------------------------------------
    
ADVISER
Alliance, which is 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  contract (the "Investment  Advisory  Contract") to provide
investment  advice and, in general,  to conduct the  management  and  investment
program  of each Fund  subject to the  general  supervision  and  control of the
Trustees of the Trust. The employee of Alliance principally  responsible for the
Funds'  investment   program  is  Robert  G.  Heisterberg,   who  has  had  such
responsibility  since February 1996. Mr.  Heisterberg is a Senior Vice President
and Global  Economic  Policy  Analyst of Alliance and has been  associated  with
Alliance since 1977.
         
Alliance  is a  leading  international  investment  manager  supervising  client
accounts  with assets as of June 30, 1996  totalling  more than $168 billion (of
which more than $55  billion  represents  the assets of  investment  companies).
Alliance's clients are primarily major corporate employee benefit funds,  public
employee retirement  systems,  investment  companies,  foundations and endowment
funds. The 51 registered  investment  companies  managed by Alliance  comprising
more than 100 separate  investment  portfolios  currently  have over two million
shareholders.  As of June 30,  1996,  Alliance  was  retained  as an  investment
manager of employee benefit fund assets for 33 of the Fortune 100 companies.
     
Alliance Capital  Management  Corporation,  the sole general partner of, and the
owner  of a 1%  general  partnership  interest  in,  Alliance,  is  an  indirect
wholly-owned  subsidiary of The Equitable Life  Assurance  Society of the United
States, ("Equitable"), one of the largest life insurance companies in the United
States,   which  is  a  wholly-owned   subsidiary  of  The  Equitable  Companies
Incorporated,  a holding company  controlled by AXA, a French insurance  holding
company.  Certain information  concerning the ownership and control of Equitable
by AXA is set forth in the Statement of Additional Information under "Management
of the Trust."

Alliance provides  investment  advisory,  administrative  and clerical services,
office  space,  and  order  placement  facilities  for  each  Fund  and pays all
compensation  of the  Trustees  and  officers  of the Trust  who are  affiliated
persons of Alliance. For its services, Alliance is entitled to receive a monthly
fee from each Fund at an annual rate of 0.75% of such Fund's  average  daily net
assets.  However,  Alliance  has  voluntarily  agreed to waive its fees and bear
certain  expenses so that total  expenses of each Fund do not exceed 1.10% on an
annual basis of average net assets for Advisor Class shares.

EXPENSES OF THE FUNDS 
In addition to the payments to Alliance under the Investment  Advisory  Contract
described  above,  each Fund pays certain  other costs,  including  (i) custody,
transfer  and  dividend  disbursing  expenses,  (ii)  fees of the  directors  or
trustees  who are  not  affiliated  with  Alliance,  (iii)  legal  and  auditing
expenses,  (iv)  clerical,  accounting  and  other  office  costs,  (v) costs of
printing  the  Fund's  prospectuses  and  shareholder  reports,  (vi)  costs  of
maintaining the Fund's existence,  (vii) interest charges, taxes, brokerage fees
and commissions, (viii) costs of stationery and supplies, (ix) expenses and fees
related to registration and filing with the Commission and with state regulatory
authorities  and (x) upon the approval of a Fund's  Board of Trustees,  costs of
personnel of Alliance or its affiliate rendering clerical,  accounting and other
office services.

DISTRIBUTION SERVICES AGREEMENTS 
Each Fund has  entered  into a  Distribution  Services  Agreement  with AFD with
respect to the Advisor Class shares. The Glass-Steagall Act and other applicable
laws may 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 do not prohibit
such depository  institutions from providing  services for investment  companies
such as the  administrative,  accounting and other  services  referred to in the
Agreement.  In the  event  that a change  in these  laws  prevented  a bank from
providing such services, it is expected that other service arrangements would be
made and that shareholders would not be adversely  affected.  The State of Texas
requires  that  shares of the Funds may be sold in that state only by dealers or
other financial institutions that are registered there as broker-dealers.

                                       11
<PAGE>
 
- --------------------------------------------------------------------------------
                             DIVIDENDS, DISTRIBUTIONS
- --------------------------------------------------------------------------------
                                   AND TAXES
- --------------------------------------------------------------------------------
    
DIVIDENDS AND DISTRIBUTIONS
If you receive an income  dividend or capital gains  distribution in cash from a
Fund, you may,  within 120 days following the date of its payment,  reinvest the
dividend or  distribution  in  additional  shares of the Fund without  charge by
returning to Alliance,  with appropriate  instructions,  the check  representing
such dividend or distribution.  Thereafter,  unless you otherwise  specify,  you
will be  deemed  to have  elected  to  reinvest  all  subsequent  dividends  and
distributions in shares of the Fund.
     
It is the  intention  of the  Conservative  Investors  Fund  to  distribute  net
investment  income  quarterly  and any  net  realized  capital  gains  at  least
annually. It is the intention of the Growth Investors Fund to distribute any net
investment  income  and  any net  realized  capital  gains  at  least  annually.
Distributions  from net  investment  income,  if any,  are expected to be small.
Distributions  from net capital gains are made after applying any available loss
carryovers.

TAXES
Each Fund  intends to qualify to be taxed as a  "regulated  investment  company"
under the Internal  Revenue Code. So long as a Fund  distributes at least 90% of
its income,  qualification as a regulated  investment company relieves that Fund
of Federal income and excise taxes on that part of its taxable income  including
net capital  gains which it pays out to its  shareholders.  Dividends out of net
ordinary income and distributions of net short-term capital gains are taxable to
the  recipient  shareholders  as  ordinary  income.  In the  case  of  corporate
shareholders,   such  dividends  may  be  eligible  for  the  dividends-received
deduction,  except that the amount  eligible for the deduction is limited to the
amount  of  qualifying   dividends   received  by  the  Fund.  A   corporation's
dividends-received  deduction will be disallowed  unless the  corporation  holds
shares  in the  Fund at  least  46  days.  Furthermore,  the  dividends-received
deduction  will be disallowed to the extent that a  corporation's  investment in
shares of a Fund is financed with indebtedness.

The excess of net long-term capital gains over the net short-term capital losses
realized  and  distributed  by each Fund to its  shareholders  as capital  gains
distributions  is  taxable  to the  shareholders  as  long-term  capital  gains,
irrespective  of the length of time a shareholder  may have held his or her Fund
shares.   Long-term  capital  gains  distributions  are  not  eligible  for  the
dividends-received deduction referred to above.

Under current federal tax law, the amount of an income dividend or capital gains
distribution  declared by a Fund during October,  November or December of a year
to  shareholders  of record as of a specified  date in such a month that is paid
during  January of the following  year is includable in the prior year's taxable
income of shareholders that are calendar year taxpayers.

Any dividend or distribution  received by a shareholder on shares of a Fund will
have the effect of reducing  the net asset value of such shares by the amount of
such dividend or  distribution.  Furthermore,  a dividend or  distribution  made
shortly after the purchase of such shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to him or her
as described  above.  Any loss realized on the sale of shares held six months or
less will be a long-term capital loss to the extent of distribution with respect
to such shares of net capital gain.

A dividend or capital gains  distribution  with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual  retirement  account,
403(b)(7)  retirement plan or corporate pension or profit-sharing plan, will not
be  taxable  to the plan.  Distributions  from such  plans  will be  taxable  to
individual  participants  under  applicable  tax  rules  without  regard  to the
character of the income earned by the qualified plan.

- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------

PORTFOLIO TRANSACTIONS 
Consistent  with the Conduct  Rules of the National  Association  of  Securities
Dealers,  Inc., and subject to seeking best price and  execution,  the Trust may
consider sales of shares of the Funds as a factor in the selection of dealers to
enter into portfolio transactions with the Funds.

ORGANIZATION 
The Trust is a Massachusetts  business trust organized on March 26, 1987.  Prior
to August 2, 1993,  the Trust was known as The Equitable  Funds,  and the Growth
Investors Fund and the  Conservative  Investors Fund were known as The Equitable
Growth   Investors  Fund  and  The  Equitable   Conservative   Investors   Fund,
respectively.
    
The Trust is an open-end management investment company with an unlimited number
of authorized shares of beneficial interest, which may, without shareholder
approval, be divided into an unlimited number of series of such shares which, in
turn, may be subdivided into an unlimited number of classes of shares. The Trust
currently consists of five series of shares, two of which represent the Funds.
Each Fund is divided into four classes of shares, one of which, designated
Advisor Class shares, is offered by this Prospectus and three of which,
designated Class A shares, Class B shares and Class C shares, are offered by
another prospectus. The Trustees may, without shareholder approval, further
divide each series into additional classes of shares which may be sold under
conditions or with charges varying from those of the present classes of shares
of each series.
     

                                       12
<PAGE>
 
Shareholders  are  entitled  to one vote for each  share held and to vote in the
election  of  Trustees  and the  termination  of the Trust and on other  matters
submitted  to  meetings  of  shareholders.  Shareholders  of a series or a class
thereof are  entitled to vote only on matters  which  affect that series or that
class,  and  shareholders  of the series or a particular  class of shares of the
series which are affected  generally vote together as a single class.  The Trust
is not required  and does not  presently  intend to hold annual  meetings of its
shareholders  for  election of Trustees  and  ratification  of the  selection of
auditors.  Shareholders  may remove Trustees from office by votes cast in person
or by proxy at a meeting of  shareholders or by written  consent.  The shares of
each Fund are freely transferable, are entitled to distributions from the assets
of  the  relevant  Fund  as  declared  by the  Trustees,  and,  if a  Fund  were
liquidated,  would  receive  the net  assets  of the  Fund  attributable  to the
relevant  class.  The Trust may  suspend the sale of shares of any Fund or class
thereof at any time and may refuse any order to  purchase  shares.  

Shareholders could, under certain circumstances, be held personally liable for
obligations of the Trust. However, the risk of a shareholder incurring financial
loss on account of such liability is considered remote since it may arise only
in very limited circumstances. See "Shareholder and Trustee Liability" under
"General Information" in the Statement of Additional Information.
    
REGISTRAR,  TRANSFER  AGENT  AND  DIVIDEND-DISBURSING  AGENT  
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, is the Trust's registrar, transfer agent and
dividend-disbursing agent for a fee based upon a dollar amount (determined by
reference to the total number of shareholder accounts for all Alliance funds in
the Fund's broad investment category) charged to the Fund for each shareholder
account.
     
PRINCIPAL UNDERWRITER 
AFD, an indirect wholly-owned subsidiary of Alliance,  located at 1345 Avenue of
the Americas,  New York,  New York 10105,  is the principal  underwriter  of the
shares of the Trust.

PERFORMANCE INFORMATION 
From time to time the Funds  advertise  their "yield" and "total  return." Yield
and total return are  computed  separately  for each class of shares,  including
Advisor Class  shares.  A Fund's yield for any 30-day (or  one-month)  period is
computed by dividing  the net  investment  income per share  earned  during such
period by the  maximum  public  offering  price per share on the last day of the
period, and then annualizing such 30-day (or one-month) yield in accordance with
a formula  prescribed by the  Commission  which  provides for  compounding  on a
semi-annual  basis.  The Funds may also  state in sales  literature  an  "actual
distribution  rate" for each class which is computed in the same manner as yield
except that actual  income  dividends  declared  per share  during the period in
question  are  substituted  for net  investment  income  per  share.  The actual
distribution  rate is computed  separately  for each class of shares,  including
Advisor Class shares. Advertisements of total return disclose the average annual
compounded  total  return  for the  recent  one-year  period and the life of the
class. Total return for each such period is computed by finding, through the use
of a formula prescribed by the Commission, the average annual compounded rate of
return over the period that would equate an assumed  initial amount  invested to
the value of the investment at the end of the period.  For purposes of computing
total return, income dividends and capital gains distributions paid on shares of
the Funds are assumed to have been  reinvested  when paid and the maximum  sales
charges  applicable to purchases and  redemptions  of Fund shares are assumed to
have been paid.  Advertisements may quote performance rankings or ratings of the
Funds as measured by financial publications or by independent organizations such
as Lipper Analytical Services, Inc. and Morningstar,  Inc. or compare the Funds'
performance to various indices.

ADDITIONAL INFORMATION 
This  Prospectus  and the  Statement of Additional  Information,  which has been
incorporated by reference  herein,  do 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 offices of the Commission in Washington, D.C.


This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.

                                       13
<PAGE>
 
- --------------------------------------------------------------------------------
APPENDIX A
- --------------------------------------------------------------------------------

RATINGS OF CORPORATE BONDS
    
Descriptions of the bond ratings of Standard & Poor's are: 
     
AAA--Debt  rated AAA has the  highest  rating  assigned  by  Standard  & Poor's.
     Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
     and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong  capacity  to pay  interest  and  repay  principal
     although it is somewhat more  susceptible to the adverse effects of changes
     in  circumstances  and  economic  conditions  than  debt  in  higher  rated
     categories.

BBB--Debt rated BBB is regarded as having an adequate  capacity to pay  interest
     and repay  principal.  Whereas it  normally  exhibits  adequate  protection
     parameters,  adverse economic conditions or changing circumstances are more
     likely to lead to a weakened  capacity to pay interest and repay  principal
     for debt in this category than for debt in higher rated categories.

BB,  B, CCC, CC or C--Debt rated BB, B, CCC, CC or C is regarded, on balance, as
     predominantly  speculative  with  respect to the  issuer's  capacity to pay
     interest  and  repay   principal  in  accordance  with  the  terms  of  the
     obligation.  While such debt will likely have some  quality and  protective
     characteristics,  these are outweighed by large uncertainties or major risk
     exposures to adverse debt conditions.

C1--The rating C1 is  reserved  for income  bonds on which no  interest is being
     paid.

D--Debt rated D is in  default  and  payment of  interest  and/or  repayment  of
     principal is in arrears.

The ratings from AA to CC may be  modified  by the  addition  of a plus (+) or
     minus  (-)  sign  to  show  relative   standing  within  the  major  rating
     categories.

Descriptions of the bond ratings of
Moody's Investors Service, Inc. are as follows: 

Aaa--Bonds which are rated Aaa are judged to be of the best quality.  They carry
     the smallest  degree of investment  risk and are  generally  referred to as
     "gilt  edge."  Interest  payments  are  protected  by  a  large  or  by  an
     exceptionally  stable  margin,  and principal is secure.  While the various
     protective elements are likely to change, such changes as can be visualized
     are most  unlikely  to impair the  fundamentally  strong  position  of such
     issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all  standards.
     Together with the Aaa group they comprise what are generally  known as high
     grade bonds.  They are rated lower than the best bonds  because  margins of
     protection  may not be as  large as in Aaa  securities  or  fluctuation  of
     protective  elements  may be of  greater  amplitude  or there  may be other
     elements  present which make the long-term  risks appear  somewhat  greater
     than the Aaa securities.

A--Bonds which are rated A possess many favorable investment  attributes and are
     to be considered as upper-medium-grade obligations. Factors giving security
     to  principal  and interest are  considered  adequate,  but elements may be
     present  which  suggest a  susceptibility  to  impairment  some time in the
     future.

Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
     they are neither highly protected nor poorly secured. Interest payments and
     principal security appear adequate for the present,  but certain protective
     elements may be lacking or may be  characteristically  unreliable  over any
     great   length   of  time.   Such   bonds   lack   outstanding   investment
     characteristics and in fact have speculative characteristics as well.

Ba--Bonds  which are rated Ba are  judged to have  speculative  elements;  their
     future  cannot be  considered  as well  assured.  Often the  protection  of
     interest and  principal  payments may be very moderate and thereby not well
     safeguarded during both good and bad times over the future.  Uncertainty of
     position characterizes bonds in this class.

B--Bonds which are  rated B  generally  lack  characteristics  of the  desirable
     investment.  Assurance of interest and principal payments or of maintenance
     of other terms of the contract over any long period of time may be small.

Caa--Bonds  which are  rated Caa are of poor  standing.  Such  issues  may be in
     default  or there  may be  present  elements  of  danger  with  respect  to
     principal or interest.

Ca--Bonds which are rated Ca represent  obligations  which are  speculative to a
     high  degree.  Such  issues  are  often in  default  or have  other  marked
     shortcomings.

C--Bonds which are rated C are the lowest class of bonds and issues so rated can
     be regarded as having  extremely  poor prospects of ever attaining any real
     investment standing.

Moody's  applies  modifiers to each rating  classification  from Aa through B to
indicate  relative  ranking  within  its rating  categories.  The  modifier  "1"
indicates  that a security ranks in the higher end of its rating  category;  the
modifier "2" indicates a mid-range ranking;  and the modifier "3" indicates that
the issue ranks in the lower end of its rating category.


                                      A-1




<PAGE>

                                         THE ALLIANCE PORTFOLIOS:
                             ALLIANCE CONSERVATIVE INVESTORS FUND
                                   ALLIANCE GROWTH INVESTORS FUND

P.O. Box 1520, Secaucus, New Jersey  07096-1520
Toll Free (800) 221-5672
For Literature Toll Free (800) 227-4618
_________________________________________________________________

               STATEMENT OF ADDITIONAL INFORMATION
                        September 3, 1996
_________________________________________________________________


This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Funds' current Prospectus.
A copy of the Funds' Prospectus may be obtained by contacting
Alliance Fund Services, Inc. at the address or telephone numbers
shown above.

_________________________________________________________________

                        TABLE OF CONTENTS

INVESTMENT POLICIES AND RESTRICTIONS......................    3

ADDITIONAL INVESTMENT TECHNIQUES OF THE FUNDS.............   12

INVESTMENT RESTRICTIONS...................................   35

MANAGEMENT OF THE FUNDS...................................   39

PORTFOLIO TRANSACTIONS....................................   45

EXPENSES OF THE FUNDS.....................................   47

PURCHASE OF SHARES........................................   53

REDEMPTION AND REPURCHASE OF SHARES.......................   70

SHAREHOLDER SERVICES......................................   73

NET ASSET VALUE...........................................   80

DIVIDENDS, DISTRIBUTIONS AND TAXES........................   81

GENERAL INFORMATION.......................................   83

FINANCIAL STATEMENTS......................................     

REPORT OF INDEPENDENT ACCOUNTANTS.........................     



<PAGE>

APPENDIX..................................................  108




















































                                2



<PAGE>

              INVESTMENT POLICIES AND RESTRICTIONS

         The following investment policies and restrictions
supplement and should be read in conjunction with the information
set forth in the Prospectus of Alliance Conservative Investors
Fund (the "Conservative Investors Fund") and Alliance Growth
Investors Fund (the "Growth Investors Fund"), each a series of
The Alliance Portfolios (the "Trust"), under the heading
"Investment Objective and Policies."  In addition to the
investment techniques described in this section for each of the
Funds, the Funds also may engage in the investment techniques
described below under the sub-heading "Additional Investment
Techniques of the Funds."

Investment Objectives and Policies of the Conservative
Investors Fund and Growth Investors Fund

         General.  The Conservative Investors and Growth
Investors Funds invest in a variety of fixed-income securities,
money market instruments and equity securities, each pursuant to
a different asset allocation strategy, as described below.  The
term "asset allocation" is used to describe the process of
shifting assets among discrete categories of investments in an
effort to adjust risk while producing desired return objectives.
Portfolio management, therefore, will consist not only of
specific securities selection but also of setting, monitoring and
changing, when necessary, the asset mix.

         Each Fund has been designed with a view toward a
particular "investor profile."  The "conservative investor" has a
relatively short-term investment bias, either because of a
limited tolerance for market volatility or a short investment
horizon.  This investor is averse to taking risks that may result
in principal loss, even though such aversion may reduce the
potential for higher long-term gains and result in lower
performance during periods of equity market strength.

         Consequently, the asset mix for the Conservative
Investors Fund attempts to reduce volatility while providing
modest upside potential.  The "growth investor" has a longer-term
investment horizon and is therefore willing to take more risks in
an attempt to achieve long-term growth of principal.  This
investor wishes, in effect, to be risk conscious without being
risk averse.  The asset mix for the Growth Investors Fund is
therefore intended to provide for upside potential without
excessive volatility.
    
         Alliance Capital Management L.P. (the "Adviser") has
established an asset allocation committee (the "Committee"), all
the members of which are employees of the Adviser, which is
responsible for setting and continually reviewing the asset mix


                                3



<PAGE>

ranges of each Fund.  The Committee generally meets at least
twice each month.  Under normal market conditions, the Committee
is expected to change allocation ranges approximately three to
five times per year.  However, the Committee has broad latitude
to establish the frequency, as well as the magnitude, of
allocation changes within the guidelines established for each
Fund.  During periods of severe market disruption, allocation
ranges may change frequently.  It is also possible that in
periods of stable and consistent outlook no change will be made.
The Committee's decisions are based on and may be limited by a
variety of factors, including liquidity, portfolio size, tax
consequences and general market conditions, always within the
context of the appropriate investor profile for each Fund.
Consequently, asset mix decisions for the Conservative Investors
Fund particularly emphasize risk assessment of each asset class
viewed over the shorter term, while decisions for the Growth
Investors Fund are principally based on an assessment of the
longer term total return potential for each asset class.
    
         The Funds are permitted to use a variety of hedging
techniques to attempt to reduce market interest rate and currency
risks.

Investment Policies of the Conservative Investors Fund

         The investment objective of the Fund is to achieve a
high total return without, in the view of the Adviser, undue risk
to principal.  The Fund attempts to achieve its investment
objective by allocating varying portions of its assets among
investment grade, publicly traded fixed-income securities, money
market instruments and publicly traded common stocks and other
equity securities of U.S. and non-U.S. issuers.
    
         All fixed-income securities owned by the Fund will be of
investment grade at the time of purchase.  This means that they
will be in one of the top four rating categories assigned by
Standard & Poor's ("S&P") or Moody's Investors Service, Inc.
("Moody's") or will be unrated securities of comparable quality
as determined by the Adviser.  Securities in the fourth such
rating category (rated BBB by S&P or Baa by Moody's) have
speculative characteristics, and changes in economic conditions
or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments on such
obligations than in the case of higher-rated securities.  In the
event that the rating of any security held by the Fund falls
below investment grade (or, in the case of an unrated security,
the Adviser determines that it is no loner of investment grade),
the Fund will not be obligated to dispose of such security and
may continue to hold the obligation if, in the opinion of the
Adviser, such investment is appropriate under the circumstances.



                                4



<PAGE>

For a description of the ratings referred to above, see Appendix
A to this Statement of Additional Information.
    
         Equity securities invested in by the Fund will consist
of common stocks and securities convertible into common stocks,
such as convertible bonds, convertible preferred stocks and
warrants, issued by companies with a favorable outlook for
earnings and whose rate of growth is expected to exceed that of
the U.S. economy over time.
    
         The Fund will at all times hold at least 40% of its
total assets in investment grade fixed-income securities, each
having a duration less than that of a 10-year Treasury bond (the
"Fixed Income Core").  The duration of a fixed-income security is
the weighted average maturity, expressed in years of the present
value of all future cash flows, including coupon payments and
principal repayments.

         The Fund is generally expected to hold approximately 70%
of its total assets in fixed-income securities (including the
Fixed Income Core, cash and money market instruments) and 30% in
equity securities.  Actual asset mixes will be adjusted in
response to economic and credit market cycles.  The fixed-income
asset class will always comprise at least 50%, but never more
than 90%, of the Fund's total assets.  The equity class will
always comprise at least 10%, but never more than 50%, of the
Fund's total assets.  For temporary defensive purposes, the Fund
may invest in money market instruments.

Investment Policies of the Growth Investors Fund

         The investment objective of the Fund is to achieve the
highest total return consistent with the Adviser's determination
of reasonable risk.  The Fund attempts to achieve its investment
objective by allocating varying portions of its assets among a
number of asset classes.  Equity investments will include
publicly traded common stocks and other equity securities of the
type in which the Conservative Investors Fund may invest, but may
also include equity securities issued by intermediate and small-
sized companies with favorable growth prospects, companies in
cyclical industries, companies whose securities are, in the
opinion of the Adviser, temporarily undervalued, companies in
special situations and less widely known companies.  Fixed-income
investments will include investment grade fixed-income securities
(including cash and money market instruments) and may include
securities that are rated in the lower rating categories by
recognized ratings agencies (i.e., BB or lower by S&P or Ba or
lower by Moody's) or that are unrated but determined by the
Adviser to be of comparable quality.  Lower rated fixed-income
securities generally provide greater current income than higher
rated fixed-income securities, but are subject to greater credit


                                5



<PAGE>

and market risk.  The Fund will not invest more than 25% of its
total assets in securities rated at the time of purchase below
investment grade, that is, securities rated BB or lower by S&P or
Ba or lower by Moody's, or in unrated securities deemed to be of
comparable quality at the time of purchase by the Adviser.  For a
description of the ratings referred to above, see Appendix A.
For more information about the risks associated with investment
in lower rated securities, see "High-Yield Securities" below.
    
         The Fund will at all times hold at least 40% of its
total assets in publicly traded common stocks and other equity
securities of the type purchased by the Conservative Investors
Fund (the "Equity Core").  The Fund is generally expected to hold
approximately 70% of its total assets in equity securities
(including the Equity Core) and 30% in fixed-income securities
(including cash and money market instruments).  Actual asset
mixes will be adjusted in response to economic and credit market
cycles.  The fixed-income asset class will always comprise at
least 10%, but never more than 60%, of the Fund's total assets.
The equity class will always comprise at least 40%, but never
more than 90%, of the Fund's total assets.  For temporary
defensive purposes, the Fund may invest in money market
instruments.

         High-Yield Securities.  The Fund may invest in high-
yield, high-risk, fixed-income and convertible securities rated
at the time of purchase BB or lower by S&P or Ba or lower by
Moody's or, if unrated, judged by the Adviser to be of comparable
quality at the time of purchase ("High-Yield Securities").  The
Fund will generally invest in securities with a minimum rating at
the time of purchase of CCC- by S&P or Caa- by Moody's or in
unrated securities judged by the Adviser to be of comparable
quality at the time or purchase.  However, from time to time, the
Fund may invest in securities rated in the lowest grades by
Moody's (C) or S&P (D) or in unrated securities judged by the
Adviser to be of comparable quality, if the Fund's management
determines that there are prospects for an upgrade or a favorable
conversion into equity securities (in the case of convertible
securities). Securities rated Ba or BB or lower (and comparable
unrated securities) are commonly referred to as "junk bonds."
Securities rated D by S&P are in default.  During the fiscal year
ended April 30, 1996, the Fund did not invest in any High-Yield
Securities.
    
         As with other fixed-income securities, High-Yield
Securities are subject to credit risk and market risk and their
yields may fluctuate.  Market risk relates to changes in a
security's value as a result of changes in interest rates.
Credit risk relates to the ability of the issuer to make payments
of principal and interest.  High-Yield Securities are subject to
greater credit risk (and potentially greater incidence of


                                6



<PAGE>

default) than comparable higher-rated securities because issuers
are more vulnerable to economic downturns, higher interest rates
or adverse issuer-specific developments.  In addition, the prices
of High-Yield Securities are generally subject to greater market
risk and therefore react more sharply to changes in interest
rates.  The value and liquidity of High-Yield Securities may be
diminished by adverse publicity or investor perceptions.
    
         Because High-Yield Securities are frequently traded only
in markets where the number of potential purchasers and sellers,
if any, is limited, the ability of the Fund to sell High-Yield
Securities at their fair value either to meet redemption requests
or to respond to changes in the financial markets may be limited.
Thinly traded High-Yield Securities may be more difficult to
value accurately for the purpose of determining the Fund's net
asset value.  Also, because the market for certain High-Yield
Securities is relatively new, that market may be particularly
sensitive to an economic downturn or a general increase in
interest rates. In addition, under such circumstances the values
of such securities may be more volatile.

         Some High-Yield Securities in which the Fund may invest
may be subject to redemption or call provisions that may limit
increases in market value that might otherwise result from lower
interest rates while increasing the risk that the Fund may be
required to reinvest redemption or call proceeds during a period
of relatively low interest rates.

         The credit ratings issued by Moody's and S&P, a
description of which is included as Appendix A to this Statement
of Additional Information, are subject to various limitations.
For example, while such ratings evaluate credit risk, they
ordinarily do not evaluate the market risk of High-Yield
Securities.  In certain circumstances, the ratings may not
reflect in a timely fashion adverse developments affecting an
issuer.  For these reasons, the Adviser conducts its own
independent credit analysis of High-Yield Securities.  When the
Fund invests in securities in the lower rating categories, the
achievement of the Fund's goals is more dependent on the
Adviser's ability than would be the case if the Fund were
investing in higher rated securities.

         In the event that the credit rating of a High-Yield
Security held by the Fund falls below its rating at the time of
purchase (or, in the case of unrated securities, the Adviser
determines that the quality of such security has deteriorated
since purchased by the Fund), the Fund will not be obligated to
dispose of such security and may continue to hold the obligation
if, in the opinion of the Adviser, such investment is appropriate
under the circumstances.
    


                                7



<PAGE>

         Securities rated Baa by Moody's or BBB by S&P or judged
by the Adviser to be of comparable quality share some of the
speculative characteristics of High-Yield Securities described
above.

Additional Investment Policies and Techniques Applicable
to the Conservative Investors and Growth Investors Funds

         Mortgage-Backed Securities.  Each Fund may invest in
mortgage-backed securities, including collateralized mortgage
obligations ("CMOs").  Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed
securities are passed through to the holders of the mortgage-
backed security. Prepayments occur when the mortgagor on an
individual mortgage prepays the remaining principal before the
mortgage's scheduled maturity date.  As a result of the pass-
through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid
prepayment of principal than their stated maturity would
indicate.  Because the prepayment characteristics of the
underlying mortgages vary, it is not possible to predict
accurately the realized yield or average life of a particular
issue of pass-through certificates.  During periods of declining
interest rates, such prepayments can be expected to accelerate
and the Fund would be required to reinvest the proceeds at the
lower interest rates then available.  In addition, prepayments of
mortgages which underlie securities purchased at a premium could
result in capital losses.
    
         Stripped Mortgage-Related Securities.  The Fund may
invest in stripped mortgage-related securities ("SMRS").  SMRS
are derivative multi-class mortgage-related securities. SMRS may
be issued by the U.S. Government, its agencies or
instrumentalities, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.

         SMRS are usually structured with two classes that
receive different proportions of the interest and principal
distributions on a pool of GNMA, FNMA or FHLMC certificates,
whole loans or private pass-through mortgage-related securities
("Mortgage Assets").  A common type of SMRS will have one class
receiving some of the interest and most of the principal from the
Mortgage Assets, while the other class will receive most of the
interest and the remainder of the principal.  In the most extreme
case, one class will receive all of the interest (the interest-
only or "IO" class), while the other class will receive all of
the principal (the principal-only or "PO" class).  The yield to
maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the related


                                8



<PAGE>

underlying Mortgage Assets, and a rapid rate of principal
prepayments may have a material adverse effect on the yield to
maturity of the IO class. The rate of principal prepayment will
change as the general level of interest rates fluctuates.  If the
underlying Mortgage Assets experience greater than anticipated
principal prepayments, the Fund may fail to fully recoup its
initial investment in these securities.  Due to their structure
and underlying cash flows, SMRS may be more volatile than
mortgage-related securities that are not stripped.

         Although SMRS are purchased and sold by institutional
investors through several investment banking firms acting as
brokers or dealers, these securities were only recently
developed.  As a result, established trading markets have not yet
developed and, accordingly, these securities may be illiquid.

         Adjustable Rate Securities.  Each Fund may invest in
adjustable rate securities.  Adjustable rate securities are
securities that have interest rates that are reset at periodic
intervals, usually by reference to some interest rate index or
market interest rate.  Some adjustable rate securities are backed
by pools of mortgage loans.  Although the rate adjustment feature
may act as a buffer to reduce sharp changes in the value of
adjustable rate securities, these securities are still subject to
changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.  Because the interest
rate is reset only periodically, changes in the interest rate on
adjustable rate securities may lag behind changes in prevailing
market interest rates.  Also, some adjustable rate securities (or
the underlying mortgages) are subject to caps or floors that
limit the maximum change in the interest rate during a specified
period or over the life of the security.

         Convertible Securities.  Each Fund may invest in
convertible securities. These securities normally provide a
higher yield than the underlying stock but lower than a fixed-
income security without the conversion feature.  Also, the price
of the convertible security will normally vary to some degree
with changes in the price of the underlying stocks although under
some market conditions the higher yield tends to make the
convertible security less volatile than the underlying common
stock. In addition, the price of the convertible security will
also generally vary to some degree inversely with interest rates.
Convertible debt securities that are rated below BBB by S&P or
Baa by Moody's or comparable unrated securities as determined by
the Adviser may share some or all of the risks of High-Yield
Securities.  For a description of these risks, see "High-Yield
Securities" above.
    
         Equity-Linked Debt Securities.  Equity-linked debt
securities are securities with respect to which the amount of


                                9



<PAGE>

interest and/or principal that the issuer thereof is obligated to
pay is linked to the performance of a specified index of equity
securities.  Such amount may be significantly greater or less
than payment obligations in respect of other types of debt
securities.  Adverse changes in equity securities indices and
other adverse changes in the securities markets may reduce
payments made under, and/or the principal of, equity-linked debt
securities held by a Fund.  Furthermore, as with any debt
securities, the values of equity-linked debt securities will
generally vary inversely with changes in interest rates.  A
Fund's ability to dispose of equity-linked debt securities will
depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to
be speculative.  As with other securities, a Fund could lose its
entire investment in equity-linked debt securities.
    
         Zero-Coupon and Payment-in-Kind Bonds.  Each Fund may at
times invest in so-called "zero-coupon" bonds and "payment-in-
kind" bonds.  Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically.  Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in
cash or in additional bonds.  Because zero-coupon bonds do not
pay current interest, their value is generally subject to greater
fluctuation in response to changes in market interest rates than
bonds which pay interest currently.  Both zero-coupon and
payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments.  Accordingly,
such bonds may involve greater credit risks than bonds paying
interest currently.  Even though such bonds do not pay current
interest in cash, the Fund is nonetheless required to accrue
interest income on such investments and to distribute such
amounts at least annually to shareholders.  Thus, the Fund could
be required to liquidate other investments in order to satisfy
its dividend requirements at times when the Adviser would not
otherwise deem it advisable to do so.
    
         Foreign Currency Exchange Transactions.  Each Fund may
engage in foreign currency exchange transactions to protect
against uncertainty in the level of future currency exchange
rates.  The Adviser expects to engage in foreign currency
exchange transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").

