ALLIANCE VARIABLE PRODUCTS SERIES FUND INC, 485APOS, 1999-03-01

ALLIANCE VARIABLE PRODUCTS SERIES FUND INC
485APOS, 1999-03-01

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<PAGE>

As filed with the Securities and Exchange
Commission on March 1, 1999
File Nos. 33-18647
811-5398

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. 26

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

X Amendment No. 27

____________________________________________

ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)

1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)

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

EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105

(Name and address of agent for service)
Copies of communications to:
Thomas G. MacDonald
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004

<PAGE>

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

___ Immediately upon filing pursuant to paragraph (b)
___ On (date) pursuant to paragraph (b)
_X_ 60 days after filing pursuant to paragraph (a)(1)
___ On (date) pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ On (date) pursuant to paragraph (a) of Rule 485

If appropriate, check the following box:

This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

<PAGE>

Class A Prospectus

ALLIANCE VARIABLE PRODUCTS
SERIES FUND

-Money Market Portfolio
-Premier Growth Portfolio
-Growth and Income Portfolio
-U.S. Government/High Grade Securities Portfolio
-High-Yield Portfolio
-Total Return Portfolio
-International Portfolio
-Short-Term Multi-Market Portfolio
-Global Bond Portfolio
-North American Government Income Portfolio
-Global Dollar Government Portfolio
-Utility Income Portfolio
-Conservative Investors Portfolio
-Growth Investors Portfolio
-Growth Portfolio
-Worldwide Privatization Portfolio
-Technology Portfolio
-Quasar Portfolio
-Real Estate Investment Portfolio

This Prospectus describes the Portfolios that are available as
underlying investments through your variable [life insurance
contract/annuity certificate or contract.] For information about
your variable [life insurance contract/annuity certificate or
contract], including information about insurance-related
expenses, see the prospectus for your variable [life insurance
contract/annuity certificate or contract], which accompanies this
Prospectus.

The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense.

<PAGE>

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY

GLOSSARY

DESCRIPTION OF THE PORTFOLIOS
Investment Objectives and Policies
Description of Investment Practices
Additional Risk Considerations

MANAGEMENT OF THE PORTFOLIOS

PURCHASE AND SALE OF SHARES
How The Portfolios Value Their Shares
How To Purchase and Sell Shares

DIVIDENDS, DISTRIBUTIONS AND TAXES

FINANCIAL HIGHLIGHTS

<PAGE>

The Alliance Variable Products Series Funds' investment adviser
is Alliance Capital Management L.P., a global investment manager
providing diversified services to institutions and individuals
through a broad line of investments including more than 100
mutual funds.

RISK/RETURN SUMMARY

The following is a summary of certain key information about the
Alliance Variable Products Series Fund. You will find additional
information about each Portfolio, including a detailed
description of the risks of an investment in each Portfolio,
after this summary.

The Risk/Return Summary describes the Portfolios' objectives,
principal investment strategies, principal risks and fees. Each
Portfolio's Summary page includes a short discussion of some of
the principal risks of investing in that Portfolio. A further
discussion of these and other risks is on page _____.

More detailed descriptions of the Portfolios, including the risks
associated with investing in the Portfolios, can be found further
back in this Prospectus. Please be sure to read this additional
information BEFORE you invest. Each of the Portfolios may at
times use certain types of investment derivatives such as
options, futures, forwards, and swaps. The use of these
techniques involves special risks that are discussed in this
Prospectus.

The Risk/Return Summary includes a table for each Portfolio
showing its average annual returns and a bar chart showing its
annual returns. The table and the bar chart provide an
indication of the historical risk of an investment in each
Portfolio by showing:

- how the Portfolio's average annual returns for one,
five, and 10 years (or over the life of the Portfolio if
the Portfolio is less than 10 years old) compare to
those of a broad based securities market index; and

- changes in the Portfolio's performance from year to year
over 10 years (or over the life of the Portfolio if the
Portfolio is less than 10 years old).

A Portfolio's past performance, of course, does not necessarily
indicate how it will perform in the future.

Other important things for you to note:

- You may lose money by investing in the Portfolios.

<PAGE>

- An investment in the Portfolios is not a deposit in a
bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government
agency.

<PAGE>

Money Market Portfolio

- Objective: The Portfolio's investment objectives are in
the following order of priority - safety of principal,
excellent liquidity and maximum current income to the
extent consistent with the first two objectives.

- Principal Investment Strategies and Risks: The
Portfolio is a "money market fund" that seeks to
maintain a stable net asset value of $1.00 per share.
The Portfolio invests in high-quality, U.S. Dollar
denominated money market securities.

Among the principal risks of investing in the Portfolio
are interest rate risk and credit risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %

Bar Chart

[Graphic to be Inserted]

You should consider an investment in the Portfolio as a long-term
investment. The Portfolio's returns will fluctuate over long and
short periods. For example, during the period shown in the bar
chart, the Portfolio's:

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Premier Growth Portfolio

- Objective: The Portfolio's investment objective is
growth of capital by pursuing aggressive investment
policies.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in equity securities of U.S.
companies. Unlike most equity funds, the Portfolio
focuses on a relatively small number of intensively
researched companies. Alliance selects the Portfolio's
investments from a research universe of more than 600
companies that have strong management, superior industry
positions, excellent balance sheets, and superior
earnings growth prospects.

Normally, the Portfolio invests in about 40-50
companies, with the 25 most highly regarded of these
companies usually constituting approximately 70% of the
Portfolio's net assets. During market declines, while
adding to positions in favored stocks, the Portfolio
becomes somewhat more aggressive, gradually reducing the
number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or
eliminating fully-valued positions, the Portfolio
becomes somewhat more conservative, gradually increasing
the number of companies represented in its portfolio.
Through this approach, Alliance seeks to gain positive
returns in good markets while providing some measure of
protection in poor markets. The Portfolio also may
invest up to 20% of its net assets in convertible
securities.

Among the principal risks of investing in the Portfolio
is market risk. Because the Portfolio invests in a
smaller number of securities than many other equity
funds, your investment has the risk that changes in the
value of a single security may have a more significant
effect, either negative or positive, on the Portfolio's
net asset value.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth and Income Portfolio

- Objective: The Portfolio's investment objective is
reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-
paying common stocks of good quality.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in dividend-paying common
stocks of large, well-established "blue-chip" companies.
The Portfolio also may invest in fixed-income and
convertible securities and in securities of foreign
issuers.

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
The Portfolio's investments in foreign securities have
foreign risk and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance U.S. Government/High Grade Securities Portfolio

- Objective: The Portfolio's investment objective is high
current income consistent with preservation of capital.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in U.S. Government
securities, including mortgage-related securities,
repurchase agreements and forward contracts relating to
U.S. Government securities. The Portfolio also may
invest in non-U.S. Government mortgage-related and
asset-backed securities. The average weighted maturity
of the Portfolio's investments varies between one year
or less and 30 years.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, and market risk.
Because the Portfolio may invest in mortgage-related and
asset-backed securities, it may be subject to the risk
that mortgage loans or other obligations will be prepaid
when interest rates decline, forcing the Portfolio to
reinvest in securities with lower interest rates. For
this and other reasons, mortgage-related and asset-
backed securities may have significantly greater price
and yield volatility than traditional debt securities.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Government Bond
Index

Bar Chart

[INSERT CHART]

<PAGE>

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance High-Yield Portfolio

- Objective: The Portfolio's investment objective is to
earn the highest level of current income without
assuming undue risk by investing principally in high-
yielding fixed-income securities rated Baa or lower by
Moody's or BBB or lower by S&P, Duff & Phelps or Fitch
or, if unrated, of comparable quality.

- Principal Investment Strategies and Risks: The
Portfolio primarily invests in high yield, below
investment grade debt securities, commonly known as
"junk bonds." The Portfolio seeks to maximize current
income by taking advantage of market developments, yield
disparities, and variations in the creditworthiness of
issuers.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, and market risk.
Because the Portfolio invests in lower-rated securities,
it has significantly more risk than other types of bond
funds and its returns will be more volatile. The
Portfolio's investments in foreign securities have
foreign risk and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since Inception
Portfolio % %
First Boston High
Yield Index

Bar Chart

[INSERT CHART]

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Total Return Portfolio

- Objective: The Portfolio's investment objective is to
achieve a high return through a combination of current
income and capital appreciation.

- Principal Investment Strategies and Risks: The
Portfolio primarily invests in U.S. Government and
agency obligations, bonds, fixed-income senior
securities (including short and long-term debt
securities and preferred stocks to the extent their
value is attributable to their fixed-income
characteristics), and common stocks.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, and market risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Aggregate Bond Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance International Portfolio

- Objective: The Portfolio's investment objective is to
seek to obtain a total return on its assets from long-
term growth of capital principally through a broad
portfolio of marketable securities of established non-
U.S. companies (i.e., companies incorporated outside the
U.S.), companies participating in foreign economies with
prospects for growth, and foreign government securities.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in equity securities of
established non-U.S. companies, companies participating
in foreign economies with prospects for growth,
including U.S. companies having their principal
activities and interests outside the U.S., and foreign
government securities. The Portfolio diversifies its
investments broadly among countries and normally invests
in companies in at least three foreign countries,
although it may invest a substantial portion of its
assets in one or more foreign countries.

Among the principal risks of investing in the Portfolio
are market risk, foreign risk, and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
MSCI World Index (minus
the U.S.)

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Short-Term Multi-Market Portfolio

- Objective: The Portfolio's investment objective is to
seek the highest level of current income, consistent
with what the Alliance considers to be prudent
investment risk, that is available from a portfolio of
high-quality debt securities having remaining maturities
of not more than three years.

- Principal Investment Strategies and Risks: The
Portfolio invests in high-quality debt securities having
remaining maturities of not more than three years, with
a high proportion of investments in money market
instruments. The Portfolio seeks investment
opportunities in foreign, as well as domestic,
securities markets. While the Portfolio normally
maintains a substantial portion of its assets in debt
securities denominated in foreign currencies, it invests
at least 25% of its net assets in U.S. Dollar-
denominated debt securities. The Portfolio limits its
investments in a single currency other than the U.S.
Dollar to 25% of its net assets except for the Euro in
which the Portfolio may invest up to 50% of its net
assets.

The Portfolio concentrates at least 25% of its total
assets in debt instruments issued by domestic and
foreign banking companies. A high proportion of the
Portfolio's investments normally consist of money market
instruments.

The Portfolio also may:

- use derivatives strategies;

- invest in prime commercial paper or unrated paper
of equivalent quality;

- enter into repurchase agreements; and

- invest in variable, floating, and inverse floating
rate instruments.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk and market risk.
The Portfolio's investments in debt securities
denominated in foreign currencies have foreign risk and
currency risk. In addition, the Portfolio is "non-
diversified" meaning that it invests more of its assets
in a smaller number of issuers than many other funds.
Changes in the value of a single security may have a

<PAGE>

more significant effect, either negative or positive, on
the Fund's net asset value.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Merrill Lynch 1-3
Year Government Bond
Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Global Bond Portfolio

- Objective: The Portfolio's investment objective is to
seek a high level of return from a combination of
current income and capital appreciation by investing in
a globally diversified portfolio of high quality debt
securities denominated in the U.S. Dollar and a range of
foreign currencies.

- Principal Investment Strategies and Risks: The
Portfolio primarily invests in debt securities of U.S.
or foreign governments, and supranational entities, U.S.
and non-U.S. companies. The Fund's foreign investments
are generally denominated in foreign currencies.

The Portfolio normally invests at least 65% of its total
assets in debt securities of at least three countries
and invests approximately 25% of its total assets in
U.S. Dollar-denominated debt securities. The average
weighted maturity of the Portfolio's investments in
fixed-income securities is expected to vary between one
year or less and 10 years.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, market risk and
leveraging risk. The Portfolio's investments in foreign
issuers have foreign risk and currency risk. To the
extent the Portfolio invests in lower-rated securities,
your investment is subject to more risk than a fund that
invests primarily in higher-rated securities. The
Portfolio's use of derivatives strategies has
derivatives risk. In addition, the Fund is "non-
diversified" meaning that it invests more of its assets
in a smaller number of issuers than many other funds.
Changes in the value of a single security may have a
more significant effect, either negative or positive, on
the Fund's net asset value.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Aggregate Bond
Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance North American Government Income Portfolio

- Objective: The Portfolio's investment objective is to
seek the highest level of current income, consistent
with what Alliance considers to be prudent investment
risk, that is available from a portfolio of debt
securities issued or guaranteed by the United States,
Canada, or Mexico, their political subdivisions
(including Canadian provinces, but excluding states of
the United States), agencies, instrumentalities or
authorities.