         The Funds may engage in transaction hedging to protect
against a change in foreign currency exchange rates between the
date on which the Fund contracted to purchase or sell a security
and the settlement date, or to "lock in" the U.S. dollar
equivalent of a dividend or interest payment in a foreign


                               10



<PAGE>

currency.  The Funds may purchase or sell a foreign currency on a
spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities
denominated in that foreign currency.

         If conditions warrant, the Funds may also enter into
contracts to purchase or sell foreign currencies at a future date
("forward contracts"), and may purchase and sell foreign currency
futures contracts, as a hedge against changes in foreign currency
exchange rates between the trade and settlement dates on
particular transactions and not for speculation.  A foreign
currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher
or lower than the spot rate.  Foreign currency futures contracts
are standardized exchange-traded contracts and have margin
requirements.

         For transaction hedging purposes, the Funds may also
purchase and sell call and put options on foreign currency
futures contracts and on foreign currencies.

         Each Fund may engage in position hedging to protect
against a decline in value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or
quoted (or an increase in value of a currency in which securities
the Fund intends to buy are denominated, when the Fund holds cash
or short-term investments).  For position hedging purposes, each
Fund may purchase or sell foreign currency futures contracts,
foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies.  In
connection with position hedging, the Funds may also purchase or
sell foreign currency on a spot basis.

         A Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated.  The Adviser will
engage in such "cross hedging"activities when it believes that
such transactions provide significant hedging opportunities for a
Fund.

Portfolio Management

         The Adviser manages each Fund's portfolio by buying and
selling securities to help attain its investment objective.  The
portfolio turnover rate for each Fund is included under
"Financial Highlights" in the Funds' Prospectus.  A high
portfolio turnover rate will involve greater costs to a Fund
(including brokerage commissions and transaction costs) and may
also result in the realization of taxable capital gains,
including short-term capital gains taxable at ordinary income


                               11



<PAGE>

rates.  See "Dividends, Distributions and Taxes" and "Portfolio
Transactions" below.

          ADDITIONAL INVESTMENT TECHNIQUES OF THE FUNDS

Repurchase Agreements

         The repurchase agreements referred to in the Funds'
Prospectus are agreements by which a Fund purchases a security
and obtains a simultaneous commitment from the seller to
repurchase the security at an agreed upon price and date.  The
resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the
purchased security.  The purchased security serves as collateral
for the obligation of the seller to repurchase the security and
the value of the purchased security is initially greater than or
equal to the amount of the repurchase obligation and the seller
is required to furnish additional collateral on a daily basis in
order to maintain with the purchaser securities with a value
greater than or equal to the amount of the repurchase obligation.
Such transactions afford the Funds the opportunity to earn a
return on temporarily available cash.  While at times the
underlying security may be a bill, certificate of indebtedness,
note, or bond issued by an agency, authority or instrumentality
of the U.S. Government, the obligation of the seller is not
guaranteed by the U.S. Government and there is a risk that the
seller may fail to repurchase the underlying security, whether
because of the seller's bankruptcy or otherwise.  In such event,
the Funds would attempt to exercise their rights with respect to
the underlying security, including possible disposition in the
market.  However, the Funds may be subject to various delays and
risks of loss, including (a) possible declines in the value of
the underlying security during the period while the Funds seek to
enforce their rights thereto, (b) possible reduced levels of
income and lack of access to income during this period and
(c) inability to enforce rights and the expenses involved in the
attempted enforcement.
    
Non-Publicly Traded Securities

         As described in the Prospectus, each of the Funds may
invest in securities that are not publicly traded, including
securities sold pursuant to Rule 144A under the Securities Act of
1933 ("Rule 144A Securities").  The sale of these securities is
usually restricted under Federal securities laws, and market
quotations may not be readily available.  As a result, a Fund may
not be able to sell these securities (other than Rule 144A
Securities) unless they are registered under applicable Federal
and state securities laws, or may have to sell such securities at
less than fair market value.  Investment in these securities is
restricted to 5% of a Fund's total assets (excluding, to the


                               12



<PAGE>

extent permitted by applicable law, Rule 144A Securities) and is
also subject to the restriction against investing more than 15%
of total assets in "illiquid" securities.  To the extent
permitted by applicable law, Rule 144A Securities will not be
treated as "illiquid" for purposes of the foregoing restriction
so long as such securities meet the liquidity guidelines
established by the Trust's Board of Trustees.  Pursuant to these
guidelines, the Adviser will monitor the liquidity of a Fund's
investment in Rule 144A Securities.
    
Foreign Securities

         Each Fund may invest without limit in securities of
foreign issuers which are not publicly traded in the United
States, although each Fund generally will not invest more than
15% of its total assets (30% in the case of the Growth Investors
Fund) in such securities.  Investment in foreign issuers or
securities principally traded outside the United States may
involve certain special risks due to foreign economic, political,
diplomatic and legal developments, including favorable or
unfavorable changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation or
nationalization of assets, confiscatory taxation, imposition of
withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign
entities.  Furthermore, issuers of foreign securities are subject
to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers.  The securities of
some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable
U.S. companies and U.S. securities markets, and foreign
securities markets may be subject to less regulation than U.S.
securities markets.  The laws of some foreign countries may limit
the Funds' abilities to invest in securities of certain issuers
located in these countries.  Foreign brokerage commissions and
other fees are also generally higher than in the United States.
There are also special tax considerations which apply to
securities of foreign issuers and securities principally traded
overseas.  Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic
investments.  The Fund may invest a portion of its assets in
developing countries or in countries with new or developing
capital markets.  The risks noted above are generally increased
with respect to these investments.  These countries may have
relatively unstable governments, economies based on only a few
industries or securities markets that trade a small number of
securities.  Securities of issuers located in these countries
tend to have volatile prices and may offer significant potential
for loss.


                               13



<PAGE>

    
         The value of foreign investments measured in U.S.
dollars will rise or fall because of decreases or increases,
respectively, in the value of the U.S. dollar in comparison to
the value of the currency in which the foreign investment is
denominated.  The Fund may buy or sell foreign currencies,
options on foreign currencies, foreign currency futures contracts
(and related options) and deal in forward foreign currency
exchange contracts in connection with the purchase and sale of
foreign investments.  See "Additional Investment Policies and
Techniques Applicable to the Conservative Investors and Growth
Investors Funds - Foreign Currency Exchange Transactions" above.

Descriptions of Certain Money Market Securities
in Which the Funds May Invest

         Certificates of Deposit, Bankers' Acceptances and Bank
Time Deposits.  Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds.  The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate.  The
certificate usually can be traded in the secondary market prior
to maturity.

         Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions.  Generally, an acceptance is
a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then "accepted" by another 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 maturities are six months or less.

         Bank time deposits are funds kept on deposit with a bank
for a stated period of time in an interest bearing account. At
present, bank time deposits maturing in more than seven days are
not considered by the Adviser to be readily marketable.

         Commercial Paper.  Commercial paper consists of short-
term (usually from 1 to 270 days) unsecured promissory notes
issued by entities in order to finance their current operations.

         Variable Notes.  Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by a Fund at varying rates
of interest pursuant to direct arrangements between a Fund, as
lender, and the borrower.  Master demand notes permit daily


                               14



<PAGE>

fluctuations in the interest rate while the interest rate under
variable amount floating rate notes fluctuates on a weekly basis.
These notes permit daily changes in the amounts borrowed.  The
Funds have the right to increase the amount under these notes at
any time up to the full amount provided by the note agreement, or
to decrease the amount, and the borrower may repay up to the full
amount of the note without penalty.  Because these types of notes
are direct lending arrangements between the lender and the
borrower, it is not generally contemplated that such instruments
will be traded and there is no secondary market for these notes.
Master demand notes are redeemable (and, thus, immediately
repayable by the borrower) at face value, plus accrued interest,
at any time.  Variable amount floating rate notes are subject to
next-day redemption 14 days after the initial investment therein.
With both types of notes, therefore, the Funds' right to redeem
depends on the ability of the borrower to pay principal and
interest on demand.  In connection with both types of note
arrangements, the Funds consider earning power, cash flow and
other liquidity ratios of the issuer.  These notes, as such, are
not typically rated by credit rating agencies.  Unless they are
so rated, a Fund may invest in them only if at the time of an
investment the issuer has an outstanding issue of unsecured debt
rated Aa or better by Moody's or AA or better by S&P.

Asset-Backed Securities

         Each Fund may invest in asset-backed securities
(unrelated to first mortgage loans), which represent fractional
interests in pools of retail installment loans, leases or
revolving credit receivables, both secured (such as Certificates
for Automobile Receivables or "CARS") and unsecured (such as
Credit Card Receivable Securities or "CARDS").  These assets are
generally held by a trust and payments of principal and interest
or interest only are passed through monthly or quarterly to
certificate holders and may be guaranteed up to certain amounts
by letters of credit issued by a financial institution affiliated
or unaffiliated with the trustee or originator of the trust.

         Like mortgages underlying mortgage-backed securities,
underlying automobile sales contracts or credit card receivables
are subject to prepayment, which may reduce the overall return to
certificate holders.  Certificate holders may also experience
delays in payment if the full amounts due on underlying sales
contracts or receivables are not realized by the trust holding
the obligations because of unanticipated legal or administrative
costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain
contracts, or other factors.  If consistent with their investment
objectives and policies, each of the Funds may invest in other
asset-backed securities that may be developed in the future.
    


                               15



<PAGE>

         The staff of the Securities and Exchange Commission (the
"SEC") is of the view that certain asset-backed securities may
constitute investment companies under the Investment Company Act
of 1940 (the "1940 Act").  The Funds intend to conduct their
operations in a manner consistent with this view; therefore, the
Funds generally may not invest more than 10% of their total
assets in such securities without obtaining appropriate
regulatory relief.

Lending of Securities

         Each Fund may seek to increase its income by lending
portfolio securities.  Under present regulatory policies,
including those of the Board of Governors of the Federal Reserve
System and the SEC, such loans may be made only to member firms
of the New York Stock Exchange (the"Exchange") and would be
required to be secured continuously by collateral in cash, cash
equivalents, or U.S. Treasury Bills maintained on a current basis
at an amount at least equal to the market value of the securities
loaned.  A Fund would have the right to call a loan and obtain
the securities loaned at any time on five days' notice.  During
the existence of a loan, a Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive compensation based on
investment of the collateral.  A Fund would not, however, have
the right to vote any securities having voting rights during the
existence of the loan but would call the loan in anticipation of
an important vote to be taken among holders of the securities or
of the giving or withholding of their consent on a material
matter affecting the investment.  As with other extensions of
credit there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities
fail financially.  However, the loans would be made only to firms
deemed by the Adviser to be of good standing, and when, in the
judgment of the Adviser, the consideration that can be earned
currently from securities loans of this type justifies the
attendant risk.  The value of the securities loaned will not
exceed 25% of the value of such Fund's total assets at the time
any such loan is made.
    
Forward Commitments and When-Issued and Delayed
Delivery Securities

         Each Fund may enter into forward commitments for the
purchase of securities and may purchase securities on a "when-
issued" or "delayed delivery" basis.  Agreements for such
purchases might be entered into, for example, when a Fund
anticipates a decline in interest rates and is able to obtain a
more advantageous yield by committing currently to purchase
securities to be issued later.  When a Fund purchases securities
in this manner (i.e., on a forward commitment, when-issued or


                               16



<PAGE>

delayed delivery basis), it does not pay for the securities until
they are received, and a Fund is required to create a segregated
account with the Trust's custodian and to maintain in that
account liquid assets in an amount equal to or greater than, on a
daily basis, the amount of the Fund's forward commitments and
when-issued or delayed delivery commitments.

         A Fund will enter into forward commitments and make
commitments to purchase securities on a when-issued or delayed
delivery basis only with the intention of actually acquiring the
securities.  However, a Fund may sell these securities before the
settlement date if it is deemed advisable as a matter of
investment strategy.

         Although neither of the Funds intends to make such
purchases for speculative purposes and each Fund intends to
adhere to the provisions of SEC policies, purchases of securities
on such bases may involve more risk than other types of
purchases.  For example, by committing to purchase securities in
the future, a Fund subjects itself to a risk of loss on such
commitments as well as on its portfolio securities.  Also, a Fund
may have to sell assets which have been set aside in order to
meet redemptions.  In addition, if a Fund determines it is
advisable as a matter of investment strategy to sell the forward
commitment or "when-issued" or "delayed delivery" securities
before delivery, that Fund may incur a gain or loss because of
market fluctuations since the time the commitment to purchase
such securities was made.  Any such gain or loss would be treated
as a capital gain or loss and would be treated for tax purposes
as such.  When the time comes to pay for the securities to be
purchased under a forward commitment or on a "when-issued" or
"delayed delivery" basis, a Fund will meet its obligations from
the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of
the forward commitment or "when-issued" or "delayed delivery"
securities themselves (which may have a value greater or less
than a Fund's payment obligation).

Options

         Options on Securities.  Each Fund intends to write only
covered options.  In addition to the methods of "cover" described
in the Prospectus, each Fund may write call and put options and
may purchase call and put options on securities.  This means that
so long as a Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option or
securities convertible into such securities without additional
consideration (or for additional cash consideration held in a
segregated account by the custodian).  In the case of call
options on U.S. Treasury Bills, a Fund might own U.S. Treasury
Bills of a different series from those underlying the call


                               17



<PAGE>

option, but with a principal amount and value corresponding to
the option contract amount and a maturity date no later than that
of the securities deliverable under the call option.  A Fund will
be considered "covered" with respect to a put option it writes,
if, so long as it is obligated as the writer of a put option, it
deposits and maintains with its custodian in a segregated account
liquid assets having a value equal to or greater than the
exercise price of the option.
    
         Effecting a closing transaction in the case of a written
call option will permit a Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both, or in the case of a written put option
will permit a Fund to write another put option to the extent that
the exercise price thereof is secured by deposited cash or short-
term securities.  Such transactions permit a Fund to generate
additional premium income, which will partially offset declines
in the value of portfolio securities or increases in the cost of
securities to be acquired.  Also, effecting a closing transaction
will permit the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other investments
by a Fund, provided that another option on such security is not
written.  If a Fund desires to sell a particular security from
its portfolio on which it has written a call option, it will
effect a closing transaction in connection with the option prior
to or concurrent with the sale of the security.

         A Fund will realize a profit from a closing transaction
if the premium paid in connection with the closing of an option
written by the Fund is less than the premium received from
writing the option, or if the premium received in connection with
the closing of an option purchased by the Fund is more than the
premium paid for the original purchase. Conversely, a Fund will
suffer a loss if the premium paid or received in connection with
a closing transaction is more or less, respectively, than the
premium received or paid in establishing the option position.
Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option
previously written by a Fund is likely to be offset in whole or
in part by appreciation of the underlying security owned by the
Fund.

         A Fund may purchase a security and then write a call
option against that security or may purchase a security and
concurrently write an option on it.  The exercise price of the
call a Fund determines to write will depend upon the expected
price movement of the underlying security.  The exercise price of
a call option may be below ("in-the-money"), equal to ("at-the-
money") or above ("out-of-the-money") the current value of the
underlying security at the time the option is written.  In-the-


                               18



<PAGE>

money call options may be used when it is expected that the price
of the underlying security will decline moderately during the
option period.  Out-of-the-money call options may be written when
it is expected that the premiums received from writing the call
option plus the appreciation in the market price of the
underlying security up to the exercise price will be greater than
the appreciation in the price of the underlying security alone.
If the call options are exercised in such transactions, a Fund's
maximum gain will be the premium received by it for writing the
option, adjusted upwards or downwards by the difference between
the Fund's purchase price of the security and the exercise price.
If the options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.

         The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions.  If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and a Fund's gain will be limited to the premium received.  If
the market price of the underlying security declines or otherwise
is below the exercise price, a Fund may elect to close the
position or retain the option until it is exercised, at which
time the Fund will be required to take delivery of the security
at the exercise price; the Fund's return will be the premium
received from the put option minus the amount by which the market
price of the security is below the exercise price, which could
result in a loss.  Out-of-the-money put options may be written
when it is expected that the price of the underlying security
will decline moderately during the option period.  In-the-money
put options may be used when it is expected that the premiums
received from writing the put option plus the appreciation in the
market price of the underlying security up to the exercise price
will be greater than the appreciation in the price of the
underlying security alone.

         Each of the Funds may also write combinations of put and
call options on the same security, known as "straddles," with the
same exercise and expiration date.  By writing a straddle, a Fund
undertakes a simultaneous obligation to sell and purchase the
same security in the event that one of the options is exercised.
If the price of the security subsequently rises above the
exercise price, the call will likely be exercised and the Fund
will be required to sell the underlying security at a below
market price.  This loss may be offset, however, in whole or
part, by the premiums received on the writing of the two options.
Conversely, if the price of the security declines by a sufficient
amount, the put will likely be exercised.  The writing of
straddles will likely be effective, therefore, only where the
price of the security remains stable and neither the call nor the
put is exercised.  In those instances where one of the options is


                               19



<PAGE>

exercised, the loss on the purchase or sale of the underlying
security may exceed the amount of the premiums received.

         By writing a call option, a Fund limits its opportunity
to profit from any increase in the market value of the underlying
security above the exercise price of the option.  By writing a
put option, a Fund assumes the risk that it may be required to
purchase the underlying security for an exercise price above its
then current market value, resulting in a capital loss unless the
security subsequently appreciates in value.  Where options are
written for hedging purposes, such transactions constitute only a
partial hedge against declines in the value of portfolio
securities or against increases in the value of securities to be
acquired, up to the amount of the premium.

         Each of the Funds may purchase put options to hedge
against a decline in the value of portfolio securities.  If such
decline occurs, the put options will permit the Fund to sell the
securities at the exercise price or to close out the options at a
profit.  By using put options in this way, a Fund will reduce any
profit it might otherwise have realized on the underlying
security by the amount of the premium paid for the put option and
by transaction costs.

         A Fund may purchase call options to hedge against an
increase in the price of securities that the Fund anticipates
purchasing in the future.  If such increase occurs, the call
option will permit the Fund to purchase the securities at the
exercise price, or to close out the options at a profit.  The
premium paid for the call option plus any transaction costs will
reduce the benefit, if any, realized by a Fund upon exercise of
the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to the Fund
and the Fund will suffer a loss on the transaction to the extent
of the premium paid.

         Options on Securities Indexes.  Each Fund may write
(sell) covered call and put options on securities indexes and
purchase call and put options on securities indexes.  A call
option on a securities index is considered covered if, so long as
a Fund is obligated as the writer of the call, the Fund holds in
its portfolio securities the price changes of which are, in the
opinion of the Adviser, expected to replicate substantially the
movement of the index or indexes upon which the options written
by the Fund are based.  A put on a securities index written by a
Fund will be considered covered if, so long as it is obligated as
the writer of the put, the Fund segregates with its custodian
liquid assets having a value equal to or greater than the
exercise price of the option.
    



                               20



<PAGE>

         A Fund may also purchase put options on securities
indexes to hedge its investments against a decline in value.  By
purchasing a put option on a securities index, a Fund will seek
to offset a decline in the value of securities it owns through
appreciation of the put option.  If the value of a Fund's
investments does not decline as anticipated, or if the value of
the option does not increase, the Fund's loss will be limited to
the premium paid for the option.  The success of this strategy
will largely depend on the accuracy of the correlation between
the changes in value of the index and the changes in value of a
Fund's security holdings.

         The purchase of call options on securities indexes may
be used by a Fund to attempt to reduce the risk of missing a
broad market advance, or an advance in an industry or market
segment, at a time when the Fund holds uninvested cash or short-
term debt securities awaiting investment.  When purchasing call
options for this purpose, a Fund will also bear the risk of
losing all or a portion of the premium paid if the value of the
index does not rise.  The purchase of call options on stock
indexes when a Fund is substantially fully invested is a form of
leverage, up to the amount of the premium and related transaction
costs, and involves risks of loss and of increased volatility
similar to those involved in purchasing calls on securities the
Fund owns.

Futures Contracts and Options on Futures Contracts

         Futures Contracts.  Each Fund may enter into interest
rate transactions with respect to futures contracts, index
futures contracts and foreign currency futures contracts.
(Unless otherwise specified, interest rate futures contracts,
index futures contracts and foreign currency futures contracts
are collectively referred to as "Futures Contracts.")  Such
investment strategies will be used as a hedge and not for
speculation.

         Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect a
Fund's current or intended investments from broad fluctuations in
stock or bond prices.  For example, a Fund may sell stock or bond
index futures contracts in anticipation of or during a market
decline to attempt to offset the decrease in market value of the
Fund's portfolio securities that might otherwise result.  If such
decline occurs, the loss in value of portfolio securities may be
offset, in whole or part, by gains on the futures position.  When
a Fund is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock
or bond index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the
cost of securities that the Fund intends to purchase. As such


                               21



<PAGE>

purchases are made, the corresponding positions in stock or bond
index futures contracts will be closed out. 

         Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on a Fund's current or intended investments
in fixed income securities.  For example, if a Fund owned long-
term bonds and interest rates were expected to increase, that
Fund might sell interest rate futures contracts.  Such a sale
would have much the same effect as selling some of the long-term
bonds in that Fund's portfolio.  However, since the futures
market is more liquid than the cash market, the use of interest
rate futures contracts as a hedging technique allows a Fund to
hedge its interest rate risk without having to sell its portfolio
securities.  If interest rates did increase, the value of the
debt securities in the portfolio would decline, but the value of
that Fund's interest rate futures contracts would be expected to
increase at approximately the same rate, thereby keeping the net
asset value of that Fund from declining as much as it otherwise
would have.  On the other hand, if interest rates were expected
to decline, interest rate futures contracts could be purchased to
hedge in anticipation of subsequent purchases of long-term bonds
at higher prices.  Because the fluctuations in the value of the
interest rate futures contracts should be similar to those of
long-term bonds, a Fund could protect itself against the effects
of the anticipated rise in the value of long-term bonds without
actually buying them until the necessary cash became available or
the market had stabilized.  At that time, the interest rate
futures contracts could be liquidated and that Fund's cash
reserves could then be used to buy long-term bonds on the cash
market.

         Each Fund may purchase and sell foreign currency futures
contracts for hedging purposes to attempt to protect its current
or intended investments from fluctuations in currency exchange
rates.  Such fluctuations could reduce the dollar value of
portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant.  Each Fund may
sell futures contracts on a foreign currency, for example, when
it holds securities denominated in such currency and it
anticipates a decline in the value of such currency relative to
the dollar.  In the event such decline occurs, the resulting
adverse effect on the value of foreign-denominated securities may
be offset, in whole or in part, by gains on the futures
contracts.  However, if the value of the foreign currency
increases relative to the dollar, the Fund's loss on the foreign
currency futures contract may or may not be offset by an increase
in the value of the securities because a decline in the price of
the security stated in terms of the foreign currency may be


                               22



<PAGE>

greater than the increase in value as a result of the change in
exchange rates.

         Conversely, the Funds could protect against a rise in
the dollar cost of foreign-denominated securities to be acquired
by purchasing futures contracts on the relevant currency, which
could offset, in whole or in part, the increased cost of such
securities resulting from a rise in the dollar value of the
underlying currencies.  When a Fund purchases futures contracts
under such circumstances, however, and the price of securities to
be acquired instead declines as a result of appreciation of the
dollar, the Fund will sustain losses on its futures position
which could reduce or eliminate the benefits of the reduced cost
of portfolio securities to be acquired.

         The Funds may also engage in currency "cross hedging"
when, in the opinion of the Adviser, the historical relationship
among foreign currencies suggests that a Fund may achieve
protection against fluctuations in currency exchange rates
similar to that described above at a reduced cost through the use
of a futures contract relating to a currency other than the U.S.
dollar or the currency in which the foreign security is
denominated.  Such "cross hedging" is subject to the same risks
as those described above with respect to an unanticipated
increase or decline in the value of the subject currency relative
to the dollar.

         Options on Futures Contracts.  The writing of a call
option on a Futures Contract constitutes a partial hedge against
declining prices of the securities in the Fund's portfolio.  If
the futures price at expiration of the option is below the
exercise price, a Fund will retain the full amount of the option
premium, which provides a partial hedge against any decline that
may have occurred in the Fund's portfolio holdings.  The writing
of a put option on a Futures Contract constitutes a partial hedge
against increasing prices of the securities or other instruments
required to be delivered under the terms of the futures contract.
If the futures price at expiration of the put option is higher
than the exercise price, a Fund will retain the full amount of
the option premium, which provides a partial hedge against any
increase in the price of securities which the Fund intends to
purchase.  If a put or call option a Fund has written is
exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives.  Depending on the degree
of correlation between changes in the value of its portfolio
securities and changes in the value of its options on futures
positions, a Fund's losses from exercised options on futures may
to some extent be reduced or increased by changes in the value of
portfolio securities.




                               23



<PAGE>

         The Funds may purchase options on Futures Contracts for
hedging purposes instead of purchasing or selling the underlying
Futures Contracts.  For example, where a decrease in the value of
portfolio securities is anticipated as a result of a projected
market-wide decline or changes in interest or exchange rates, a
Fund could, in lieu of selling futures contracts, purchase put
options thereon.  In the event that such decrease occurs, it may
be offset, in whole or part, by a profit on the option.  If the
market decline does not occur, the Fund will suffer a loss equal
to the price of the put.  Where it is projected that the value of
securities to be acquired by a Fund will increase prior to
acquisition, due to a market advance or changes in interest or
exchange rates, a Fund could purchase call options on Futures
Contracts, rather than purchasing the underlying Futures
Contracts.  If the market advances, the increased cost of
securities to be purchased may be offset by a profit on the call.
However, if the market declines, the Fund will suffer a loss
equal to the price of the call, but the securities which the Fund
intends to purchase may be less expensive.

Forward Foreign Currency Exchange Contracts

         Each Fund may enter into forward foreign currency
exchange contracts ("Forward Contracts") to attempt to minimize
the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies.  The Funds intend
to enter into Forward Contracts for hedging purposes similar to
those described above in connection with their transactions in
foreign currency futures contracts.  In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where a Fund seeks to
protect against an anticipated increase in the exchange rate for
a specific currency which could reduce the dollar value of
portfolio securities denominated in such currency.  Conversely, a
Fund may enter into a Forward Contract to purchase a given
currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the Fund
intends to acquire.  A Fund also may enter into a Forward
Contract in order to assure itself of a predetermined exchange
rate in connection with a security denominated in a foreign
currency.  The Funds may engage in currency "cross hedging" when,
in the opinion of the Adviser, the historical relationship among
foreign currencies suggests that a Fund may achieve the same
protection for a foreign security at a reduced cost through the
use of a Forward Contract relating to a currency other than the
U.S. dollar or the foreign currency in which the security is
denominated.

         If a hedging transaction in Forward Contracts is
successful, the decline in the value of portfolio securities or
the increase in the cost of securities to be acquired may be


                               24



<PAGE>

offset, at least in part, by profits on the Forward Contract.
Nevertheless, by entering into such Forward Contracts, a Fund may
be required to forego all or a portion of the benefits which
otherwise could have been obtained from favorable movements in
exchange rates.

         Each Fund has established procedures consistent with SEC
policies concerning purchases of foreign currency through Forward
Contracts.  Since those policies currently recommend that an
amount of a Fund's assets equal to the amount of the purchase be
held aside or segregated to be used to pay for the commitment, a
Fund will always have liquid assets available sufficient to cover
any commitments under these contracts or to limit any potential
risk.
    
Options on Foreign Currencies

         Each Fund may purchase and write options on foreign
currencies for hedging purposes. For example, a decline in the
dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities,
even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of
portfolio securities, the Funds may purchase put options on the
foreign currency.  If the value of the currency does decline, the
Fund will have the right to sell such currency for a fixed amount
in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have
resulted.

         Conversely, where a rise in the dollar value of a
currency in which securities to be acquired are denominated is
projected, thereby increasing the cost of such securities, the
Funds may purchase call options thereon.  The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates.  As in the case of other
types of options, however, the benefit to a Fund from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs.  In addition, where
currency exchange rates do not move in the direction or to the
extent anticipated, a Fund could sustain losses on transactions
in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such
rates.
    
         Each Fund may write options on foreign currencies for
the same types of hedging purposes or to increase return.  For
example, where the Fund anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency.  If the expected


                               25



<PAGE>

decline occurs, the option will most likely not be exercised, and
the diminution in value of portfolio securities will be offset by
the amount of the premium received.

         Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the dollar cost of securities
to be acquired, a Fund could write a put option on the relevant
currency, which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium.  As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction.
If this does not occur, the option may be exercised and the Fund
will be required to purchase or sell the underlying currency at a
loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, a Fund also
may be required to forego all or a portion of the benefits which
might otherwise have been obtained from favorable movements in
exchange rates.

Risk Factors in Options, Futures and Forward Transactions

         Risk of Imperfect Correlation of Hedging Instruments
With a Fund's Portfolio.  The Funds' abilities effectively to
hedge all or a portion of their portfolios through transactions
in options, Futures Contracts, options on Futures Contracts,
Forward Contracts and options on foreign currencies depend on the
degree to which price movements in the underlying index or
instrument correlate with price movements in the securities that
are the subject of the hedge.  In the case of futures and options
based on an index, the portfolio will not duplicate the
components of the index, and in the case of futures and options
on fixed income securities, the portfolio securities which are
being hedged may not be the same type of obligation underlying
such contract.  As a result, the correlation, to the extent it
exists, probably will not be exact.

         It should be noted that stock index futures contracts or
options based upon a narrower index of securities, such as those
of a particular industry group, may present greater risk than
options or futures based on a broad market index.  This is due to
the fact that a narrower index is more susceptible to rapid and
extreme fluctuations as a result of changes in the value of a
small number of securities.

         The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
instrument.  The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,


                               26



<PAGE>

such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market.  In this regard, trading by speculators in futures and
options has in the past occasionally resulted in market
distortions, which may be difficult or impossible to predict,
particularly near the expiration of such contracts.

         The trading of options on Futures Contracts also entails
the risk that changes in the value of the underlying Futures
Contract will not be fully reflected in the value of the option.  
    
         Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and options on
Futures Contracts, the Funds are subject to the risk of market
movements between the time that the option is exercised and the
time of performance thereunder. This could increase the extent of
any loss suffered by a Fund in connection with such transactions.

         If a Fund purchases futures or options in order to hedge
against a possible increase in the price of securities before the
Fund is able to invest its cash in such securities, the Fund
faces the risk that the market may instead decline.  If the Fund
does not then invest in such securities because of concern as to
possible further market declines or for other reasons, the Fund
may realize a loss on the futures or option contract that is not
offset by a reduction in the price of securities purchased.

         In writing a call option on a security, foreign
currency, index or futures contract, a Fund also incurs the risk
that changes in the value of the assets used to cover the
position will not correlate closely with changes in the value of
the option or underlying index or instrument.  For example, when
a Fund writes a call option on a stock index, the securities used
as "cover" may not match the composition of the index, and the
Fund may not be fully covered.  As a result, the Fund could
suffer a loss on the call which is not entirely offset or offset
at all by an increase in the value of the Fund's portfolio
securities.

         The writing of options on securities, options on stock
indexes or options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of a Fund's
portfolio. When a Fund writes an option, it will receive premium
income in return for the holder's purchase of the right to
acquire or dispose of the underlying security or future or, in
the case of index options, cash.  In the event that the price of
such obligation does not rise sufficiently above the exercise
price of the option, in the case of a call, or fall below the
exercise price, in the case of a put, the option will not be
exercised and the Fund will retain the amount of the premium,
which will constitute a partial hedge against any decline that


                               27



<PAGE>

may have occurred in the Fund's portfolio holdings, or against
the increase in the cost of the instruments to be acquired.

         When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option, however, and the option is exercised, the Fund will incur
a loss which may only be partially offset by the amount of the
premium the Fund received.  Moreover, by writing an option, a
Fund may be required to forego the benefits which might otherwise
have been obtained from an increase in the value of portfolio
securities or a decline in the value of securities to be
acquired.

         In the event of the occurrence of any of the foregoing
adverse market events, a Fund's overall return may be lower than
if it had not engaged in the transactions described above.

         With respect to the writing of straddles on securities,
a Fund incurs the risk that the price of the underlying security
will not remain stable, that one of the options written will be
exercised and that the resulting loss will not be offset by the
amount of the premiums received.  Such transactions, therefore,
while creating an opportunity for increased return by providing a
Fund with two simultaneous premiums on the same security,
nonetheless involve additional risk, because the Fund may have an
option exercised against it regardless of whether the price of
the security increases or decreases.

         Potential Lack of a Liquid Secondary Market.  Prior to
exercise or expiration, a futures or option position can be
terminated only by entering into a closing purchase or sale
transaction.  This requires a secondary market for such
instruments on the exchange on which the initial transaction was
entered into.  While the Funds will enter into options or futures
positions only if there appears to be a liquid secondary market
therefor, there can be no assurance that such a market will exist
for any particular contracts at any specific time.  In that
event, it may not be possible to close out a position held by a
Fund, and the Fund could be required to purchase or sell the
instrument underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements.  Under
such circumstances, if the Fund has insufficient cash available
to meet margin requirements, it may be necessary to liquidate
portfolio securities at a time when it is disadvantageous to do
so.  The inability to close out options and futures positions,
therefore, could have an adverse impact on the Funds' ability to
effectively hedge their portfolios, and could result in trading
losses.

         The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by "daily


                               28



<PAGE>

price fluctuation limits," established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day.  Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit, thus preventing the liquidation of open futures or option
positions and requiring traders to make additional margin
deposits.  Prices have in the past moved to the daily limit on a
number of consecutive trading days.

         The trading of Futures Contracts and options (including
options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation
margin payments.

         The staff of the SEC has taken the position that over-
the-counter options and the assets used as cover for over-the-
counter options are illiquid securities, unless certain
arrangements are made with the other party to the option
contract, permitting the prompt liquidation of the option
position.  The Funds will enter into those special arrangements
only with primary U.S. Government securities dealers recognized
by the Federal Reserve Bank of New York ("primary dealers").
Under these special arrangements, the Trust will enter into
contracts with primary dealers which provide that each Fund has
the absolute right to repurchase an option it writes at any time
at a repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract.  Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Fund for writing the
option, plus the amount, if any, by which the option is "in-the-
money."  The formula will also include a factor to account for
the difference between the price of the security and the strike
price of the option if the option is written out-of-the-money.
Under such circumstances the Fund only needs to treat as illiquid
that amount of the "cover" assets equal to the amount by which
(i) the formula price exceeds (ii) any amount by which the market
value of the security subject to the option exceeds the exercise
price of the option (the amount by which the option is "in-the-
money").  Although each agreement will provide that the Fund's
repurchase price shall be determined in good faith (and that it
shall not exceed the maximum determined pursuant to the formula),
the formula price will not necessarily reflect the market value
of the option written; therefore, the Fund might pay more to



                               29



<PAGE>

repurchase the option contract than the Fund would pay to close
out a similar exchange-traded option.

         Margin.  Because of low initial margin deposits made
upon the opening of a futures position and the writing of an
option, such transactions involve substantial leverage.  As a
result, relatively small movements in the price of the contract
can result in substantial unrealized gains or losses.  However,
to the extent the Funds purchase or sell Futures Contracts and
options on Futures Contracts and purchase and write options on
securities and securities indexes for hedging purposes, any
losses incurred in connection therewith should, if the hedging
strategy is successful, be offset, in whole or in part, by
increases in the value of securities held by the Fund or
decreases in the prices of securities the Fund intends to
acquire.  When a Fund writes options on securities or options on
stock indexes for other than hedging purposes, the margin
requirements associated with such transactions could expose the
Fund to greater risk.

         Trading and Position Limits.  The exchanges on which
futures and options are traded may impose limitations governing
the maximum number of positions on the same side of the market
and involving the same underlying instrument which may be held by
a single investor, whether acting alone or in concert with others
(regardless of whether such contracts are held on the same or
different exchanges or held or written in one or more accounts or
through one or more brokers).  In addition, the Commodity Futures
Trading Commission (the "CFTC") and the various contract markets
have established limits referred to as "speculative position
limits" on the maximum net long or net short position which any
person may hold or control in a particular futures or option
contract.  An exchange may order the liquidation of positions
found to be in violation of these limits and may impose other
sanctions or restrictions.  The Adviser does not believe that
these trading and position limits will have any adverse impact on
the strategies for hedging the portfolios of the Funds.

         Risks of Options on Futures Contracts.  The amount of
risk a Fund assumes when it purchases an option on a Futures
Contract is the premium paid for the option, plus related
transaction costs.  In order to profit from an option purchased,
however, it may be necessary to exercise the option and to
liquidate the underlying Futures Contract, subject to the risks
of the availability of a liquid offset market described herein.
The writer of an option on a Futures Contract is subject to the
risks of commodity futures trading, including the requirement of
initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate
with movements in the price of the underlying security, index,
currency or Futures Contract.


                               30



<PAGE>

         Risks of Forward Contracts, Foreign Currency Futures
Contracts and Options Thereon, Options on Foreign Currencies and
Over-the-Counter Options on Securities. Transactions in Forward
Contracts, as well as futures and options on foreign currencies,
are subject to all of the correlation, liquidity and other risks
outlined above.  In addition, however, such transactions are
subject to the risk of governmental actions affecting trading in
or the prices of currencies underlying such contracts, which
could restrict or eliminate trading and could have a substantial
adverse effect on the value of positions held by a Fund.  In
addition, the value of such positions could be adversely affected
by a number of other complex political and economic factors
applicable to the countries issuing the underlying currencies. 

         Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon.  As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which a Fund makes investment and trading
decisions in connection with other transactions.  Moreover,
because the foreign currency market is a global, twenty-four hour
market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the
following day, thereby preventing the Funds from responding to
such events in a timely manner.

         Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency, which in turn
requires traders to accept or make delivery of such currencies in
conformity with any United Sates or foreign restrictions and
regulations regarding the maintenance of foreign banking
relationships and fees, taxes or other charges.

         Unlike transactions entered into by the Funds in Futures
Contracts and exchange-traded options, options on foreign
currencies, Forward Contracts and over-the-counter options on
securities and securities indexes are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) the SEC.  Such instruments are instead
traded through financial institutions acting as market-makers,
although foreign currency options are also traded on certain
national securities exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC
regulation.  In an over-the-counter trading environment, many of
the protections afforded to exchange participants will not be
available.  For example, there are no daily price fluctuation
limits, and adverse market movements could therefore continue to
an unlimited extent over a period of time.  Although the
purchaser of an option cannot lose more than the amount of the


                               31



<PAGE>

premium plus related transaction costs, this entire amount could
be lost.  Moreover, the option writer could lose amounts
substantially in excess of the initial investment, due to the
margin and collateral requirements associated with such
positions.

         In addition, over-the-counter transactions can be
entered into only with a financial institution willing to take
the opposite side, as principal, of a Fund's position unless the
institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the Fund.
Where no such counterparty is available, it will not be possible
to enter into a desired transaction.  There also may be no liquid
secondary market in the trading of over-the-counter contracts,
and a Fund could be required to retain options purchased or
written, or Forward Contracts entered into, until exercise,
expiration or maturity.  This in turn could limit the Fund's
ability to profit from open positions or to reduce losses
experienced, and could result in greater losses.

         Further, over-the-counter transactions are not subject
to the guarantee of an exchange clearing house, and a Fund will
therefore be subject to the risk of default by, or the bankruptcy
of, the financial institution serving as its counterparty.  A
Fund will enter into an over-the-counter transaction only with
parties whose creditworthiness has been reviewed and found
satisfactory by the Adviser.

         Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option.  The Funds
are not able to determine at this time whether or to what extent
additional restrictions on the trading of over-the-counter
options on foreign currencies may be imposed at some point in the
future, or the effect that any such restrictions may have on the
hedging strategies to be implemented by them.

         As discussed below, CFTC regulations require that a Fund
not enter into transactions in commodity futures contracts or
commodity option contracts for other than "bona fide" hedging
purposes, unless the aggregate initial margin and premiums do not
exceed 5% of the fair market value of the Fund's assets.
Premiums paid to purchase over-the-counter options on foreign
currencies, and margins paid in connection with the writing of
such options, are required to be included in determining
compliance with this requirement, which could, depending upon the
existing positions in Futures Contracts and options on Futures
Contracts already entered into by a Fund, limit the Fund's
ability to purchase or write options on foreign currencies.
Conversely, the existence of open positions in options on foreign



                               32



<PAGE>

currencies could limit the ability of the Fund to enter into
desired transactions in other options or futures contracts.

         While forward contracts are not presently subject to
regulation by the CFTC, the CFTC may in the future assert or be
granted authority to regulate such instruments.  In such event,
the Fund's ability to utilize Forward Contracts in the manner set
forth above could be restricted.

         Options on foreign currencies traded on national
securities exchanges are within the jurisdiction of the SEC, as
are other securities traded on such exchanges.  As a result, many
of the protections provided to traders on organized exchanges
will be available with respect to such transactions.  In
particular, all foreign currency option positions entered into on
a national securities exchange are cleared and guaranteed by the
Options Clearing Corporation ("OCC"), thereby reducing the risk
of counterparty default.  Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting a Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.

         The purchase and sale of exchange-traded foreign
currency options, however, is subject to the risks of the
availability of a liquid secondary market described above, as
well as the risks regarding adverse market movements, the
margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the
effects of other political and economic events.  In addition,
exchange-traded options on foreign currencies involve certain
risks not presented by the over-the-counter market.  For example,
exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in
applicable foreign countries for this purpose.  As a result, if
it determines that foreign governmental restrictions or taxes
would prevent the orderly settlement of foreign currency option
exercises, or would result in undue burdens on the OCC or its
clearing member, the OCC may impose special procedures on
exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions on exercise.

Restrictions on the Use of Futures and Option Contracts

         Under applicable regulations, when a Fund enters into
transactions in Futures Contracts and options on Futures
Contracts other than for bona fide hedging purposes, that Fund
maintains with its custodian in a segregated account cash, short-
term U.S. Government securities or high quality United States


                               33



<PAGE>

dollar denominated money market instruments, which, together with
any initial margin deposits, are equal to the aggregate market
value of the Futures Contracts and options on Futures Contracts
that it purchases.  In addition, a Fund may not purchase or sell
such instruments for other than bona fide hedging purposes if,
immediately thereafter, the sum of the amount of initial margin
deposits on such futures and options positions and premiums paid
for options purchased would exceed 5% of the market value of the
Fund's total assets.

         Each Fund has adopted the additional restriction that it
will not enter into a Futures Contract if, immediately
thereafter, the value of securities and other obligations
underlying all such Futures Contracts would exceed 50% of the
value of such Fund's total assets.  Moreover, a Fund will not
purchase put and call options if as a result more than 10% of its
total assets would be invested in such options.

Economic Effects and Limitations

         Income earned by a Fund from its hedging activities will
be treated as capital gain and, if not offset by net realized
capital losses incurred by a Fund, will be distributed to
shareholders in taxable distributions.  Although gain from such
transactions may hedge against a decline in the value of a Fund's
portfolio securities, that gain, to the extent not offset by
losses, will be distributed in light of certain tax
considerations and will constitute a distribution of that portion
of the value preserved against decline.

         No Fund will "over-hedge," that is, a Fund will not
maintain open short positions in futures or options contracts if,
in the aggregate, the market value of its open positions exceeds
the current market value of its securities portfolio plus or
minus the unrealized gain or loss on such open positions,
adjusted for the historical volatility relationship between the
portfolio and futures and options contracts.

         Each Fund's ability to employ the options and futures
strategies described above will depend on the availability of
liquid markets in such instruments.  Markets in financial futures
and related options are still developing.  It is impossible to
predict the amount of trading interest that may hereafter exist
in various types of options or futures.  Therefore no assurance
can be given that a Fund will be able to use these instruments
effectively for the purposes set forth above.

         The Funds' ability to use options, futures and forward
contracts may be limited by tax considerations.  In particular,
tax rules might affect the length of time for which the Funds can
hold such contracts and the character of the income earned on


                               34



<PAGE>

such contracts.  In addition, differences between each Fund's
book income (upon the basis of which distributions are generally
made) and taxable income arising from its hedging activities may
result in return of capital distributions, and in some
circumstances, distributions in excess of the Fund's book income
may be required in order to meet tax requirements.

Future Developments

         The above discussion relates to each Fund's proposed use
of Futures Contracts, options and options on Futures Contracts
currently available.  As noted above, the relevant markets and
related regulations are evolving.  In the event of future
regulatory or market developments, each Fund may also use
additional types of futures contracts or options and other
investment techniques for the purposes set forth above.

                     INVESTMENT RESTRICTIONS

         Except as described below and except as otherwise
specifically stated in the Prospectus or this Statement of
Additional Information, the investment policies of each Fund set
forth in the Prospectus and in this Statement of Additional
Information are not fundamental and may be changed without
shareholder approval.

         The following is a description of restrictions on the
investments to be made by the Funds, which restrictions may not
be changed without the approval of a majority of the outstanding
voting securities of the relevant Fund.

         Neither of the Funds will:

         (1)  Borrow money in excess of 10% of the value (taken
              at the lower of cost or current value) of its total
              assets (not including the amount borrowed) at the
              time the borrowing is made, and then only from
              banks as a temporary measure to facilitate the
              meeting of redemption requests (not for leverage)
              which might otherwise require the untimely
              disposition of portfolio investments or pending
              settlement of securities transactions or for
              extraordinary or emergency purposes.

         (2)  Underwrite securities issued by other persons
              except to the extent that, in connection with the
              disposition of its portfolio investments, it may be
              deemed to be an underwriter under certain federal
              securities laws.




                               35



<PAGE>

         (3)  Purchase or retain real estate or interests in real
              estate, although each Fund may purchase securities
              which are secured by real estate and securities of
              companies which invest in or deal in real estate.

         (4)  Make loans to other persons except by the purchase
              of obligations in which such Fund may invest
              consistent with its investment policies and by
              entering into repurchase agreements, or by lending
              its portfolio securities representing not more than
              25% of its total assets.

         (5)  Issue any senior security (as that term is defined
              in the 1940 Act), if such issuance is specifically
              prohibited by the 1940 Act or the rules and
              regulations promulgated thereunder.  For the
              purposes of this restriction, collateral
              arrangements with respect to options, Futures
              Contracts and Options on Futures Contracts and
              collateral arrangements with respect to initial and
              variation margins are not deemed to be the issuance
              of a senior security.  (There is no intention to
              issue senior securities except as set forth in
              paragraph 1 above.)

         It is also a fundamental policy of each Fund that it may
purchase and sell futures contracts and related options.

         In addition, the following is a description of operating
policies which the Trust has adopted on behalf of the Funds but
which are not fundamental and are subject to change without
shareholder approval.

         Neither of the Funds will:

         (a)  Pledge, mortgage, hypothecate or otherwise encumber
              an amount of its assets taken at current value in
              excess of 15% of its total assets (taken at the
              lower of cost or current value) and then only to
              secure borrowings permitted by restriction (1)
              above.  For the purpose of this restriction, the
              deposit of securities and other collateral
              arrangements with respect to reverse repurchase
              agreements, options, Futures Contracts, Forward
              Contracts and options on foreign currencies, and
              payments of initial and variation margin in
              connection therewith are not considered pledges or
              other encumbrances.

         (b)  Purchase securities on margin, except that each
              Fund may obtain such short-term credits as may be


                               36



<PAGE>

              necessary for the clearance of purchases and sales
              of securities, and except that each Fund may make
              margin payments in connection with Futures
              Contracts, Options on Futures Contracts, options,
              Forward Contracts or options on foreign currencies.

         (c)  Make short sales of securities or maintain a short
              position for the account of such Fund unless at all
              times when a short position is open it owns an
              equal amount of such securities or unless by virtue
              of its ownership of other securities it has at all
              such times a right to obtain securities (without
              payment of further consideration) equivalent in
              kind and amount to the securities sold, provided
              that if such right is conditional the sale is made
              upon equivalent conditions and further provided
              that no Fund will make such short sales with
              respect to securities having a value in excess of
              5% of its total assets.

         (d)  Write, purchase or sell any put or call option or
              any combination thereof, provided that this shall
              not prevent a Fund from writing, purchasing and
              selling puts, calls or combinations thereof with
              respect to securities, indexes of securities or
              foreign currencies, and with respect to Futures
              Contracts.

         (e)  Purchase voting securities of any issuer if such
              purchase, at the time thereof, would cause more
              than 10% of the outstanding voting securities of
              such issuer to be held by such Fund; or purchase
              securities of any issuer if such purchase at the
              time thereof would cause more than 10% of any class
              of securities of such issuer to be held by such
              Fund.  For this purpose all indebtedness of an
              issuer shall be deemed a single class and all
              preferred stock of an issuer shall be deemed a
              single class.

         (f)  Invest in securities of any issuer if, to the
              knowledge of the Trust, officers and Trustees of
              the Trust and officers and directors of the Adviser
              who beneficially own more than 0.5% of the shares
              of securities of that issuer together own more than
              5%.

         (g)  Purchase securities issued by any other registered
              open-end investment company or investment trust
              except (A) by purchase in the open market where no
              commission or profit to a sponsor or dealer results


                               37



<PAGE>

              from such purchase other than the customary
              broker's commission, or (B) where no commission or
              profit to a sponsor or dealer results from such
              purchase, or (C) when such purchase, though not
              made in the open market, is part of a plan of
              merger or consolidation; provided, however, that a
              Fund will not purchase such securities if such
              purchase at the time thereof would cause more than
              5% of its total assets (taken at market value) to
              be invested in the securities of such issuers; and,
              provided further, that a Fund's purchases of
              securities issued by such open-end investment
              company will be consistent with the provisions of
              the 1940 Act.

         (h)  Make investments for the purpose of exercising
              control or management.

         (i)  Participate on a joint or joint and several basis
              in any trading account in securities.

         (j)  Invest in interests in oil, gas, or other mineral
              exploration or development programs, although each
              Fund may purchase securities which are secured by
              such interests and may purchase securities of
              issuers which invest in or deal in oil, gas or
              other mineral exploration or development programs.

         (k)  Purchase warrants, if, as a result, a Fund would
              have more than 5% of its total assets invested in
              warrants or more than 2% of its total assets
              invested in warrants which are not listed on the
              New York Stock Exchange or the American Stock
              Exchange.

         (l)  Purchase commodities or commodity contracts,
              provided that this shall not prevent a Fund from
              entering into interest rate futures contracts,
              securities index futures contracts, foreign
              currency futures contracts, forward foreign
              currency exchange contracts and options (including
              options on any of the foregoing) to the extent such
              action is consistent with such Fund's investment
              objective and policies.

         (m)  Purchase additional securities in excess of 5% of
              the value of its total assets until all of a Fund's
              outstanding borrowings (as permitted and described
              in Restriction No. 1 above) have been repaid. 




                               38



<PAGE>

         Whenever any investment restriction states a maximum
percentage of a Fund's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of such Fund's acquisition of such securities or other
assets.  Accordingly, any later increase or decrease beyond the
specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.

                     MANAGEMENT OF THE FUNDS

Adviser

         Alliance Capital Management L.P. (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 "Investment
Advisory Contract") to provide investment advice and, in general,
to conduct the management and investment program of the Trust
under the supervision of the Trust's Board of Trustees.

         The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of more than $168 billion (of which more than $55 billion
represented the assets of investment companies).  The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included, as of June 30,
1996, 33 of the FORTUNE 100 Companies.  As of that date, the
Adviser and its subsidiaries employed more than 1,450 employees
who operated out of domestic offices and the overseas offices of
subsidiaries in Bombay, Istanbul, London, Sao Paulo, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore.  The 50
registered investment companies comprising more than 100 separate
investment portfolios managed by the Adviser currently have over
more than two million shareholders.
    
         Alliance Capital Management Corporation, sole general
partner of, and the owner of a 1% general partnership interest
in, the Adviser, is an indirect wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company.  As of June 30, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 59% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the


                               39



<PAGE>

Adviser ("Units").  As of June 30, 1996, approximately 32% and
10% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Trustees of the Trust.
    
         AXA owns approximately 63.9% of the outstanding voting
shares of common stock of ECI.  AXA is the holding company for an
international group of insurance and related financial services
companies.  AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance.  The insurance operations are diverse geographically
with activities in France, the United states, the United Kingdom,
Canada and other countries, principally in Europe.  AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe.  Based on information provided by AXA, as of
March 1, 1996, 42.1% of the voting shares (representing 53.4% of
the voting power) of AXA were owned by Midi Participations, a
French holding company ("Midi").  The shares of Midi were, in
turn, owned 61.4% (representing 62.5% of the voting power) by
Finaxa, a French holding company, and 38.6% (representing 37.5%
of the voting power) by subsidiaries of Assicurazioni Generali
S.p.A., an Italian corporation (one of which, Belgica Insurance
Holding S.A., a Belgian Corporation, owned 30.8%, representing
33.1% of the voting power).  As of March 1, 1996, 61.1% of the
voting shares (representing 73.4% of the voting power) of Finaxa
were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 34.7% of the voting shares representing 40.4% of the voting
power), and 25.5% of the voting shares (representing 16% of the
voting power) of Finaxa were owned by Banque Paribas, a French
bank.  Including the ordinary shares owned by Midi, as of
March 1, 1996, the Mutuelles AXA directly or indirectly owned 51%
of the issued ordinary shares (representing 64.7% of the voting
power) of AXA.  Acting as a group, the Mutuelles AXA control AXA,
Midi and Finaxa.
    
Investment Advisory Contract and Expenses

         The Adviser serves as investment manager and adviser of
each of the Funds and furnishes continuously an investment
program for each Fund and manages, supervises and conducts the
affairs of each Fund.  The Investment Advisory Contract also
provides that the Adviser will furnish or pay the expenses of the
Trust for office space, facilities and equipment, services of
executive and other personnel of the Trust and certain
administrative services.  The Adviser is compensated for its
services to the Funds at an annual rate of .75% of each Fund's
average daily net assets.  The Adviser has voluntarily undertaken
until further notice to waive its fees in respect of each Fund
and has agreed to bear certain expenses of the Class A, Class B


                               40



<PAGE>

and Class C shares of each Fund to the extent that expenses
exceed an annual rate of 1.40% for Class A shares and 2.10% for
Class B and Class C shares.  The management fees for each Fund
are higher than those paid by most mutual funds.

         The Investment Advisory Contract became effective on
July 23, 1993.  The Investment Advisory Contract replaced an
earlier agreement (the "First Investment Advisory Contract")
between the Trust and Equitable Capital Management Corporation
("Equitable Capital") or Equitable, as the case may be, with
respect to the Funds.  The First Investment Advisory Agreement
terminated because of its technical assignment in connection with
the transfer of substantially all of the assets comprising
Equitable Capital's business to the Adviser and certain of its
subsidiaries in exchange for newly issued limited partnership
interests in the Adviser and the assumption by the Adviser and
such subsidiaries of certain liabilities of Equitable Capital.
Equitable Capital was compensated for its services as investment
manager of the Funds at the same rates as are currently paid by
the Funds to the Adviser. 

         In anticipation of the assignment of the First
Investment Advisory Contract, the Investment Advisory Contract
was approved by the vote of the Trust's Trustees, including the
Trustees who are not parties to the Investment Advisory Contract
or interested persons of any such party, at meetings called for
the purpose and held on February 16, 1993 and March 31, 1993.  At
a meeting held on April 8, 1993, a majority of the outstanding
voting securities of the Funds approved the Investment Advisory
Contract.  Most recently, the continuance of the Investment
Advisory Contract until July 31, 1997 was approved by a vote,
cast in person, of the Board of Trustees, including a majority of
the Trustees who are not parties to the Investment Advisory
Contract or interested persons of any such party, at their
Regular Meeting held on July 17, 1996.

         During the period May 1, 1995 through April 30, 1996,
the Adviser earned $387,903 in management fees from the
Conservative Investors Fund (an additional $174,857 in fees were
waived) and $632,516 from the Growth Investors Fund (an
additional $214,077 in fees were waived).  During the period
May 1, 1994 through April 30, 1995, the Adviser earned $385,818
in management fees from the Conservative Investors Fund (an
additional $217,650 in fees were waived) and $464,336 from the
Growth Investors Fund (an additional $350,235 in fees were
waived).  During the period July 23, 1993 through the fiscal year
ended April 30, 1994, the Adviser earned $202,051 in management
fees from the Conservative Investors Fund (an additional $164,848
in fees were waived) and $173,868 from the Growth Investors Fund
(an additional $215,813 in fees were waived).  During the period
May 1, 1993 to July 22, 1993, Equitable Capital earned $42,814 in


                               41



<PAGE>

management fees from the Conservative Investors Fund (an
additional $31,138 in fees were waived) and $33,175 from the
Growth Investors Fund (an additional $25,249 in fees were
waived).
    
         The Investment Advisory Contract provides that it will
continue in effect for two years from its date of execution and
thereafter from year to year if its continuance is approved at
least annually (i) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the relevant
Fund, and (ii) by vote of a majority of the Trustees who are not
interested persons of the Adviser cast in person at a meeting
called for the purpose of voting on such approval.  Any amendment
to the Investment Advisory Contract must be approved by vote of a
majority of the outstanding voting securities of the relevant
Fund and by vote of a majority of the Trustees who are not such
interested persons, cast in person at a meeting called for the
purpose of voting on such approval.  The Investment Advisory
Contract may be terminated without penalty by the Adviser, by
vote of the Trustees or by vote of a majority of the outstanding
voting securities of the relevant Fund upon sixty days' written
notice, and it terminates automatically in the event of its
assignment.  The Adviser controls the word "Alliance" in the
names of the Trust and each Fund, and if Alliance should cease to
be the investment manager of any Fund, the Trust and such Fund
may be required to change their names and delete that word.

         The Investment Advisory Contract provides that Alliance
shall not be subject to any liability in connection with the
performance of its services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties.

Trustees and Officers

         The Trustees and principal officers of the Trust, their
ages as of the date of this Statement of Additional Information
and their primary occupations during the past five years are set
forth below.
   
Trustees

         * John D. Carifa, 51, Chairman of the Board and
President, is the President, Chief Operating Officer, and a
Director of Alliance Capital Management Corporation, the general
partner of the Adviser.  His address is 1345 Avenue of the
Americas, New York, New York 10105.
_________________________

*   An "interested person" of the Trust, as defined by the 1940
    Act.


                               42



<PAGE>

         Alberta B. Arthurs, 63, is the Director for Arts and
Humanities for The Rockefeller Foundation.  Her address is 1133
Avenue of the Americas, New York, New York 10036.

         Ruth Block, 65, was formerly an Executive Vice President
and the Chief Insurance Officer of The Equitable Life Assurance
Society of the United States.  She is a Director of Ecolab
Incorporated (specialty chemicals) and Amoco Corporation (oil and
gas).  Her address is Box 4653, Stamford, Connecticut 06903.

         Richard W. Couper, 73, is President Emeritus and Trustee
of The Woodrow Wilson Fellowship Foundation and President
Emeritus of the New York Public Library.  His address is Box 345,
Clinton, New York 13323-0345.

         Brenton W. Harries, 68, is a Director of Enhance
Reinsurance Co. and was formerly the President and Chief
Executive of Global Electronic Markets Company.  His address is
14 Point Road, Wilson Point, South Norwalk, Connecticut 06854.

         Donald J. Robinson, 62, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently of counsel to
that firm.  His address is 599 Lexington Avenue, 26th Floor, New
York, New York 10022.
    
   Officers

         * John D. Carifa, President, see biography above.

         Edmund P. Bergan, Jr., 46, Clerk, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
His address is 1345 Avenue of the Americas, New York, New York
10105.

         Mark D. Gersten, 45, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc.  His address is 500 Plaza Drive, Secaucus, New Jersey 07094.

         Vincent S. Noto, 31, Controller and Chief Accounting
Officer, is a Vice President of Alliance Fund Services, Inc.  His
address is 500 Plaza Drive, Secaucus, New Jersey 07094.

         Bruce W. Calvert, 49, Vice President, is the Vice
Chairman and Chief Investment Officer of Alliance Capital
Management Corporation, the general partner of Alliance Capital
Management L.P.  His address is 1345 Avenue of the Americas, New
York, NY  10105.

         Kathleen A. Corbet, 36, Vice President, is, since July
23, 1993, a Senior Vice President of ACMC, the general partner of
the Adviser.  She is also Vice President of The Hudson River


                               43



<PAGE>

Trust.  She was formerly Executive Vice President of Equitable
Capital.  Her address is 1345 Avenue of the Americas, New York,
New York 10105.

         Barbara J. Krumsiek, 44, Vice President - Marketing, is,
since July 23, 1993, a Senior Vice President of Alliance Fund
Distributors, Inc.   She was formerly an Investment Officer of
Equitable, Senior Vice President of Equitable Capital and Vice
President of Equitable Variable Life Insurance Company.  Her
address is 1345 Avenue of the Americas, New York, New York 10105.

         Wayne D. Lyski, 54, Vice President, is Executive Vice
President of Alliance Capital Management Corporation, the general
partner of Alliance Capital Management L.P.  His address is 1345
Avenue of the Americas, New York, NY  10105.
    
         The aggregate compensation paid to each of the Trustees
by the Conservative Investors Fund and by the Growth Investors
Fund for the fiscal year ended April 30, 1996, the aggregate
compensation paid to each of the Trustees during calendar year
1995 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 in the
Alliance Fund Complex with respect to which each of the Trustees
serves as a director or trustee, are set forth below.  Neither of
the Funds nor any fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its directors or trustees.  Each of the Trustees is a director
or trustee of one or more other registered investment companies
in the Alliance Fund Complex.
    
   





















                               44



<PAGE>

                                                              Total Number
                                                              of Funds
                                                              in the
                                                              Alliance
                                                Total         Fund Complex,
                    Aggregate     Aggregate     Compensation  Including
                    Compensation  Compensation  From the      the Trust,
                    from the      from the      Alliance      as to which
                    Conservative  Growth        Fund Complex  the Trustee
Name of Trustee     Investors     Investors     Including     is a Director
of the Fund         Fund          Fund          the Trust*    or Trustee
________________    ___________   ____________  ___________   _____________

Alberta B. Arthurs   $5,000        $5,000        $ 24,000         5
Ruth Block           $5,000        $5,000        $159,000        39
John D. Carifa       $ --          $ --          $ --            52
Richard W. Couper    $5,000        $5,000        $ 24,000         5
Brenton W. Harries   $5,000        $5,000        $ 24,000         5
Donald J. Robinson   $5,000        $5,000        $ 24,000         5
    
____________________________
*  There are 107 investment companies or portfolios thereof in the Alliance
Fund Complex.

         As of August 15, 1996, the Trustees and officers of the
Trust as a group owned less than 1% of the outstanding shares of
any Fund or of the Trust as a whole.
    
         The Trust undertakes to provide assistance to
shareholders in communications concerning the removal of any
Trustee of the Trust in accordance with Section 16 of the 1940
Act.

                     PORTFOLIO TRANSACTIONS

         Under the general supervision of the Board of Trustees,
the Adviser makes the Funds' portfolio decisions and determines
the broker to be used in each specific transaction with the
objective of negotiating a combination of the most favorable
commission and the best price obtainable on each transaction
(generally defined as best execution).  When consistent with the
objective of obtaining best execution, brokerage may be directed
to persons or firms supplying investment information to the
Adviser.  Neither the Funds nor the Adviser have entered into
agreements or understandings with any brokers regarding the
placement of securities transactions because of research services
they provide.  To the extent that such persons or firms supply
investment information to the Adviser for use in rendering
investment advice to the Funds, such information may be supplied
at no cost to the Adviser and, therefore, may have the effect of
reducing the expenses of the Adviser in rendering advice to the


                               45



<PAGE>

Funds.  While it is impossible to place an actual dollar value on
such investment information, its receipt by the Adviser probably
does not reduce the overall expenses of the Adviser to any
material extent.

         The investment information provided to the Adviser is of
the type described in Section 28(e) of the Securities Exchange
Act of 1934, as amended, and is designed to augment the Adviser's
own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Funds
effect securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its clients' accounts. There may be occasions
where the transaction cost charged by a broker may be greater
than that which another broker may charge if it is determined in
good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services
provided by the executing broker.

         The Funds may deal in some instances in securities which
are not listed on a national securities exchange but are traded
in the over-the-counter market.  They may also purchase listed
securities through the third market.  Where transactions are
executed in the over-the-counter market or third market, the
Funds will seek to deal with the primary market makers; but when
necessary in order to obtain best execution, they will utilize
the services of others.

         Aggregate securities transactions for the Funds during
the fiscal year ended April 30, 1996 were as follows: with
respect to the Conservative Investors Fund, $260,211,306 and, in
connection therewith, brokerage commissions of $75,237 (100%)
were allocated to persons or firms supplying research
information; and with respect to the Growth Investors Fund,
$322,321,206 and, in connection therewith, brokerage commission
of $386,197 (100%) were allocated to persons or firms supplying
research information.  Aggregate securities transactions for the
Funds during the fiscal year ended April 30, 1995 were as
follows: with respect to the Conservative Investors Fund,
$207,531,166 and, in connection therewith, brokerage commissions
of $3,758 (100%) were allocated to persons or firms supplying
research information; and with respect to the Growth Investors
Fund, $154,095,965 and, in connection therewith, brokerage
commission of $143,563 (100%) were allocated to persons or firms
supplying research information.  Aggregate securities
transactions for the Funds during the fiscal year ended April 30,
1994 were as follows:  with respect to the Conservative Investors
Fund, $92,313,848 and, in connection therewith, brokerage
commissions of $10,178 (100%) were allocated to persons or firms
supplying research information; and with respect to the Growth
Investors Fund, $60,632,954 and, in connection therewith,


                               46



<PAGE>

brokerage commissions of $45,808 (100%) were allocated to persons
or firms supplying research information.
    
         For the fiscal year ended April 30, 1996, the
Conservative Investors Fund paid an aggregate of $75,237 in
brokerage commissions; and the Growth Investors Fund paid an
aggregate of $386,197 in brokerage commissions.  For the fiscal
year ended April 30, 1995, the Conservative Investors Fund paid
an aggregate of $3,758 in brokerage commissions; and the Growth
Investors Fund paid an aggregate of $143,563 in brokerage
commissions.  For the fiscal year ended April 30, 1994, the
Conservative Investors Fund paid an aggregate of $10,178 in
brokerage commissions; and the Growth Investors Fund paid an
aggregate of $45,808 in brokerage commissions.
    
         The Funds may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
and with brokers which may have their transactions cleared or
settled, or both, by the Pershing Division of DLJ, for which DLJ
may receive a portion of the brokerage commission.  In such
instances, the placement of orders with such brokers would be
consistent with the Funds' objective of obtaining the best
execution and would not be dependent upon the fact that DLJ is an
affiliate of the Adviser.  With respect to orders placed with DLJ
for execution on a national securities exchange, commissions
received must conform to Section 17(e)(2)(A) of the 1940 Act and
Rule 17e-1 thereunder, which permit an affiliated person of a
registered investment company (such as the Trust), or any
affiliated person of such person, to receive a brokerage
commission from such registered investment company provided that
such commission is reasonable and fair compared to the
commissions received by other brokers in connection with
comparable transactions involving similar securities during a
comparable period of time.

         The brokerage transactions engaged in by the Funds with
DLJ and its affiliates during the fiscal years ended April 30,
1994, April 30, 1995 and April 30, 1996, are set forth below:

                                    % of Fund's   % of Fund's
                        Amount      Aggregate     Aggregate
Fiscal Year             Brokerage   Brokerage     Dollar Amount
Ended        Fund       Commission  Commissions   of Transactions
__________   ____       __________  ___________   _______________

  1996         N.A.        None        None         None

  1995   Growth Investors  $33         0%           0%

  1994         N.A.        None        None         None


                               47



<PAGE>

    
         The annual portfolio turnover rates of the securities of
the Conservative Investors Fund and the Growth Investors Fund for
the fiscal years ended April 30, 1996 and 1995 were 267% and 248%
for Conservative Investors and 209% and 134% for Growth
Investors, respectively. 
    
                      EXPENSES OF THE FUNDS

         In addition to the payments to the Adviser under the
Investment Advisory Contract described above, the Trust pays
certain other costs including (a) brokerage and commission
expenses, (b) Federal, state and local taxes, including issue and
transfer taxes incurred by or levied on a Fund, (c) interest
charges on borrowing, (d) fees and expenses of registering the
shares of the Funds under the appropriate Federal securities laws
and of qualifying shares of the Funds under applicable state
securities laws including expenses attendant upon renewing and
increasing such registrations and qualifications, (e) expenses of
printing and distributing the Funds' prospectuses and other
reports to shareholders, (f) costs of proxy solicitations,
(g) transfer agency fees described below, (h) charges and
expenses of the Trust's custodian, (i) compensation of the
Trust's officers, Trustees and employees who do not devote any
part of their time to the affairs of the Adviser or its
affiliates, (j) costs of stationery and supplies, and (k) such
promotional expenses as may be contemplated by the Distribution
Services Agreement described below.