- Principal Investment Strategies and Risks: The
Portfolio primarily invests in debt securities issued or
guaranteed by: (i) the federal governments of the United
States, Canada, and Mexico; (ii) government-related
entities in the United States, Canada, and Mexico; and
(iii) the provincial governments of Canada and Mexico.
The Portfolio also invests significantly in debt
securities issued by Argentine government entities. The
Portfolio also may invest in debt securities of other
Central and South American countries. These investments
are investment grade securities generally denominated in
each countries' currency, but at least 25% of the
Portfolio's assets are in U.S. Dollar-denominated
securities. The average weighted maturity of the
Portfolio is expected to vary between one year or less
and 30 years.

The Portfolio may use significant borrowings for
leverage. The Portfolio also may:

- use derivative strategies; and
- invest in variable, floating, and inverse floating
rate instruments.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, market risk and
leveraging risk. The Portfolio's investments in debt
securities of Canada, Mexico, and Argentina have foreign
risk and currency risk. Your investment also has the
risk that market changes or other events affecting these
countries, including potential instability and
unpredictable economic conditions, may have a more
significant effect on the Portfolio's net asset value.
In addition, the Portfolio is "non-diversified" meaning
that it invests more of its assets in a smaller number
of issuers than many other funds. Changes in the value
of a single security may have a more significant effect,
either negative or positive, on the Portfolio's net
asset value.

<PAGE>

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Lehman Brothers
Aggregate Bond
Index

Bar Chart

[INSERT CHART]

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Global Dollar Government Portfolio

- Objective: The Portfolio's investment objectives are to
seek a high level of current income and, secondarily,
capital appreciation.

- Principal Investment Strategies and Risks: The
Portfolio primarily invests in sovereign debt
obligations. The Portfolio invests substantially all of
its assets in lower-rated securities or unrated
securities of equivalent quality. The Portfolio limits
its investments in sovereign debt obligations of any one
country to no more than 25% of its total assets.

The Portfolio may invest up to 35% of its total assets
in U.S. and non-U.S. corporate fixed-income securities.
All of the Portfolio's investments in sovereign debt
obligations and fixed-income securities will be U.S.
Dollar-denominated. The Portfolio also may invest up to
30% of its assets in emerging markets or developing
countries, including Argentina, Brazil, Mexico, Morocco,
the Philippines, Russia, and Venezuela. The average
weighted maturity of the Portfolio's investments varies
between nine and 30 years.

The Portfolio may use significant borrowings and reverse
repurchase agreements and dollar rolls for leverage.
The Portfolio also may:

- use derivatives strategies;
- invest in structured securities;
- invest in fixed and floating rate loans to
sovereign debt issuers;
- enter into repurchase agreements; and
- invest in variable, floating, and inverse floating
rate securities.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, market risk, and
leveraging risk. Because the Portfolio invests in
lower-rated securities, it has significantly more risk
than other types of bond funds and its returns will be
more volatile. The Portfolio's investments have foreign
risk and currency risk. Because the Portfolio invests
in emerging markets and in developing countries, the
Portfolio's returns will be significantly more volatile
and may differ substantially from returns in the U.S.
bond markets generally. Your investment also has the
risk that market changes or other factors affecting
emerging markets and developing countries, including
political instability and unpredictable economic

<PAGE>

conditions, may have a significant effect on the
Portfolio's net asset value. In addition, the Portfolio
is "non-diversified" meaning that it invests more of its
assets in a smaller number of issuers than may other
funds. Changes in the value of a single security may
have a more significant effect, either negative or
positive, on the Portfolio's net asset value.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Lehman Brother
Aggregate Bond
Index

Bar Chart

[INSERT CHART]

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Utility Income Portfolio

- Objective: The Portfolio's investment objective is to
seek current income and capital appreciation by
investing primarily in equity and fixed-income
securities of companies in the utilities industry.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in income-producing equity
securities. The Portfolio invests in securities of
utility companies in the electric, telecommunications,
gas, and water utility industries. The Portfolio may
invest in both U.S. and foreign utility companies,
although the Portfolio will limit its investments in
issuers in any one foreign country to no more than 15%
of its total assets. The Portfolio may invest up to 35%
of its net assets in lower-rated securities and up to
30% of its net assets in convertible securities.

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
Because the Portfolio invests a substantial portion of
its assets in companies in a specific industry, there is
the risk that factors affecting utility companies will
have a significant effect on the value of the
Portfolio's investments. To the extent the Portfolio
invests in lower-rated securities, your investment is
subject to more credit risk than a Portfolio that
invests in higher-rated securities.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
NYSE Utilities Index

Bar Chart

[Graphic to be Inserted]

<PAGE>

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Conservative Investors Portfolio

- Objective: The Portfolio's investment objective is to
achieve a high total return without, in the view of
Alliance, undue risk to principal.

- Principal Investment Strategies and Risks: The
Portfolio invests varying portions of its assets in debt
and equity securities. The Portfolio normally invests
between 50% and 90% (generally approximately 70%) of its
total assets in investment grade fixed-income securities
and money market instruments, with equity securities
comprising the remainder of the Portfolio's holdings.
Most of the Portfolio's investments in fixed-income
securities generally will have a duration less than that
of a 10-year Treasury bond. The Portfolio may invest in
foreign securities, mortgage-related and asset-backed
securities.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk and market risk. To
the extent the Portfolio invests in debt and foreign
securities, your investment has credit risk, currency
risk, and foreign risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth Investors Portfolio

- Objective: The Portfolio's investment objective is to
achieve the highest total return consistent with what
Alliance considers to be reasonable risk.

- Principal Investment Strategies and Risks: The
Portfolio invests varying portions of its assets in
equity and debt securities. The Portfolio normally
invests between 40% and 90% (generally approximately
70%) of its total assets in common stock and other
equity securities with debt securities comprising the
remainder of the Portfolio's holdings. The Portfolio's
investments may include intermediate- and small-sized
companies with favorable growth rates, companies in
cyclical industries, companies with undervalued
securities or in special situations, and less widely
known companies. The Portfolio's investments may
include foreign securities and lower-rated securities.

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, credit risk,
foreign risk and currency risk. To the extent the
Portfolio invests in lower-rated securities, your
investment is subject to more credit risk than a fund
that invests in higher-rated securities.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth Portfolio

- Objective: The Portfolio's investment objective is to
provide long-term growth of capital. Current income is
incidental to the Portfolio's objective.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in equity securities of
companies with favorable earnings outlooks and whose
long-term growth rates are expected to exceed that of
the U.S. economy over time. The Portfolio emphasizes
investments in large- and mid-cap companies. The
Portfolio also may invest up to 25% of its total assets
in lower-rated fixed-income securities and convertible
bonds and generally up to 15% of its total assets in
foreign securities.

Among the principal risks of investing in the Portfolio
is market risk. Investments in mid-cap companies may be
more volatile then investments in large-cap companies.
To the extent the Portfolio invests in lower-rated
fixed-income securities and convertible bonds, your
investment may have interest rate or credit risk. The
Portfolio's investments in foreign securities have
foreign risk and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Worldwide Privatization Portfolio

- Objective: The Portfolio's investment objective is to
seek long-term capital appreciation.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in equity securities of
companies that are undergoing, or have undergone,
privatization. The Portfolio also invests in securities
of companies that will benefit from privatizations. The
Portfolio takes advantage of investment opportunities,
historically inaccessible to U.S. individual investors,
that result from the privatization of state enterprises
in both established and developing economies. Because
privatizations are integral to a country's economic
restructuring, securities sold in initial public
offerings often are attractively priced to secure the
issuer's transition to private sector ownership. In
addition, these enterprises often dominate their local
markets and have the potential for significant
managerial and operational efficiency gains.

The Portfolio diversifies its investments among a number
of countries and normally invests in issuers based in
four, and usually considerably more, countries. The
Portfolio may invest up to 30% of its total assets in
any one of France, Germany, Great Britain, Italy, and
Japan and may invest all of its assets in a single world
region. The Portfolio also may invest up to 35% of its
total assets in debt securities and convertible debt
securities of privatized companies.

Among the principal risks of investing in the Portfolio
are market risk, foreign risk, and currency risk.
Investments in companies that are undergoing or, or have
undergone, privatization could have more risk because
they have no operating history as a private company. In
addition, the Portfolio's investments in U.S. Dollar or
foreign currency denominated fixed-income securities
have interest rate and credit risk. In addition, the
Portfolio is "non-diversified" meaning that it invests
more of its assets in a smaller number of issuers than
many other funds. Changes in the value of a single
security may have a more significant effect, either
negative or positive, on the Fund's net asset value.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
MSCI EAFE Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Technology Portfolio

- Objective: The Portfolio's objective is growth of
capital. Current income is incidental to the
Portfolio's objective.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in securities of companies
that use technology extensively in the development of
new or improved products or processes. Within this
framework, the Portfolio may invest in any company and
industry and in any type of security with potential for
capital appreciation. It invests in well-known,
established companies or in new or unseasoned companies.
The Portfolio also may invest in debt securities and up
to 10% of its total assets in foreign securities.

Among the principal risks of investing in the Portfolio
is market risk. In addition, technology stocks,
especially those of smaller, less-seasoned companies,
tend to be more volatile than the overall stock market.
To the extent the Portfolio invests in debt and foreign
securities, your investment has credit risk, foreign
risk, and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Quasar Portfolio

- Objective: The Portfolio's investment objective is
growth of capital by pursuing aggressive investment
policies. Current income is incidental to the
Portfolio's objective.

- Principal Investment Strategies and Risks: The
Portfolio generally invests in a widely diversified
portfolio of equity securities spread among many
industries that offer the possibility of above-average
earnings growth. The Portfolio currently emphasizes
investment in small-cap companies. The Portfolio
invests in well-known and established companies and in
new and unseasoned companies. The Portfolio can invest
in the equity securities of any company and industry and
in any type of security with potential for capital
appreciation. When selecting securities, Alliance
considers the economic and political outlook, the values
of specific securities relative to other investments,
trends in the determinants of corporate profits, and
management capabilities and practices. The Portfolio
also may invest in non-convertible bonds, preferred
stocks, and foreign securities.

Among the principal risks of investing in the Portfolio
is market risk. Investments in smaller companies tend
to be more volatile than investments in large-cap or
mid-cap companies. To the extent the Portfolio invests
in non-convertible bonds, preferred stocks, and foreign
stocks, your investment has interest rate risk, credit
risk, foreign risk, and currency risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Russell 2000 Index

Bar Chart

[Graphic to be Inserted]

You should consider an investment in the Portfolio as a long-term
investment. The Portfolio's returns will fluctuate over long and

<PAGE>

short periods. For example, during the period shown in the bar
chart, the Portfolio's:

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Real Estate Investment Portfolio

- Objective: The Portfolio's investment objective is
total return from long-term growth of capital and income
principally through investing in equity securities of
companies that are primarily engaged in or related to
the real estate industry.

- Principal Investment Strategies and Risks: The
Portfolio invests primarily in equity securities of real
estate investment trusts or "REITs" and other real
estate industry companies. The Portfolio invests in
real estate companies that Alliance believes have strong
property fundamentals and management teams. The
Portfolio seeks to invest in real estate companies whose
underlying portfolios are diversified geographically and
by property type. The Portfolio may invest up to 35% of
its total assets in mortgage-backed securities, which
are securities that directly or indirectly represent
participations in or are collateralized by and payable
from, mortgage loans secured by real property.