Distribution Arrangements

         Rule 12b-1 adopted by the SEC under the 1940 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 Trust has adopted a plan
for each of Class A, Class B and Class C shares of the Funds
pursuant to Rule 12b-1 (each a "Plan" and collectively the
"Plans").  Pursuant to the Plans, each Fund pays Alliance Fund
Distributors, Inc. (the "Principal Underwriter") a Rule 12b-1
distribution services fee which may not exceed an annual rate of
 .50% of a Fund's aggregate average daily net assets attributable
to the Class A shares, 1.00% of a Fund's aggregate average daily
net assets attributable to the Class B shares and 1.00% of a
Fund's aggregate average daily net assets attributable to the
Class C shares to compensate the Principal Underwriter for
distribution expenses.  The Trustees currently limit payments
under the Class A Plan to .30% of a Fund's aggregate average
daily net assets attributable to the Class A shares.  The Plans
provide that a portion of the distribution services fee in an
amount not to exceed .25% of the aggregate average daily net
assets of a Fund attributable to each of the Class A shares,


                               48



<PAGE>

Class B shares and Class C shares constitutes a service fee that
the Principal Underwriter will use for personal service and/or
the maintenance of shareholder accounts.  The Plans also provide
that the Adviser may use its own resources, which may include
management fees received by the Adviser from the Trust or other
investment companies which it manages and the Adviser's past
profits, to finance the distribution of the Funds' shares.

         Each Plan may be terminated with respect to the class of
shares of any Fund to which the Plan relates by vote of a
majority of the Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in
the operation of the Plans or in any agreement related to the
Plans (the "Qualified Trustees"), or by vote of a majority of the
outstanding voting securities of that class.  Each Plan may be
amended by vote of the Trustees, including a majority of the
Qualified Trustees, cast in person at a meeting called for that
purpose.  Any change in a Plan that would materially increase the
distribution costs to the class of shares of any Fund to which
the Plan relates requires approval by the affected class of
shareholders of that Fund.  The Trustees review quarterly a
written report of such distribution costs and the purposes for
which such costs have been incurred with respect to each Fund's
Class A, Class B and Class C shares.  For so long as the Plans
are in effect, selection and nomination of those Trustees who are
not interested persons of the Trust shall be committed to the
discretion of such disinterested persons July 1, 1996.

         The Plans may be terminated with respect to any Fund or
class of shares thereof at any time on 60 days' written notice
without payment of any penalty by the Principal Underwriter or by
vote of a majority of the outstanding voting securities of that
Fund or that class (as appropriate) or by vote of a majority of
the Qualified Trustees.

         The Plans will continue in effect with respect to each
Fund and each class of shares thereof for successive one-year
periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the Qualified Trustees
and (ii) by the vote of a majority of the entire Board of
Trustees cast in person at a meeting called for that purpose.

         For services rendered by the Principal Underwriter in
connection with the distribution of Class A shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $45,690 and $81,307 with respect to the Class A shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1996.  For
services rendered by the Principal Underwriter in connection with
the distribution of Class A shares pursuant to the Plan
applicable to such shares, the Principal Underwriter received


                               49



<PAGE>

$47,590 and $58,355 with respect to the Class A shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995.  For
services rendered by the Principal Underwriter and Equico
Securities, Inc., the Trust's prior principal underwriter
("Equico"), in connection with the distribution of Class A shares
pursuant to the Plan applicable to such shares, Equico received
$3,700 and $2,574 with respect to the Class A shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1994; and
the Principal Underwriter received $26,447 and $21,336 with
respect to the Class A shares of the Conservative Investors Fund
and the Growth Investors Fund, respectively, during the fiscal
year ended April 30, 1994.
    
         For services rendered by the Principal Underwriter in
connection with the distribution of Class B shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $316,700 and $523,545 with respect to the Class B shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1996.  For
services rendered by the Principal Underwriter in connection with
the distribution of Class B shares pursuant to the Plan
applicable to such shares, the Principal Underwriter received
$307,217 and $385,615 with respect to the Class B shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995.  For
services rendered by the Principal Underwriter and Equico in
connection with the distribution of Class B shares pursuant to
the Plan applicable to such shares, Equico received $29,317 and
$24,700 with respect to the Class B shares of the Conservative
Investors Fund and the Growth Investors Fund, respectively,
during the fiscal year ended April 30, 1994; and the Principal
Underwriter received $165,904 and $149,494 with respect to the
Class B shares of the Conservative Investors Fund and the Growth
Investors Fund, respectively, during the fiscal year ended
April 30, 1994.
    
         For services rendered by the Principal Underwriter in
connection with the distribution of Class C shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $48,204 and $48,786 with respect to the Class C shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1996.  For
services rendered by the Principal Underwriter in connection with
the distribution of Class C shares pursuant to the Plan
applicable to such shares, the Principal Underwriter received
$48,572 and $38,982 with respect to the Class C shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995.  For
services rendered by the Principal Underwriter in connection with


                               50



<PAGE>

the distribution of Class C shares pursuant to the Plan
applicable to such shares, the Principal Underwriter received
$15,339 and $11,203 with respect to the Class C shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1994.
    
         The Principal Underwriter has informed the Trust that
expenses incurred by it and costs allocated to it in connection
with activities primarily intended to result in the sale of
Class A, Class B, and Class C shares, respectively, were as
follows for the periods indicated:
   









































                               51



<PAGE>

                   CONSERVATIVE INVESTORS FUND
              Amount of Expense and Allocated Cost

                 Class A Shares  Class B Shares  Class C Shares
                 (For the Fiscal (For the Fiscal (For the Fiscal
Category         Year ended      Year ended      Year ended
of Expense       April 30, 1996) April 30, 1996) April 30, 1996)

Advertising/
 Marketing            $40,040        $93,534          $33,464

Printing and
 Mailing of
 Prospectuses
 and Semi-Annual
 and Annual
 Reports to Other
 than Current
 Shareholders         $5,042         $10,643          $3,998

Compensation to
  Underwriters        $4,306         $8,367           $2,811

Compensation to
  Dealers             $70,635        $420,778         $76,990

Compensation to
  Sales
  Personnel           $  0           $52,913          $  0

Interest, Carrying
  and Other
  Financing
  Charges             $44,499        $77,575          $31,932

Other (includes
  personnel costs
  of those home
  office employees
  involved in the
  distribution effort
  and the travel-
  related expenses
  incurred by the
  marketing personnel
  conducting seminars $164,522       $705,212         $149,195
    






                               52



<PAGE>

                      GROWTH INVESTORS FUND
              Amount of Expense and Allocated Cost

                 Class A Shares  Class B Shares  Class C Shares
                 (For the Fiscal (For the Fiscal (For the Fiscal
Category         Year ended      Year ended      Year ended
of Expense       April 30, 1996) April 30, 1996) April 30, 1996)
__________       ______________  ______________  _______________

Advertising/
Marketing            $53,754         $123,355         $21,011

Printing and Mailing $6,380          $16,290          $2,707
of Prospectuses and
Semi-Annual and
Annual Reports
to Other than
Current Shareholders

Compensation to      $13,281         $19,468          $2,951
Underwriters

Compensation
to Dealers

Compensation to
Sales Personnel      $99,650         $771,272         $65,840

Interest, Carrying   $  0            $ 87,985         $  0
and Other Financing
Charges

Other (includes
  personnel          $55,736         $96,088          $19,034
costs of those home
office employees
involved in the
distribution effort
and the travel-related
expenses incurred
by the marketing
personnel conducting
seminars)            $228,801        $1,114,458       $111,212
    

Custodial Arrangements

         State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA, 02110 ("State Street Bank") is the Trust's
custodian.



                               53



<PAGE>

Transfer Agency Arrangements
   
         Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of each of the Class A shares, Class B shares,
Class C and Advisor Class shares of the Fund, plus reimbursement
for out-of-pocket expenses.  The transfer agency fee with respect
to the Class B and Class C shares is higher than that with
respect to the Class A and Advisor Class shares, reflecting the
differential costs associated with the Class B and Class C
contingent deferred sales charge.
    
                       PURCHASE OF SHARES

         The following information supplements that set forth in
the Prospectus under the heading "Purchase and Sale of Shares --
How To Buy Shares."
   
General

         Shares of the Funds are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase (the "initial sales charge
alternative"), with a contingent deferred sales charge (the
"deferred sales charge alternative"), without any initial sales
charge or, as long as the shares are held for one year or more,
without any contingent deferred sales charge (the "asset-based
sales charge alternative") or, to investors eligible to purchase
Advisor Class shares, without any initial, contingent deferred or
asset-based sales charges, in each case as described below.
Shares of the Funds that are offered subject to a sales charge
are offered on a continuous basis through (i) investment dealers
that are members of the National Association of Securities
Dealers, Inc. and have entered into selected dealer agreements
with the Principal Underwriter ("selected dealers"), (ii)
depository institutions and other financial intermediaries or
their affiliates, that have entered into selected agent
agreements with the Principal Underwriter ("selected agents"), or
(iii) the Principal Underwriter.   Investors may purchase and
hold Advisor Class shares of the Fund principally through
(i) accounts established under fee-based programs, sponsored and
maintained by registered broker-dealers or other financial
intermediaries and approved by the Principal Underwriter,
pursuant to which each investor pays an asset-based fee at an
annual rate of at least .50% of the assets in the investor's
account, to the sponsor, or its affiliate or agent, or (ii) self-
directed defined contribution employee benefit plans (e.g.,
401(k) plans) that have at least 1,000 participants or $25
million in assets.
    



                               54



<PAGE>

         If you are a Fund shareholder through an account
established under a fee-based program, your fee-based program may
impose requirements with respect to the purchase, sale or
exchange of Advisor Class shares of the Fund that are different
from those described in the Prospectus and this Statement of
Additional Information.  A transaction fee may be charged by your
financial representative with respect to the purchase, sale or
exchange of Advisor Class shares made through such financial
representative.  
    
         The minimum for initial investments is $250; subsequent
investments (other than reinvestments of dividends and capital
gains distributions in shares) must be in the minimum amount of
$50.  As described under "Shareholder Services," the Funds offer
an automatic investment program and a 403(b)(7) retirement plan
which permit investments of $25 or more. The subscriber may use
the Subscription Application found in the Prospectus for his or
her initial investment.  Sales personnel of selected dealers and
agents distributing the Funds' shares may receive differing
compensation for selling Class A, Class B, Class C or Advisor
Class shares.
    
         Investors may purchase shares of the Funds in the United
States either through selected dealers or agents or directly
through the Principal Underwriter.  Shares may also be sold in
foreign countries where permissible.  The Funds may refuse any
order for the purchase of shares. The Funds reserve the right to
suspend the sale of their shares to the public in response to
conditions in the securities markets or for other reasons.

         The public offering price of shares of the Funds is
their net asset value, plus, in the case of most purchases of
Class A shares, a sales charge which will vary depending on the
amount of the purchase, as shown in the table in the Prospectus.
On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in
which the Fund invests might materially affect the value of Fund
shares, the per share net asset value is computed in accordance
with the Trust's Agreement and Declaration of Trust and By-Laws
as of the next close of regular trading on the New York Stock
Exchange (the "Exchange") (currently 4:00 p.m. Eastern time) by
dividing the value of the total assets attributable to a class,
less its liabilities, by the total number of its shares then
outstanding.  The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and Class
C shares may be lower than the per share net asset value of the
Class A and Advisor Class shares and the per share net asset
value of the Class A shares may be lower than that of the Advisor
Class shares, as a result of the daily expense accruals of the


                               55



<PAGE>

distribution and transfer agency fees applicable with respect to
those classes of shares.  Even under those circumstances, the per
share net asset values of the four classes eventually will tend
to converge immediately after the payment of dividends, which
will differ by approximately the amount of the expense accrual
differential among the classes.  A Fund business day is any
weekday, exclusive of national holidays on which the Exchange is
closed and Good Friday.  For purposes of this computation, the
securities in a Fund's portfolio are valued at their current
market value determined on the basis of market quotations or, if
such quotations are not readily available, such other methods as
the Trustees believe would accurately reflect fair market value.
    
         The Funds will accept unconditional orders for their
shares to be executed at the public offering price equal to their
net asset value next determined (plus applicable Class A sales
charges).  Orders received by the Principal Underwriter prior to
the close of regular trading on the Exchange on each day the
Exchange is open for trading are priced at the net asset value
computed as of the close of regular trading on the Exchange on
that day (plus applicable Class A sales charges).  In the case of
orders for purchase of shares placed through selected dealers,
agents or financial representatives, as applicable, the
applicable public offering price will be the net asset value as
so determined, but only if the selected dealer, agent or
financial representative receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. Eastern time).  The selected dealer, agent or
financial representative, as applicable, is responsible for
transmitting such orders by 5:00 p.m.  If the selected dealer,
agent or financial representative fails to do so, the investor's
right to that day's closing price must be settled between the
investor, and the selected dealer, agent or financial
representatives, as applicable.  If the selected dealer, agent or
financial representative receives the order after the close of
regular trading on the Exchange, the price will be based on the
net asset value determined as of the close of regular trading on
the Exchange on the next day it is open for trading.
    
         Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "Literature" telephone number
shown on the cover of this Statement of Additional Information.
Except with respect to certain omnibus accounts, telephone
purchase orders may not exceed $500,000.  Payment for shares
purchased by telephone can be made only by Electronic Funds
Transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House


                               56



<PAGE>

Association ("NACHA").  If a shareholder's telephone purchase
request is received before 3:00 p.m. Eastern time on a Fund
business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.  Full and
fractional shares are credited to a subscriber's account in the
amount of his or her subscription.  As a convenience to the
subscriber, and to avoid unnecessary expense to the Fund, share
certificates representing shares of the Fund are not issued
except upon written request to the Fund by the shareholder or his
or her authorized selected dealer or agent.  This facilitates
later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen
certificates.  No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund.
    
         In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash bonuses or other incentives to dealers or
agents, including EQ Financial Consultants, Inc., formerly
Equico,("EQ Financial"), an affiliate of the Principal
Underwriter, in connection with the sale of shares of the Funds.
Such additional amounts may be utilized, in whole or in part, to
provide additional compensation to registered representatives who
sell shares of the Funds.  On some occasions, such cash or other
incentives will be conditioned upon the sale of a specified
minimum dollar amount of the shares of a Fund and/or other
Alliance Mutual Funds, as defined below, during a specific period
of time.  On some occasions, such cash or other incentives may
take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment incurred in
connection with travel, lodging and entertainment by persons
associated with a dealer or agent and their immediate family
members to urban or resort locations within or outside the United
States.  Such dealer or agent may elect to receive cash
incentives of equivalent amount in lieu of such payments.
    
         Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
Fund, have the same rights and are identical in all respects,
except that (i) Class A shares bear the expense of the initial
sales charge (or contingent deferred sales charge, when
applicable) and Class B and Class C shares bear the expense of
the deferred sales charge, (ii) Class B shares and Class C shares
each bear the expense of a higher distribution services fee than
do Class A shares, and Advisor Class shares do not bear such a
fee, (iii) Class B and Class C shares bear higher transfer agency
costs than do Class A and Advisor Class shares, (iv) each of
Class A, Class B and Class C has exclusive voting rights with


                               57



<PAGE>

respect to provisions of the Rule 12b-1 Plan pursuant to which
its distribution services fee is paid and other matters for which
separate class voting is appropriate under applicable law,
provided that, if the Fund submits to a vote shareholders an
amendment to the Rule 12b-1 Plan that would materially increase
the amount to be paid thereunder with respect to the Class A
shares, the Class A shareholders and the Class B shareholders
will vote separately by Class, and (v) Class B shares are subject
to a conversion feature.  Each class has different exchange
privileges and certain different shareholder service options
available.
    
Alternative Purchase Arrangements -- Class A, Class B and Class C
Shares** 

         Class A, Class B and Class C shares have the following
alternative purchase arrangements:  Class A shares are sold to
investors choosing the initial sales charge alternative, Class B
shares are sold to investors choosing the deferred sales charge
alternative, and Class C shares are sold to investors choosing
the asset-based sales charge alternative.    These alternative
purchase arrangements permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the
shares, and other circumstances.  Investors should consider
whether, during the anticipated life of their investment in a
Fund, the accumulated distribution services fee and contingent
deferred sales charges on Class B shares prior to conversion, or
the accumulated distribution services fee and contingent deferred
sales charge on Class C shares, would be less than the initial
sales charge and accumulated distribution services fee on Class A
shares purchased at the same time, and to what extent such
differential would be offset by the higher return of Class A
shares.  Class A shares will normally be more beneficial than
Class B shares to the investor who qualifies for reduced initial
sales charges on Class A shares, as described below.  In this
regard, the Principal Underwriter will reject any order (except
orders from certain retirement plans) for more than $250,000 for
Class B shares.  Class C shares will normally not be suitable for
the investor who qualifies to purchase Class A shares at net
asset value.  For this reason, the Principal Underwriter will
reject any order for more than $5,000,000 for Class C shares.
    
         Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
_________________________

**  Advisor Class shares are sold principally to investors
    described above in this section under "-- General."


                               58



<PAGE>

of purchase, most investors purchasing Class A shares would not
have all their funds invested initially and, therefore, would
initially own fewer shares.  Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.

         Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively.  For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares.  In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares.  This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.
    
         Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
period during which Class B shares are subject to a contingent
deferred sales charge may find it more advantageous to purchase
Class C shares.

         The Trustees of the Trust have determined that currently
no conflict of interest exists between or among the Class A,
Class B, and Class C shares.  On an ongoing basis, the Trustees
of the Trust, pursuant to their fiduciary duties under the 1940
Act and state laws will seek to ensure that no such conflict
arises.
   
Class A Shares

         The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below:
    





                               59



<PAGE>

                                                 Discount or
                                                 Commission
                                     As % of     to Dealers
                         As % of     the         or Agents
                         Net         Public      As % of
Amount of                Amount      Offering     Offering
Purchase                 Invested    Price        Price
_________                ________    ________    __________

Less than
   $100,000 . . . .        4.44%       4.25%       4.00%
$100,000 but
    less than
    250,000 . . . .        3.36        3.25        3.00
250,000 but
    less than
    500,000 . . . .        2.30        2.25        2.00
500,000 but
    less than
    1,000,000*. . .        1.78        1.75        1.50

* There is no initial sales charge on transactions of $1,000,000
  or more

         With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption.  Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.  The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, and such charge will be applied to
redemptions of shares by shareholders who hold both Class A and
shares of one or more other classes that are subject to a
contingent deferred sales charge, as described below under "--
Class B Shares" and "-- Class C shares."  Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Funds
in connection with sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling Class
A Shares.  With respect to purchases of $1,000,000 or more made
through selected dealers or agents, the Adviser may, pursuant to
the Rule 12b-1 Plans described above, pay such dealers or agents
from its own resources a fee of up to 1% of the amount invested
to compensate such dealers or agents for their distribution
assistance in connection with such purchases.
    


                               60



<PAGE>

         No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions or (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (a list of which
appears in "Combined Purchase Privilege" below), except that an
initial sales charge will be imposed on Class A shares issued in
exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge.  The Funds receive the entire net asset value of
their Class A shares sold to investors.  The Principal
Underwriter's commission is the sales charge shown in the
Prospectus less any applicable discount or commission "reallowed"
to selected dealers and agents.  The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table in the Prospectus.  The Principal
Underwriter may, however, elect to reallow the entire sales
charge to selected dealers and agents for all sales with respect
to which orders are placed with the Principal Underwriter.  A
selected dealer who receives a reallowance in excess of 90% of
such a sales charge may be deemed to be an "underwriter" under
the Securities Act of 1933, as amended.
    
         Set forth below is an example of the method of computing
the offering price of the Class A shares.  The example assumes a
purchase of Class A shares of the Conservative Investors Fund and
of the Growth Investors Fund aggregating less than $100,000
subject to the schedule of sales charges set forth in the
Prospectus at a price based upon the net asset value of Class A
shares of the Fund on April 30, 1996.
    
   Conservative Investors Fund

Net Asset Value per Class A Share
at April 30, 1996                         $11.14

Per Share Sales Charge - 4.25%
of offering price (4.40% of net
asset value per share)                    $  .49

Class A Per Share Offering
Price to the Public                       $11.63
    










                               61



<PAGE>

   Growth Investors Fund

Net Asset Value per Class A Share
at April 30, 1996                         $14.08

Per Share Sales Charge - 4.25%
of offering price (4.40% of net
asset value per share)                    $  .62

Class A Per Share Offering
Price to the Public                       $14.70
    
         Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no reduced
initial sales charge (but be subject in most cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
charge.  The circumstances under which such an investor may pay a
reduced initial sales charge or no initial sales charge are
described below.
    
         Combined Purchase Privilege.  Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges shown in the Prospectus by combining purchases of
shares of a Fund into a single "purchase," if the resulting
"purchase" totals at least $100,000. The term "purchase" refers
to: (i) a single purchase by an individual, or to concurrent
purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their
children under the age of 21 years purchasing shares of a Fund
for his, her or their own account(s); (ii) a single purchase by a
trustee or other fiduciary purchasing shares for a single trust,
estate or single fiduciary account although more than one
beneficiary is involved; or (iii) a single purchase for the
employee benefit plans of a single employer.  The term "purchase"
also includes purchases by any "company," as that term is defined
in the 1940 Act, but does not include purchases by any such
company which has not been in existence for at least six months
or which has no purpose other than the purchase of shares of a
Fund or shares of other registered investment companies at a
discount.  The term "purchase" does not include purchases by any
group of individuals whose sole organizational nexus is that the
participants therein are credit card holders of a company, policy
holders of an insurance company, customers of either a bank or
broker-dealer or clients of an investment adviser.  A "purchase"
may also include shares, purchased at the same time through a
single selected dealer or agent, of any other Alliance Mutual
Fund.  Currently, the Alliance Mutual Funds include:

AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.


                               62



<PAGE>

Alliance Bond Fund, Inc.
  -Corporate Bond Portfolio
  -U.S. Government Portfolio
Alliance Developing Markets Fund, Inc. 
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
  -California Portfolio
  -Insured California Portfolio
  -Insured National Portfolio
  -National Portfolio
  -New York Portfolio
Alliance Municipal Income Fund II
  -Arizona Portfolio
  -Florida Portfolio
  -Massachusetts Portfolio
  -Michigan Portfolio
  -Minnesota Portfolio
  -New Jersey Portfolio
  -Ohio Portfolio
  -Pennsylvania Portfolio
  -Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios.
  -Alliance Growth Fund
  -Alliance Conservative Investors Fund
  -Alliance Growth Investors Fund
  -Alliance Strategic Balanced Fund
  -Alliance Short-Term U.S. Government Fund

         Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "Literature" telephone number shown on
the front cover of this Statement of Additional Information.



                               63



<PAGE>

         Cumulative Quantity Discount (Right of Accumulation).
An investor's purchase of additional Class A shares of a Fund may
qualify for a Cumulative Quantity Discount.  The applicable sales
charge will be based on the total of:

         (i)  the investor's current purchase;

        (ii)  the net asset value (at the close of business on
              the previous day) of (a) all Class A, Class B and
              Class C shares of the Fund held by the investor and
              (b) all shares of any other Alliance Mutual Fund
              held by the investor; and

       (iii)  the net asset value of all shares described in
              paragraph (ii) owned by another shareholder
              eligible to combine his or her purchase with that
              of the investor into a single "purchase" (see
              above).

         For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial sales charge for the $100,000
purchase would be at the rate applicable to a single $300,000
purchase of shares of the Fund.

         To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.

         Statement of Intention.  Class A investors may also
obtain the reduced initial sales charges shown in the Prospectus
by means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B, Class
C and/or Advisor Class shares) of a Fund or any other Alliance
Mutual Fund.  Each purchase of shares under a Statement of
Intention will be made at the public offering price or prices
applicable at the time of such purchase to a single transaction
of the dollar amount indicated in the Statement of Intention.  At
the investor's option, a Statement of Intention may include
purchases of shares of a Fund or any other Alliance Mutual Fund
made not more than 90 days prior to the date that the investor
signs the Statement of Intention; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.




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<PAGE>

         Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention.  For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of a Fund, the investor and the
investor's spouse each purchase shares of the Fund worth $20,000
(for a total of $40,000), it will be necessary to invest only a
total of $60,000 during the following 13 months in shares of the
Fund or any other Alliance Mutual Fund to qualify for the initial
sales charge on the total amount being invested, i.e., the
initial sales charge applicable to an investment of $100,000.

         The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated.  The
minimum initial investment under a Statement of Intention is 5%
of such amount.  Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher initial
sales charge applicable to the shares actually purchased if the
full amount indicated is not purchased, and such escrowed shares
will be involuntarily redeemed to pay the additional sales
charge, if necessary.  Dividends on escrowed shares, whether paid
in cash or reinvested in additional Fund shares, are not subject
to escrow.  When the full amount indicated has been purchased,
the escrow will be released.  To the extent that an investor
purchases more than the dollar amount indicated on the Statement
of Intention and qualifies for a further reduced sales charge,
the initial sales charge will be adjusted for the entire amount
purchased at the end of the 13-month period.  The difference in
the initial sales charge will be used to purchase additional
shares of a Fund subject to the rate of sales charge applicable
to the actual amount of the aggregate purchases.

         Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
a Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.

         Certain Retirement Plans.  Multiple participant payroll
deduction retirement plans may also purchase shares of a Fund or
any other Alliance Mutual Fund at a reduced initial sales charge
on a monthly basis during the 13-month period following such a
plan's initial purchase.  The initial sales charge applicable to
such initial purchase of shares of a Fund will be that normally
applicable, under the schedule of the initial sales charges set
forth above, to an investment 13 times larger than such initial
purchase.  The sales charge applicable to each succeeding monthly


                               65



<PAGE>

purchase will be that normally applicable, under such schedule,
to an investment equal to the sum of (i) the current month's
purchase multiplied by the number of months (including the
current month) remaining in the 13-month period, and (ii) the
total purchase previously made during the 13-month period.  Sales
charges previously paid during such period will not be
retroactively adjusted on the basis of later purchases.

         Reinstatement Privilege.  A shareholder who has caused
any or all of his or her Class A or Class B shares of a Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date, and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinstatement of
such shares.  Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above.  A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund.  The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used more than once in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in a Fund to his or her individual retirement account or
other qualified retirement plan account.  Investors may exercise
the reinstatement privilege by written request sent to a Fund at
the address shown on the cover of this Statement of Additional
Information.

         Sales at Net Asset Value.  The Funds may sell their
Class A shares at net asset value (i.e., without any initial
sales charge), and without any contingent deferred sales charge
to certain categories of investors including: (i) investment
advisory clients of the Adviser or its affiliates; (ii) officers
and present or former Trustees of the Trust; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser; officers, directors and present or retired full-time
employees of ACMC, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; officers, directors and
present and full-time employees of selected dealers or agents; or
the spouse, sibling, direct ancestor or direct descendant
(collectively "relatives") of any such person; or any trust,
individual retirement account or retirement plan account for the
benefit of any such person or relative; or the estate of any such
person or relative, if such shares are purchased for investment


                               66



<PAGE>

purposes (such shares may not be resold except to the relevant
Fund); (iii) the Adviser, Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; certain employee benefit
plans for employees of the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates; (iv) persons
participating in a fee-based program, sponsored and maintained by
a registered broker-dealer and approved by the Principal
Underwriter, pursuant to which such persons pay an asset-based
fee to such broker-dealer, or its affiliate or agent, for service
in the nature of investment advisory or administrative services;
(v) persons who establish to the Principal Underwriter's
satisfaction that they are investing in the Fund, within such
time period as may be designated by the Principal Underwriter,
proceeds of their redemption of shares of such other registered
investment companies as may be designated from time to time by
the Principal Underwriter; and (vi) employer-sponsored qualified
pension or profit-sharing plans (including Section 401(k) plans),
custodial accounts maintained pursuant to Section 403(b)(7)
retirement plans and individual retirement accounts (including
individual retirement accounts to which simplified employee
pension (SEP) contributions are made), if such plans or accounts
are established or administered under programs sponsored by
administrators or other persons that have been approved by the
Principal Underwriter.

Class B Shares
   
         Investors purchase Class B shares at the public offering
price equal to the net asset value per share of the Class B
shares on the date of purchase without the imposition of a sales
charge at the time of purchase.  The Class B shares are sold
without an initial sales charge so that the Funds will receive
the full amount of the investor's purchase payment.
    
         Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Funds in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares.  The combination of the
contingent deferred sales charge and the distribution services
fee enables the Funds to sell Class B shares without a sales
charge being deducted at the time of purchase.  The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.

         Contingent Deferred Sales Charge.  Class B shares which
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below


                               67



<PAGE>

charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption.  Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares
derived from reinvestment of dividends or capital gains
distributions.

         To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase the net asset value per share is $12
and, during such time, the investor has acquired 10 additional
Class B shares upon dividend reinvestment.  If at such time the
investor makes his or her first redemption of 50 Class B shares
(proceeds of $600), 10 Class B shares will not be subject to
charge because of dividend reinvestment.  With respect to the
remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 3.0% (the
applicable rate in the second year after purchase, as set forth
below).

         The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.


          Contingent Deferred Sales Charge as a % of Dollar Amount

                                        Shares Purchased
                                           On or After
   Years since       Shares Purchased    August 2, 1993     Shares Purchased
    Purchase              Before           but Before          On or After
Subject to Change     August 2, 1993    November 19, 1993   November 19, 1993

First                     5.00%               3.00%                4.00%

Second                    4.00%               2.00%                3.00%

Third                     3.00%               1.00%                2.00%

Fourth                    1.00%               1.00%                1.00%

Fifth                     None                None                 None

Sixth                     None                None                 None




                               68



<PAGE>

         In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed that the
redemption is first of any shares in the shareholder's Fund
account that are not subject to a contingent deferred sales
charge, second of Class B shares held for over four years, third
of any Class C shares that are not subject to a contingent
deferred sales charge and fourth of any Class A shares that are
subject to a contingent deferred sales charge held shortest
during the one-year period during which such shares are subject
to the sales charge, as the case may be.  When Class B shares
acquired in an exchange are redeemed, the applicable contingent
deferred sales charge and conversion schedules will be the
schedules that applied to Class B shares of the Alliance Mutual
Fund originally purchased by the shareholder at the time of their
purchase. 
    
         The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who
has attained the age of 70-1/2, (iii) that had been purchased by
present or former Trustees of the Trust, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services - Systematic Withdrawal Plan" below).

         Conversion Feature.  Class B shares will automatically
convert to Class A shares on the tenth Fund business day in the
month following the month in which the eighth anniversary date of
the acceptance of the purchase order for the Class B shares
occurs and such shares will no longer be subject to a higher
distribution services fee.  Such conversions will be on the basis
of the relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge.  The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.  See "Shareholder Services -- Exchange Privilege."

         For purposes of conversion to Class A shares, Class B
shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B shares in a
shareholder's account will be considered to be held in a separate
sub-account.  Each time any Class B shares in the shareholder's
account (other than those in the sub-account) convert to Class A



                               69



<PAGE>

shares, an equal pro-rata portion of the Class B shares in the
sub-account will also convert to Class A.

         The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that (i) the assessment of the higher distribution
services fee and transfer agency costs with respect to Class B
shares does not result in a Fund's dividends or distributions
constituting "preferential dividends" under the Code, and
(ii) the conversion of Class B shares to Class A shares does not
constitute a taxable event under federal income tax law.  The
conversion of Class B shares to Class A shares may be suspended
if such an opinion is no longer available at the time such
conversion is to occur.  In that event, no further conversions of
Class B shares would occur, and shares might continue to be
subject to the higher distribution services fee for an indefinite
period.

Class C Shares

         Investors purchase Class C shares at the public offering
price equal to the net asset value per share of the Class C
shares on the date of purchase without the imposition of a sales
charge either at the time of purchase or upon redemption.  Class
C shares are sold without an initial sales charge so that a Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, the
investor will receive as proceeds upon redemption the entire net
asset value of his or her Class C shares.  The Class C
distribution services fee enables a Fund to sell Class C shares
without either an initial or contingent deferred sales charge, as
long as the shares are held for one year or more.  Class C shares
do not convert to any other class of shares and incur higher
distribution services fees than Class A shares.  Class C shares
will thus have a higher expense ratio and pay correspondingly
lower dividends than Class A shares.
    
         Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the lesser of their original cost
or their net asset value at the time of redemption.  Accordingly,
no sales charge will be imposed on increases in net asset value
above the initial purchase price.  In addition, no charge will be
assessed on shares derived from reinvestment of dividends or
capital gains distributions.  The contingent deferred sales
charge on Class C shares will be waived on certain redemptions,
and will be applied to redemptions of shares by shareholders who
hold both Class C shares and shares of one or more other classes
subject to a contingent deferred sales charge as described above
under "--Class B Shares."
    


                               70



<PAGE>

         Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares.  The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase.  The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than Class
A shares.
    

               REDEMPTION AND REPURCHASE OF SHARES

         The following information supplements that set forth in
the Funds' Prospectus under the heading "Purchase and Sale of
Share--How to Sell Shares."  If you are an Advisor Class
shareholder through an account established under a fee-based
program, your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
that are different from those described herein.  A transaction
fee may be charged by your financial representative with respect
to the purchase, sale or exchange of Advisor Class shares made
through such financial representative.
    
Redemption

         Subject only to the limitations described below, the
Funds will redeem the shares tendered to them, as described
below, at a redemption price equal to their net asset value as
next computed following the receipt of shares tendered for
redemption in proper form.  Except for any contingent deferred
sales charge which may be applicable to Class A shares, Class B
shares or Class C shares, there is no redemption charge.  Payment
of the redemption price will be made within seven days after a
Fund's receipt of such tender for redemption.  If a shareholder
has any questions regarding what documents are required by his or
her fee-based program or employee benefit plan, the shareholder
should contact his or her financial representative.
    
         The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that
trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which
disposal by a Fund of securities owned by it is not reasonably


                               71



<PAGE>

practicable or as a result of which it is not reasonably
practicable for a Fund fairly to determine the value of its net
assets, or for such other periods as the Securities and Exchange
Commission may by order permit for the protection of security
holders of a Fund.

         Payment of the redemption price may be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of a Fund's
portfolio securities at the time of such redemption or
repurchase.  Redemption proceeds on Class A shares, Class B
shares and Class C shares will reflect the deduction of the
contingent deferred sales charge, if any. Payment (either in cash
or in portfolio securities) received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.

         To redeem shares of a Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption.  The signature or signatures on the letter must be
guaranteed by an institution that is an "eligible guarantor" as
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.