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
Because the Portfolio invests a substantial portion of
its assets in the real estate market, it has many of the
same risks as direct ownership of real estate including
the risk that the value of real estate could decline due
to a variety of factors affecting the real estate
market. In addition, REITs are dependent on the
capability of their managers, may have limited
diversification, and could be significantly affected by
changes in tax laws. Because the Portfolio invests in
mortgage-backed securities, it is subject to the risk
that mortgage loans will be prepaid when interest rates
decline, forcing the Portfolio to reinvest in securities
with lower interest rates. For this and other reasons,
mortgage-backed securities may have significantly
greater price and yield volatility than traditional
fixed-income securities.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Portfolio will change with
changes in the values of that Portfolio's investments. Many
factors can affect those values. In this Summary, we describe
the principal risks that may affect a Portfolio's investments as
a whole. These risks and the Portfolios particularly subject to
the risks appear in a chart at the end of this section. All
Portfolios could be subject to additional principal risks because
the types of investments made by each Portfolio can change over
time. This Prospectus has additional descriptions of the types
of investments that appear in bold type in the discussions under
"Description of Investment Practices" or "Additional Risk
Considerations." These sections also include more information
about the Portfolios, their investments, and related risks.

- Interest Rate Risk This is the risk that changes in
interest rates will affect the value of a Portfolio's
investments in debt securities, such as bonds, notes,
and asset-backed securities, or other income-producing
securities. Debt securities are obligations of the
issuer to make payments of principal and/or interest in
future dates. Interest rate risk is particularly
applicable to Portfolios that invest in fixed-income
securities. Increases in interest rates may cause the
value of a Portfolio's investments to decline and this
decrease in value may not be offset by the higher
interest rate income.

Even Portfolios that invest a substantial portion of
their assets in the highest quality debt securities,
including U.S. Government securities, are subject to
interest rate risk. Interest rate risk generally is
greater for those Portfolios that invest a significant
portion of their assets in lower-rated securities or
comparable unrated securities.

Interest rate risk is generally greater for Portfolios
that invest in debt securities with longer maturities.
This risk may be greater for the Portfolios that invest
a substantial portion of their assets in mortgage-
related or other asset-backed securities. The value of
these securities is affected more by changes in interest
rates because when interest rates rise, the maturities
of these type of securities tend to lengthen and the
value of the securities decreases more significantly.
In addition, these types of securities are subject to
prepayment when interest rates fall, which generally
results in lower returns because the Portfolios must
reinvest their assets in debt securities with lower
interest rates. Increased interest rate risk also is

<PAGE>

likely for a Portfolio that invests in debt securities
paying no current interest, such as zero coupon,
principal-only, and interest-only securities, or paying
non-cash interest in the form of other debt securities
(payment-in-kind securities).

- Credit Risk This is the risk that the issuer or the
guarantor of a debt security, or the counterparty to a
derivatives contract, will be unable or unwilling to
make timely payments of interest or principal, or to
otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit
rating. Credit risk is greater for Portfolios that
invest in lower-rated securities. These debt securities
and similar unrated securities (commonly known as "junk
bonds") have speculative elements or are predominantly
speculative credit risks.

Credit risk is greater for Portfolios that invest in
debt securities issued in connection with corporate
restructurings by highly leveraged issuers and in debt
securities not current in the payment of interest or
principal or are in default. Portfolios that invest in
foreign securities also are subject to increased credit
risk because of the difficulties of requiring foreign
entities, including issuers of sovereign debt
obligations, to honor their contractual commitments, and
because a number of foreign governments and other
issuers are already in default.

- Market Risk This is the risk that the value of a
Portfolio's investments will fluctuate as the stock or
bond markets fluctuate and that prices overall will
decline over shorter or longer-term periods. All of the
Portfolios are subject to this risk.

- Sector Risk This is the risk of investments in a
particular industry sector. Market or economic factors
affecting that industry sector could have a major effect
on the value of a Portfolio's investments.

- Capitalization Risk This is the risk of investments in
small- to mid-capitalization companies. Investments in
mid-cap companies may be more volatile than investments
in large-cap companies. In addition, a Portfolio's
investments in smaller capitalization stocks may have
additional risks because these companies often have
limited product lines, markets, or financial resources.

- Foreign Risk This is the risk of investments in issuers
located in foreign countries. All Alliance Portfolios

<PAGE>

that invest in foreign securities are subject to this
risk. These Portfolios' investments in foreign
securities may experience more rapid and extreme changes
in value than if they invested solely in securities of
U.S. companies. The securities markets of many foreign
countries are relatively small, with a limited number of
companies representing a small number of securities. In
addition, foreign companies usually are not subject to
the same degree of regulation as U.S. companies.
Reporting, accounting, and auditing standards of foreign
countries differ, in some cases significantly, from U.S.
standards. Nationalization, expropriation or
confiscatory taxation, currency blockage, political
changes, or diplomatic developments could adversely
affect a Portfolio's investments in a foreign country.
In the event of nationalization, expropriation, or other
confiscation, a Portfolio could lose its entire
investment.

- Country or Geographic Risk This is the risk of
investments in issuers located in a particular country
or geographic region. Market changes or other factors
affecting that country or region, including political
instability and unpredictable economic conditions, may
have a particularly significant effect on a Portfolios'
net asset value.

Political, social, and economic changes in a particular
country could result in increased risks for a Portfolio
that invests a substantial portion of its assets in
sovereign debt obligations, including Brady Bonds. The
investments in emerging market countries are likely to
involve significant risks. These countries, such as
Mexico, Argentina, Brazil, Morocco, the Philippines,
Russia, and Venezuela, have a history of political and
economic instability.

- Currency Risk This is the risk that fluctuations in the
exchange rates between the U.S. Dollar and foreign
currencies may negatively affect the value of a
Portfolio's investments. Portfolios with foreign
investments are subject to this risk.

- Leveraging Risk. When a Portfolio borrows money or
otherwise leverages its Portfolio, the value of an
investment in that Portfolio will be more volatile and
all other risks will tend to be compounded. The
Portfolios may create leverage by using reverse
repurchase agreements, inverse floating rate instruments
or derivatives, or by borrowing money.

<PAGE>

- Derivatives Risk. All Portfolios may use derivatives,
which are financial contracts whose value depends on, or
is derived from, the value of an underlying asset,
reference rate, or index. Alliance will sometimes use
derivatives as part of a strategy designed to reduce
other risks. Generally, however, the Portfolios use
derivatives as direct investments to earn income,
enhance yield, and broaden Portfolio diversification,
which entail greater risk than if used solely for
hedging purposes. In addition to other risks such as
the credit risk of the counterparty, derivatives involve
the risk of difficulties in pricing and valuation and
the risk that changes in the value of the derivative may
not correlate perfectly with relevant assets, rates, or
indices.

- Liquidity Risk. Liquidity risk exists when particular
investments are difficult to purchase or sell, possibly
preventing a Portfolio from selling out of these
illiquid securities at an advantageous price. All of
the Portfolios that use derivatives strategies are
subject to liquidity risk because these strategies
involving substantial interest rate and credit risk tend
to involve greater liquidity risk. In addition,
liquidity risk tends to increase to the extent a
Portfolio invests in securities whose sale may be
restricted by law or by contract.

- Management Risk. Each Portfolio is subject to
management risk because it is an actively managed
investment Portfolio. Alliance will apply its
investment techniques and risk analyses in making
investment decisions for the Portfolios, but there can
be no guarantee that its decisions will produce the
desired results. In some cases, derivative and other
investment techniques may be unavailable or Alliance may
determine not to use them, possibly even under market
conditions where their use could benefit a Portfolio.

- Focused Portfolio Risk Portfolios that invest in a
limited number of companies, may have more risk because
changes in the value of a single security may have a
more significant effect, either negative or positive, on
the Portfolio's net asset value. Similarly, a Portfolio
may have more risk if it is "non-diversified" meaning
that it can invest more of its assets in a smaller
number of companies than many other funds.

- Allocation Risk Those Portfolios that allocate their
investments between equity and debt securities may have
a more significant risk that poor performance of one

<PAGE>

asset class will have a greater effect on the
Portfolio's net asset value.

<PAGE>

Principal Risks By Portfolio

The following chart summarizes the principal risks of each
Portfolio. Risks not marked for a particular Portfolio may,
however, still apply to some extent to that Portfolio at various
times.

Country or
PORTFOLIO Interest Credit Market Foreign Geographic Currency
Rate Risk Risk Risk Risk Risk Risk

Money Market
Portfolio X X

Premier Growth
Portfolio X

Growth and Income
Portfolio X X X X X

U.S. Government/
High Grade
Securities
Portfolio X X X

High Yield X X X X X

Total Return
Portfolio X X X

International
Portfolio X X X X

Short-Term Multi-
Market Portfolio X X X X X

Global Bond
Portfolio X X X X X

North American
Government Income X X X X X X

Global Dollar
Government X X X X X

Utility Income
Portfolio X X X

<PAGE>

Conservative
Investors
Portfolio X X X X X

Growth Investors
Portfolio X X X X X

Growth Portfolio X X X X

Worldwide
Privatization
Portfolio X X X X

Technology
Portfolio X

Quasar Portfolio X

Real Estate
Investment
Portfolio X X X

<PAGE>

<TABLE>
Focused
PORTFOLIO Derivatives Liquidity Management Portfolio Allocation Capitalization Sector Leveraging
Risk Risk Risk Risk Risk Risk Risk Risk

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market
Portfolio

Premier
Growth Portfolio X X

Growth and Income
Portfolio X

U.S. Government/
High Grade
Securities
Portfolio X X

High Yield X X X X

Total Return
Portfolio X

International
Portfolio X

Short-Term
[6~Multi-Market
Portfolio X X X X

Global Bond
Portfolio X

North American
Government Income X X X X

Global Dollar
Government X X X X

Utility Income
Portfolio X X

Conservative
Investors
Portfolio X

<PAGE>

Growth Investors
Portfolio X

Growth
Portfolio X X

Worldwide
Privatization
Portfolio X

Technology
Portfolio X X

Quasar Portfolio X X

Real Estate
Investment
Portfolio X X
</TABLE>

<PAGE>

GLOSSARY

This Prospectus uses the following terms.

Types of Securities

Bonds are fixed, floating, and variable rate debt obligations.

Convertible securities are fixed-income securities that are
convertible into common and preferred stock.

Debt securities are bonds, debentures, notes, and bills.

Depositary receipts include American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs") and other types of
depositary receipts.

Equity securities include (i) common stocks, partnership
interests, business trust shares and other equity or ownership
interests in business enterprises, and (ii) securities
convertible into, and rights and warrants to subscribe for the
purchase of, such stocks, shares and interests.

Fixed-income securities are debt securities and preferred stocks,
including floating rate and variable rate instruments.

Foreign government securities are securities issued or
guaranteed, as to payment of principal and interest, by
foreign governments, quasi-governmental entities, or governmental
agencies or other entities.

Interest-only or IO securities are debt securities that receive
only the interest payments on an underlying debt that has been
structured to have two classes, one of which is the IO class and
the other of which is the principal-only or PO class, that
receives only the principal payments on the underlying debt
obligation. POs are similar to, and are sometimes referred to as,
zero coupon securities, which are debt securities issued without
interest coupons.

Mortgage-related securities are pools of mortgage loans that are
assembled for sale to investors (such as mutual funds) by various
governmental, government-related, and private organizations.
These securities include:

- ARMS, which are adjustable-rate mortgage securities;

- SMRS, which are stripped mortgage-related securities;

- CMOs, which are collateralized mortgage obligations;

<PAGE>

- GNMA certificates, which are securities issued by the
Government National Mortgage Association or GNMA;

- FNMA certificates, which are securities issued by the
Federal National Mortgage Association or FNMA; and

- FHLMC certificates, which are securities issued by the
Federal Home Loan Mortgage Corporation or FHLMC.

Qualifying bank deposits are certificates of deposit, bankers'
acceptances, and interest-bearing savings deposits of banks that
have total assets of more than $1 billion and are members of the
Federal Deposit Insurance Corporation.

Rule 144A securities are securities that may be resold under Rule
144A of the Securities Act.

Sovereign debt obligations are foreign government debt
securities, loan participations between foreign governments
and financial institutions, and interests in entities organized
and operated for the purpose of restructuring the investment
characteristics of foreign government securities.

U.S. Government securities are securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.

Rating Agencies, Rated Securities and Indexes

Duff & Phelps is Duff & Phelps Credit Rating Company.

EAFE Index is Morgan Stanley Capital International Europe,
Australasia and Far East ("EAFE") Index.

Fitch is Fitch IBCA, Inc.

Higher-quality commercial paper is commercial paper rated at
least Prime-2 by Moody's, A-2 by S&P, Fitch-2 by Fitch, or Duff 2
by Duff & Phelps.

Investment grade securities are fixed-income securities rated Baa
and above by Moody's or B and above by S&P, Duff & Phelps or
Fitch, or determined by Alliance to be of equivalent quality.

Lower-rated securities are fixed-income securities rated Ba or
below by Moody's or BB or below by S&P, Duff & Phelps or Fitch,
or determined by Alliance to be of equivalent quality, and are
commonly referred to as "junk bonds."

Moody's is Moody's Investors Service, Inc.

NRSRO is a nationally recognized statistical rating organization.

<PAGE>

Prime commercial paper is commercial paper rated Prime 1 by
Moody's or A-1 or higher by S&P or, if not rated, issued by
companies that have an outstanding debt issue rated Aa or higher
by Moody's or AA or higher by S&P.

S&P is Standard & Poor's Ratings Services.

S&P 500 Index is S&P's 500 Composite Stock Price Index, a widely
recognized unmanaged index of market activity.

Other

1940 Act is the Investment Company Act of 1940, as amended.

Code is the Internal Revenue Code of 1986, as amended.

Commission is the Securities and Exchange Commission.

Duration is a measure that relates the price volatility of a
security to changes in interest rates. The duration of a debt
security is the weighted average term to maturity, expressed in
years, of the present value of all future cash flows, including
coupon payments and principal repayments. Thus, by definition,
duration is always less than or equal to full maturity.

Exchange is the New York Stock Exchange.

LIBOR is the London Interbank Offered Rate.

Non-U.S. Company is an entity that (i) is organized under the
laws of a foreign country and conducts business in a foreign
country, (ii) derives 50% or more of its total revenues from
business in foreign countries, or (iii) issues equity or debt
securities that are traded principally on a stock exchange in a
foreign country.

Securities Act is the Securities Act of 1933, as amended.

World Bank is the commonly used name for the International Bank
for Reconstruction and Development.

<PAGE>

Description of the Portfolios

This section of the Prospectus provides a more complete
description of each Portfolio's investment objectives, principal
strategies and risks. Of course, there can be no assurance that
any Portfolio will achieve its investment objective.

Please note that:

- Additional discussion of the Portfolios' investments,
including the risks of the investments, can be found in
the discussion under Description of Investment Practices
following this section.

- The description of the principal risks for a Portfolio
may include risks described in the Summary of Principal
Risks above. Additional information about the risks of
investing in the Portfolios can be found in the
discussion under Additional Risk Considerations.

- Additional descriptions of each Portfolio's strategies,
investments and risks can be found in the Portfolio's
Statement of Additional Information or SAI.

- Except as noted, (i) the Portfolio's investment
objectives are "fundamental" and cannot be changed
without a shareholder vote, and (ii) the Portfolio's
investment policies are not fundamental and thus can be
changed without a shareholder vote.

INVESTMENT OBJECTIVE AND POLICIES

Alliance Money Market Portfolio

The Portfolio's investment objectives are safety of principal,
excellent liquidity, and maximum current income to the extent
consistent with the first two objectives. As a money market
fund, the Portfolio must meet the requirements of Commission Rule
2a-7. The Rule imposes strict requirements on the investment
quality, maturity, and diversification of the Portfolio's
investments. Under Rule 2a-7, the Portfolio's investments must
have a remaining maturity of no more than 397 days and its
investments must maintain an average weighted maturity that does
not exceed 90 days.

The Portfolio pursues its objectives by investing in high-quality
U.S. Dollar-denominated money market securities. The Portfolio
may invest in:

- marketable obligations issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities;

<PAGE>

- certificates of deposit and bankers' acceptances issued
or guaranteed by, or time deposits maintained at, banks
or savings and loan associations including foreign
branches of U.S. banks or U.S. or foreign branches of
foreign banks) having total assets of more than $1
billion;

- high-quality commercial paper issued by U.S. or foreign
companies (rated or determined by Alliance to be of
comparable quality) and participation interests in loans
extended to such companies;

- adjustable rate obligations;

- asset-backed securities;

- repurchase agreements collateralized by the types of
liquid securities listed above.

The Portfolio buys and sells securities based on its objective of
maximizing current income to the extent consistent with safety of
principal and liquidity. Alliance evaluates investments based on
credit analysis and the interest rate outlook.

The Portfolio may invest up to 25% of its total assets in money
market instruments issued by foreign branches of foreign banks.
To the extent the Portfolio makes such investments, consideration
will be given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations,
the possible impact of interruptions in the flow of international
currency transactions, potential political and social instability
or expropriation, imposition of foreign taxes, the lower level of
government supervision of issuers, the difficulty in enforcing
contractual obligations, and the lack of uniform accounting and
financial reporting standards.

The Portfolio limits its investment in illiquid securities to 10%
of its total assets. Illiquid securities include restricted
securities, except restricted securities determined by the
Adviser to be liquid in accordance with procedures adopted by the
Trustees of the Portfolio.

The Portfolio does not invest more than 25% of its assets in
securities of issuers in any one industry except for U.S.
Government securities or certificates of deposit and bankers'
acceptances issued or guaranteed by, or interest bearing savings
deposits maintained at, banks and savings institutions and loan
associations (including foreign branches of U.S. banks and U.S.
branches of foreign banks).

<PAGE>

The Portfolio's primary risks are interest rate risk and credit
risk. Because the Portfolio invests in short-term securities, a
decline in interest rates will affect the Portfolio's yield as
these securities mature or are sold and the Portfolio purchases
new short-term securities with a lower yield. Generally, an
increase in interest rates causes the value of a debt instrument
to decrease. The change in value for shorter-term securities is
usually smaller than for securities with longer maturities.
Because the Portfolio invests in securities with short maturities
and seeks to maintain a stable net asset value of $1.00 per
share, it is possible, though unlikely, that an increase in
interest rates would change the value of your investment.

Credit risk is the possibility that a security's credit rating
will be downgraded or that the issuer of the security will
default (fail to make scheduled interest and principal payments).
The Portfolio invests in highly-rated securities to minimize
credit risk. Under Rule 2a-7, 95% of a money market Portfolio's
holdings must be rated in the highest credit category (e.g., A-1
or A-1+) and the remaining 5% must be rated no lower than the
second highest credit category.

The Portfolio's investments in illiquid securities also may be
subject to liquidity risk, which is the risk that, under certain
circumstances, particular investments may be difficult to sell at
an advantageous price. Illiquid restricted securities also are
subject to the risk that the Portfolio may be unable to sell the
security due to legal or contractual restrictions on resale.

The Portfolio's investments in U.S. dollar-denominated
obligations of foreign banks, foreign branches of U.S. banks,
U.S. branches of foreign banks, and commercial paper of foreign
companies may be subject to foreign risk. Foreign securities
issuers are usually not subject to the same degree of regulation
as U.S. issuers. Reporting, accounting, and auditing standards
of foreign countries differ, in some cases, significantly from
U.S. standards. Foreign risk includes nationalization,
expropriation or confiscatory taxation, political changes or
diplomatic developments that could adversely affect the
Portfolio's investments.

Alliance Premier Growth Portfolio

The Portfolio seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of
large, carefully selected, high-quality U.S. companies that are
judged likely to achieve superior earnings growth. As a matter
of fundamental policy, the Portfolio normally invests at least
85% of its total assets in the equity securities of U.S.
companies. A U.S. company is a company that is organized under
United States law, has its principal office in the United States

<PAGE>

and issues equity securities that are traded principally in the
United States. Normally, about 40-50 companies will be
represented in the Portfolio, with the 25 most highly regarded of
these companies usually constituting approximately 70% of the
Portfolio's net assets. The Portfolio is thus atypical from most
equity mutual funds in its focus on a relatively small number of
intensively researched companies. The Portfolio is designed for
those seeking to accumulate capital over time with less
volatility than that associated with investment in smaller
companies.

Alliance's investment strategy for the Portfolio emphasizes stock
selection and investment in the securities of a limited number of
issuers. Alliance relies heavily upon the fundamental analysis
and research of its large internal research staff, which
generally follows a primary research universe of more than 600
companies that have strong management, superior industry
positions, excellent balance sheets and superior earnings growth
prospects. An emphasis is placed on identifying companies whose
substantially above average prospective earnings growth is not
fully reflected in current market valuations.

In managing the Portfolio, Alliance seeks to utilize market
volatility judiciously (assuming no change in company
fundamentals), striving to capitalize on apparently unwarranted
price fluctuations, both to purchase or increase positions on
weakness and to sell or reduce overpriced holdings. The
Portfolio normally remains nearly fully invested and does not
take significant cash positions for market timing purposes.
During market declines, while adding to positions in favored
stocks, the Portfolio becomes somewhat more aggressive, gradually
reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating
fully valued positions, the Portfolio becomes somewhat more
conservative, gradually increasing the number of companies
represented in its portfolio. Alliance thus seeks to gain
positive returns in good markets while providing some measure of
protection in poor markets.

Alliance expects the average market capitalization of companies
represented in the Portfolio normally to be in the range, or in
excess, of the average market capitalization of companies
included in the S&P 500 Index.

The Portfolio also may:

- - invest up to 20% of its net assets in convertible securities;

- - invest up to 5% of its net assets in rights or warrants;

- - invest up to 15% of its total assets in foreign securities;

<PAGE>

- - purchase and sell exchange-traded index options and stock
index futures contracts;

- - write covered exchange-traded call options on its securities
of up to 15% of its total assets, and purchase and sell
exchange-traded call and put options on common stocks written
by others of up to, for all options, 10% of its total assets;
and

- - make short sales "against the box" of up to 15% of its net
assets; and

- - invest in illiquid securities of up to 10% of its total
assets.

Because the Portfolio invests in a smaller number of securities
than many other equity Portfolios, your investment also has the
risk that changes in the value of a single security may have a
more significant effect, either negative or positive, on the
Portfolio's net asset value.

Alliance Growth and Income Portfolio

The Portfolio seeks appreciation through investments primarily in
dividend-paying common stocks of good quality. The Portfolio
also may invest in fixed-income securities and convertible
securities.

The Portfolio also may try to realize income by writing covered
call options listed on domestic securities exchanges. The
Portfolio also invests in foreign securities. Since the purchase
of foreign securities entails certain political and economic
risks, the Portfolio restricts its investments in these
securities to issues of high quality. The Portfolio also may
purchase and sell financial forward and futures contracts and
options on these securities for hedging purposes. The Portfolio
may invest in illiquid securities of up to 10% of its total
assets.

Alliance U.S. Government/High Grade Securities Portfolio

The Portfolio's investment objective is a high level of current
income consistent with preservation of capital. The Portfolio
invests primarily (i) in U.S. Government securities, including
mortgage-related securities, repurchase agreements and forward
contracts relating to U.S. Government securities, and (ii) in
other high-grade debt securities rated AAA, AA, A by S&P, Duff &
Phelps or Fitch, Aaa, Aa or A by Moody's, or, if unrated, of
equivalent quality. As a matter of fundamental policy, the
Portfolio invests at least 65% of its total assets in these types
of securities. The Portfolio may invest the remaining 35% of its

<PAGE>

total assets in non-U.S. Government mortgage-related and asset-
backed securities. The average weighted maturity of the Fund's
investments varies between one year or less and 30 years.

The Portfolio invests up to 35% of its total assets in investment
grade securities other than U.S. Government and high-grade debt
securities, including CMOs. The Portfolio may utilize certain
other investment techniques, including options and futures
contracts, intended to enhance income and reduce market risk.