         Telephone Redemption By Electronic Funds Transfer.  Each
Fund shareholder is entitled to request redemption by electronic
funds transfer, once in any 30 day period(except for certain
omnibus accounts) of shares for which no share certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from Alliance Fund Services, Inc.
A telephone redemption request may not exceed $100,000 (except
for certain omnibus accounts), and must be made by 4:00 p.m.
Eastern time on a Fund business day as defined above.  Proceeds
of telephone redemptions will be sent by Electronic Funds
Transfer to a shareholder's designated bank account at a bank
selected by the shareholder that is a member of the NACHA.

         Telephone Redemption By Check.  Except for certain
omnibus accounts or as noted below, each Fund shareholder is
eligible to request redemption by check, once in any 30-day
period, of Fund shares for which no share certificates have been
issued by telephone at (800) 221-5672 before 4:00 p.m. Eastern
time on a Fund business day in an amount not exceeding $50,000.
Proceeds of such redemptions are remitted by check to the


                               72



<PAGE>

shareholder's address of record.  Telephone redemption by check
is not available with respect to shares (i) for which
certificates have been issued, (ii) held in nominee or "street
name" accounts, (iii) held by a shareholder who has changed his
or her address of record within the preceding 30 calendar days or
(iv) held in any retirement plan account.  A shareholder
otherwise eligible for telephone redemption by check may cancel
the privilege by written instruction to Alliance Fund Services,
Inc., or by checking the appropriate box on the Subscription
Application found in the Prospectus.

         General.  During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break).  If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this Statement of Additional Information.  The Funds reserve the
right to suspend or terminate their telephone redemption service
at any time without notice.  Neither the Funds nor the Adviser,
the Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
redemptions that a Fund reasonably believes to be genuine.
Alliance Fund Services, Inc. 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 Alliance Fund
Services, Inc. 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.

         To redeem shares of the Funds represented by share
certificates, the investor should forward the appropriate share
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the relevant Fund with the request that
the shares represented thereby, or a specified portion thereof,
be redeemed.  The stock assignment form on the reverse side of
each share certificate surrendered to the Fund for redemption
must be signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the share certificate or certificates or, where
tender is made by mail, separately mailed to the relevant Fund.
The signature or signatures on the assignment form must be
guaranteed in the manner described above.




                               73



<PAGE>

Repurchase

         The Funds may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents.  The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time).  The financial intermediary, selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m.  If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent.  A
shareholder may offer shares of a Fund to the Principal
Underwriter either directly or through a selected dealer or
agent.  Neither the Funds nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares).  Normally, if
shares of the Funds are offered through a financial intermediary,
selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service.  The repurchase of shares of the Funds as described
above is a voluntary service of the Funds and the Funds may
suspend or terminate this practice at any time.
    
General

         The Funds reserve the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed.  No contingent
deferred sales charge will be deducted from the proceeds of this
redemption.  In the case of a redemption or repurchase of shares
of the Funds recently purchased by check, redemption proceeds
will not be made available until the relevant Fund is reasonably
assured that the check has cleared, normally up to 15 calendar
days following the purchase date.

                      SHAREHOLDER SERVICES

         The following information supplements that set forth in
the Funds' Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services."    The shareholder services set


                               74



<PAGE>

forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated.  If you are an
Advisor Class shareholder through an account established under a
fee-based program, your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein.  A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
    
Automatic Investment Program

         Investors may purchase shares of the Funds through an
automatic investment program utilizing "pre-authorized check"
drafts drawn on the investor's own bank account.  Under such a
program, pre-authorized monthly drafts for a fixed amount (at
least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank.  Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form.  If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter.  If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus.  Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.

Exchange Privilege

         You may exchange your investment in the Funds for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by Alliance).  In
addition, present Directors or Trustees of any Alliance Mutual
Fund may exchange Class A shares of any Alliance Mutual Fund for
Advisor Class shares of any other Alliance Mutual Fund, including
the Fund.  If you make an exchange for shares of AFD Exchange
Reserves, you may exchange the shares of AFD Exchange Reserves
received in return only for shares of the Fund.  Exchanges of
shares are made at the net asset value next determined after
receipt of a properly completed exchange request and without
sales or service charges.  Exchanges may be made by telephone or
written request.  Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to
receive that day's net asset value.
    


                               75



<PAGE>

         Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares.  After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares").  When redemption occurs, the CDSC applicable to the
original shares is applied.
    
         Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call AFS at 800-221-5672 to exchange uncertificated shares.  An
exchange is a taxable capital transaction for federal tax
purposes.  The exchange service may be changed, suspended, or
terminated on 60 days written notice.
    
         All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired.  An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph.  Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.  Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for Federal income tax purposes.

         Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc. receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus.  Such telephone requests
cannot be accepted with respect to shares then represented by
share certificates.  Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.
    
         Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange at (800) 221-5672 before


                               76



<PAGE>

4:00 p.m., Eastern time, on a Fund business day as defined above.
Telephone requests for exchange received before 4:00 p.m. Eastern
time on a Fund business day will be processed as of the close of
business on that day.  During periods of drastic economic or
market developments, such as the market break of October 1987, it
is possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break).  If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this Statement of Additional Information.

         A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund.  Auto Exchange transactions
normally occur on the 12th day of each month, or the following
Fund business day.

         Neither the Alliance Mutual Funds nor the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that a Fund reasonably believes to be genuine.
Alliance Fund Services, Inc. will employ reasonable procedures in
order to verify that telephone requests for exchanges are
genuine, including, among others, recording such telephone
instructions and causing written confirmations of the resulting
transactions to be sent to shareholders.  If Alliance Fund
Services, Inc. did not employ such procedures, it could be liable
for losses arising from unauthorized or fraudulent telephone
instructions.  Selected dealers, agents or financial
representatives, as applicable, may charge a commission for
handling telephone requests for exchanges.
    
         The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold.  Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders to modify, restrict or
terminate the exchange privilege.

Retirement Plans

         The Funds may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below.  The Funds have available forms of
such plans pursuant to which investments can be made in a Fund
and other Alliance Mutual Funds.  Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "Literature" telephone number on the cover of this
Statement of Additional Information, or write to:


                               77



<PAGE>

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

         Individual Retirement Account ("IRA").  Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by a Fund is
deferred until distribution from the IRA.  An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan.  If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.

         Employer-Sponsored Qualified Retirement Plans.  Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.  

         If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan investing through
the Alliance Premier Retirement Program reaches $5 million on or
before December 15 in any year, all Class B shares or Class C
shares of the Fund held by such plan can be exchanged, without
any sales charge, for Class A shares of such Fund shortly before
the end of the calendar year in which the $5 million level is
attained.  The Fund waives any contingent deferred sales charge
applicable to redemptions of Class B shares by qualified plans
investing through the Alliance Premier Retirement Program.

         Simplified Employee Pension Plan ("SEP").  Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.

         403(b)(7) Retirement Plan.  Certain tax-exempt
organizations and public educational institutions may sponsor
retirements plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.

         The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United


                               78



<PAGE>

States, which serves as custodian or trustee under the retirement
plan prototype forms available from the Funds, charges certain
nominal fees for establishing an account and for annual
maintenance.  A portion of these fees is remitted to Alliance
Fund Services, Inc. as compensation for its services to the
retirement plan accounts maintained with a Fund.

         Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures.  For additional information please contact Alliance
Fund Services, Inc.

Dividend Direction Plan

         A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account(s) with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).
Further information can be obtained by contacting Alliance Fund
Services, Inc. at the address or the "Literature" telephone
number shown on the cover of this Statement of Additional
Information.  Investors wishing to establish a dividend direction
plan in connection with their initial investment should complete
the appropriate section of the Subscription Application found in
the Prospectus.  Current shareholders should contact Alliance
Fund Services, Inc. to establish a dividend direction plan.
    
Systematic Withdrawal Plan

         General.  Any shareholder who owns or purchases shares
of a Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date.  Systematic withdrawal plan
participants must elect to have their dividends and distributions
from a Fund automatically reinvested in additional shares of that
Fund.

         Shares of a Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions and, except as discussed
below, any applicable contingent deferred sales charge.  Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and


                               79



<PAGE>

thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted.  A systematic withdrawal
plan may be terminated at any time by the shareholder or the
relevant Fund.

         Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to a Fund's involuntary redemption provisions.  See
"How to Sell Shares -- General."  Purchases of additional shares
concurrently with withdrawals are undesirable because of sales
charges when purchases are made.  While an occasional lump-sum
investment may be made by a shareholder of Class A shares who is
maintaining a systematic withdrawal plan, such investment should
normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.

         Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network.  Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of a Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "Literature" telephone number shown on the cover of this
Statement of Additional Information.

         Class B and Class C CDSC Waiver .  Under a systematic
withdrawal plan, up to 1% monthly, 2% bi-monthly or 3% quarterly
of the value at the time of redemption of the Class B shares in a
shareholder's account acquired after July 1, 1995 and the Class C
shares in a shareholder's account acquired on or after July 1,
1996 may be redeemed free of any contingent deferred sales
charge.  Class B shares acquired after July 1, 1995 and Class C
shares acquired after July 1, 1996 that are not subject to a
contingent deferred sales charge (such as shares acquired with
reinvented dividends or distributions or shares held beyond the
period during which shares are subject to a contingent deferred
sales charge) will be redeemed first and will count toward these
limitations.  Remaining Class B shares acquired after July 1,
1995 that are held the longest and remaining Class C shares
acquired on or after July 1, 1996 that are held the longest will
be redeemed next. Redemptions of Class B shares acquired after
July 1, 1995 and Class C shares acquired on or after July 1, 1996
in excess of the foregoing limitations and redemptions of Class B
shares acquired before July 1, 1995 will be subject to any
otherwise applicable contingent deferred sales charge.
    


                               80



<PAGE>

Statements and Reports

         Each shareholder receives semi-annual and annual reports
which include a portfolio of investments, financial statements
and, in the case of the annual report, the report of the Trust's
independent auditors, Price Waterhouse LLP, as well as a
confirmation of each purchase and redemption.  By contacting his
or her broker or Alliance Fund Services, Inc., a shareholder can
arrange for copies of his or her account statements to be sent to
another person.

                         NET ASSET VALUE

         The net asset value of a share of each class is the
quotient obtained by dividing the value, as of such closing, of
the net assets of the Fund allocable to that class (i.e., the
value of the assets of the Fund allocated to that class less the
liabilities of the Fund allocated to that class, including
expenses payable or accrued) by the total number of shares of
such class then outstanding at such closing.

         For purposes of this computation, readily marketable
portfolio securities, including open short positions, listed on
the Exchange are valued at the last sale price reflected on the
consolidated tape at the close of the Exchange on the business
day as of which such value is being determined.  If there has
been no sale on such day, then the security is valued at the mean
of the closing bid and asked prices on such day.  If no bid and
asked prices are quoted on such day, then the security is valued
by such method as the Board of Trustees of the Trust shall
determine in good faith to reflect its fair market value.
Securities not listed on the Exchange but listed on other
national securities exchanges or admitted to trading on the
National Association of Securities Dealers Automatic Quotations,
Inc. ("NASDAQ") National List ("List") are valued in like manner.

         Portfolio securities traded on more than one national
securities exchange are valued at the last sale price on the
business day as of which such value is being determined as
reflected on the tape at the close of the exchange representing
the principal market for such securities.  Securities traded only
in the over-the-counter market, excluding those admitted to
trading on the List, are valued at the mean of the current bid
and asked prices therefor as reported by NASDAQ or, in the case
of securities not quoted by NASDAQ, the National Quotation Bureau
or such other comparable sources as the Board of Trustees of the
Trust deems appropriate to reflect the fair market value thereof.
Call options written or purchased by a Fund are valued at the
last sale price and put options purchased by a Fund are valued at
the last sale price.  Readily marketable fixed-income securities
may be valued on the basis of prices provided by a pricing


                               81



<PAGE>

service when such prices are believed by the Adviser to reflect
the fair market value of such securities.  The prices provided by
a pricing service take into account institutional size trading in
similar groups of securities and any developments related to
specific securities.  U.S. Government Securities and other debt
instruments having 60 days or less remaining until maturity are
stated at amortized cost if their original maturity was 60 days
or less, or by amortizing their fair value as of the 61st day
prior to maturity if their original term to maturity exceeded 60
days (unless in either case the Board of Trustees of the Trust
determines that this method does not represent fair value).  All
other assets, including restricted securities of a Fund, are
valued in such manner as the Board of Trustees of the Trust in
good faith deems appropriate to reflect their fair market value.

         The Trustees may suspend the determination of a Fund's
net asset value (and the offering and sales of shares), subject
to the rules of the SEC and other governmental rules and
regulations, at a time when:  (1) the Exchange is closed, other
than customary weekend and holiday closings, (2) an emergency
exists as a result of which it is not reasonably practicable for
a Fund to dispose of securities owned by it or to determine
fairly the value of its net assets, or (3) for the protection of
shareholders, the SEC by order permits a suspension of the right
of redemption or a postponement of the date of payment on
redemption.

         The assets belonging to the Class A shares, the Class B
shares, the Class C shares and Advisor Class shares will be
invested together in a single portfolio.
    
               DIVIDENDS, DISTRIBUTIONS AND TAXES

         Each Fund intends to qualify for tax treatment as a
"regulated investment company" under the Internal Revenue Code
for each taxable year.  In order to qualify as a regulated
investment company, each Fund must, among other things,
(1) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains
from the sale or other disposition of stock or securities,
foreign currencies or other income (including gains from options,
futures or forward contracts) derived with respect to its
business of investing in stock, securities or currencies,
(2) derive less than 30% of its gross income from the sale or
other disposition of stock, securities, options, futures, forward
contracts, and certain foreign currencies (or options, futures,
or forward contracts on foreign currencies held for less than
three months), and (3) diversify its holdings so that at the end
of each quarter of its taxable year (i) at least 50% of the
market value of the Fund's assets is represented by cash or cash
items, U.S. Government Securities, securities of other regulated


                               82



<PAGE>

investment companies, and other securities limited, in respect of
any one issuer, to an amount not greater than 5% of the value of
the Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other
than U.S. Government Securities or the securities of other
regulated investment companies) or of two or more issuers that
the Fund controls and that are engaged in the same, similar, or
related trades or businesses.  These requirements may restrict
the degree to which the Fund may engage in short-term trading and
limit the range of the Fund's investments.  If a Fund qualifies
as a regulated investment company, it will not be subject to
federal income tax on the part of its income distributed to
shareholders, provided the Fund distributes during its taxable
year at least (a) 90% of its taxable net investment income
(generally, dividends, interest, certain other income, and the
excess, if any, of net short-term capital gain over net long-term
loss), and (b) 90% of the excess of (i) its tax-exempt interest
income less (ii) certain deductions attributable to that income.
Each Fund intends to make sufficient distributions to
shareholders to meet this requirement.  Investors should consult
their own counsel for a complete understanding of the
requirements the Funds must meet to qualify for such treatment.
The information set forth in the Prospectus and the following
discussion relates solely to Federal income taxes on dividends
and distributions by a Fund and assumes that each Fund qualifies
as a regulated investment company.  Investors should consult
their own counsel for further details and for the application of
state and local tax laws to his or her particular situation.

         Dividends out of net ordinary income and distributions
of net short-term capital gains are taxable to shareholders as
ordinary income.  The dividends-received deduction for
corporations should also be applicable to a Fund's dividends of
net investment income.  The amount of such dividends and
distributions eligible for the dividends-received deduction is
limited to the amount of dividends from domestic corporations
received by a Fund during the fiscal year.  Furthermore,
provisions of the tax law disallow the dividends-received
deduction to the extent a corporation's investment in shares of a
Fund is financed with indebtedness.

         The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by a Fund to
its shareholders as capital gains distributions will not be
taxable to the Fund but will be taxable to the shareholders as
long-term capital gains, irrespective of the length of time a
shareholder may have held his Fund shares.  Capital gains
distributions are not eligible for the dividends-received
deduction referred to above.  Any dividend or distribution
received by a shareholder on shares of the Fund shortly after the


                               83



<PAGE>

purchase of such shares by him or her will have the effect of
reducing the net asset value of such shares by the amount of such
dividend or distribution.  A loss on the sale of shares held for
less than six months will be treated as a long-term capital loss
for Federal income tax purposes to the extent of any capital gain
distribution made with respect to such shares.

         Dividends and distributions are taxable in the manner
described above regardless of whether they are paid to the
shareholder in cash or are reinvested in additional shares of a
Fund.

         For Federal income tax purposes, when equity call
options which a Fund has written expire unexercised, the premiums
received by the Fund give rise to short-term capital gains at the
time of expiration.  When a call written by a Fund is exercised,
the selling price or purchase price of stock is increased by the
amount of the premium, and the gain or loss on the sale of stock
becomes long-term or short-term depending on the holding period
of the stock.  There may be short-term gains or losses associated
with closing purchase transactions.

         Each Fund is required to withhold and remit to the U.S.
Treasury 31% of all dividend income paid to any shareholder
account for which an incorrect or no taxpayer identification
number has been provided or where the Fund is notified that the
shareholder has under-reported income in the past (or the
shareholder fails to certify that he or she is not subject to
such withholding).  In addition, the Fund will be required to
withhold and remit to the U.S. Treasury 31% of the amount of the
proceeds of any redemption of shares of a shareholder account for
which an incorrect or no taxpayer identification number has been
provided.  

         The foregoing discussion relates only to U.S. Federal
income tax law as it affects U.S. shareholders.  The effects of
Federal income tax law on non-U.S. shareholders may be
substantially different.  Foreign investors should consult their
counsel for further information as to the U.S. tax consequences
of receipt of income from a Fund.

                       GENERAL INFORMATION

Description of the Trust

         The Trust is organized as a Massachusetts business trust
under the laws of The Commonwealth of Massachusetts by an
Agreement and Declaration of Trust ("Declaration of Trust") dated
March 26, 1987, a copy of which is on file with the Secretary of
State of The Commonwealth of Massachusetts.  The Trust is a
"series" company as described in Rule 18f-2 under the 1940 Act,


                               84



<PAGE>

having five separate portfolios, each of which is represented by
a separate series of shares.  In addition to the Funds, the other
portfolios of the Trust are the Alliance Short-Term U.S.
Government Fund, the Alliance Growth Fund and the Alliance
Strategic Balanced Fund.

         The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of each series
and of each class of shares thereof.  The shares of each Fund and
each class thereof do not have any preemptive rights.  Upon
termination of any Fund or any class thereof, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund
or that class are entitled to share pro rata in the net assets of
that Fund or that class then available for distribution to such
shareholders.

         The assets received by the Trust for the issue or sale
of the Class A, Class B, Class C shares and Advisor Class of each
Fund and all income, earnings, profits, losses and proceeds
therefrom, subject only to the rights of creditors, are allocated
to, and constitute the underlying assets of, the appropriate
class of that Fund.  The underlying assets of each Fund and each
class of shares thereof are segregated and are charged with the
expenses with respect to that Fund and that class and with a
share of the general expenses of the Trust.  While the expenses
of the Trust are allocated to the separate books of account of
each Fund and each class of shares thereof, certain expenses may
be legally chargeable against the assets of all Funds or a
particular class of shares thereof.

         The Declaration of Trust provides for the perpetual
existence of the Trust.  The Trust or any Fund, however, may be
terminated at any time by vote of at least a majority of the
outstanding shares of each Fund affected.  The Declaration of
Trust further provides that the Trustees may also terminate the
Trust upon written notice to the shareholders.

Capitalization

         Except as noted below under "Shareholder and Trustee
Liability," all shares of the Funds when duly issued will be
fully paid and non-assessable.  

         Set forth below is certain information as to all persons
who owned of record or beneficially 5% or more of any class of
the Funds' outstanding shares at August 15, 1996:
    






                               85



<PAGE>

Names and Addresses                            % of Class
   
              Conservative Investors Fund - Class C

Alliance Plan Div/FTC
C/F Jack S. Hoffman IRA
Rollover Account..........................         5.52%
224 Windsor Drive
Mineral Wells, WV 26250-9623

Merrill Lynch
Mutual Fund Operations
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL  32246-6486.............          9.55%
    
                 Growth Investors Fund - Class A

Trust for Profit Sharing Plan
for Employees of ACMC L.P. ................         8.05%
1345 Avenue of the Americas
New York, NY  10105-0302
   
                 Growth Investors Fund - Class C

Merrill Lynch
Mutual Fund Operations
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL  32246-6486...............         7.38%
    

Voting Rights

         As summarized in the Prospectus, shareholders are
entitled to one vote for each full share held (with fractional
votes for fractional shares held) and will vote (to the extent
provided herein) in the election of Trustees and the termination
of the Trust or a Fund and on other matters submitted to the vote
of shareholders.

         The By-Laws of the Trust provide that the shareholders
of any particular series or class shall not be entitled to vote
on any matters as to which such series or class is not affected.
Except with respect to matters as to which the Trustees have
determined that only the interests of one or more particular
series or classes are affected or as required by law, all of the
shares of each series or class shall, on matters as to which such
series or class is entitled to vote, vote with other series or
classes so entitled as a single class.  Notwithstanding the
foregoing, with respect to matters which would otherwise be voted
on by two or more series or classes as a single class, the
Trustees may, in their sole discretion, submit such matters to


                               86



<PAGE>

the shareholders of any or all such series or classes,
separately.  Rule 18f-2 under the 1940 Act provides in effect
that a series shall be deemed to be affected by a matter unless
it is clear that the interests of each series in the matter are
substantially identical or that the matter does not affect any
interest of such series.  Although not governed by Rule 18f-2,
shares of each class of a Fund will vote separately with respect
to matters pertaining to the respective Distribution Plans
applicable to each class.

         The terms "shareholder approval" and "majority of the
outstanding voting securities" as used in the Prospectus and this
Statement of Additional Information mean the lesser of (i) 67% or
more of the shares of the applicable Fund or applicable class
thereof represented at a meeting at which more than 50% of the
outstanding shares of such Fund or such class are represented or
(ii) more than 50% of the outstanding shares of such Fund or such
class.

         There will normally be no meetings of shareholders for
the purpose of electing Trustees except that in accordance with
the 1940 Act (i) the Trust will hold a shareholders' meeting for
the election of Trustees at such time as less than a majority of
the Trustees holding office have been elected by shareholders,
and (ii) if, as a result of a vacancy on the Board of Trustees,
less than two-thirds of the Trustees holding office have been
elected by the shareholders, that vacancy may only be filled by a
vote of the shareholders.  The Funds' shares have non-cumulative
voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so, and in such event the
holders of the remaining less than 50% of the shares voting for
such election of Trustees will not be able to elect any person or
persons to the Board of Trustees.  A special meeting of
shareholders for any purpose may be called by 10% of the Trust's
outstanding shareholders.

         Except as set forth above, the Trustees shall continue
to hold office and may appoint successor Trustees.  

         No amendment may be made to the Declaration of Trust
without the affirmative vote of a majority of the outstanding
shares of the Trust except (i) to change the Trust's name,
(ii) to establish, change or eliminate the par value of shares or
(iii) to supply any omission, cure any ambiguity or cure, correct
or supplement any defective or inconsistent provision contained
in the Declaration of Trust.






                               87



<PAGE>

Shareholder and Trustee Liability

         Under Massachusetts law shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Trust.  However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or
executed by the Trust or the Trustees.  The Declaration of Trust
provides for indemnification out of a Fund's property for all
loss and expense of any shareholder of that Fund held liable on
account of being or having been a shareholder.  Thus, the risk of
a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund of which
he was a shareholder would be unable to meet its obligations.

         The Declaration of Trust further provides that the
Trustees will not be liable for errors of judgment or mistakes of
fact or law.  However, nothing in the Declaration of Trust
protects a Trustee against any liability to which the Trustee
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.  The By-Laws of the Trust
provide for indemnification by the Trust of the Trustees and the
officers of the Trust but no such person may be indemnified
against any liability to the Trust or the Trust's shareholders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.

Counsel

         Legal matters in connection with the issuance of the
shares of the Funds offered hereby are passed upon by Ropes &
Gray, One International Place, Boston, Massachusetts 02110.

Independent Accountants

         The financial statements of the Conservative Investors
Fund and Growth Investors Fund for the fiscal year ended
April 30, 1996, which are included in this Statement of
Additional Information, have been audited by Price Waterhouse
LLP, 1177 Avenue of the Americas, New York, New York 10036, the
Trust's independent auditors for such period, as stated in their
report appearing herein, and have been so included in reliance
upon such report given upon the authority of that firm as experts
in accounting and auditing.
    





                               88



<PAGE>

Total Return Quotations

         From time to time, a Fund may advertise its "total
return." Total return is computed separately for Class A, Class
B, Class C shares and Advisor Class shares.  Such advertisements
disclose a Fund's average annual compounded total return for
recent one-, five-and ten-year periods (or the life of a Fund or
class, if shorter).  Total return for each such period is
computed by finding, through the use of a formula prescribed by
the SEC, the average annual compounded rate of return over such
period that would equate an assumed initial amount invested to
the value of such investment at the end of the period.  For
purposes of computing total return, income dividends and capital
gains distributions paid on shares of a Fund are assumed to have
been reinvested when received and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been
paid.

         The average annual compounded total return for Class A
shares of the Conservative Investors and Growth Investors Funds
was 7.90% and 18.57%, respectively, for the one-year period ended
April 30, 1996.  The average annual compounded total return for
Class A shares of the Conservative Investors and Growth Investors
Funds was 6.22% and 11.10%, respectively, for the period May 4,
1992 (commencement of distribution of Class A shares) through
April 30, 1996.  The average annual compounded total return for
Class B shares of the Conservative Investors and Growth Investors
Funds was 7.95% and 19.06%, respectively, for the one year period
ended April 30, 1996.  The average annual compounded total return
for Class B shares of the Conservative Investors and Growth
Investors Funds was 6.42% and 11.31%, respectively, for the
period May 4, 1992 (commencement of distribution of Class B
shares) through April 30, 1996.  The average annual compounded
total return for Class C shares of the Conservative Investors and
Growth Investors Funds was 11.84% and 23.04% respectively, for
the one-year period ended April 30, 1996.  The average annual
compounded total return for Class C shares of the Conservative
Investors and Growth Investors Funds was 4.50% and 9.62%,
respectively, for the period August 2, 1992 (commencement of
distribution of Class C shares) through April 30, 1996.  
    
         A Fund's total return is not fixed and will fluctuate in
response to prevailing market conditions or as a function of the
type and quality of the securities in the Fund's portfolio and
the Fund's expenses.  Total return information is useful in
reviewing the Fund's performance but such information may not
provide a basis for comparison with bank deposits or other
investments which pay a fixed return for a stated period of time.
An investor's principal invested in the Fund is not fixed and
will fluctuate in response to prevailing market conditions.



                               89



<PAGE>

         Advertisements quoting performance rankings of a Fund as
measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc., and advertisements presenting the historical
performance of such Fund, may also from time to time be sent to
investors or placed in newspapers and magazines such as The New
York Times, The Wall Street Journal, Barrons, Investor's Daily,
Money Magazine, Changing Times, Business Week and Forbes or other
media on behalf of such Fund.  

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 SEC under the Securities
Act of 1933. Copies of the Registration Statement may be obtained
at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.  



































                               90
00250184.AJ4



<PAGE>

                            APPENDIX

              DESCRIPTION OF CORPORATE BOND RATINGS

         Description of the bond ratings of Moody's Investors
Service, Inc. are as follows:

         Aaa-- Bonds which are rated Aaa are judged to be of the
best quality.  They carry the smallest degree of investment risk
and are generally referred to as "gilt edge."  Interest payments
are protected by a large or by an exceptionally stable margin,
and principal is secure.  While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.

         Aa--  Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are
rated lower than the best bond because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
greater than the Aaa securities.

         A--   Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper-medium-
grade obligations.  Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the
future.

         Baa-- Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured.  Interest payments and principal security appear
adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time.  Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.

         Ba--  Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well
assured.  Often the protection of interest and principal payments
may be very moderate and thereby not well safeguarded during both
good and bad times over the future.  Uncertainty of position
characterizes bonds in this class.

         B--   Bonds which are rated B generally lack
characteristics of the desirable investment.  Assurance of






<PAGE>

interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.

         Caa-- Bonds which are rated Caa are of poor standing.
Such issues may be in default of there may be present elements of
danger with respect to principal or interest.

         Ca--  Bonds which are rated Ca represent obligations
which are speculative to a high degree.  Such issues are often in
default or have other marked shortcomings.

         C--   Bonds which are rated C are the lowest class of
bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.

Moody's applies modifiers to each rating classification from Aa
through B to indicate relative ranking within its rating
categories.  The modifier "1" indicates that a security ranks in
the higher end of its rating category; the modifier "2" indicates
a mid-range ranking; and the modifier "3" indicates that the
issue ranks in the lower end of its rating category.

         Descriptions of the bond ratings of Standard & Poor's
Corporation are as follows:

         AAA-- Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.

         AA--  Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the higher rated
issues only in small degree.

         A--   Debt rated A has a strong capacity to pay interest
and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.

         BBB-- Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal.  Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated
categories.

         BB, B, CCC, CC, or C --  Debt rated BB, B, CCC, CC or C
is regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation.  While
such debt will likely have some quality and protective


                                2



<PAGE>

characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse debt conditions.

         C1--  The rating C1 is reserved for income bonds on
which no interest is being paid.

         D--   Debt rated D is in default and payment of interest
and/or repayment of principal is in arrears.

The ratings from AAA to CC may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the
major rating categories.









































                                3
00250184.AJ4

 
<PAGE>
 
                             C.  OTHER INFORMATION
                                 -----------------

Item 24.    FINANCIAL STATEMENTS AND EXHIBITS:
            --------------------------------- 

     (a)    Financial Statements:

     For financial statements, which are part of this Registration Statement see
"Financial Highlights" in the Prospectuses and "Financial Statements" in the
Statements of Additional Information.

     (b)    Exhibits:

     1.     Agreement and Declaration of Trust (previously filed with Pre-
            Effective Amendment No. 1 to the Registrant's Registration Statement
            on July 8, 1987); Amendment No. 1 to Agreement and Declaration of
            Trust (previously filed with Pre-Effective Amendment No. 1 to the
            Registrant's Registration Statement on July 8, 1987); Amendment No.
            2 to Agreement and Declaration of Trust (previously filed with Post-
            Effective Amendment No. 11 to the Registrant's Registration
            Statement on June 28, 1993).

     2.     By-Laws (previously filed with Post-Effective Amendment No. 1 to the
            Registrant's Registration Statement on April 29, 1988); Amendment to
            By-Laws dated October 16, 1991 (previously filed with Post-Effective
            Amendment No. 9 to the Registrant's Registration Statement on August
            31, 1992).

     3.     Not applicable.

     4(a).  Specimen Share Certificate with respect to (a) The Equitable Growth
            Fund; (b) The Equitable Balanced Fund; (c) The Equitable Government
            Securities Fund; (d) The Equitable Tax Exempt Fund; (e) The
            Equitable Growth and Income Fund; and (f) The Equitable Short-Term
            World Income Fund (previously filed with Post-Effective Amendment
            No. 6 to the Registrant's Registration Statement on February 8,
            1991).

     4(b).  Specimen Share Certificate with respect to (a) The Equitable
            Aggressive Growth Fund; (b) The Equitable Short-Term U.S. Government
            Fund; (c) The Equitable Conservative Investors Fund; and (d) The
            Equitable Growth Investors Fund (previously filed with Post-
            Effective Amendment No. 9 to the Registrant's Registration Statement
            on August 31, 1992).
<PAGE>
 
     4(c).  Portions of the Registrant's Agreement and Declaration of Trust and
            By-Laws pertaining to shareholders' rights (previously filed with
            Post-Effective Amendment No. 11 to the Registrant's Registration
            Statement on June 28, 1993).

     4(d).  Specimen Share Certificate with respect to Class C shares of (a)
            Alliance Conservative Investors Fund and (b) Alliance Growth
            Investors Fund (previously filed with Post-Effective Amendment No.
            17 to the Registrant's Registration Statement on August 30, 1995).
 
     4(e).  Specimen Share Certificate with respect to Class C shares of (a) 
            Alliance Strategic Balanced Fund; (b) Alliance Growth Fund; and (c) 
            Alliance Short-Term U.S. Government Fund (previously filed with 
            Post-Effective Amendment No. 19 to the Registrant's Registration 
            Statement on October 31, 1995.)
         
     4(f).  Specimen Share Certificate with respect to Advisor Class shares of
            (a) Alliance Conservative Investors Fund and (b) Alliance Growth
            Investors Fund - filed herewith.     

     5.     Form of Investment Advisory Agreement between the Registrant and
            Alliance Capital Management L.P. (previously filed with Post-
            Effective Amendment No. 11 to the Registrant's Registration
            Statement on June 28, 1993).

     6(a).  Distribution Services Agreement between the Registrant and Alliance
            Fund Distributors, Inc., dated August 2, 1993, as amended through
            July 17, 1996 - filed herewith.

     6(b).  Form of Selected Dealers Agreement between Alliance Fund
            Distributors, Inc. and selected dealers offering shares of the
            Registrant (previously filed with Post-Effective Amendment No. 11 to
            the Registrant's Registration Statement on June 28, 1993).

     6(c).  Form of Selected Agents Agreement between Alliance Fund
            Distributors, Inc. and selected agents making available shares of
            the Registrant (previously filed with Post-Effective Amendment No.
            11 to the Registrant's Registration Statement on June 28, 1993).

     7.     Not applicable.

                                     - 2 -
<PAGE>

          
     8.     Custodian Agreement between the Registrant and State Street Bank and
            Trust Company dated July 25, 1988, as amended through July 17, 1996
            - filed herewith.     
         
     9(a).  Transfer Agent Agreement between the Registrant and State Street
            Bank and Trust Company (previously filed with Post-Effective
            Amendment No. 17 to the Registrant's Registration Statement on
            August 30, 1995).

     9(b).  Accounting Agreement between Equitable Capital Management
            Corporation and State Street Bank and Trust Company concerning (a)
            The Equitable Growth Fund; (b) The Equitable Balanced Fund; (c) The
            Equitable Government Securities Fund; and (d) The Equitable Tax
            Exempt Fund (previously filed with Post-Effective Amendment No. 4 to
            the Registrant's Registration Statement on June 29, 1989).      
              
     10.    Opinion and Consent of Counsel (previously filed with Post-Effective
            Amendment No. 20 to the Registrant's Registration Statement on June
            28, 1996).     