The Portfolio also may:

- - enter into reverse repurchase agreements and dollar rolls;

- - enter into interest rate swaps, caps and floors for hedging
purposes;

- - purchase and sell futures contracts for hedging purposes;

- - invest up to 35% of its total assets in investment grade
corporate debt securities (rated BBB or higher by S&P, Duff &
Phelps or Fitch or Baa or higher by Moody's, or, if unrated,
of equivalent quality) and CMOs;

- - enter into forward contracts;

- - invest in qualifying bank deposits;

- - purchase call and put options on futures contracts or on
securities for hedging purposes; and

- - enter into repurchase agreements.

Alliance High-Yield Portfolio

The Portfolio's investment objective is to earn the highest level
of current income available without assuming undue risk by
investing principally in high-yielding debt securities. The
Portfolio pursues this objective by investing primarily in a
diversified mix of high yield, below investment grade fixed-
income securities, known as "junk bonds." As a secondary
objective, the High-Yield Portfolio will seek capital
appreciation, but only when consistent with its primary
objective. Capital appreciation may result, for example, from an
improvement in the credit standing of an issuer whose securities
are held by the Portfolio or from a general decline in interest
rates or a combination of both. Conversely, capital depreciation
may result, for example, from a lowered credit standing or a
general rise in interest rates, or a combination of both.

<PAGE>

The Portfolio normally invests at least 65% of its total assets
in high yield fixed-income securities rated Baa or lower by
Moody's, BBB or lower by S&P, Duff & Phelps or Fitch, or, if
unrated, of equivalent quality. The Portfolio normally does not
invest in securities rated below CCC by each of Moody's, S&P,
Duff & Phelps and Fitch, or, if unrated of comparable quality.

As of December 31, 1998, the Portfolio's investments were rated
(or equivalent quality):

- - A and above %
- - Ba or BB %
- - B %
- - CCC %
- - Unrated %

When the spreads between the yields derived from lower rated
securities and those derived from higher-rated issues are
relatively narrow, the Portfolio may invest in the higher-rated
issues since they may provide similar yields with somewhat less
risk. Fixed-income securities appropriate for the Portfolio may
include both convertible and non-convertible debt securities and
preferred stock.

The Portfolio also may:

- invest in foreign securities;

- invest in U.S. Government securities;

- invest in municipal securities of up to 20% of its
assets;

- invest in mortgage-related and asset-backed securities;

- invest in loan participations and assignments of loans
to corporate, governmental, or other borrowers
originally made by institutional lenders or lending
syndicates;

- enter into forward commitments;

- write covered put and call options on fixed-income
securities, securities indices and foreign currencies
and purchase put or call options on fixed-income
securities, securities indices and foreign currencies;

- purchase or write privately negotiated or exchange-
traded options on securities;

<PAGE>

- enter into futures contracts and options on futures
contracts;

- invest up to 10% of its total assets in illiquid
securities;

- make secured loans of portfolio securities of up to 30%
of its net assets; and

- enter into repurchase agreements.

Alliance Total Return Portfolio

The Portfolio's investment objective is to achieve a high return
through a combination of current income and capital appreciation.
The Portfolio invests in U.S. Government and agency obligations,
bonds, fixed-income senior securities (including short and long-
term debt securities and preferred stocks to the extent their
value is attributable to their fixed-income characteristics),
preferred and common stocks in such proportions and of such type
as are deemed best adapted to the current economic and market
outlooks. The percentage of the Portfolio's assets invested in
each type of security at any time shall be in accordance with the
judgment of Alliance.

Alliance International Portfolio

The Portfolio's investment objective is to seek to obtain a total
return on its assets from long-term growth of capital principally
through a broad portfolio of marketable securities of established
non-U.S. companies (e.g., companies incorporated outside the
U.S.), companies participating in foreign economies with
prospects for growth, and foreign government securities. The
Portfolio also invests in U.S. companies that have their
principal activities and interests outside the U.S. Normally,
the Portfolio will invest more than 80% of its assets in these
types of companies.

The Portfolio expects to invest primarily in common stocks of
established non-U.S. companies that Alliance believes have
potential for capital appreciation or income or both. The
Portfolio also may invest in any other type of security,
including convertible securities, preferred stocks, debt
securities of foreign issuers, or U.S. Government securities.

The Portfolio intends to diversify its investments broadly among
countries and normally invests in at least three foreign
countries, although it may invest a substantial portion of its
assets in one or more of these countries. The Portfolio may
invest in companies, wherever organized, that Alliance judges
have their principal activities and interests outside the U.S.

<PAGE>

These companies may be located in developing countries, which
involves exposure to economic structures that are generally less
diverse and mature, and to political systems which can be
expected to have less stability, than those of developed
countries.

The Portfolio also may:

- - purchase or sell forward foreign currency exchange contracts
of up to 50% of its assets;

- - invest in warrants;

- - make loans of portfolio securities of up to 30% of its total
assets;

- - invest in illiquid securities of up to 10% of its total
assets; and

- - enter into repurchase agreements of up to seven days'
duration for up to 10% of the Portfolio's total assets.

Investments in non-U.S. countries may have more risk because they
tend to be more volatile than the U.S. stock market. To the
extent that the Portfolio invests a substantial amount of its
assets in a particular foreign country, an investment in the
Portfolio has the risk that market changes or other events
affecting that country including political instability and
unpredictable economic conditions, may have a more significant
effect on the Portfolio's net asset value.

Alliance Short-Term Multi-Market Portfolio

The Portfolio's investment objective is to seek the highest level
of current income, consistent with what the Adviser considers to
be prudent investment risk, that is available from a portfolio of
high-quality debt securities having remaining maturities of not
more than three years. The Portfolio is designed for the investor
who seeks a higher yield than a money market fund or certificate
of deposit and less fluctuation in net asset value than a longer-
term bond fund.

The Portfolio invests in debt securities denominated in the U.S.
Dollar (at least 25% of its net assets) and selected foreign
currencies. The Portfolio seeks investment opportunities in
foreign, as well as domestic, securities markets. The Portfolio
normally expects to maintain at least 70% of its assets in debt
securities denominated in foreign currencies. The Portfolio
limits its investments in a single currency other than the U.S.
Dollar to 25% of its net assets except for the Euro in which the
Portfolio may invest up to 50% of its net assets.

<PAGE>

In pursuing its investment objective, the Portfolio seeks to
minimize credit risk and fluctuations in net asset value by
investing only in shorter-term debt securities. Normally, a high
proportion of the Portfolio's investments consist of money market
instruments. Alliance actively manages the Portfolio in
accordance with a multi-market investment strategy, allocating
the Portfolio's investments among securities denominated in the
U.S. Dollar and the currencies of a number of foreign countries
and, within each such country, among different types of debt
securities. Alliance adjusts the Portfolio's exposure to each
currency based on its perception of the most favorable markets
and issuers. The percentage of assets invested in securities of
a particular country or denominated in a particular currency
varies in accordance with the Alliance's assessment of the
relative yield and appreciation potential of such securities and
the relationship of a country's currency. Fundamental economic
strength, credit quality and interest rate trends are the
principal factors considered by Alliance in determining whether
to increase or decrease the emphasis placed upon a particular
type of security or industry sector within the Portfolio's
investment portfolio.

The returns available from short-term foreign currency
denominated debt instruments can be adversely affected by changes
in exchange rates. Alliance believes that the use of foreign
currency hedging techniques, including "cross-hedges" can help
protect against declines in the U.S. Dollar value of income
available for distribution to shareholders and declines in the
net asset value of the Portfolio's shares resulting from adverse
changes in the currency exchange rates. The Portfolio invests in
debt securities denominated in the currencies of countries whose
governments are considered stable by the Adviser.

The Portfolio expects to invest in debt securities denominated in
the Euro. An issuer of debt securities purchased by the
Portfolio may be domiciled in a country other than the country in
whose currency the instrument is denominated. In addition, the
Portfolio may purchase debt securities (sometimes referred to as
"linked" securities) that are denominated in one currency while
the principal amounts of, and value of interest payments on, such
securities are determined with reference to another currency.

The Portfolio seeks to minimize investment risk by limiting its
investments to debt securities of high-quality and invests in:

- - U.S. Government securities;

- - high-quality foreign government securities;

- - obligations issued by supranational entities and corporate
debt securities having a high-quality rating;

<PAGE>

- - certificates of deposit and bankers' acceptances issued or
guaranteed by, or time deposits maintained at, banks
(including foreign branches of U.S. banks or U.S. or foreign
branches of foreign banks) having total assets of more than
$500 million and determined by the Adviser to be of high
quality; and

- - prime commercial paper (or unrated commercial paper of
equivalent quality) issued by U.S. or foreign companies
having outstanding high-quality debt securities.

As a matter of fundamental policy, the Portfolio concentrates at
least 25% of its total assets in debt instruments issued by
domestic and foreign companies engaged in the banking industry,
including bank holding companies. These investments may include
certificates of deposit, time deposits, bankers' acceptances, and
obligations issued by bank holding companies, as well as
repurchase agreements entered into with banks.

The Portfolio also may:

- - invest in indexed commercial paper;

- - enter into futures contracts and purchase and write options
on futures contracts and privately negotiated options on
securities;

- - purchase and write put and call options on foreign
currencies;

- - purchase or sell forward foreign currency exchange contracts;

- - enter into interest rate swaps, caps and floors;

- - invest in variable, floating, and inverse floating rate
instruments;

- - make secured loans of its portfolio securities of up to 20%
of its net assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements.

Alliance Global Bond Portfolio

The Portfolio's investment objective is to seek a high level of
return from a combination of current income and capital
appreciation by investing in a globally diversified portfolio of
high-quality debt securities denominated in the U.S. Dollar and a

<PAGE>

range of foreign currencies. The Portfolio normally invests
approximately 25% of its total assets in U.S. Dollar-denominated
debt securities. The average weighted maturity of the
Portfolio's investments in fixed-income securities is expected
to vary between one year or less and 10 years.

In the past, debt securities offered by certain foreign
governments have provided higher investment returns than U.S.
government debt securities. The relative performance of various
countries' fixed-income markets historically has reflected wide
variations relating to the unique characteristics of each
country's economy. Year-to-year fluctuations in certain markets
have been significant, and negative returns have been experienced
in various markets from time to time. Alliance and the
Portfolio's Sub-Adviser, AIGAM International Limited, believe
that investment in a composite of foreign fixed-income markets
and in the U.S. government and corporate bond market is less
risky than a portfolio invested exclusively in foreign debt
securities, and provides investors with more opportunities for
attractive total return than a portfolio invested exclusively in
U.S. debt securities.

The Portfolio invests only in securities of issuers in countries
whose governments are deemed stable by Alliance and the Sub-
Adviser. Their determination that a particular country should be
considered stable depends on their evaluation of political and
economic developments affecting the country as well as recent
experience in the markets for foreign government securities of
the country. The Adviser does not believe that the credit risk
inherent in the obligations of stable foreign governments is
significantly greater than that of U.S. government debt
securities.

The Portfolio intends to spread investment risk among the capital
markets of a number of countries and will invest in securities of
the governments of, and companies based in, at least three, and
normally considerably more, of these countries. The percentage
of the Portfolio's assets invested in the debt securities of the
government of, or a company based in, a particular country or
denominated in a particular currency varies depending on the
relative yields of the securities, the economies of the countries
in which the investments are made and the countries' financial
markets, the interest rate climate of these countries and the
relationship of the countries' currencies to the U.S. Dollar.
Currency is judged on the basis of fundamental economic criteria
(e.g., relative inflation levels and trends, growth rate
forecasts, balance of payments status, and economic policies) as
well as technical and political data.

<PAGE>

The Portfolio seeks to minimize investment risk by limiting its
portfolio investments to high-quality debt securities and invests
in:

- - U.S. Government securities;

- - high-quality foreign government securities;

- - obligations issued by supranational organizations and
corporate debt obligations; and

- - prime commercial paper.

The Portfolio expects to invest in debt securities denominated in
the euro. The Portfolio also may engage in certain hedging
strategies, including the purchase and sale of forward foreign
currency exchange contracts and other hedging techniques.

Alliance North American Government Income Portfolio

The Portfolio's investment objective is the highest level of
current income, consistent with what Alliance considers to be
prudent investment risk, that is available from a portfolio of
debt securities issued or guaranteed by the governments of the
United States, Canada, and Mexico, their political subdivisions
(including Canadian provinces but excluding states of the United
States), agencies, instrumentalities or authorities ("Government
securities"). The Portfolio invests in investment grade
securities denominated in the U.S. Dollar, the Canadian Dollar,
and the Mexican Peso and expects to maintain at least 25% of its
assets in securities denominated in the U.S. Dollar. In
addition, the Portfolio may invest up to 25% of its total assets
in debt securities issued by governmental entities of Argentina
("Argentine Government securities").

The Portfolio invests at least 65%, and normally substantially
more, of its assets in Government securities and income-producing
securities. The average weighted maturity of the Portfolio's
fixed-income securities is expected to vary between one year or
less and 30 years. The Portfolio maintains borrowings of
approximately one-third of its net assets.

The Portfolio expects that it will not retain a debt security
that is downgraded below BBB or Baa, or, if unrated, determined
by Alliance to have undergone similar credit quality
deterioration. The Portfolio may conclude, under certain
circumstances, such as the downgrading to below investment grade
of all of the securities of a governmental issuer in one of the
countries in which the Portfolio has substantial investments,
that it is in the best interests of the shareholders to retain
its holdings in securities of that issuer.

<PAGE>

Alliance believes that the increasingly integrated economic
relationship among the United States, Canada and Mexico,
characterized by the reduction and projected elimination of most
barriers to free trade among the three nations and the growing
coordination of their fiscal and monetary policies, will over the
long term benefit the economic performance of all three countries
and promote greater correlation of currency fluctuation among the
U.S. and Canadian Dollars and the Mexican Peso.

Alliance will actively manage the Portfolio's assets in relation
to market conditions and general economic conditions and adjust
the Portfolio's investments in an effort to best enable the
Portfolio to achieve its investment objective. Thus, the
percentage of the Portfolio's assets invested in a particular
country or denominated in a particular currency will vary in
accordance with Alliance's assessment of the relative yield and
appreciation potential of such securities and the relationship of
the country's currency to the U.S. Dollar. To the extent that
its assets are not invested in Government securities, however,
the Portfolio may invest the balance of its total assets in
investment grade debt securities issued by, and denominated in
the local currencies of, governments of countries located in
Central and South America or any of their political subdivisions,
agencies, instrumentalities or authorities, provided that such
securities are denominated in their local currencies. The
Portfolio limits its investments in debt securities issued by the
governmental entities of any one country, except for Argentine
Government securities, to 10% of its total assets.

The Portfolio also may:

- enter into futures contracts and purchase and write
options on futures contracts for hedging purposes of up
to 50% of its total assets with initial margins deposits
of up to 5% of its total assets;

- purchase and write put and call options on foreign
currencies;

- purchase or sell forward foreign currency exchange
contracts;

- write covered put and call options and purchase put and
call options on U.S. Government and foreign government
securities traded on U.S. and foreign securities
exchanges, and write put and call options for cross-
hedging purposes;

- enter into interest rate swaps (involving payments in
the same currency or in different currencies), caps, and
floors;

<PAGE>

- enter into forward commitments for the purchase or sale
of securities for up 30% of its total assets;

- invest in variable, floating, and inverse floating rate
instruments;

- invest up to 10% of its net assets in illiquid
securities;

- make secured loans of its portfolio securities of up to
20% of net assets;

- invest in illiquid securities of up to 15% of its total
assets; and

- enter into repurchase agreements.

Alliance Global Dollar Government Portfolio

The Portfolio's investment objective is a high level of current
income. Its secondary investment objective is capital
appreciation. In seeking to achieve these objectives, the
Portfolio invests at least 65% of its total assets in sovereign
debt obligations. The Portfolio's investments in sovereign debt
obligations will emphasize obligations referred to as "Brady
Bonds," which are issued as part of debt restructurings and
collateralized in full as to principal due at maturity by zero
coupon U.S. Government securities.

The Portfolio also may invest up to 35% of its total assets in
U.S. and non-U.S. corporate fixed-income securities. The
Portfolio will limit its investments in sovereign debt
obligations and U.S. and non-U.S. corporate fixed-income
securities to U.S. Dollar-denominated securities. Alliance
expects the average weighted maturity of the Portfolio's
investments will be approximately:

- for U.S. fixed-income securities, nine to 15 years;

- for non-U.S. fixed-income securities, 15 to 25 years;
and

- for sovereign debt obligations longer than 25 years.

Substantially all of the Portfolio's assets will be invested in
lower-rated securities, which may include securities having the
lowest rating for non-subordinated debt instruments (i.e., rated
C by Moody's or CCC or lower by S&P, Duff & Phelps and Fitch) and
unrated securities of equivalent investment quality. These
securities may have extremely poor prospects of ever attaining
any real investment standing and a current identifiable

<PAGE>

vulnerability to default, be unlikely to have the capacity to pay
interest and repay principal when due in the event of adverse
business, financial or economic conditions, and be in default or
not current in the payment of interest or principal.

The Portfolio also may invest in investment grade securities.
Unrated securities will be considered for investment by the
Portfolio when Alliance believes that the financial condition of
the issuers of such obligations and the protection afforded by
the terms of the obligations themselves limit the risk to the
Portfolio to a degree comparable to that of rated securities
which are consistent with the Portfolio's investment objectives
and policies.

As of December 31, 1998, securities ratings (or equivalent
quality) of the Portfolio's securities were:

- A and above %
- Baa or BBB %
- Ba or BB %
- B %
- CC %
- C %
- Unrated %

The Portfolio's investments in sovereign debt obligations and
non-U.S. corporate fixed-income securities emphasize countries
that are considered at the time of purchase to be emerging
markets or developing countries by the World Bank. The Portfolio
may invest up to 30% of its total assets in securities or
obligations of Argentina, Brazil, Mexico, Morocco, the
Philippines, Russia and Venezuela. Alliance expects that these
countries are now, or are expected at a future date to be, the
principal participants in debt restructuring programs (including,
in the case of Argentina, Mexico, the Philippines and Venezuela,
issuers of currently outstanding Brady Bonds) that, in Alliance's
opinion, will provide the most attractive investment
opportunities for the Portfolio. The Portfolio will limit
investments in the sovereign debt obligations of each country (or
of any other single foreign country) to less than 25% of its
total assets.

Alliance anticipates that other countries that will provide
investment opportunities for the Portfolio include, among others,
Bolivia, Costa Rica, the Dominican Republic, Ecuador, Jordan,
Nigeria, Panama, Peru, Poland, Thailand, Turkey and Uruguay. The
Portfolio will limit its investments in the sovereign debt
obligations and corporate fixed-income securities of issuers in
any other single foreign country to not more than 10% of its
total assets.

<PAGE>

The Portfolio also may:

[6~ - invest in structured securities of up to 25% of its
total assets;

- invest in fixed and floating rate loans that are
arranged through private negotiations between an issuer
of sovereign debt obligations and one or more financial
institutions and in participations in and assignments of
these types of loans;

- invest up to 10% of its total assets in other investment
companies whose investment objectives and policies are
consistent with those of the Portfolio;

- invest in warrants;

- enter into interest rate swaps, caps and floors;

- enter into forward commitments for the purchase or sale
of securities but only if these commitments total 30% or
less of the total assets of the Portfolio.

- enter into standby commitment agreements;

- make short sales of securities "against the box" or
maintain a short position of up to 10% of its net
assets;

- write put and call options on securities of the types in
which it is permitted to invest and write call options
for cross-hedging purposes;

- write privately negotiated options on securities.

- purchase and sell exchange-traded options on any
securities index of the types of securities in which it
may invest;

- invest in variable, floating, and inverse floating rate
instruments;

- enter into reverse repurchase agreements and dollar
rolls;

- invest in loan participations and assignments up to 25%
of its total assets;

- make secured loans of its portfolio securities of up to
30% of its net assets;

<PAGE>

- invest in illiquid securities of up to 15% of its total
assets; and

- enter into repurchase agreements.

While it does not currently intend to do so, the Portfolio
reserves the right to borrow an amount not to exceed one-third of
the Portfolio's net assets.

Alliance Utility Income Portfolio

The Portfolio's investment objective is to seek current income
and capital appreciation by investing primarily in equity and
fixed-income securities of companies in the utilities industry.
As a fundamental policy, the Portfolio normally invests at least
65% of its total assets in securities of companies in the
utilities industry.

The Portfolio seeks to take advantage of the characteristics and
historical performance of securities of utility companies, many
of which pay regular dividends and increase their common stock
dividends over time. The Portfolio considers a company to be in
the utilities industry if, during the most recent twelve-month
period, at least 50% of the company's gross revenues, on a
consolidated basis, were derived from its utilities activities.

The Portfolio may invest in securities of both U.S. and foreign
issuers, although the Portfolio will invest no more than 15% of
its total assets in issuers in any one foreign country. The
Portfolio invests at least 65% of its total assets in income-
producing securities, but there is otherwise no limit on the
allocation of the Portfolio's investments between equity
securities and fixed-income securities. The Portfolio may invest
up to 35% of its net assets in lower-rated securities. The
Portfolio will not retain a security that is downgraded below B
or determined by Alliance to have undergone similar credit
quality deterioration following purchase.

The Portfolio may invest up to 35% of its total assets in equity
and fixed-income securities of domestic and foreign corporate and
governmental issuers other than utility companies. These
securities include U.S. Government securities and repurchase
agreements for those securities, foreign government securities,
corporate fixed-income securities of domestic issuers, corporate
fixed-income securities of foreign issuers denominated in foreign
currencies or in U.S. dollars (in each case including fixed-
income securities of an issuer in one country denominated in the
currency of another country), qualifying bank deposits, and prime
commercial paper.

<PAGE>

The Portfolio also may:

- - invest up to 30% of its net assets in convertible securities;

- - invest up to 5% of its net assets in rights or warrants;

- - invest in depositary receipts, securities of supranational
entities denominated in the currency of any country,
securities denominated in the euro, and "semi-governmental
securities";

- - write covered call and put options, purchase call and put
options on securities of the types in which it is permitted
to invest that are exchange-traded and over-the-counter, and
write uncovered call options for cross-hedging purposes;

- - purchase and sell exchange-traded options on any securities
index composed of the types of securities in which it may
invest;

- - enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including an index of
U.S. Government securities, foreign government securities,
corporate fixed-income securities, or common stock, and may
purchase and write options on futures contracts;

- - purchase and write call and put options on foreign currencies
traded on U.S. and foreign exchanges or over-the-counter for
hedging purposes;

- - purchase or sell forward contracts;

- - enter into interest rate swaps (in the same or different
currencies) and purchase or sell interest rate caps and
floors;

- - enter into forward commitments;

- - enter into standby commitment agreements;

- - make short sales "against the box" of securities or maintain
a short position of up to 10% of its net assets;

- - make secured loans of portfolio securities of up to 20% of
its total assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

<PAGE>

- - enter into repurchase agreements for U.S. Government
securities.

The Portfolio's principal risks include its investing primarily
in electric utility companies. Factors affecting that industry
sector can have a significant effect on the Portfolio's net asset
value. The U.S. utilities industry has experienced significant
changes in recent years. Electric utility companies in general
have been favorably affected by lower fuel costs, the full or
near completion of major construction programs and lower
financing costs. In addition, many utility companies have
generated cash flows in excess of current operating expenses and
construction expenditures, permitting some degree of
diversification into unregulated businesses. Regulatory changes,
however, could increase costs or impair the ability of nuclear
and conventionally fueled generating facilities to operate their
facilities and reduce their ability to make dividend payments of
their securities. Rates of return of utility companies generally
are subject to review and limitation by state public utilities
commissions and tend to fluctuate with marginal financing costs.
Rate changes ordinarily lag behind changes in financing costs and
can favorably or unfavorably affect the earnings or dividend pay-
outs of utilities stocks depending upon whether the rates and
costs are declining or rising.