     11.    Consent of Independent Accountants - filed herewith.

     12.    Not applicable.

     13.    Investment Letter of The Equitable Life Assurance Society of the
            United States (previously filed with Pre-Effective Amendment No. 2
            to the Registrant's Registration Statement on October 19, 1987).

     14.    Not applicable.

     15(a). Amended and Restated Distribution Plan applicable to the
            Registrant's Class A shares (previously filed with Post-Effective
            Amendment No. 11 to the Registrant's Registration Statement on June
            28, 1993).

     15(b). Amended and Restated Distribution Plan applicable to the
            Registrant's Class B shares (previously filed with Post-Effective
            Amendment No. 11 to the Registrant's Registration Statement on June
            28, 1993).

     15(c). Form of Distribution Plan applicable to the Registrant's Class C
            shares (previously filed with Post-Effective Amendment No. 11 to the
            Registrant's Registration Statement on June 28, 1993).

                                     - 3 -
<PAGE>
 
     16.    Schedule for computation of performance quotations (previously filed
            with Post-Effective Amendment No. 15 to the Registrant's
            Registration Statement on January 27, 1995).

     17.    Financial Data Schedule - filed herewith.

     18.    Rule 18f-3 Plan (previously filed with Post-Effective Amendment No.
            19 to the Registrant's Registration Statement on January 31, 1996).

Item 25.    PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
            -------------------------------------------------------------

            As of August 15, 1996, the Registrant, The Alliance Portfolios,
     believes that no person is directly or indirectly controlled by or under
     common control with the Registrant.

Item 26.    NUMBER OF HOLDERS OF SECURITIES
            -------------------------------
    
            (as of August 15, 1996)
  
 (1)                                                              (2)
 
                                                                NUMBER OF
                                                                RECORD
TITLE OF CLASS                                                  HOLDERS
- --------------                                                  -------
 
Class A shares of 
  beneficial interest of 
  Alliance Conservative 
  Investors Fund                                                     956
 
Class B shares of  
  beneficial interest of 
  Alliance Conservative 
  Investors Fund                                                     2,204
 
Class C shares of 
  beneficial interest of 
  Alliance Conservative 
  Investors Fund                                                     402
 
Advisor Class shares of 
  beneficial interest of 
  Alliance Conservative 
  Investors Fund                                                     1
 
Class A shares of 
  beneficial interest of      

                                     - 4 -
<PAGE>

     
  Alliance Growth 
  Investors Fund                                                     2,306
 
Class B shares of 
  beneficial interest of 
  Alliance Growth 
  Investors Fund                                                     5,284
                                                                
Class C shares of                                               
  beneficial interest of                                        
  Alliance Growth                                               
  Investors Fund                                                     603
                                                                
Advisor Class shares of                                         
  beneficial interest of                                        
  Alliance Growth                                               
  Investors Fund                                                     1
                                                                
Class A shares of                                               
  beneficial interest of                                        
  Alliance Growth Fund                                               34,678
                                                                
Class B shares of                                               
  beneficial interest of                                        
  Alliance Growth Fund                                               163,327
                                                                
Class C shares of                                               
  beneficial interest of                                        
  Alliance Growth Fund                                               18,890
                                                                
Advisor Class shares of                                         
  beneficial interest of                                        
  Alliance Growth Fund                                               1
                                                                
Class A shares of                                               
  beneficial interest of                                        
  Alliance Strategic                                            
  Balanced Fund                                                      1,477
                                                                
Class B shares of                                               
  beneficial interest of                                        
  Alliance Strategic                                            
  Balanced Fund                                                      2,771
                                                                
Class C shares of                                               
  beneficial interest of                                        
  Alliance Strategic                                            
  Balanced Fund                                                      241
                                                                
Advisor Class shares of                                         
  beneficial interest of                                             

                                     - 5 -
<PAGE>

     
  Alliance Strategic                                            
  Balanced Fund                                                      1
                                                                
Class A shares of                                               
  beneficial interest of                                        
  Alliance Short-Term                                           
  U.S. Government Fund                                               176
                                                                
Class B shares of                                               
  beneficial interest of                                        
  Alliance Short-Term                                           
  U.S. Government Fund                                               384
                                                                
Class C shares of                                               
  beneficial interest of                                        
  Alliance Short-Term                                           
  U.S. Government Fund                                               186
                                                                
Advisor Class shares of                                         
  beneficial interest of                                        
  Alliance Short-Term                                           
  U.S. Government Fund                                               1     

Item 27.    INDEMNIFICATION
            ---------------

            Paragraph (n) of Section 3, Article IV of the Registrant's Agreement
     and Declaration of Trust provides in relevant part that the Trustees of the
     Trust have the power:

               "(n)  To purchase and pay for entirely out of Trust property such
            insurance as they may deem necessary or appropriate for the conduct
            of the business, including without limitation, insurance policies
            insuring the assets of the Trust and payment of distributions and
            principal on its portfolio investments, and insurance policies
            insuring the Shareholders, Trustees, officers, employees, agents,
            investment advisers or managers, principal underwriters, or
            independent contractors of the Trust individually against all claims
            and liabilities of every nature arising by reason of holding, being
            or having held any such office or position, or by reason of any
            action alleged to have been taken or omitted by any such person as
            Shareholder, Trustee, officer, employee, agent, investment adviser
            or manager, principal underwriter, or independent contractor,
            including any action taken or omitted that may be determined to
            constitute negligence, whether or not the Trust would have the power
            to indemnify such person against such liability;"

                                     - 6 -
<PAGE>
 
            Section 2 of Article VII of the Registrant's Agreement and
            Declaration of Trust provides in relevant part:

            "Limitation of Liability
            ------------------------

          Section 2.  The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, manager or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office."

            Article VIII of the Registrant's Agreement and Declaration of Trust
            provides in relevant part:

                                 ARTICLE VIII
                                 Indemnification

               "Section 1.  The Trust shall indemnify each of its Trustees and
            officers (including persons who serve at the Trust's request as
            directors, officers or trustees of another organization in which the
            Trust has any interest as a shareholder, creditor or otherwise)
            (hereinafter referred to as a "Covered Person") against all
            liabilities and expenses, including but not limited to amounts paid
            in satisfaction of judgments, in compromise or as fines and
            penalties, and counsel fees reasonably incurred by any Covered
            Person in connection with the defense or disposition of any action,
            suit or other proceeding, whether civil or criminal, before any
            court or administrative or legislative body, in which such Covered
            Person may be or may have been involved as a party or otherwise or
            with which such Covered Person may be or may have been threatened,
            while in office or thereafter, by reason of being or having been
            such a Covered Person except with respect to any matter as to which
            such Covered Person shall have been finally adjudicated in any such
            action, suit or other proceeding to be liable to the Trust or its
            Shareholders by reason of wilful misfeasance, bad faith, gross
            negligence or reckless disregard of the duties involved in the
            conduct of such Covered Person's office.  Expenses, including
            counsel fees so incurred by any such Covered Person (but excluding
            amounts paid in satisfaction of judgments, in compromise or as fines
            or penalties), shall be paid 

                                     - 7 -
<PAGE>
 
            from time to time by the Trust in advance of the final disposition
            of any such action, suit or proceeding upon receipt of an
            undertaking by or on behalf of such Covered Person to repay amounts
            so paid to the Trust if it is ultimately determined that
            indemnification of such expenses is not authorized under this
            Article, provided, however, that either (a) such Covered Person
                     --------  -------      
            shall have provided appropriate security for such undertaking, (b)
            the Trust shall be insured against losses arising from any such
            advance payments or (c) either a majority of the disinterested
            Trustees acting on the matter (provided that a majority of the
            disinterested Trustees then in office act on the matter), or
            independent legal counsel in a written opinion, shall have
            determined, based upon a review of readily available facts (as
            opposed to a full trial type inquiry) that there is reason to
            believe that such Covered Person will be found entitled to
            indemnification under this Article.

               "Section 2.  As to any matter disposed of (whether by a
            compromise payment, pursuant to a consent decree or otherwise)
            without an adjudication by a court, or by any other body before
            which the proceeding was brought, that such Covered Person is liable
            to the Trust or its Shareholders by reason of wilful misfeasance,
            bad faith, gross negligence or reckless disregard of the duties
            involved in the conduct of his or her office, indemnification shall
            be provided if (a) approved as in the best interests of the Trust,
            after notice that it involves such indemnification, by at least a
            majority of the disinterested Trustees acting on the matter
            (provided that a majority of the disinterested Trustees then in
            office act on the matter) upon a determination, based upon a review
            of readily available facts (as opposed to a full trial type inquiry)
            that such Covered Person is not liable to the Trust or its
            Shareholders by reason or wilful misfeasance, bad faith, gross
            negligence or reckless disregard of the duties involved in the
            conduct of his or her office, or (b) there has been obtained an
            opinion in writing of independent legal counsel, based upon a review
            of readily available facts (as opposed to a full trial type inquiry)
            to the effect that such indemnification would not protect such
            Person against any liability to the Trust to which he would
            otherwise be subject by reason of wilful misfeasance, bad faith,
            gross negligence or reckless disregard of the duties involved in the
            conduct of his office.  Any approval 

                                     - 8 -
<PAGE>
 
            pursuant to this Section shall not prevent the recovery from any
            Covered Person in accordance with this Section as indemnification if
            such Covered Person is subsequently adjudicated by a Court of
            competent jurisdiction to have been liable to the Trust or its
            Shareholders by reason or wilful misfeasance, bad faith, gross
            negligence or reckless disregard of the duties involved in the
            conduct of such Covered Person's office.

               Section 3.  The right of indemnification hereby provided shall
            not be exclusive of or affect any other rights to which such Covered
            Person may be entitled.  As used in this Article VIII, the term
            "Covered Person" shall include such person's heirs, executors and
            administrators and a "disinterested Trustee" is a Trustee who is not
            an "interested person" of the Trust as defined in Section 2(a)(19)
            of the Investment Company Act of 1940, as amended, (or who has been
            exempted from being an "interested person" by any rule, regulation
            or order of the Commission) and against whom none of such actions,
            suits or other proceedings or another action, suit or proceeding on
            the same or similar grounds is then or has been pending.  Nothing
            contained in this Article shall affect any rights to indemnification
            to which personnel of the Trust, other than Trustees or officers,
            and other persons may be entitled by contract or otherwise under
            law, nor the power of the Trust to purchase and maintain liability
            insurance on behalf of any such person.

            Section 2 of Article IX of the Registrant's Agreement and 
            Declaration of Trust provides in relevant part:

            "TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY

          Section 2.  The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.  A Trustee
shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law.  The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice.  The Trustees shall not
be required to give any bond as such, nor any surety if a bond is required."

                                     - 9 -
<PAGE>
     
               The Investment Advisory Agreement between the 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 the Registrant or its shareholders to which it would
            otherwise be subject by reason or willful misfeasance, bad faith or
            gross negligence in the performance of its duties thereunder, or by
            reason or reckless disregard of its obligations or duties
            thereunder.     
    
               The Distribution Services Agreement between the Registrant and
            Alliance Fund Distributors, Inc. provides that the Registrant will
            indemnify, defend and hold Alliance Fund Distributors, Inc., and any
            person who controls it within the meaning of Section 15 of the
            Investment Company Act of 1940, free and harmless from and against
            any and all claims, demands, liabilities and expenses which Alliance
            Fund Distributors, Inc. or any controlling person may incur arising
            out of or based upon any alleged untrue statement of a material fact
            contained in Registrant's Registration Statement, 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 any one of the foregoing or necessary to make the
            statements in any one of the foregoing not misleading, provided 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 or
            willful misfeasance, bad faith or gross negligence in the
            performance of its duties thereunder, or by reason of reckless
            disregard of its obligations or duties thereunder.     
    
               The foregoing summaries are qualified by the entire text of
            Registrant's Agreement and Declaration of Trust, the Advisory
            Agreement between the Registrant and Alliance Capital Management
            L.P. and the Distribution Services Agreement between the Registrant
            and Alliance Fund Distributors, Inc.     

                                     - 10 -
<PAGE>
 
               The Registrant participates in a joint directors and officers
            liability policy for the benefit of its Trustees and officers.
    
               Insofar as indemnification for liabilities arising under the
            Securities Act of 1933 (the "Act") may be permitted to Trustees,
            Officers and controlling persons of the Trust 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 Act,
            and is, therefore, unenforceable.  In the event that a claim for
            indemnification against such liabilities (other than the payment by
            the Trust of expenses incurred or paid by a Trustee, Officer or
            controlling person of the Trust 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 Trust 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 whether such
            indemnification by it is against public policy as expressed in the
            Act and will be governed by the final adjudication of such issue.
     
Item 28.    BUSINESS AND OTHER CONNECTIONS OF ADVISER.
    
            The descriptions of Alliance Capital Management L.P. under the
     captions "Management of the Fund" in the Prospectuses and in the Statements
     of Additional Information constituting Parts A and B, respectively, of this
     Registration Statement are incorporated by reference herein.     

          The information as to the directors and executive officers of Alliance
     Capital Management Corporation, the general partner of Alliance Capital
     Management L.P., set forth in Alliance Capital Management L.P.'s Form ADV
     filed with the Securities and Exchange Commission on April 21, 1988 (File
     No. 801-32361) and amended through the date hereof, is incorporated by
     reference herein.


ITEM 29.    Principal Underwriters

     (a)    Alliance Fund Distributors, Inc., the Registrant's Principal
            Underwriter in connection with the sale of shares of the Registrant,
            also acts as principal Underwriter or Distributor for the following
            investment companies:

                                     - 11 -
<PAGE>
 
                ACM Institutional Reserves, Inc.
                AFD Exchange Reserves
                Alliance All-Asia Investment Fund, Inc.
                Alliance Balanced Shares, Inc.
                Alliance Bond Fund, Inc.
                Alliance Capital Reserves
                Alliance Developing Markets Fund, Inc.
                Alliance Global Dollar Government Fund, Inc.
                Alliance Global Small Cap Fund, Inc.
                Alliance Global Strategic Income Trust, Inc.
                Alliance Government Reserves
                Alliance Growth and Income Fund, Inc.
                Alliance Income Builder Fund, Inc.
                Alliance International Fund
                Alliance Limited Maturity Government Fund, Inc.
                Alliance Money Market Fund
                Alliance Mortgage Securities Income Fund, Inc.
                Alliance Mortgage Strategy Trust, 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 Short-Term Multi-Market Trust, Inc.
                Alliance Technology Fund, Inc.
                Alliance Utility Income Fund, Inc.
                Alliance Variable Products Series Fund, Inc.
                Alliance World Income Trust, Inc.
                Alliance Worldwide Privatization Fund, Inc.
                Fiduciary Management Associates
                The Alliance Fund, Inc.
     
     (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.  Except as noted,
            such Directors and Officers hold no offices with the Registrant     

                                     - 12 -
<PAGE>
 
                                                 Positions and
                       Position and Offices      Offices
Name                   with Underwriter          with Registrant
- ----                   ----------------          ---------------

Michael J. Laughlin    Chairman

Robert L. Errico       President

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

Daniel J. Dart         Senior Vice President

Richard A. Davies      Senior Vice President,
                        Managing Director

Byron M. Davis         Senior Vice President

Kimberly A. Gardner    Senior Vice President

Geoffrey L. Hyde       Senior Vice President

Richard E. Khaleel     Senior Vice President

Barbara J. Krumsiek    Senior Vice President     Vice President-
                                                 Marketing
Stephen R. Laut        Senior Vice President

Daniel D. McGinley     Senior Vice President

Dusty W. Paschall      Senior Vice President

Antonios G.            Senior Vice President
 Poleondakis

Gregory K.             Senior Vice President
 Shannahan

Joseph F. Sumanski     Senior Vice President

Peter J. Szabo         Senior Vice President

Nicholas K. Willett    Senior Vice President

Richard A. Winge       Senior Vice President

Jamie A. Atkinson      Vice President

Warren W. Babcock III  Vice President

                                     - 13 -
<PAGE>
 
Benji A. Baer          Vice President

Kenneth F. Barkoff     Vice President

William P.             Vice President
 Beanblossom

Jack C. Bixler         Vice President

Casimir F. Bolanowski  Vice President

Kevin T. Cannon        Vice President

William W. Collins,    Vice President
 Jr.

Leo H. Cook            Vice President

Richard W. Dabney      Vice President

John F. Dolan          Vice President

Mark J. Dunbar         Vice President

Sohaila S. Farsheed    Vice President

Leon M. Fern           Vice President

Linda A. Finnerty      Vice President

William C. Fisher      Vice President

Robert M. Frank        Vice President

Gerard J. Friscia      Vice President
                        and Controller

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

Mark D. Gersten        Vice President            Treasurer and Chief Financial
                                                 Officer
Joseph W. Gibson       Vice President

Troy L. Glawe          Vice President

Herbert H. Goldman     Vice President

James E. Gunter        Vice President

                                     - 14 -
<PAGE>
 
Alan Halfenger         Vice President

Daniel M. Hazard       Vice President

George R. Hrabovsky    Vice President

Valerie J. Hugo        Vice President

Thomas K. Intoccia     Vice President

Larry P. Johns         Vice President

Robert H. Joseph, Jr.  Vice President
                        and Treasurer

Richard D. Keppler     Vice President

Sheila F. Lamb         Vice President

Donna M. Lamback       Vice President

Thomas Leavitt, III    Vice President

James M. Liptrot       Vice President

James P. Luisi         Vice President

Lori E. Master         Vice President

Shawn P. McClain       Vice President

Christopher J.         Vice President
 MacDonald

Michael F. Mahoney     Vice President

Maura A. McGrath       Vice President

Matthew P. Mintzer     Vice President

Joanna D. Murray       Vice President

Jeanette M. Nardella   Vice President

Nicole M.              Vice President
 Nolan-Koester

Daniel J. Phillips     Vice President

Robert T. Pigozzi      Vice President

                                     - 15 -
<PAGE>
 
James J. Posch         Vice President

Robert E. Powers       Vice President

Domenick Pugliese      Vice President and
                        Associate General
                        Counsel

Bruce W. Reitz         Vice President

Dennis A. Sanford      Vice President

Karen C. Satterberg    Vice President

Raymond S. Sclafani    Vice President

Richard J. Sidell      Vice President

J. William Strott, Jr. Vice President

Richard E. Tambourine  Vice President

Joseph T. Tocyloski    Vice President

Neil S. Wood           Vice President

Emilie D. Wrapp        Vice President and
                        Special Counsel

Maria L. Carreras      Assistant Vice President

John W. Cronin         Assistant Vice President

Faith C. Dunn          Assistant Vice President

William B. Hanigan     Assistant Vice President

Vicky M. Hayes         Assistant Vice President

Daniel M. Hazard       Assistant Vice President

John C. Hershock       Assistant Vice President

James J. Hill          Assistant Vice President

Kalen H. Holliday      Assistant Vice President

Edward W. Kelly        Assistant Vice President

Nicholas J. Lapi       Assistant Vice President

                                     - 16 -
<PAGE>
 
Patrick Look           Assistant Vice President
                        and Assistant Treasurer

Thomas F. Monnerat     Assistant Vice President

Carol H. Rappa         Assistant Vice President

Lisa Robinson-Cronin   Assistant Vice President

Robert M. Smith        Assistant Vice President

Wesley S. Williams     Assistant Vice President

Mark R. Manley         Assistant Secretary


     (c)    Not applicable.


ITEM 30.    LOCATION OF ACCOUNTS AND RECORDS.

            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 31.    MANAGEMENT SERVICES.

     Not applicable.

ITEM 32.    UNDERTAKINGS.
    
         The Registrant undertakes to furnish each person to whom a prospectus
     is delivered with a copy of the Registrant's latest annual report to
     shareholders, upon request and without charge.     

                                     - 17 -
<PAGE>
 
                             ********************



                                    NOTICE
    

     A copy of the Agreement and Declaration of Trust of The Alliance Portfolios
(the "Trust") is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Trust.     

                                     - 18 -
<PAGE>
 
                                   SIGNATURES
                                   ----------
    
       Pursuant to the requirements of the Securities Act of 1933, as amended,
  and the Investment Company Act of 1940, as amended, the Registrant certifies
  that it meets all of the requirements for effectiveness of this Amendment to
  its Registration Statement pursuant to Rule 485(b) under the Securities Act of
  1933 and has duly caused this Amendment to its Registration Statement to be
  signed on its behalf by the undersigned, thereunto duly authorized, in the
  City of New York and State of New York, on the 29th day of August, 1996.     


                                         THE ALLIANCE PORTFOLIOS
                                
                                         by   /s/ John D. Carifa
                                           -----------------------------
                                              John D. Carifa
                                              Chairman and 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/ John D. Carifa            Chairman           August 29, 1996
       ----------------------        and President    
       John D. Carifa                                 
                                                     
  2)   Principal Financial                           
       and Accounting Officer                        
                                                     
       /s/ Mark D. Gersten           Treasurer          August 29, 1996
       ----------------------        and Chief        
       Mark D. Gersten               Financial Officer 


       All of the Trustees
       -------------------

       Alberta B. Arthurs
       Ruth Block
       John D. Carifa
       Richard W. Couper
       Brenton W. Harries
       Donald J. Robinson
 
       by /s/ Edmund P. Bergan, Jr.                     August 29, 1996
         --------------------------                     
       (Attorney-in-fact)
       Edmund P. Bergan, Jr.      
<PAGE>
 
                                 EXHIBIT INDEX
    
Exhibit
    No.                          Description
- -------                          -----------

99.B4(f).                        Specimen Share Certificates

99.B6(a).                        Distribution Services Agreement dated August 2,
                                 1993, as amended through July 17, 1996

99.B8.                           Custodian Agreement dated July 25, 1988, as
                                 amended through July 17, 1996

99.B11.                          Consent of Independent
                                 Accountants

27                               Financial Data Schedule     

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 041
   <NAME> GROWTH INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       88,841,150
<INVESTMENTS-AT-VALUE>                      95,193,824
<RECEIVABLES>                                6,238,916
<ASSETS-OTHER>                                  89,836
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             101,522,576
<PAYABLE-FOR-SECURITIES>                     4,740,893
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      280,017
<TOTAL-LIABILITIES>                          5,020,910
<SENIOR-EQUITY>                                     69
<PAID-IN-CAPITAL-COMMON>                    81,773,153
<SHARES-COMMON-STOCK>                        2,174,272
<SHARES-COMMON-PRIOR>                        1,837,412
<ACCUMULATED-NII-CURRENT>                      485,859
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                      7,889,205
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                     6,353,380
<NET-ASSETS>                                96,501,666
<DIVIDEND-INCOME>                              714,512
<INTEREST-INCOME>                            2,021,304
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (1,581,329)
<NET-INVESTMENT-INCOME>                      1,154,487
<REALIZED-GAINS-CURRENT>                    13,079,485
<APPREC-INCREASE-CURRENT>                    2,657,978
<NET-CHANGE-FROM-OPS>                       16,891,950
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (510,038)
<DISTRIBUTIONS-OF-GAINS>                   (1,147,583)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        623,012
<NUMBER-OF-SHARES-REDEEMED>                  (404,354)
<SHARES-REINVESTED>                            118,202
<NET-CHANGE-IN-ASSETS>                      26,738,663
<ACCUMULATED-NII-PRIOR>                        593,778
<ACCUMULATED-GAINS-PRIOR>                  (1,597,594)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          632,516
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,795,406
<AVERAGE-NET-ASSETS>                        27,102,302
<PER-SHARE-NAV-BEGIN>                            12.08
<PER-SHARE-NII>                                   0.10
<PER-SHARE-GAIN-APPREC>                           2.75
<PER-SHARE-DIVIDEND>                            (0.26)
<PER-SHARE-DISTRIBUTIONS>                       (0.59)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.08
<EXPENSE-RATIO>                                   1.40
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 042
   <NAME> GROWTH INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       88,841,150
<INVESTMENTS-AT-VALUE>                      95,193,824
<RECEIVABLES>                                6,238,916
<ASSETS-OTHER>                                  89,836
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             101,522,576
<PAYABLE-FOR-SECURITIES>                     4,740,893
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      280,017
<TOTAL-LIABILITIES>                          5,020,910
<SENIOR-EQUITY>                                     69
<PAID-IN-CAPITAL-COMMON>                    81,773,153
<SHARES-COMMON-STOCK>                        4,261,102
<SHARES-COMMON-PRIOR>                        3,584,279
<ACCUMULATED-NII-CURRENT>                      485,859
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                      7,889,205
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                     6,353,380
<NET-ASSETS>                                96,501,666
<DIVIDEND-INCOME>                              714,512
<INTEREST-INCOME>                            2,021,304
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (1,581,329)
<NET-INVESTMENT-INCOME>                      1,154,487
<REALIZED-GAINS-CURRENT>                    13,079,485
<APPREC-INCREASE-CURRENT>                    2,657,978
<NET-CHANGE-FROM-OPS>                       16,891,950
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (687,510)
<DISTRIBUTIONS-OF-GAINS>                   (2,234,313)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                      1,018,816
<NUMBER-OF-SHARES-REDEEMED>                  (550,350)
<SHARES-REINVESTED>                            208,357
<NET-CHANGE-IN-ASSETS>                      26,738,663
<ACCUMULATED-NII-PRIOR>                        593,778
<ACCUMULATED-GAINS-PRIOR>                  (1,597,594)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          632,516
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,795,406
<AVERAGE-NET-ASSETS>                        52,354,517
<PER-SHARE-NAV-BEGIN>                            12.09
<PER-SHARE-NII>                                   0.06
<PER-SHARE-GAIN-APPREC>                           2.70
<PER-SHARE-DIVIDEND>                            (0.18)
<PER-SHARE-DISTRIBUTIONS>                       (0.59)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.08
<EXPENSE-RATIO>                                   2.10
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 043
   <NAME> GROWTH INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       88,841,150
<INVESTMENTS-AT-VALUE>                      95,193,824
<RECEIVABLES>                                6,238,916
<ASSETS-OTHER>                                  89,836
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             101,522,576
<PAYABLE-FOR-SECURITIES>                     4,740,893
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      280,017
<TOTAL-LIABILITIES>                          5,020,910
<SENIOR-EQUITY>                                     69
<PAID-IN-CAPITAL-COMMON>                    81,773,153
<SHARES-COMMON-STOCK>                          419,843
<SHARES-COMMON-PRIOR>                          351,116
<ACCUMULATED-NII-CURRENT>                      485,859
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                      7,889,205
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                     6,353,380
<NET-ASSETS>                                96,501,666
<DIVIDEND-INCOME>                              714,512
<INTEREST-INCOME>                            2,021,304
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (1,581,329)
<NET-INVESTMENT-INCOME>                      1,154,487
<REALIZED-GAINS-CURRENT>                    13,079,485
<APPREC-INCREASE-CURRENT>                    2,657,978
<NET-CHANGE-FROM-OPS>                       16,891,950
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                     (64,858)
<DISTRIBUTIONS-OF-GAINS>                     (210,790)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        186,320
<NUMBER-OF-SHARES-REDEEMED>                  (136,951)
<SHARES-REINVESTED>                             19,358
<NET-CHANGE-IN-ASSETS>                      26,738,663
<ACCUMULATED-NII-PRIOR>                        593,778
<ACCUMULATED-GAINS-PRIOR>                  (1,597,594)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          632,516
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,795,406
<AVERAGE-NET-ASSETS>                         4,878,650
<PER-SHARE-NAV-BEGIN>                            12.10
<PER-SHARE-NII>                                   0.06
<PER-SHARE-GAIN-APPREC>                           2.70
<PER-SHARE-DIVIDEND>                            (0.18)
<PER-SHARE-DISTRIBUTIONS>                       (0.59)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.09
<EXPENSE-RATIO>                                   2.10
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 051
   <NAME> CONSERVATIVE INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       50,863,198
<INVESTMENTS-AT-VALUE>                      51,291,404
<RECEIVABLES>                                5,704,499
<ASSETS-OTHER>                                  96,287
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                              57,092,190
<PAYABLE-FOR-SECURITIES>                     5,404,300
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      222,489
<TOTAL-LIABILITIES>                          5,626,789
<SENIOR-EQUITY>                                     46
<PAID-IN-CAPITAL-COMMON>                    49,719,182
<SHARES-COMMON-STOCK>                        1,271,079
<SHARES-COMMON-PRIOR>                        1,551,155
<ACCUMULATED-NII-CURRENT>                      346,838
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        973,200
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       426,135
<NET-ASSETS>                                51,465,401
<DIVIDEND-INCOME>                              198,278
<INTEREST-INCOME>                            2,814,820
<OTHER-INCOME>                                       0
<EXPENSES-NET>                               (979,518)
<NET-INVESTMENT-INCOME>                      2,033,580
<REALIZED-GAINS-CURRENT>                     4,671,618
<APPREC-INCREASE-CURRENT>                    (793,910)
<NET-CHANGE-FROM-OPS>                        5,911,288
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (740,336)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        246,346
<NUMBER-OF-SHARES-REDEEMED>                  (589,043)
<SHARES-REINVESTED>                             62,621
<NET-CHANGE-IN-ASSETS>                         399,319
<ACCUMULATED-NII-PRIOR>                        498,475
<ACCUMULATED-GAINS-PRIOR>                  (3,698,418)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          387,903
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,154,375
<AVERAGE-NET-ASSETS>                        15,230,005
<PER-SHARE-NAV-BEGIN>                            10.38
<PER-SHARE-NII>                                   0.51
<PER-SHARE-GAIN-APPREC>                           0.80
<PER-SHARE-DIVIDEND>                            (0.55)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              11.14
<EXPENSE-RATIO>                                   1.40
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 052
   <NAME> CONSERVATIVE INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       50,863,198
<INVESTMENTS-AT-VALUE>                      51,291,404
<RECEIVABLES>                                5,704,499
<ASSETS-OTHER>                                  96,287
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                              57,092,190
<PAYABLE-FOR-SECURITIES>                     5,404,300
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      222,489
<TOTAL-LIABILITIES>                          5,626,789
<SENIOR-EQUITY>                                     46
<PAID-IN-CAPITAL-COMMON>                    49,719,182
<SHARES-COMMON-STOCK>                        2,828,583
<SHARES-COMMON-PRIOR>                        2,905,089
<ACCUMULATED-NII-CURRENT>                      346,838
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        973,200
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       426,135
<NET-ASSETS>                                51,465,401
<DIVIDEND-INCOME>                              198,278
<INTEREST-INCOME>                            2,814,820
<OTHER-INCOME>                                       0
<EXPENSES-NET>                               (979,518)
<NET-INVESTMENT-INCOME>                      2,033,580
<REALIZED-GAINS-CURRENT>                     4,671,618
<APPREC-INCREASE-CURRENT>                    (793,910)
<NET-CHANGE-FROM-OPS>                        5,911,288
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                  (1,250,244)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        518,473
<NUMBER-OF-SHARES-REDEEMED>                  (697,358)
<SHARES-REINVESTED>                            102,379
<NET-CHANGE-IN-ASSETS>                         399,319
<ACCUMULATED-NII-PRIOR>                        498,475
<ACCUMULATED-GAINS-PRIOR>                  (3,698,418)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          387,903
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,154,375
<AVERAGE-NET-ASSETS>                        31,670,014
<PER-SHARE-NAV-BEGIN>                            10.51
<PER-SHARE-NII>                                   0.43
<PER-SHARE-GAIN-APPREC>                           0.82
<PER-SHARE-DIVIDEND>                            (0.45)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              11.31
<EXPENSE-RATIO>                                   2.10
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 053
   <NAME> CONSERVATIVE INVESTORS FUND
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          APR-30-1996
<PERIOD-START>                             MAY-01-1995
<PERIOD-END>                               APR-30-1996
<INVESTMENTS-AT-COST>                       50,863,198
<INVESTMENTS-AT-VALUE>                      51,291,404
<RECEIVABLES>                                5,704,499
<ASSETS-OTHER>                                  96,287
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                              57,092,190
<PAYABLE-FOR-SECURITIES>                     5,404,300
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      222,489
<TOTAL-LIABILITIES>                          5,626,789
<SENIOR-EQUITY>                                     46
<PAID-IN-CAPITAL-COMMON>                    49,719,182
<SHARES-COMMON-STOCK>                          470,876
<SHARES-COMMON-PRIOR>                          420,130
<ACCUMULATED-NII-CURRENT>                      346,838
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                        973,200
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                       426,135
<NET-ASSETS>                                51,465,401
<DIVIDEND-INCOME>                              198,278
<INTEREST-INCOME>                            2,814,820
<OTHER-INCOME>                                       0
<EXPENSES-NET>                               (979,518)
<NET-INVESTMENT-INCOME>                      2,033,580
<REALIZED-GAINS-CURRENT>                     4,671,618
<APPREC-INCREASE-CURRENT>                    (793,910)
<NET-CHANGE-FROM-OPS>                        5,911,288
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                    (194,637)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        170,526
<NUMBER-OF-SHARES-REDEEMED>                  (135,782)
<SHARES-REINVESTED>                             16,002
<NET-CHANGE-IN-ASSETS>                         399,319
<ACCUMULATED-NII-PRIOR>                        498,475
<ACCUMULATED-GAINS-PRIOR>                  (3,698,418)
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                          387,903
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              1,154,375
<AVERAGE-NET-ASSETS>                         4,820,349
<PER-SHARE-NAV-BEGIN>                            10.52
<PER-SHARE-NII>                                   0.41
<PER-SHARE-GAIN-APPREC>                           0.83
<PER-SHARE-DIVIDEND>                            (0.45)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              11.31
<EXPENSE-RATIO>                                   2.10
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<PAGE>
 
                               Exhibit 99.B4(f)
                               ---------------
Alliance Capital [logo]
     Number                                                             Shares

                     Alliance Conservative Investors Fund
         CERTIFICATE FOR ADVISOR CLASS SHARES OF BENEFICIAL INTEREST,
                          PAR VALUE $0.0001 PER SHARE

ACCOUNT No.     ALPHA CODE                                               CUSIP
                                           SEE REVERSE FOR CERTAIN DEFINITIONS


THIS CERTIFIES THAT


is the registered holder of


     FULLY PAID AND NON-ASSESSABLE, ADVISOR CLASS SHARES OF BENEFICIAL INTEREST,
PAR VALUE 4.00001 PER SHARE, IN
       -- ALLIANCE CONSERVATIVE INVESTORS FUND - ADVISOR CLASS SHARES --
under, in accordance with, and subject to all the provisions of, an Agreement
and Declaration of Trust dated March 26, 1987, amended April 21, 1993, a copy of
which has been filed with the Secretary of the commonwealth of Massachusetts, to
all of which provisions, as the same may be in effect from time to time, the
holder and every transferee and assignee hereof agrees by the acceptance of this
share certificate.

          This certificate is not valid until countersigned by the Transfer 
Agent.

          IN WITNESS WHEREOF, the Trustees under said Agreement and Declaration
of Trust, acting not individually, but as such Trustees, have caused to be
affixed to this certificate the facsimile Seal of the Trust and the facsimile
signature of two duly authorized officers of the Trust, acting not individually,
but as such officers.
Dated:
[Seal of the Alliance Portfolios, 1987 Massachusetts Trust]

             /s/ Edmund P. Bergan Jr.    /s/ John D.Carifa
             Secretary                   Chairman of the Trustees

Countersigned                       TRANSFER AGENT
BY Alliance Fund Services Inc.      Authorized Signature

R. Used under license from the owner Alliance Capital Management L.P.
<PAGE>
 
                                 Exhibit 99.B4(f)
                                 ----------------
Alliance Capital [logo]
     Number                                                              Shares

                        Alliance Growth Investors Fund
         CERTIFICATE FOR ADVISOR CLASS SHARES OF BENEFICIAL INTEREST,
                          PAR VALUE $0.0001 PER SHARE

ACCOUNT No.     ALPHA CODE                                                CUSIP
                                            SEE REVERSE FOR CERTAIN DEFINITIONS


THIS CERTIFIES THAT


is the registered holder of


     FULLY PAID AND NON-ASSESSABLE, ADVISOR CLASS SHARES OF BENEFICIAL INTEREST,
PAR VALUE 4.00001 PER SHARE, IN
       ---- ALLIANCE GROWTH INVESTORS FUND - ADVISOR CLASS SHARES -----
under, in accordance with, and subject to all the provisions of, an Agreement
and Declaration of Trust dated March 26, 1987, amended April 21, 1993, a copy of
which has been filed with the Secretary of the commonwealth of Massachusetts, to
all of which provisions, as the same may be in effect from time to time, the
holder and every transferee and assignee hereof agrees by the acceptance of this
share certificate.
          This certificate is not valid until countersigned by the Transfer 
Agent.
          IN WITNESS WHEREOF, the Trustees under said Agreement and Declaration
of Trust, acting not individually, but as such Trustees, have caused to be
affixed to this certificate the facsimile Seal of the Trust and the facsimile
signature of two duly authorized officers of the Trust, acting not individually,
but as such officers.
Dated:
[Seal of the Alliance Portfolios, 1987 Massachusetts Trust]

         /s/ Edmund P. Bergan Jr.    /s/ John D. Carifa
         Secretary                   Chairman of the Trustees

Countersigned                           TRANSFER AGENT
BY Alliance Fund Services Inc.          Authorized Signature

R. Used under license from the owner Alliance Capital Management L.P.

<PAGE>
 
                                                               EXHIBIT 99.B6(a)



                        DISTRIBUTION SERVICES AGREEMENT

          AGREEMENT made as of August 2, 1993 between THE ALLIANCE PORTFOLIOS, a
Massachusetts business trust (the "Trust"), and ALLIANCE FUND DISTRIBUTORS,
INC., a Delaware corporation (the "Underwriter").

                                   WITNESSETH

          WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end management
investment company and it is in the interest of the Trust to offer its shares
for sale continuously;

          WHEREAS, the Underwriter is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through other securities dealers;

          WHEREAS, the Trust and the Underwriter wish to enter into an agreement
with each other with respect to the continuous offering of the Trust's shares in
order to promote the growth of the Trust and facilitate the distribution of its
shares;

          NOW, THEREFORE, the parties agree as follows:
 
               SECTION 1. Appointment of the Underwriter. The Trust hereby
                          ------------------------------
appoints the Underwriter as the principal underwriter and distributor of the
Trust to sell to the public Class A shares, Class B shares and Class C shares
(the Class A shares, Class B shares and Class C shares being collectively
referred to herein as the "shares") of each portfolio of the Trust represented
by a separate series (a "Fund") and hereby agrees during the term of this
Agreement to sell shares to the Underwriter upon the terms and conditions herein
set forth.

               SECTION 2. Exclusive Nature of Duties. The Underwriter shall be
                          --------------------------
the exclusive representative of the Trust to act as principal underwriter and
distributor except that the rights given under this Agreement to the Underwriter
shall not apply to shares issued in connection with (a) the merger or
consolidation of any other investment company with a Fund, (b) a Fund's
acquisition by purchase or otherwise of all or substantially all of the assets
or shares of any other investment company or (c) the reinvestment in shares by a
Fund's shareholders of dividends or other distributions.
<PAGE>
 
               SECTION 3.  Purchase of Shares from the Trust.
                           --------------------------------- 

          (a)  The Underwriter shall have the right to buy from the Trust the
shares needed to fill unconditional orders for shares of the Trust placed with
the Underwriter by investors or securities dealers, depository institutions or
other financial intermediaries acting as agent for their customers.  The price
which the Underwriter shall pay for the shares so purchased from the Trust shall
be the net asset value, determined as set forth in Section 3(d) hereof, used in
determining the public offering price on which such orders are based.

          (b)  The shares are to be resold by the Underwriter to investors at a
public offering price, as set forth in Section 3(c) hereof, or to securities
dealers, depository institutions or other financial intermediaries acting as
agent for their customers having agreements with the Underwriter upon the terms
and conditions set forth in Section 8 hereof.

          (c)  The public offering price of the shares, i.e., the price per
share at which the Underwriter or selected dealers or selected agents (each as
defined in Section 8(a) below) may sell shares to the public, shall be the
public offering price determined in accordance with the then current Prospectus
and Statement of Additional Information of the Trust (the "Prospectus" and
"Statement of Additional Information," respectively) under the Securities Act of
1933, as amended (the "Securities Act"), relating to such shares, but not to
exceed the net asset value at which the Underwriter is to purchase such shares,
plus, in the case of Class A shares, a front-end sales charge equal to a
specified percentage or percentages of the public offering price of the Class A
shares as set forth in the Prospectus.  Class A shares may be sold without such
a sales charge to certain classes of persons or in connection with certain types
of transactions as from time to time to set forth in the Prospectus and
Statement of Additional Information.  All payments to the Trust hereunder shall
be made in the manner set forth in Section 3(f) hereof.

          (d)  The net asset value of shares of the Trust shall be determined by
the Trust, or any agent of the Trust, as of the close of regular trading on the
New York Stock Exchange on each business day in accordance with the method set
forth in the Prospectus and Statement of Additional Information and guidelines
established by the Trustees of the Trust.

          (e)  The Trust reserves the right to suspend the offering of its
shares at any time in the absolute discretion of its Trustees.

          (f)  The Trust, or any agent of the Trust designated in writing to the
Underwriter by the Trust, shall be promptly 

                                      -2-
<PAGE>
 
advised by the Underwriter of all purchase orders for shares received by the
Underwriter. Any order may be rejected by the Trust. The Trust (or its agent)
will confirm orders upon their receipt, will make appropriate book entries and
upon receipt by the Trust (or its agent) of payment thereof, will deliver
deposit receipts or certificates for such shares pursuant to the instructions of
the Underwriter. Payment shall be made to the Trust in New York Clearing House
funds. The Underwriter agrees to cause such payment and such instructions to be
delivered promptly to the Trust (or its agent).


               SECTION 4.  Repurchase or Redemption of Shares by the Trust.
                           ----------------------------------------------- 

          (a)  Any of the outstanding shares may be tendered for redemption at
any time, and the Trust agrees to redeem or repurchase the shares so tendered in
accordance with its obligations as set forth in Section 2 of Article VI of its
Agreement and Declaration of Trust and in accordance with the applicable
provisions set forth in the Prospectus and Statement of Additional Information.
The price to be paid to redeem or repurchase the shares shall be equal to the
net asset value calculated in accordance with the provisions of Section 3(d)
hereof less, in the case of Class B shares, a deferred sales charge as set forth
from time to time in the Prospectus.  Class B shares that have been outstanding
for a specified period of time or purchased by certain classes of persons or in
connection with certain types of transactions may be redeemed without payment of
a deferred sales charge as from time to time set forth in the Prospectus and
Statement of Additional Information.  All payments by the Trust hereunder shall
be made in the manner set forth below.  The redemption or repurchase by the
Trust of any of the Class A shares purchased by or through the Underwriter will
not affect the sales charge secured by the Underwriter or any selected dealer or
compensation paid to any selected agent (unless such selected dealer or selected
agent has otherwise agreed with the Underwriter), in the course of the original
sale, regardless of the length of the time period between purchase by an
investor and his tendering for redemption or repurchase.

          The Trust (or its agent) shall pay the total amount of the redemption
price and, except as may be otherwise required by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. (the "NASD") and any
interpretations thereof ("NASD rules and interpretations"), the deferred sales
charges, if any, as defined in the above paragraph, pursuant to the instructions
of the Underwriter in New York Clearing House funds on or before the seventh
business day subsequent to its having received the notice of redemption in
proper form.

          (b)  Redemption of shares of a Fund or payment by a Fund may be
suspended at times when the New York Stock Exchange 

                                      -3-
<PAGE>
 
is closed, when trading thereon is closed, when trading thereon is restricted,
when an emergency exists as a result of which disposal by such Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of such Fund's net
assets, or during any other period when the Securities and Exchange Commission,
by order, so permits.

               SECTION 5.  Distribution Services Fees and Service Fees.
                           ------------------------------------------- 

          (a) For its services as distributor of a Fund's Class A shares, the
Distributor shall also receive from the Fund a service fee and a distribution
services fee at the annual rates of .25% and .05%, respectively, of a Fund's
average daily net assets attributable to its Class A shares, subject to the
terms and conditions set forth in the Distribution Plan attached as Exhibit A
hereto, as amended from time to time. For its services as distributor of a
Fund's Class B shares, the Distributor shall also receive from the Fund a
service fee and a distribution services fee at the annual rates of .25% and
 .75%, respectively, of a Fund's average daily net assets attributable to its
Class B shares, subject to the other terms and conditions set forth in the
Distribution Plan attached as Exhibit B hereto, as amended from time to time.
For its services as distributor of a Fund's Class C shares, the Distributor
shall receive from the Fund a service fee and a distribution services fee at the
annual rates of .25% and .75%, respectively, of a Fund's average daily net
assets attributable to its Class C shares, subject to the other terms and
conditions set forth in the Distribution Plan attached as Exhibit C hereto, as
amended from time to time. The respective service fees and distribution services
fees applicable to a Fund's Class A shares, Class B shares and Class C shares
shall be accrued daily and paid monthly.

               SECTION 6.  Duties of the Trust.
                           ------------------- 

          (a)  The Trust shall furnish to the Underwriter copies of all
information, financial statements and other papers that the Underwriter may
reasonably request for use in connection with the distribution of shares of the
Trust, and this shall include one certified copy, upon request by the
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.  The Trust shall make available to the Underwriter such
number of copies of the Prospectus as the Underwriter shall reasonably request.

          (b)  The Trust shall register the shares under the Securities Act, to
the end that there will be available for sale such number of shares of each Fund
as the Underwriter reasonably may be expected to sell.

                                      -4-
<PAGE>
 
          (c)  The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of shares of each Fund under the
securities laws of such states of the United States or other jurisdictions as
the Underwriter and the Trust may approve.  Any such qualification may be
withheld, terminated or withdrawn by the Trust at any time in its discretion.
As provided in Section 9(b) hereof, the expense of qualification and maintenance
of qualification shall be borne by the Trust.  The Underwriter shall furnish
such information and other material relating to its affairs and activities as
may be required by the Trust in connection with such qualification.

          (d)  The Trust will furnish, in reasonable quantities upon request by
the Underwriter, copies of annual and interim reports of the Trust.

               SECTION 7.  Duties of the Underwriter.
                           ------------------------- 

          (a) The Underwriter shall devote reasonable time and effort to effect
sales of shares of the Trust, but shall not be obligated to sell any specific
number of shares. The services of the Underwriter to the Trust hereunder are not
to be deemed exclusive and nothing in this Agreement shall prevent the
Underwriter from entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not impaired thereby.

          (b)  In selling shares of the Trust, the Underwriter shall use its
best efforts in all material respects duly to conform with the requirements of
all federal and state laws relating to the sale of such securities.  Neither the
Underwriter, any selected dealer, any selected agent nor any other person is
authorized by the Trust to give any information or to make any representations,
other than those contained in the Trust's Registration Statement (the
"Registration Statement"), as amended from time to time, under the Securities
Act and the Investment Company Act or the Prospectus and Statement of Additional
Information or any sales literature specifically approved in writing by the
Trust.

          (c)  The Underwriter shall adopt and follow procedures, as approved by
the officers of the Trust, for the confirmation of sales to investors and
selected dealers, the collection of amounts payable by investors and selected
dealers on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD, as such requirements may
from time to time exist.

               SECTION 8.  Selected Dealer and Agent Agreements.
                           ------------------------------------ 

          (a)  The Underwriter shall have the right to enter into selected
dealer agreements with securities dealers of its choice 

                                      -5-
<PAGE>
 
("selected dealers") and selected agent agreements with depository institutions
and other financial intermediaries of its choice ("selected agents") for the
sale of shares and fix therein the portion of the sales charge that may be
allocated to the selected dealers and selected agents; provided, that the Trust
shall approve the forms of agreements with selected dealers and selected agents
and the selected dealer and selected agent compensation set forth therein and
shall evidence such approval by filing said forms and amendments thereto as
exhibits to its Registration Statement. Shares sold to selected dealers or
through selected agents shall be for resale by such selected dealers and
selected agents only at the public offering price set forth in the Prospectus
and Statement of Additional Information.

          (b)  Within the United States, the Underwriter shall offer and sell
shares only to such selected dealers as are members in good standing of the
NASD.

               SECTION 9.  Payment of Expenses.
                           ------------------- 

          (a)  The Trust shall bear all costs and expenses of the Trust,
including fees and disbursements of its counsel and auditors, in connection with
the preparation and filing of its Registration Statement and Prospectus and
Statement of Additional Information, and all amendments and supplements thereto,
and preparing and mailing annual and interim reports and proxy materials to
shareholders (including but not limited to the expense of setting in type any
such registration statements, prospectuses, annual or interim reports or proxy
materials).

          (b)  The Trust shall bear the cost of expenses of qualification of
shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Trust as an issuer or as a broker or dealer, in such states of
the United States or other jurisdictions as shall be selected by the Trust and
the Underwriter pursuant to Section 6(c) hereof and the cost and expenses
payable to each such state or jurisdiction for continuing qualification therein
until the Trust decides to discontinue such qualification pursuant to Section
6(c) hereof.
        
               SECTION 10.  Indemnification.
                            --------------- 

          (a)  The Trust agrees to indemnify, defend and hold the Underwriter,
and any person who controls the Underwriter within the meaning of Section 15 of
the Securities Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which the Underwriter or any such controlling person may
incur, under the Securities Act, or under common law or otherwise, arising out
of or based upon any alleged untrue statement of a material fact contained in
the 

                                      -6-
<PAGE>
 
Trust's Registration Statement, Prospectus or Statement of Additional 
Information in effect from time to time under the Securities Act or arising out
of or based upon any alleged omission to state a material fact required to be
stated in any one thereof or necessary to make the statements in any one thereof
not misleading; provided, however, that in no event shall anything herein
contained be so construed as to protect the Underwriter against any liability to
the Trust or its security holders to which the Underwriter would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of the Underwriter's reckless disregard
of its obligations and duties under this Agreement.  The Trust's agreement to
indemnify the Underwriter and any such controlling person as aforesaid is
expressly conditioned upon the Trust's being notified of the commencement of any
action brought against the Underwriter or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office in New York, New York, and sent to the Trust by the person
against whom such action is brought within ten days after the summons or other
first legal process shall have been served.  The failure to so notify the Trust
of the commencement of any such action shall not relieve the Trust from any
liability which it may have to the person against whom such action is brought by
reason of any such alleged untrue statement or omission otherwise than on
account of the indemnity agreement contained in this Section 10.  The Trust will
be entitled to assume the defense of any suit brought to enforce any such claim,
and to retain counsel of good standing chosen by the Trust and approved by the
Underwriter.  In the event the Trust does not elect to assume the defense of any
such suit and retain counsel of good standing approved by the Underwriter, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them, but in case the Trust does not elect
to assume the defense of any such suit, or in case the Underwriter does not
approve of counsel chosen by the Trust, the Trust will reimburse the Underwriter
or the controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by the Underwriter or
such persons. The indemnification agreement contained in this Section 10 shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person and shall
survive the sale of any of the Trust's shares made pursuant to subscriptions
obtained by the Underwriter. This agreement of indemnity will inure exclusively
to the benefit of the Underwriter, to the benefit of its successors and assigns,
and to the benefit of any controlling persons and their successors and assigns.
The Trust agrees promptly to notify the Underwriter of the commencement of any
litigation or proceeding against the Trust in connection with the issue and sale
of any of its shares.

                                      -7-
<PAGE>
 
          (b)  The Underwriter agrees to indemnify, defend and hold the Trust,
its several officers and Trustees, and any person who controls the Trust within
the meaning of Section 15 of the Securities Act, free and harmless from and
against any and all claims, demands, liabilities, and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its officers or
Trustees, or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Trust, its officers, Trustees or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Underwriter or any affiliate thereof to the Trust for use in
its Registration Statement, Prospectus or Statement of Additional Information in
effect from time to time under the Securities Act, or shall arise out of or be
based upon any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement, Prospectus or
Statement of Additional Information or necessary to make such information not
misleading.  The Underwriter's agreement to indemnify the Trust, its officers
and Trustees, and any such controlling person as aforesaid is expressly
conditioned upon the Underwriter being notified of the commencement of any
action brought against the Trust, its officers or Trustees or any such
controlling person, such notification to be given by letter or telegram
addressed to the Underwriter at its principal office in New York, and sent to
the Underwriter by the person against whom such action is brought, within ten
days after the summons or other first legal process shall have been served. The
failure so to notify the Underwriter of the commencement of any such action
shall not relieve the Underwriter from any liability which it may have to the
Trust, to its officers and Trustees, or to such controlling person by reason of
any such untrue statement or omission on the part of the Underwriter otherwise
than on account of the indemnity agreement contained in this Section 10.  The
Underwriter shall have a right to control the defense of such action, with
counsel of good standing of its own choosing, satisfactory to the Trust, if such
action is based solely upon such alleged misstatement or omission on its part,
and in any other event the Underwriter and the Trust, and their officers and
directors and Trustees, and such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such action.
The indemnification agreement contained in this Section 10 shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Trust, its several officers and Trustees or any controlling
person and shall survive the sale of any of the Trust's shares made pursuant to
subscriptions obtained by the Underwriter.  This agreement of indemnity will 
inure exclusively to the benefit of the Trust, to the benefit of its successors 
and assigns, and to the benefit of 

                                      -8-
<PAGE>
 
any of the Trust's officers, Trustees or controlling persons and their
successors and assigns. The Underwriter agrees promptly to notify the Trust of
the commencement of any litigation or proceeding against the Underwriter in
connection with the issue and sale of any of the Trust's shares.


               SECTION 11.  Notification by the Trust.
                            ------------------------- 

               The Trust agrees to  advise the Underwriter immediately:

                   (a) of any request by the Securities and Exchange Commission
               for amendments to the Trust's Registration Statement, Prospectus
               or Statement of Additional Information or for additional
               information,

                   (b) in the event of the issuance by the Securities and
               Exchange Commission of any stop order suspending the
               effectiveness of the Trust's Registration Statement, Prospectus
               or Statement of Additional Information or the initiation of any
               proceeding for that purpose,

                   (c) of the happening of any material event which makes untrue
               any statement made in the Trust's Registration Statement,
               Prospectus or Statement of Additional Information or which
               requires the making of a change in any one thereof in order to
               make the statements therein not misleading, and

                   (d) of all actions of the Securities and Exchange Commission
               with respect to any amendments to the Trust's Registration
               Statement, Prospectus or Statement of Additional Information
               which may from time to time be filed with the Securities and
               Exchange commission under the Securities Act.

               SECTION 12.  Term of Agreement.
                            ----------------- 

               (a)  This Agreement shall become effective on the date hereof and
shall continue in effect until two years from the date of its execution, and
thereafter for successive twelve-month periods with respect to each class and
Fund; provided, however, that such continuance is specifically approved at least
annually by the Trustees of the Trust or by vote of the holders of a majority of
the outstanding voting securities (as defined in the Investment Company Act) of
that class or Fund, and, in either case, by a majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons, as defined in
the Investment Company Act, of any such party (other than as Trustees of the
Trust) and who have no direct or indirect financial interest in the operation of
the Distribution Plans 

                                      -9-
<PAGE>
 
referred to in Section 5 or any agreement related thereto; provided further,
however, that if the continuation of this Agreement is not approved as to any
class or Fund, the Underwriter may continue to render to such class or Fund the
services described herein in the manner and to the extent permitted by the
Investment Company Act and the rules and regulations thereunder. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof. This Agreement
may be terminated (i) by the Trust with respect to any class or Fund at any
time, without the payment of any penalty, by the vote of a majority of the
outstanding voting securities (as so defined) of such class or Fund, or by a
vote of a majority of the Trustees of the Trust who are not interested persons,
as defined in the Investment Company Act, of the Trust (other than as Trustees
of the Trust) and have no direct or indirect financial interest in the operation
of the Distribution Plans referred to in Section 5 or any agreement related
thereto, in any such event on sixty days' written notice to the Underwriter, or
(ii) by the Underwriter with respect to any class or Fund on sixty days' written
notice to the Trust.

               (b) This Agreement may be amended at any time with the approval
of the Trustees of the Trust, provided that any material amendments of the terms
hereof will become effective only upon approval as provided in the first proviso
of the first sentence of Section 12(a) hereof.

               SECTION 13. No Assignment. This Agreement may not be transferred,
                           -------------
assigned, sold or in any manner hypothecated or pledged by either party hereto
and this Agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge. The terms "transfer",
"assignment", and "sale" as used in this paragraph shall have the meanings
ascribed thereto by governing law and any interpretation thereof contained in
rules or regulations promulgated by the Securities and Exchange Commission
thereunder.

               SECTION 14. Notices. Any notice required or permitted to be given
                           -------
hereunder by either party to the other shall be deemed sufficiently given if
sent by registered mail, postage prepaid, addressed by the party giving such
notice to the other party at the last address furnished by such other party to
the party giving notice, and unless and until changed pursuant to the foregoing
provisions hereof addressed to the Trust or the Underwriter.

               SECTION 15. Governing Law. The provisions of this Agreement shall
                           -------------
be, to the extent applicable, construed and interpreted in accordance with the
laws of the State of New York.

                                      -10-
<PAGE>
 
               SECTION 16. Notice. A copy of the Agreement and Declaration of
                           ------
Trust of the Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually, and that
the obligations of or arising out of this instrument are not binding upon any of
the Trustees or shareholders individually but are binding only upon the assets
and property of each of the respective Funds.

               SECTION 17. Separate Agreements. The Trust, on behalf of each
                           -------------------
Fund, shall be deemed to have entered into a wholly separate Agreement relating
exclusively to each such Fund. Any amendment to or termination of this Agreement
explicitly relating to one or more Funds shall have no affect on, and shall not
be considered to amend or terminate this Agreement with respect to, any other
Fund.

                                      -11-
<PAGE>
 
          IN WITNESS WHEREOF, the parties have executed this Agreement.

                                           THE ALLIANCE PORTFOLIOS



                                           By
                                             ____________________________


                                           ALLIANCE FUND DISTRIBUTORS,
                                             INC.


                                           By
                                             ____________________________

                                      -12-
<PAGE>
 


                                  AMENDMENT TO
                        DISTRIBUTION SERVICES AGREEMENT

     AMENDMENT made this [      ] day of [           ], 1996 between THE
ALLIANCE PORTFOLIOS, a Massachusetts business trust (the "Fund"), and ALLIANCE
FUND DISTRIBUTORS INC., a Delaware corporation (the "Underwriter").

                                  WITNESSETH:

     WHEREAS, the Fund and the Underwriter wish to amend the Distribution
Services Agreement dated as of [                 ] (the "Agreement) in the
manner set forth herein;

     NOW, THEREFORE, the parties agree as follows:

     1.  Amendment of Agreement.  Section 1 and the first full paragraph of
         ----------------------                                            
Section 4(a) of the Agreement are hereby amended and restated to read as
follows:

          Section 1.  Appointment of Underwriter.  "The Fund hereby appoints the
                      --------------------------                                
     Underwriter as the principal underwriter and distributor of the Fund to
     sell the public shares of its Class A Common Stock (the "Class A shares"),
     Class B Common Stock (the "Class B shares"), Class C Common Stock (the
     "Class C shares"), Advisor Class Common Stock (the "Advisor Class shares"),
     and shares of such other class or classes as the Fund and the Underwriter
     shall from time to time mutually agree shall become subject to the
     Agreement ("New shares"), (the Class A shares, Class B shares, Class C
     shares, Advisor Class shares, and New shares shall be collectively referred
     to herein as the "shares") and hereby agrees during the term of this
     Agreement to sell shares to the Underwriter upon the terms and conditions
     set forth herein."

          Section 4(a).  "Any of the outstanding shares may be tendered for
     redemption at any time, and the Fund agrees to redeem or repurchase the
     shares so tendered in accordance with its obligations as set forth in its
     [constituent document] and in accordance with the applicable provisions set
     forth in the Prospectus and Statement of Additional Information.  The price
     to be paid to redeem or repurchase the shares shall be equal to the net
     asset value calculated in accordance with the provisions of Section 3(c)
     hereof, less any applicable sales charge.  All payments by the Fund
     hereunder shall be made in the manner set forth below.  The redemption or
     repurchase by the Fund of any of the Class A shares purchased by or through
     the Underwriter will not effect the initial sales charge secured by the
     Underwriter or any selected dealer or compensation paid to any selected

                                     -13-
<PAGE>
 
     agent (unless such selected dealer or selected agent has otherwise agreed
     with the Underwriter), in the course of the original sale, regardless of
     the length of the time period between the purchase by an investor and his
     tendering for redemption or repurchase."

     2.  Class References.  Any and all references in the Agreement to "Class Y
         ----------------                                                      
shares" are hereby amended to read "Advisor Class shares."

     3.  No Other Changes.  Except as provided herein, the Agreement shall be
         ----------------                                                    
unaffected hereby.

     4.  Notice.  A copy of the Agreement and Declaration of Trust of the Trust
         ------                                                                
is on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
each of the respective Funds.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Agreement.

                              THE ALLIANCE PORTFOLIOS


                              By:_______________________________


                              ALLIANCE FUND DISTRIBUTORS INC.


                              By:_______________________________

                                       
                                     -14-

<PAGE>
 
                                                                   EXHIBIT 99.B8


                              CUSTODIAN CONTRACT
                                    Between
                            THE ALLIANCE PORTFOLIOS
                                      and
                      STATE STREET BANK AND TRUST COMPANY



Global/Series/Trust
21E593
<PAGE>
 
                              CUSTODIAN CONTRACT
                              ------------------


          This Contract between The Alliance Portfolios, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at 135 West 50th Street, New York, New York 10020, hereinafter
called the "Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",


                                  WITNESSETH:

          WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and

          WHEREAS, the Fund intends to initially offer shares in four series,
the Alliance Balanced Fund, Alliance Government Fund, Alliance Growth Fund and
Alliance Tax-Exempt Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");

          NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:


1.        Employment of Custodian and Property to be Held by It
          -----------------------------------------------------

     The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic  securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust.  The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time.  The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.

     Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the 

                                       1
<PAGE>
 
Board of Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(s) the foreign banking institutions and
foreign securities depositories designated in Schedule A hereto but only in
accordance with the provisions of Article 3.

2.   Duties of the Custodian with Respect to Property of the Fund Held By the
     ------------------------------------------------------------------------
     Custodian in the United States
     ------------------------------

2.1  Holding Securities.  The Custodian shall hold and physically segregate for
     ------------------                                                        
     the account of each Portfolio all non-cash property, to be held by it in
     the United States including all domestic securities owned by such
     Portfolio, other than (a) securities which are maintained pursuant to
     Section 2.10 in a clearing agency which acts as a securities depository or
     in a book-entry system authorized by the U.S. Department of the Treasury,
     collectively referred to herein as "Securities System" and (b) commercial
     paper of an issuer for which State Street Bank and Trust Company acts as
     issuing and paying agent ("Direct Paper") which is deposited and/or
     maintained in the Direct Paper System of the Custodian pursuant to Section
     2.10A.  The Custodian shall maintain records of all receipts, deliveries
     and locations of such securities, together with a current inventory
     thereof, and shall conduct periodic physical inspections of certificates
     representing bonds and other securities held by it under this Agreement in
     such manner as the Custodian shall determine from time to time to be
     advisable in order to verify the accuracy of such inventory.  The Custodian
     will promptly report to the Trust the results of such inspections,
     indicating any shortages or discrepancies uncovered thereby, and take
     appropriate action to remedy any such shortages or discrepancies.

2.2  Delivery of Securities.  The Custodian shall release and deliver domestic
     ----------------------                                                   
     securities owned by a Portfolio held by the Custodian or in a Securities
     System account of the Custodian or in the Custodian's Direct Paper book
     entry system account ("Direct Paper System Account") only upon receipt of
     Proper Instructions from the Fund on behalf of the applicable Portfolio,
     which may be continuing instructions when deemed appropriate by the
     parties, and only in the following cases:

     1)   Upon sale of such securities for the account of the Portfolio and
          receipt of payment therefor;

     2)   Upon the receipt of payment in connection with any repurchase
          agreement related to such securities entered into by the Portfolio;

                                       2
<PAGE>
 
     3)   In the case of a sale effected through a Securities System, in
          accordance with the provisions of Section 2.10 hereof;

     4)   To the depository agent in connection with tender or other similar
          offers for securities of the Portfolio;

     5)   To the issuer thereof or its agent when such securities are called,
          redeemed, retired or otherwise become payable; provided that, in any
          such case, the cash or other consideration is to be delivered to the
          Custodian;

     6)   To the issuer thereof, or its agent, for transfer into the name of the
          Portfolio or into the name of any nominee or nominees of the Custodian
          or into the name or nominee name of any agent appointed pursuant to
          Section 2.9 or into the name or nominee name of any sub-custodian
          appointed pursuant to Article 1; or for exchange for a different
          number of bonds, certificates or other evidence representing the same
          aggregate face amount or number of units; provided that, in any such
                                                    --------                  
          case, the new securities are to be delivered to the Custodian;

     7)   Upon the sale of such securities for the account of the Portfolio, to
          the broker or its clearing agent, against a receipt, for examination
          in accordance with "street delivery" custom; provided that in any such
          case, the Custodian shall have no responsibility or liability for any
          loss arising from the delivery of such securities prior to receiving
          payment for such securities except as may arise from the Custodian's
          own negligence or willful misconduct;

     8)   For exchange or conversion pursuant to any plan of merger,
          consolidation, recapitalization, reorganization or readjustment of the
          securities of the issuer of such securities, or pursuant to provisions
          for conversion contained in such securities, or pursuant to any
          deposit agreement; provided that, in any such case, the new securities
          and cash, if any, are to be delivered to the Custodian;

     9)   In the case of warrants, rights or similar securities, the surrender
          thereof in the exercise of such warrants, rights or similar securities
          or the surrender of interim receipts or temporary securities for
          definitive securities; provided that, in any such case, the new
          securities and cash, if any, are to be delivered to the Custodian;

     10)  For delivery in connection with any loans of securities made by the
          Portfolio, but only against receipt of adequate collateral as agreed
                     --- ----                                                 
          upon from time to time by the Custodian and the Fund on behalf of the
          Portfolio, which may be in the form of cash or obligations issued by
          the United States government, its agencies or instrumentalities,
          except that in connection with any loans for which collateral is 

                                       3
<PAGE>
 
          to be credited to the Custodian's account in the book-entry system
          authorized by the U.S. Department of the Treasury, the Custodian will
          not be held liable or responsible for the delivery of securities owned
          by the Portfolio prior to the receipt of such collateral;

     11)  For delivery as security in connection with any borrowings by the Fund
          on behalf of the Portfolio requiring a pledge of assets by the Fund on
          behalf of the Portfolio, but only against receipt of amounts borrowed;
                                   --- ----                                     

     12)  For delivery in accordance with the provisions of any agreement among
          the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
          registered under the Securities Exchange Act of 1934 (the "Exchange
          Act") and a member of The National Association of Securities Dealers,
          Inc. ("NASD"), relating to compliance with the rules of The Options
          Clearing Corporation and of any registered national securities
          exchange, or of any similar organization or organizations, regarding
          escrow or other arrangements in connection with transactions by the
          Portfolio of the Fund;

     13)  For delivery in accordance with the provisions of any agreement among
          the Fund on behalf of the Portfolio, the Custodian, and a Futures
          Commission Merchant registered under the Commodity Exchange Act,
          relating to compliance with the rules of the Commodity Futures Trading
          Commission and/or any Contract Market, or any similar organization or
          organizations, regarding account deposits in connection with
          transactions by the Portfolio of the Fund;

     14)  Upon receipt of instructions from the transfer agent ("Transfer
          Agent") for the Fund, for delivery to such Transfer Agent or to the
          holders of shares in connection with distributions in kind, as may be
          described from time to time in the currently effective prospectus and
          statement of additional information of the Fund, related to the
          Portfolio ("Prospectus"), in satisfaction of requests by holders of
          Shares for repurchase or redemption; and

     15)  For any other proper corporate purpose, but only upon receipt of, in
                                                  --- ----                    
          addition to Proper Instructions from the Fund on behalf of the
          applicable Portfolio, a certified copy of a resolution of the Board of
          Trustees or of the Executive Committee signed by an officer of the
          Fund and certified by the Secretary or an Assistant Secretary,
          specifying the securities of the Portfolio to be delivered, setting
          forth the purpose for which such delivery is to be made, declaring
          such purpose to be a proper corporate purpose, and naming the person
          or persons to whom delivery of such securities shall be made.

                                       4
<PAGE>
 
2.3  Registration of Securities.  Domestic securities held by the Custodian
     --------------------------                                            
     (other than bearer securities) shall be registered in the name of the
     Portfolio or in the name of any nominee of the Fund on behalf of the
     Portfolio or of any nominee of the Custodian which nominee shall be
     assigned exclusively to the Portfolio, unless the Fund has authorized in
                                            ------                           
     writing the appointment of a nominee to  be used in common with other
     registered investment companies having the same investment adviser as the
     Portfolio, or in the name or nominee name of any agent appointed pursuant
     to Section 2.9 or in the name or nominee name of any sub-custodian
     appointed pursuant to Article 1.  All securities accepted by the Custodian
     on behalf of the Portfolio under the terms of this Contract shall be in
     "street name" or other good delivery form.