Utility companies historically have been subject to the risks of
increases in fuel and other operating costs, high interest costs,
costs associated with compliance with environmental and nuclear
safety regulations, service interruptions, economic slowdowns,
surplus capacity, competition and regulatory changes. There can
also be no assurance that regulatory policies or accounting
standards changes will not negatively affect utility companies'
earnings or dividends. Utility companies are subject to
regulation by various authorities and may be affected by the
imposition of special tariffs and changes in tax laws. To the
extent that rates are established or reviewed by governmental
authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the
Portfolio's policy of concentrating its investments in utility
companies, the Portfolio is more susceptible than most other
mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.

Foreign utility companies, like those in the U.S., are generally
subject to regulation, although the regulation may or may not be
comparable to domestic regulations. Foreign utility companies in
certain countries may be more heavily regulated by their
respective governments than utility companies located in the U.S.
As in the U.S., utility companies generally are required to seek
government approval for rate increases. In addition, many
foreign utility companies use fuels that cause more pollution

<PAGE>

than those used in the U.S. and may yet be required to invest in
pollution control equipment. Foreign utility regulatory systems
vary from country to country and may evolve in ways different
from regulation in the U.S. The percentage of the Portfolio's
assets invested in issuers of particular countries will vary.

Increases in interest rates may cause the value of the
Portfolio's investments to decline and the decrease in value may
not be offset by higher interest rate income. The Portfolio's
investments in lower-rated securities may be subject to more
credit risk than a Portfolio that invests in higher-rated
securities.

Alliance Conservative Investor Portfolio

The Portfolio's investment objective is a high total return
without, in the view of the Adviser, undue risk of principal.
The Portfolio allocates varying portions of its assets in debt
and equity securities to reduce volatility while providing modest
upside potential. The Portfolio normally invests between 50% and
90% (generally approximately 70%) of its total assets in
investment grade fixed-income securities and money market
instruments, with equity securities comprising the remainder of
the Portfolio's holdings. The Portfolio adjusts its asset mixes
in response to economic and credit market cycles.

Most of the Portfolio's investments in fixed-income securities
generally will have a duration less than that of a 10-year
Treasury bond. The Portfolio expects that its fixed-income
securities will have an average weighted maturity that varies
between less than one year and 30 years. While the Portfolio's
investments in fixed-income securities are investment grade at
the time of purchase, the Portfolio may continue to hold any
security that falls below investment grade if the Adviser
believes that it is appropriate under the circumstances.

The Portfolio's investments in equity securities consist of
common stocks and convertible securities, such as convertible
bonds, convertible preferred stocks and warrants. The Portfolio
seeks to invest in companies with a favorable outlook for
earnings with a rate of growth that Alliance expects to exceed
the U.S. economy over time.

The Portfolio also may:

- - invest up to 30% of its total assets in foreign securities;

- - invest in unrated securities;

- - invest in mortgage-related securities, asset-backed
securities, and adjustable rate securities;

<PAGE>

- - invest in fixed-income securities rated Ba or lower by S&P,
Duff & Phelps or Fitch or, if unrated, of equivalent quality;

- - invest in convertible securities;

- - invest in Euro-coupon and pay-in-kind bonds;

- - buy and sell stock index futures contracts and by options on
index futures and on stock indices for hedging purposes;

- - write covered call and put options on securities it owns or
in which it may invest;

- - enter into forward commitments;

- - make loans at portfolio securities of up to 25% of its total
assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements of up to 25% of its total
assets.

Alliance Growth Investors Portfolio

The Portfolio's investment objective is to achieve the highest
total return consistent with the Adviser's determination of
reasonable risk. The Portfolio invests varying portions of its
assets in equity and debt securities. The Portfolio normally
invests between 40% and 90% (generally approximately 70%) of its
total assets in common stocks and other equity securities, with
fixed-income securities comprising the remainder of the
Portfolio's holdings. The Portfolio will adjust its asset mixes
in response to economic and credit market cycles. The Portfolio
may invest in equity securities of intermediate- and small-sized
companies with favorable growth prospects, companies in cyclical
industries, companies whose securities are temporarily
undervalued, companies in special situations and less widely
known companies.

The Portfolio invests in investment grade fixed-income
securities, including cash and money market instruments and also
may invest up to 25% of its total assets in fixed-income
securities that are rated below investment grade. Lower-rated
securities generally provide greater current income than higher
rated fixed-income securities, but are subject to greater credit
and market risk. The Portfolio expects that its investments in
fixed-income securities will have an average weighted maturity
that varies between less than one year and 30 years.

<PAGE>

The Portfolio also may:

- - invest in foreign securities;

- - invest in unrated securities;

- - invest in mortgage-related securities, asset-backed
securities, and adjustable rate securities;

- - invest in fixed-income securities rated Ba or lower by S&P,
Duff & Phelps or Fitch, or if unrated of equivalent quality;

- - invest in convertible securities;

- - invest in Euro-coupon and pay-in-kind bonds;

- - buy and sell stock index futures contracts and buy options on
index futures and on stock indices for hedging purposes;

- - write covered call and put options on securities it owns or
[6~in which it may invest;

- - enter into forward commitments;

- - make loans of portfolio securities of up to [30]% of its
total assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements.

Alliance Growth Portfolio

The Portfolio's investment objective is to provide long-term
growth of capital. Current income is only an incidental
consideration. The Portfolio seeks to achieve its objective by
investing primarily in equity securities of companies with
favorable earnings outlooks, which have long-term growth rates
that are expected to exceed that of the U.S. economy over time.

The Portfolio also may invest up to 25% of its total assets in
lower-rated fixed-income securities rated at the time of purchase
as below investment grade, that is, securities rated Ba or lower
by Moody's or BB or lower by S&P, Duff & Phelps or Fitch or, if
unrated, of comparable quality. From time to time, however, the
Portfolio may invest in securities rated in the lowest grades
(i.e., C by Moody's or D or equivalent by S&P, Duff & Phelps or
Fitch), or securities of comparable quality if there are
prospects for an upgrade or a favorable conversion into equity

<PAGE>

securities. If the credit rating of a security held by the
Portfolio falls below its rating at the time of purchase (or
Alliance determines that the credit quality of the security has
deteriorated), the Portfolio may continue to hold the security if
such investment is considered appropriate under the
circumstances.

The Portfolio also may:

- - invest in zero-coupon and payment-in-kind bonds;

- - invest in foreign securities although not generally in excess
of 15% of its total assets;

- - invest in depository receipts, both ADRs and GDRs, where
investments in ADRs are deemed to be investments in
securities issued by U.S. issuers and those in GDRs and other
types of depositary receipts are deemed to be investments in
the underlying securities;

- - buy or sell foreign currencies, options on foreign
currencies, foreign currency futures contracts (and related
options) and deal in forward foreign currency exchange
contracts;

- - enter into forward commitments;

- - buy and sell stock index futures contracts and options on
those contracts and on stock indices;

- - purchase and sell futures contracts and options on futures
and U.S. Treasury securities;

- - write covered call and put options;

- - purchase and sell put and call options;

- - make loans of portfolio securities of up to 25% of its total
assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements of up to 25% of its total
assets.

Alliance Worldwide Privatization Portfolio

The Portfolio's investment objective is to seek long-term capital
appreciation. As a fundamental policy, the Portfolio invests at
least 65% of its total assets in equity securities issued by

<PAGE>

enterprises that are undergoing, or have undergone, privatization
(as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its
investments will include securities of companies believed by
Alliance to be beneficiaries of privatizations. The Portfolio is
designed for investors desiring to take advantage of investment
opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state
enterprises in both established and developing economies. These
companies include those in Western Europe and Scandinavia,
Australia, New Zealand, Latin America, Asia and Eastern and
Central Europe and, to a lesser degree, Canada and the United
States.

The Portfolio's investments in enterprises undergoing
privatization may comprise three distinct situations. First, the
Portfolio may invest in the initial offering of publicly traded
equity securities (an "initial equity offering") of a government-
or state-owned or controlled company or enterprise (a "state
enterprise"). Secondly, the Portfolio may purchase securities of
a current or former state enterprise following its initial equity
offering. Finally, the Portfolio may make privately negotiated
purchases of stock or other equity interests in a state
enterprise that has not yet conducted an initial equity offering.
Alliance believes that substantial potential for capital
appreciation exists as privatizing enterprises rationalize their
management structures, operations and business strategies in
order to compete efficiently in a market economy, and the
Portfolio will thus emphasize investments in such enterprises.

Privatization is a process through which the ownership and
control of companies or assets changes in whole or in part from
the public sector to the private sector. Through privatization a
government or state divests or transfers all or a portion of its
interest in a state enterprise to some form of private ownership.
Governments and states with established economies, including
France, Great Britain, Germany and Italy, and those with
developing economies, including Argentina, Mexico, Chile,
Indonesia, Malaysia, Poland and Hungary, are engaged in
privatizations. The Portfolio will invest in any country
believed to present attractive investment opportunities.

A major premise of the Portfolio's approach is that the equity
securities of privatized companies offer opportunities for
significant capital appreciation. In particular, because
privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often
are priced attractively to secure the issuer's successful
transition to private sector ownership. Additionally, these
enterprises often dominate their local markets and typically have

<PAGE>

the potential for significant managerial and operational
efficiency gains.

The Portfolio diversifies its investments among a number of
countries and normally invests in issuers based in at least four,
and usually considerably more, countries. The Portfolio invests
up to 15% of its total assets in issuers in any one foreign
country, except that the Portfolio may invest up to 30% of its
total assets in issuers in any one of France, Germany, Great
Britain, Italy and Japan. The Portfolio may invest all of its
assets within a single region of the world.

The Portfolio may invest up to 35% of its total assets in debt
securities and convertible debt securities of issuers whose
common stocks are eligible for purchase by the Portfolio. The
Portfolio invests up to 5% of its net assets in lower-rated
securities. The Portfolio will not retain a non-convertible
security that is downgraded below C or determined by Alliance to
have undergone similar credit quality deterioration following
purchase.

The Portfolio also may:

- - invest up to 20% of its total assets in rights or warrants;

- - write covered call and put options, purchase put and call
options on securities of the types in which it is permitted
to invest and on exchange-traded index options, and write
uncovered options for cross-hedging purposes;

- - enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of
U.S. Government securities, foreign government securities, or
common stock and may purchase and write options on future
contracts;

- - purchase and write put and call options on foreign currencies
for hedging purposes;

- - purchase or sell forward foreign currency contracts;

- - enter into forward commitments;

- - enter into standby commitment agreements;

- - enter into currency swaps for hedging purposes;

- - make short sales "against the box" of securities or maintain
a short position of up to 10% of its net assets;

<PAGE>

- - make secured loans of portfolio securities equal in value of
up to 30% of its total assets to entities with which it can
enter into repurchase agreements;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements for U.S. Government
securities.

Investments in non-U.S. companies and smaller companies may have
more risk because they tend to be more volatile than the overall
stock market. The Portfolio's investments in debt securities and
convertible securities have interest risk and credit risk.

Alliance Technology Portfolio

The Portfolio emphasizes growth of capital and invests for
capital appreciation. Current income is only an incidental
consideration. The Portfolio may seek income by writing listed
call options. The Portfolio invests primarily in securities of
companies expected to benefit from technological advances and
improvements (i.e., companies that use technology extensively in
the development of new or improved products or processes). The
Portfolio will normally have at least 80% of its assets invested
in the securities of these companies. The Portfolio normally
will have substantially all its assets invested in equity
securities, but it also invests in debt securities offering an
opportunity for price appreciation. The Portfolio will invest in
listed and unlisted securities, in U.S. securities, and up to 10%
of its total assets in foreign securities.

The Portfolio's policy is to invest in any company and industry
and in any type of security with potential for capital
appreciation. It invests in well-known and established companies
and in new and unseasoned companies.

The Portfolio also may:

- - write covered call options on its securities of up to 15% of
its total assets and purchase exchange-listed call and put
options, including exchange-traded index put options of up
to, for all options, 10% of its total assets;

- - invest up to 10% of its total assets in warrants;

- - invest up to 15% of its net assets in illiquid securities;
and

- - make loans of portfolio securities of up to 30% of its total
assets.