2.4  Bank Accounts.  The Custodian shall open and maintain a separate bank
     -------------                                                        
     account or accounts in the United States in the name of each Portfolio of
     the Fund, subject only to draft or order by the Custodian acting pursuant
     to the terms of this Contract, and shall hold in such account or accounts,
     subject to the provisions hereof, all cash received by it from or for the
     account of the Portfolio, other than cash maintained by the Portfolio in a
     bank account established and used in accordance with Rule 17f-3 under the
     Investment Company Act of 1940.  Funds held by the Custodian for a
     Portfolio may be deposited by it to its credit as Custodian in the Banking
     Department of the Custodian or in such other banks or trust companies as it
     may in its discretion deem necessary or desirable; provided, however, that
                                                        --------               
     every such bank or trust company shall be qualified to act as a custodian
     under the Investment Company Act of 1940 and that each such bank or trust
     company and the funds to be deposited with each such bank or trust company
     shall on behalf of each applicable Portfolio be approved by vote of a
     majority of the Board of Trustees of the Fund.  Such funds shall be
     deposited by the Custodian in its capacity as Custodian and shall be
     withdrawable by the Custodian only in that capacity.

2.5  Availability of Federal Funds.  Upon mutual agreement between the Fund on
     -----------------------------                                            
     behalf of each applicable Portfolio and the Custodian, the Custodian shall,
     upon the receipt of Proper Instructions from the Fund on behalf of a
     Portfolio, make federal funds available to such Portfolio as of specified
     times agreed upon from time to time by the Fund and the Custodian in the
     amount of checks received in payment for Shares of such Portfolio which are
     deposited into the Portfolio's account.

2.6  Collection of Income. The Custodian shall collect on a timely basis all
     --------------------                                                   
     income and other payments with respect to registered domestic securities
     held hereunder to which each Portfolio shall be entitled either by law or
     pursuant to custom in the securities business, and shall collect on a
     timely basis all income and other payments with respect to bearer domestic
     securities if, on the date of payment by the issuer, such securities are
     held by the Custodian or its agent thereof and shall credit such income, as
     collected, to such Portfolio's custodian account.  Without limiting the
     generality of the foregoing, the Custodian shall detach and present for
     payment all coupons and other income items 

                                       5
<PAGE>
 
     requiring presentation as and when they become due and shall collect
     interest when due on securities held hereunder. Income due each Portfolio
     on securities loaned pursuant to the provisions of Section 2.2 (10) shall
     be the responsibility of the Fund. The Custodian will have no duty or
     responsibility in connection therewith, other than to provide the Fund with
     such information or data as may be necessary to assist the Fund in
     arranging for the timely delivery to the Custodian of the income to which
     the Portfolio is properly entitled.

2.7  Payment of Fund Monies.  Upon receipt of Proper Instructions from the Fund
     ----------------------                                                    
     on behalf of the applicable Portfolio, which may be continuing instructions
     when deemed appropriate by the parties, the Custodian shall pay out monies
     of a Portfolio in the following cases only:

     1)   Upon the purchase of domestic securities, options, futures contracts
          or options on futures contracts for the account of the Portfolio but
          only (a) against the delivery of such securities or evidence of title
          to such options, futures contracts or options on futures contracts to
          the Custodian (or any bank, banking firm or trust company doing
          business in the United States or abroad which is qualified under the
          Investment Company Act of 1940, as amended, to act as a custodian and
          has been designated by the Custodian as its agent for this purpose)
          registered in the name of the Portfolio or in the name of a nominee of
          the Custodian referred to in Section 2.3 hereof or in proper form for
          transfer; (b) in the case of a purchase effected through a Securities
          System, in accordance with the conditions set forth in Section 2.10
          hereof; or (c) in the case of a purchase involving the Direct Paper
          System, in accordance with the conditions set forth in Section 2.10A;
          or (d) in the case of repurchase agreements entered into between the
          Fund on behalf of the Portfolio and an entity other than the
          Custodian, against delivery of the securities either in certificate
          form or through an entry crediting such securities to a segregated,
          nonproprietary account of the Custodian maintained with the Federal
          Reserve Bank of Boston; or (e) in the case of repurchase agreements
          entered into between the Fund on behalf of the Portfolio and the
          Custodian, against delivery of the receipt evidencing purchase by the
          Portfolio of securities owned by the Custodian, physical segregation
          by the Custodian of any such securities which are in certificate form
          from other securities held by the Custodian for its own account,
          transfer of any such securities which are uncertificated to a
          segregated, nonproprietary account of the Custodian maintained with
          the Federal Reserve Bank of Boston and with written evidence of the
          agreement by the Custodian to repurchase such securities from the
          Portfolio;

     2)   In connection with conversion, exchange or surrender of securities
          owned by the Portfolio as set forth in Section 2.2 hereof;

                                       6
<PAGE>
 
     3)   For the redemption or repurchase of Shares issued by the Portfolio as
          set forth in Article 4 hereof;

     4)   For the payment of any expense or liability incurred by the Portfolio,
          including but not limited to the following payments for the account of
          the Portfolio:  interest, taxes, management, accounting, transfer
          agent and legal fees, and operating expenses of the Fund whether or
          not such expenses are to be in whole or part capitalized or treated as
          deferred expenses;

     5)   For the payment of any dividends on Shares of the Portfolio declared
          pursuant to the governing documents of the Fund;

     6)   For payment of the amount of dividends received in respect of
          securities sold short;

     7)   For any other proper purpose, but only upon receipt of, in addition to
                                        --- ----                                
          Proper Instructions from the Fund on behalf of the Portfolio, a
          certified copy of a resolution of the Board of Trustees or of the
          Executive Committee of the Fund signed by an officer of the Fund and
          certified by its Secretary or an Assistant Secretary, specifying the
          amount of such payment, setting forth the purpose for which such
          payment is to be made, declaring such purpose to be a proper purpose,
          and naming the person or persons to whom such payment is to be made.

2.8  Liability for Payment in Advance of Receipt of Securities Purchased. In any
     --------------------------------------------------------- ---------        
     and every case where payment for purchase of domestic securities for the
     account of a Portfolio is made by the Custodian in advance of receipt of
     the securities purchased in the absence of specific written instructions
     from the Fund on behalf of such Portfolio to so pay in advance, the
     Custodian shall be absolutely liable to the Fund for such securities to the
     same extent as if the securities had been received by the Custodian, except
     that in the case of repurchase agreements entered into by the Fund with a
     bank which is a member of the Federal Reserve System, the Custodian may
     transfer funds to the account of such bank prior to the receipt of written
     evidence that the securities subject to such repurchase agreement have been
     transferred by book entry into a segregated nonproprietary account of the
     Custodian maintained with the Federal Reserve Bank of Boston or of the
     safekeeping receipt, provided that such securities have in fact been so
     transferred by book entry.

2.9  Appointment of Agents.  The Custodian may at any time or times in its
     ---------------------                                                
     discretion appoint (and may at any time remove) any other bank or trust
     company which is itself qualified under the Investment Company Act of 1940,
     as amended, to act as a custodian, as its agent to carry out such of the
     provisions of this Article 2 as the Custodian may from time 

                                       7
<PAGE>
 
     to time direct; provided, however, that the appointment of any agent shall
     not relieve the Custodian of its responsibilities or liabilities hereunder.

2.10 Deposit of Fund Assets in Securities Systems.  The Custodian may deposit
     --------------------------------------------                            
     and/or maintain securities owned by a Portfolio in a clearing agency
     registered with the Securities and Exchange Commission under Section 17A of
     the Securities Exchange Act of 1934, which acts as a securities depository,
     or in the book-entry system authorized by the U.S. Department of the
     Treasury and certain federal agencies, collectively referred to herein as
     "Securities System" in accordance with applicable Federal Reserve Board and
     Securities and Exchange Commission rules and regulations, if any, and
     subject to the following provisions:

     1)   The Custodian may keep securities of the Portfolio in a Securities
          System provided that such securities are represented in an account
          ("Account") of the Custodian in the Securities System which shall not
          include any assets of the Custodian other than assets held as a
          fiduciary, custodian or otherwise for customers;

     2)   The records of the Custodian with respect to securities of the
          Portfolio which are maintained in a Securities System shall identify
          by book-entry those securities belonging to the Portfolio;

     3)   The Custodian shall pay for securities purchased for the account of
          the Portfolio upon (i) receipt of advice from the Securities System
          that such securities have been transferred to the Account, and (ii)
          the making of an entry on the records of the Custodian to reflect such
          payment and transfer for the account of the Portfolio.  The Custodian
          shall transfer securities sold for the account of the Portfolio upon
          (i) receipt of advice from the Securities System that payment for such
          securities has been transferred to the Account, and (ii) the making of
          an entry on the records of the Custodian to reflect such transfer and
          payment for the account of the Portfolio.  Copies of all advices from
          the Securities System of transfers of securities for the account of
          the Portfolio shall identify the Portfolio, be maintained for the
          Portfolio by the Custodian and be provided to the Fund at its request.
          Upon request, the Custodian shall furnish the Fund on behalf of the
          Portfolio confirmation of each transfer to or from the account of the
          Portfolio in the form of a written advice or notice and shall furnish
          to the Fund on behalf of the Portfolio copies of daily transaction
          sheets reflecting each day's transactions in the Securities System for
          the account of the Portfolio;

     4)   The Custodian shall provide the Fund for the Portfolio with any report
          obtained by the Custodian on the Securities System's accounting
          system, internal 

                                       8
<PAGE>
 
          accounting control and procedures for safeguarding securities
          deposited in the Securities System;

     5)   The Custodian shall have received from the Fund on behalf of the
          Portfolio the initial or annual certificate, as the case may be,
          required by Article 14 hereof;

     6)   Anything to the contrary in this Contract notwithstanding, the
          Custodian shall be liable to the Fund for the benefit of the Portfolio
          for any loss or damage to the Portfolio resulting from use of the
          Securities System by reason of any negligence, misfeasance or
          misconduct of the Custodian or any of its agents or of any of its or
          their employees or from failure of the Custodian or any such agent to
          enforce effectively such rights as it may have against the Securities
          System; at the election of the Fund, it shall be entitled to be
          subrogated to the rights of the Custodian with respect to any claim
          against the Securities System or any other person which the Custodian
          may have as a consequence of any such loss or damage if and to the
          extent that the Portfolio has not been made whole for any such loss or
          damage.

2.10A  Fund Assets Held in the Custodian's Direct Paper System.  The Custodian
       --------------------------------------------------------               
       may deposit and/or maintain securities owned by a Portfolio in the Direct
       Paper System of the Custodian subject to the following provisions:

     1)   No transaction relating to securities in the Direct Paper System will
          be effected in the absence of Proper Instructions from the Fund on
          behalf of the Portfolio;

     2)   The Custodian may keep securities of the Portfolio in the Direct Paper
          System only if such securities are represented in an account
          ("Account") of the Custodian in the Direct Paper System which shall
          not include any assets of the Custodian other than assets held as a
          fiduciary, custodian or otherwise for customers;

     3)   The records of the Custodian with respect to securities of the
          Portfolio which are maintained in the Direct Paper System shall
          identify by book-entry those securities belonging to the Portfolio;

     4)   The Custodian shall pay for securities purchased for the account of
          the Portfolio upon the making of an entry on the records of the
          Custodian to reflect such payment and transfer of securities to the
          account of the Portfolio.  The Custodian shall transfer securities
          sold for the account of the Portfolio upon the making of an entry on
          the records of the Custodian to reflect such transfer and receipt of
          payment for the account of the Portfolio;

     5)   The Custodian shall furnish the Fund on behalf of the Portfolio
          confirmation of each transfer to or from the account of the Portfolio,
          in the form of a written 

                                       9
<PAGE>
 
          advice or notice, of Direct Paper on the next business day following
          such transfer and shall furnish to the Fund on behalf of the Portfolio
          copies of daily transaction sheets reflecting each day's transaction
          in the Securities System for the account of the Portfolio;

     6)   The Custodian shall provide the Fund on behalf of the Portfolio with
          any report on its system of internal accounting control as the Fund
          may reasonably request from time to time.

2.11 Segregated Account.  The Custodian shall upon receipt of Proper
     ------------------                                             
     Instructions from the Fund on behalf of each applicable Portfolio establish
     and maintain a segregated account or accounts for and on behalf of each
     such Portfolio, into which account or accounts may be transferred cash
     and/or securities, including securities maintained in an account by the
     Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
     provisions of any agreement among the Fund on behalf of the Portfolio, the
     Custodian and a broker-dealer registered under the Exchange Act and a
     member of the NASD (or any futures commission merchant registered under the
     Commodity Exchange Act), relating to compliance with the rules of The
     Options Clearing Corporation and of any registered national securities
     exchange (or the Commodity Futures Trading Commission or any registered
     contract market), or of any similar organization or organizations,
     regarding escrow or other arrangements in connection with transactions by
     the Portfolio, (ii) for purposes of segregating cash or government
     securities in connection with options purchased, sold or written by the
     Portfolio or commodity futures contracts or options thereon purchased or
     sold by the Portfolio, (iii) for the purposes of compliance by the
     Portfolio with the procedures required by Investment Company Act Release
     No. 10666, or any subsequent release or releases of the Securities and
     Exchange Commission relating to the maintenance of segregated accounts by
     registered investment companies and (iv) for other proper corporate
     purposes, but only, in the case of clause (iv), upon receipt of, in
               --- ----                                                 
     addition to Proper Instructions from the Fund on behalf of the applicable
     Portfolio, a certified copy of a resolution of the Board of Trustees or of
     the Executive Committee signed by an officer of the Fund and certified by
     the Secretary or an Assistant Secretary, setting forth the purpose or
     purposes of such segregated account and declaring such purposes to be
     proper corporate purposes.

2.12 Ownership Certificates for Tax Purposes.  The Custodian shall execute
     ---------------------------------------                              
     ownership and other certificates and affidavits for all federal and state
     tax purposes in connection with receipt of income or other payments with
     respect to domestic securities of each Portfolio held by it and in
     connection with transfers of securities.

2.13 Proxies.  The Custodian shall, with respect to the domestic securities held
     -------                                                                    
     hereunder, cause to be promptly executed by the registered holder of such
     securities, if the securities are registered otherwise than in the name of
     the Portfolio or a nominee of the Portfolio, 

                                       10
<PAGE>
 
     all proxies, without indication of the manner in which such proxies are to
     be voted, and shall promptly deliver to the Portfolio such proxies, all
     proxy soliciting materials and all notices relating to such securities.

2.14 Communications Relating to Portfolio Securities. The Custodian shall
     -----------------------------------------------                     
     transmit promptly to the Fund for each Portfolio all written information
     (including, without limitation, pendency of calls and maturities of
     domestic securities and expirations of rights in connection therewith and
     notices of exercise of call and put options written by the Fund on behalf
     of the Portfolio and the maturity of futures contracts purchased or sold by
     the Portfolio) received by the Custodian from issuers of the securities
     being held for the Portfolio.  With respect to tender or exchange offers,
     the Custodian shall transmit promptly to the Portfolio all written
     information received by the Custodian from issuers of the securities whose
     tender or exchange is sought and from the party (or his agents) making the
     tender or exchange offer.  If the Portfolio desires to take action with
     respect to any tender offer, exchange offer or any other similar
     transaction, the Portfolio shall notify the Custodian at least three
     business days prior to the date on which the Custodian is to take such
     action.


3.   Duties of the Custodian with Respect to Property of the Fund Held Outside
     -------------------------------------------------------------------------
     of the United States
     --------------------

3.1  Appointment of Foreign Sub-Custodians.  The Fund hereby authorizes and
     -------------------------------------                                 
     instructs the Custodian to employ as sub-custodians for the Portfolio's
     securities and other assets maintained outside the United States the
     foreign banking institutions and foreign securities depositories designated
     on Schedule A hereto ("foreign sub-custodians").  Upon receipt of "Proper
     Instructions", as defined in Section 5 of this Contract, together with a
     certified resolution of the Fund's Board of Trustees, the Custodian and the
     Fund may agree to amend Schedule A hereto from time to time to designate
     additional foreign banking institutions and foreign securities depositories
     to act as sub-custodian.  Upon receipt of Proper Instructions, the Fund may
     instruct the Custodian to cease the employment of any one or more such sub-
     custodians for maintaining custody of the Portfolio's assets.

3.2  Assets to be Held.  The Custodian shall limit the securities and other
     -----------------                                                     
     assets maintained in the custody of the foreign sub-custodians to:  (a)
     "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
     the Investment Company Act of 1940, and (b) cash and cash  equivalents in
     such amounts as the Custodian or the Fund may determine to be reasonably
     necessary to effect the Portfolio's foreign securities transactions.

3.3  Foreign Securities Depositories.  Except as may otherwise be agreed upon in
     -------------------------------                                            
     writing by the Custodian and the Fund, assets of the Portfolios shall be
     maintained in foreign 

                                       11
<PAGE>
 
     securities depositories only through arrangements implemented by the
     foreign banking institutions serving as sub-custodians pursuant to the
     terms hereof. Where possible, such arrangements shall include entry into
     agreements containing the provisions set forth in Section 3.5 hereof.

3.4  Segregation of Securities.  The Custodian shall identify on its books as
     --------------------------                                              
     belonging to  the Fund, the foreign securities of the Fund held by each
     foreign sub-custodian. Each agreement pursuant to which  the Custodian
     employs a foreign banking institution shall require that such institution
     establish a custody account  for the Custodian on behalf of the Fund and
     physically  segregate in that account, securities and other assets of  the
     Fund, and, in the event that such institution  deposits the Fund's
     securities in a foreign securities  depository, that it shall identify on
     its books as  belonging to the Custodian, as agent for the Fund, the
     securities so deposited.
 
3.5  Agreements with Foreign Banking Institutions.  Each agreement with a
     --------------------------------------------                        
     foreign banking institution shall be substantially in the form set forth in
     Exhibit 1 hereto and shall provide that:  (a) the assets of each Portfolio
     will not be subject to any right, charge, security interest, lien or claim
     of any kind in favor of the foreign banking institution or its creditors or
     agent, except a claim of payment for their safe custody or administration;
     (b) beneficial ownership for the assets of each Portfolio will be freely
     transferable without the payment of money or value other than for custody
     or administration; (c) adequate records will be maintained identifying the
     assets as belonging to each applicable Portfolio; (d) officers of or
     auditors employed by, or other representatives of the Custodian, including
     to the extent permitted under applicable law the independent public
     accountants for the Fund, will be given access to the books and records of
     the foreign banking institution relating to its actions under its agreement
     with the Custodian; and (e) assets of the Portfolios held by the foreign
     sub-custodian will be subject only to the instructions of the Custodian or
     its agents.

3.6  Access of Independent Accountants of the Fund.  Upon request of the Fund,
     ---------------------------------------------                            
     the Custodian will use its best efforts to arrange for the independent
     accountants of the Fund to be afforded access to the books and records of
     any foreign banking institution employed as a foreign sub-custodian insofar
     as such books and records relate to the performance of such foreign banking
     institution under its agreement with the Custodian.

3.7  Reports by Custodian.  The Custodian will supply to the Fund from time to
     --------------------                                                     
     time, as mutually agreed upon, statements in respect of the securities and
     other assets of the Portfolio(s) held by foreign sub-custodians, including
     but not limited to an identification of entities having possession of the
     Portfolio(s) securities and other assets and advices or notifications of
     any transfers of securities to or from each custodial account maintained by
     a foreign banking institution for the Custodian on behalf of each
     applicable Portfolio 

                                       12
<PAGE>
 
     indicating, as to securities acquired for a Portfolio, the identity of the
     entity having physical possession of such securities.

3.8  Transactions in Foreign Custody Account.  (a) Except as otherwise provided
     ---------------------------------------                                   
     in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
     of this Contract shall apply, mutatis mutandis to the foreign securities of
                                   ------- --------                             
     the Fund held outside the United States by foreign sub-custodians.

     (b) Notwithstanding any provision of this Contract to the contrary,
     settlement and payment for securities received for the account of each
     applicable Portfolio and delivery of securities maintained for the account
     of each applicable Portfolio may be effected in accordance with the
     customary established securities trading or securities processing practices
     and procedures in the jurisdiction or market in which the transaction
     occurs, including, without limitation, delivering securities to the
     purchaser thereof or to a dealer therefor (or an agent for such purchaser
     or dealer) against a receipt with the expectation of receiving later
     payment for such securities from such purchaser or dealer in accordance
     with such local custom.

     (c) Securities maintained in the custody of a foreign sub-custodian may be
     maintained in the name of such entity's nominee to the same extent as set
     forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
     nominee harmless from any liability as a holder of record of such
     securities.

3.9  Liability of Foreign Sub-Custodians.  Each agreement pursuant to which the
     -----------------------------------                                       
     Custodian employs a foreign banking institution as a foreign sub-custodian
     shall require the institution to exercise reasonable care in the
     performance of its duties and to indemnify, and hold harmless, the
     Custodian and the Fund from and against any loss, damage, cost, expense,
     liability or claim arising out of or in connection with the institution's
     performance of such obligations.  At the election of the Fund, it shall be
     entitled to be subrogated to the rights of the Custodian with respect to
     any claims against a foreign banking institution as a consequence of any
     such loss, damage, cost, expense, liability or claim if and to the extent
     that the Fund has not been made whole for any such loss, damage, cost,
     expense, liability or claim.

3.10 Liability of Custodian.  The Custodian shall be liable for the acts or
     ----------------------                                                
     omissions of a foreign banking institution to the same extent as set forth
     with respect to sub-custodians generally in this Contract and, regardless
     of whether assets are maintained in the custody of a foreign banking
     institution, a foreign securities depository or a branch of a U.S. bank as
     contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
     for any loss, damage, cost, expense, liability or claim resulting from
     nationalization,  expropriation, currency restrictions, or acts of war or
     terrorism or any loss where the sub-custodian has otherwise exercised
     reasonable care.  Notwithstanding the foregoing 

                                       13
<PAGE>
 
     provisions of this paragraph 3.10, in delegating custody duties to State
     Street London Ltd., the Custodian shall not be relieved of any
     responsibility to the Fund for any loss due to such delegation, except such
     loss as may result from (a) political risk (including, but not limited to,
     exchange control restrictions, confiscation, expropriation,
     nationalization, insurrection, civil strife or armed hostilities) or (b)
     other risk of loss (excluding a bankruptcy or insolvency of State Street
     London Ltd. not caused by political risk) for which neither the Custodian
     nor State Street London Ltd. would be liable such as loss resulting from
     force majeure (including, but not limited to, losses due to Acts of God,
     nuclear incident or other losses) under circumstances where the Custodian
     and State Street London Ltd. have exercised reasonable care.

3.11 Reimbursement for Advances.  If the Fund requires the Custodian to advance
     --------------------------                                                
     cash or securities for any purpose for the benefit of a Portfolio including
     the purchase or sale of foreign exchange or of contracts for foreign
     exchange, or in the event that the Custodian or its nominee shall incur or
     be assessed any taxes, charges, expenses, assessments, claims or
     liabilities in connection with the performance of this Contract, except
     such as may arise from its or its nominee's own negligent action, negligent
     failure to act or willful misconduct, any property at any time held for the
     account of the applicable Portfolio shall be security therefor and should
     the Fund fail to repay the Custodian promptly, the Custodian shall have
     such interest as granted by Section 15 herein.

3.12 Monitoring Responsibilities.  The Custodian shall furnish annually to the
     ---------------------------                                              
     Fund, during the month of June, information concerning the foreign sub-
     custodians employed by the Custodian.  Such information shall be similar in
     kind and scope to that furnished to the Fund in connection with the initial
     approval of this Contract.  In addition, the Custodian will promptly inform
     the Fund in the event that the Custodian learns of a material adverse
     change in the financial condition of a foreign sub-custodian or any
     material loss of the assets of the Fund or in the case of any foreign sub-
     custodian not the subject of an exemptive order from the Securities and
     Exchange Commission is notified by such foreign sub-custodian that there
     appears to be a substantial likelihood that its shareholders' equity will
     decline below $200 million (U.S. dollars or the equivalent thereof) or that
     its shareholders' equity has declined below $200 million (in each case
     computed in accordance with generally accepted U.S. accounting principles).

3.13 Branches of U.S. Banks.  (a) Except as otherwise set forth in this
     ----------------------                                            
     Contract, the provisions hereof shall not apply where the custody of the
     Portfolios assets are maintained in a foreign branch of a banking
     institution which is a "bank" as defined by Section 2(a)(5) of the
     Investment Company Act of 1940 meeting the qualification set forth in
     Section 26(a) of said Act.  The appointment of any such branch as a sub-
     custodian shall be governed by paragraph 1 of this Contract.

                                       14
<PAGE>
 
     (b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
     maintained in an interest bearing account established for the Fund with the
     Custodian's London branch, which account shall be subject to the direction
     of the Custodian, State Street London Ltd. or both.

4.   Payments for Sales or Repurchases or Redemptions of Shares of the Fund
     --------------------------------------------------- ------------------

     The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund.  The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.

     From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares.  In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.  In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor checks
drawn on the Custodian by a holder of Shares, which checks have been furnished
by the Fund to the holder of Shares, when  presented to the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time between the Fund and the Custodian.

5.   Proper Instructions
     -------------------

     Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized.  Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested.  Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved.  The Fund shall cause all oral instructions to be
confirmed in writing.  Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets.  For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian 

                                       15
<PAGE>
 
pursuant to any three - party agreement which requires a segregated asset
account in accordance with Section 2.11.

6.   Actions Permitted without Express Authority
     -------------------------------------------

     The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:

     1)   surrender securities in temporary form for securities in definitive
          form;

     2)   endorse for collection, in the name of the Portfolio, checks, drafts
          and other negotiable instruments; and

     3)   in general, attend to all non-discretionary details in connection with
          the sale, exchange, substitution, purchase, transfer and other
          dealings with the securities and property of the Portfolio except as
          otherwise directed by the Board of Trustees of the Fund.

7.   Evidence of Authority
     ---------------------

     The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund.  The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such  vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.

8.   Expense Reimbursement.
     --------------------- 

     The Custodian shall be entitled to receive from the Fund on demand
reimbursement for its cash disbursements, expenses and charges in connection
with its duties as Custodian as aforesaid, but excluding salaries and usual
overhead expenses.

9.   Miscellaneous
     -------------

     The Custodian shall render to the Fund an itemized statement of the
securities for which its is accountable to the Fund under this Custodian
Contract as of the end of each month, as well as a list of all security
transactions that remain unsettled at such time.

                                       16
<PAGE>
 
10.  Duties of Custodian with Respect to the Books of Account and Calculation of
     ---------------------------------------------------------------------------
     Net Asset Value and Net Income
     ------------------------------

     The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share.  If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components.  The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Fund's currently effective prospectus related to such
Portfolio.

11.  Records
     -------

     The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940,  with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund.  All
such records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission.  The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by each Portfolio
and held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.

12.  Opinion of Fund's Independent Accountant
     ----------------------------------------

     The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.

                                       17
<PAGE>
 
13.  Reports to Fund by Independent Public Accountants
     -------------------------------------------------

     The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a  Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.

14.  Compensation of Custodian
     -------------------------

     The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.

15.  Responsibility of Custodian
     ---------------------------

     So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement.  The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence.

     The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.10)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.

     In order that the indemnification provision contained in this Section 15
shall apply, however, it is understood that if in any case the Fund may be asked
to indemnify or save the 

                                       18
<PAGE>
 
Custodian harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to be present the probability of such a claim for indemnification by the
Fund. The Fund shall have the option to defend the Custodian against any claim
which may be the subject of this indemnification, and in the event that the Fund
so elects it will so notify the Custodian and thereupon the Fund shall take over
the complete defense of the claim, and the Custodian shall in such situations
incur no further legal or other expenses for which it shall seek indemnification
under this Section 15. The Custodian shall in no case confess any claim or make
any compromise in any case in which the Fund will be asked to indemnify the
Custodian except with the Fund's prior written consent.

     The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee in connection with the performance of this Contract, except such as may
arise from it or its nominee's own negligent action, negligent failure to act or
willful misconduct.  The Custodian shall bill the Fund for such charges, payment
of which shall be due within thirty (30) days, provided, however, that in the
                                               --------                      
event such bill is not paid within thirty (30) days of the prescribed payment
date the Custodian is authorized to charge any account of the Fund for such
amounts.

     To secure any advances of cash or securities made by the Custodian to or
for the benefit of the Fund for any purpose which results in the Fund incurring
an overdraft at the end of any business day or for extraordinary or emergency
purposes during any business day, the Fund hereby grants to the Custodian a
security interest in and pledges to the Custodian securities held for it by the
Custodian in an amount not to exceed fifteen percent (15%) of the Fund's total
assets (taken at the lower cost or market value), the specific securities to be
designated in writing from time to time by the Fund or its investment advisor.
Should the Fund fail to repay promptly any advances of cash or securities, the
Custodian shall be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such advances.
Notwithstanding the foregoing, the above-described security interest in such
designated securities shall exist only at such times as there are outstanding
any such advances of cash or securities.

16.  Effective Period, Termination and Amendment
     -------------------------------------------

     This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
                                                 --------                  
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or  an
Assistant Secretary that the Board of Trustees of the 

                                       19
<PAGE>
 
Fund has approved the initial use of a particular Securities System by such
Portfolio, as required by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not with respect to a Portfolio act
under Section 2.11 hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has approved
the initial use of the Direct Paper System by such Portfolio ; provided further,
                                                               -------- -------
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund on behalf of
one or more of the Portfolios may at any time by action of its Board of Trustees
(i) substitute another bank or trust company for the Custodian by giving notice
as described above to the Custodian, or (ii) immediately terminate this Contract
in the event of the appointment of a conservator or receiver for the Custodian
by the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.

     Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

17.  Successor Custodian
     -------------------

     If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.

     If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

     In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided  profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any 

                                       20
<PAGE>
 
Securities System. Thereafter, such bank or trust company shall be the successor
of the Custodian under this Contract.

     In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.

18.  Interpretive and Additional Provisions
     --------------------------------------

     In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract.  Any such interpretive or additional provisions shall be in a  writing
signed by both parties and shall be annexed hereto, provided that no such
                                                    --------             
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund.  No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.

19.  Additional Funds
     ----------------

     In the event that the Fund establishes one or more series of Shares in
addition to the Alliance Balanced Fund, Alliance Government Fund, Alliance
Growth Fund, and Alliance Tax-Exempt Fund with respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it shall
so notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.

20.  Massachusetts Law to Apply
     --------------------------

     This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.

21.  Prior Contracts
     ---------------

     This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.

                                       21
<PAGE>
 
     IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 25th day of July, 1988.


ATTEST                  THE ALLIANCE PORTFOLIOS


                        By
- ---------------         -----------------------------------
Assistant Clerk         President


ATTEST                  STATE STREET BANK AND TRUST COMPANY


                        By
- ---------------         -----------------------------------                    
Assistant Secretary     Vice President

                                       22
<PAGE>
 
                                 Schedule A
                                 ----------


          The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of The Alliance
Portfolios for use as sub-custodians for the Fund's securities and other assets:

ANZ Banking Group Ltd.
Girozentrale Und Bank Der Oesterreichischen
Banque Bruxelles Lambert
Canada Trust Company
Den Danskek Bank
Kansallis-Osake Pankki
Credit Commercial de France
Berliner Handels und Frankfurter Bank
Standard Chartered Bank
Standard Trust & Banking Company Limited
Bank Mees & Hope, N.V.
Westpac Banking Corp.
Christiania Bank OG Kreditkasse
DBS Bank Ltd.
Skandinaviska Enskilda Banken
Union Bank of Switzerland
State Street London Limited
Euroclear
Cedel
Oesterreichischen Kontrollbank AG
C.I.K. (Caisse Interprofessionelle de depots et de Virements de Titres S.A.)
CDS (The Canadian Depository for Securities Ltd.)
VP-Centralen (Vaerdipapircentralen)
SICOVAM
Kassenverein
NECIGEF (Netherlands Clearing Institue for Giro Securities Deliveries)
The Reserve Bank of New Zealand
SEGA (Schweizerische Effekten Giro A.G.)

                                       23
<PAGE>
 


                        AMENDMENT TO CUSTODIAN CONTRACT

     Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and The Alliance Portfolios (the "Fund").

     WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated July 25, 1988 as amended April 23, 1993 (the "Custodian Contract")
governing the terms and conditions under which the Custodian maintains custody
of the securities and other assets of the Fund; and

     WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended.

     NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;

     1.   Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign sub-
custodian in a single account that is identified as belonging to the Custodian
for the benefit of its customers, provided however, that (i) the records of the
                                  -------- -------                             
Custodian with respect to securities and other non-cash property of the Fund
which are maintained in such account shall identify by book-entry those 
securities and other non-cash property belonging to the Fund and (ii) the 
Custodian shall require that securities and other non-cash property so held by 
the foreign sub-custodian be held separately from any assets of the foreign 
sub-custodian or of others.

     2.   Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.

     IN WITNESS WHEREOF, each of the parities has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this   day of        , 1996.


                              THE ALLIANCE PORTFOLIOS

                              By:____________________________________

                              Title:_________________________________


                              STATE STREET BANK AND TRUST COMPANY

                              By:____________________________________

                              Title:_________________________________



                                      24


<PAGE>
 
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information 
constituting part of this Post-Effective Amendment No. 21 to the registration 
statement on Form N-1A (the "Registration Statement") of our report dated June 
24, 1996, relating to the financial statements and financial highlights of 
Alliance Growth Investors Fund and Alliance Conservative Investors Fund, which 
appears in such Statement of Additional Information, and to the incorporation 
by reference of our report into the Prospectus which constitutes part of this 
Registration Statement.  We also consent to the references to us under the
headings "Statements and Reports" and "Independent Accountants" in such
Statement of Additional Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.

We also consent to the incorporation by reference of our report dated September 
27, 1995 relating to the financial statements and financial highlights of 
Alliance Strategic Balanced Fund, our report dated October 20, 1995 relating to
the financial statements and financial highlights of Alliance Short-Term U.S. 
Government Fund and our report dated December 14, 1995 relating to the financial
statements and financial highlights of Alliance Growth Fund into this 
Registration Statetement and to the references to us under the headings 
"Statements and Reports" and "Independent Accountants" in the Statements of
Additional Information constituting parts of this Registration Statement and to
the reference to us under the heading "Financial Highlights" in the
Prospectuses constituting parts of this Registration Statement.


PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
August 29, 1996


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