<PAGE>

Because the Portfolio invests primarily in technology companies,
factors affecting those types of companies could have a
significant effect on the Portfolio's net asset value. In
addition, the Portfolio's investments in technology stocks,
especially those of smaller, less-seasoned companies, tend to be
more volatile than the overall market. The Portfolio's
investments in debt and foreign securities have credit risk and
foreign risk.

Alliance Quasar Portfolio

The Portfolio's investment objective is to seek growth of capital
by pursuing aggressive investment policies. The Portfolio
invests for capital appreciation and only incidentally for
current income. The Portfolio's practice of selecting securities
based on the possibility of appreciation cannot, of course,
ensure against a loss in value. Moreover, because the
Portfolio's investment policies are aggressive, an investment in
the Portfolio is risky and investors who want assured income or
preservation of capital should not invest in the Portfolio.

The Portfolio invests in any company and industry and in any type
of security with potential for capital appreciation. It invests
in well-known and established companies and in new and unseasoned
companies. When selecting securities for the Portfolio, Alliance
considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the
determinants of corporate profits and management capability and
practices.

The Portfolio invests principally in equity securities, but it
also invests to a limited degree in non-convertible bonds and
preferred stocks. The Portfolio invests in listed and unlisted
U.S. and foreign securities. The Portfolio periodically invests
in special situations, which occur when the securities of a
company are expected to appreciate due to a development
particularly or uniquely applicable to that company regardless of
general business conditions or movements of the market as a
whole.

The Portfolio also may:

- - make short sales of securities "against the box" but not more
than 15% of its net assets may be deposited on short sales;

- - write covered call options of up to 15% of its total assets
and purchase and sell put and call options written by others
of up to, for all options, 10% of its total assets; and

- - invest up to 15% of its assets in illiquid securities.

<PAGE>

Investments in smaller companies may have more risk because they
tend to be more volatile than the overall stock market. The
Portfolio's investments in non-convertible bonds, preferred
stocks, and foreign stocks may have credit risk and foreign risk.

Alliance Real Estate Investment Portfolio

The Portfolio's investment objective is to seek a total return on
its assets from long-term growth of capital and from income
principally through investing in a portfolio of equity securities
of issuers that are primarily engaged in or related to the real
estate industry.

The Portfolio normally invests at least 65% of its total assets
in equity securities of real estate investment trusts, or REITs,
and other real estate industry companies. A "real estate
industry company" is a company that derives at least 50% of its
gross revenues or net profits from the ownership, development,
construction, financing, management or sale of commercial,
industrial or residential real estate or interests in these
properties. The Portfolio invests in equity securities that
include common stock, shares of beneficial interest of REITs, and
securities with common stock characteristics, such as preferred
stock or convertible securities ("Real Estate Equity
Securities").

In selecting Real Estate Equity Securities, Alliance's analysis
will focus on determining the degree to which the company
involved can achieve sustainable growth in cash flow and dividend
paying capability. Alliance believes that the primary
determinant of this capability is the economic viability of
property markets in which the company operates and that the
secondary determinant of this capability is the ability of
management to a value through strategic focus and operating
expertise. The Portfolio will purchase Real Estate Equity
Securities when, in the judgment of Alliance, their market price
does not adequately reflect this potential. In making this
determination, Alliance will take into account fundamental trends
in underlying property markets as determined by proprietary
models, site visits conducted by individuals knowledgeable in

<PAGE>

local real estate markets, price-earnings ratios (as defined for
real estate companies), cash flow growth and stability, the
relationship between asset value and market price of the
securities, dividend payment history, and such other factors
which Alliance may determine from time to time to be relevant.
Alliance will attempt to purchase for the Portfolio Real Estate
Equity Securities of companies whose underlying portfolios are
diversified geographically and by property type.

The Portfolio may invest without limitation in shares of REITs.
REITs are pooled investment vehicles that invest primarily in
income producing real estate or real estate related loans or
interests. REITs are generally classified as equity REITs,
mortgage REITs, or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real
property and derive income primarily from the collection of
rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest
the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to
investment companies such as the Portfolio, REITs are not taxed
on income distributed to shareholders provided they comply with
several requirements of the Code. The Portfolio will indirectly
bear its proportionate share of expenses incurred by REITs in
which the Portfolio invests in addition to the expenses incurred
directly by the Portfolio.

The Portfolio's investment strategy with respect to Real Estate
Equity Securities is based on the premise that property market
fundamentals are the primary determinant of growth underlying the
performance of Real Estate Equity Securities. Value and
management further distinguishes the most attractive Real Estate
Equity Securities. The Portfolio's research and investment
process is designed to identify those companies with strong
property fundamentals and strong management teams. This process
is comprised of real estate market research, specific property
inspection, and securities analysis. Alliance believes that this
process will result in a portfolio that will consist of Real
Estate Equity Securities of companies that own assets in the most
desirable markets across the country, diversified geographically
and by property type.

To implement the Portfolio's research and investment process,
Alliance has retained the consulting services of CB Richard
Ellis, Inc. ("CBRE"), a publicly held company and the largest
real estate services company in the United States. CBRE business
includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory
activities. The universe of property-owning real estate industry
firms consists of approximately 142 companies of sufficient size
and quality to merit consideration for investment by the

<PAGE>

Portfolio. As consultant to Alliance, CBRE provides access to
its proprietary model, REIT-Score, which analyzes the
approximately 18,000 properties owned by these 142 companies.
Using proprietary databases and algorithms, CBRE analyzes local
market rent, expense, and occupancy trends, market specific
transaction pricing, demographic and economic trends, and leading
indicators of real estate supply such as building permits. Over
1,000 asset-type specific geographic markets are analyzed and
ranked on a relative scale by CBRE in compiling its REIT-Score
database. The relative attractiveness of these real estate
industry companies is similarly ranked based on the composite
rankings of the properties they own.

Once the universe of real estate industry companies has been
distilled through the market research process, CBRE's local
market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific
location, condition, and sub-market trends. CBRE's use of
locally based real estate professionals provides Alliance with a
window on the operations of the portfolio companies as
information can immediately be put in the context of local market
events. Only those companies whose specific property portfolios
reflect the promise of their general markets will be considered
for initial and continued investment by the Portfolio.

Alliance further screens the universe of real estate industry
companies by using rigorous financial models and by engaging in
regular contact with management of targeted companies. Each
management's strategic plan and ability to execute the plan are
determined and analyzed. Alliance makes extensive use of CBRE's
network of industry analysts in order to assess trends in tenant
industries. This information is then used to further interpret
management's strategic plans. Financial ratio analysis is used
to isolate those companies with the ability to make value-added
acquisitions. This information is combined with property market
trends and used to project future earnings potential.

The Portfolio may invest in short-term investments including:
corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with
similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations
(including certificates of deposit, time deposits, demand
deposits and bankers' acceptances) of banks with securities
outstanding that are rated Prime-1, Aa or better by Moody's or A-
1, AA or better by S&P; and obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.

The Portfolio may invest in debt securities rated BBB or higher
by S&P or Baa or higher by Moody's or, if not rated, of

<PAGE>

equivalent credit quality as determined by Alliance. The
Portfolio expects that it will not retain a debt security that is
downgraded below BBB or Baa or, if unrated, determined by
Alliance to have undergone similar credit quality deterioration,
subsequent to purchase by the Portfolio.

The Portfolio also may:

- - invest up to 10% of its net assets in rights or warrants;

- - invest up to 15% of its net assets in convertible securities
of companies whose common stocks are eligible for purchase by
the Portfolio;

- - enter into forward commitment transactions as long as the
Portfolio's aggregate commitments under such transactions are
not more than 30% of the Portfolio's total assets;

- - enter into standby commitment agreements;

- - make short sales of securities or maintain a short position
but only if at all times when a short position is open not
more than 25% of the Portfolio's net assets (taken at market
value) is held as collateral for such sales;

- - invest up to 15% of its net assets in illiquid securities;

- - make loans of portfolio securities of up to 25% of its total
assets; and

- - enter into repurchase agreements of up to seven days'
duration.

Because the Portfolio invests a substantial portion of its assets
in the real estate market, it has many of the same risks as
direct ownership of real estate. For example, the value of real
estate could decline due to a variety of factors affecting the
real estate market generally, such as overbuilding, increases in
interest rates, or declines in rental rates. In addition, REITs
are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by
changes in tax laws.

The Portfolio's investments in mortgage-backed securities have
prepayment risk, which is the risk that mortgage loans will be
repaid when interest rates decline and the Portfolio will have to
reinvest in securities with lower interest rates. This risk
causes mortgage-backed securities to have significantly greater
price and yield volatility than traditional fixed-income
securities. The Portfolio's investments in REMICs, CMOs and
other types of mortgage-backed securities may be subject to

<PAGE>

special risks that are described under "Description of Investment
Practices."

<PAGE>

Description of Investment Practices

This section describes the Portfolios' investment practices and
associated risks. Unless otherwise noted, a Portfolio's use of
any of these practices was specified in the previous section.

Derivatives. The Portfolios may use derivatives to achieve their
investment objectives. Derivatives are financial contracts whose
value depends on, or is derived from, the value of an underlying
asset, reference rate or index. These assets, rates, and indices
may include bonds, stocks, mortgages, commodities, interest
rates, currency exchange rates, bond indices, and stock indices.
Derivatives can be used to earn income or protect against risk,
or both. For example, one party with unwanted risk may agree to
pass that risk to another party who is willing to accept the
risk, the second party being motivated, for example, by the
desire either to earn income in the form of a fee or premium from
the first party, or to reduce its own unwanted risk by attempting
to pass all or part of that risk to the first party.

Derivatives can be used by investors such as the Portfolios to
earn income and enhance returns, to hedge or adjust the risk
profile of a portfolio, and either to replace more traditional
direct investments or to obtain exposure to otherwise
inaccessible markets. Each of the Portfolios is permitted to use
derivatives for one or more of these purposes, although most of
the Portfolios generally use derivatives primarily as direct
investments in order to enhance yields and broaden portfolio
diversification. Each of these uses entails greater risk than if
derivatives were used solely for hedging purposes. Derivatives
are a valuable tool, which, when used properly, can provide
significant benefits to Portfolio shareholders. A Portfolio may
take a significant position in those derivatives that are within
its investment policies if, in Alliance's judgment, this
represents the most effective response to current or anticipated
market conditions. Certain Portfolios will generally make
extensive use of carefully selected forwards and other
derivatives to achieve the currency hedging that is an integral
part of their investment strategy. Alliance's use of derivatives
is subject to continuous risk assessment and control from the
standpoint of each Portfolio's investment objectives and
policies.

Derivatives may be (i) standardized, exchange-traded contracts or
(ii) customized, privately-negotiated contracts. Exchange-traded
derivatives tend to be more liquid and subject to less credit
risk than those that are privately negotiated.

There are four principal types of derivative instruments-
- -options, futures, forwards, and swaps--from which virtually any
type of derivative transaction can be created.

<PAGE>

- Options--An option, which may be standardized and
exchange-traded, or customized and privately negotiated,
is an agreement that, for a premium payment or fee,
gives the option holder (the buyer) the right but not
the obligation to buy or sell the underlying asset (or
settle for cash an amount based on an underlying asset,
rate or index) at a specified price (the exercise price)
during a period of time or on a specified date. A call
option entitles the holder to purchase, and a put option
entitles the holder to sell, the underlying asset (or
settle for cash an amount based on an underlying asset,
rate or index). Likewise, when an option is exercised
the writer of the option is obligated to sell (in the
case of a call option) or to purchase (in the case of a
put option) the underlying asset (or settle for cash an
amount based on an underlying asset, rate or index).

- Futures--A futures contract is an agreement that
obligates the buyer to buy and the seller to sell a
specified quantity of an underlying asset (or settle for
cash the value of a contract based on an underlying
asset, rate or index) at a specific price on the
contract maturity date. Futures contracts are
standardized, exchange-traded instruments and are
fungible (i.e., considered to be perfect substitutes for
each other). This fungibility allows futures contracts
to be readily offset or cancelled through the
acquisition of equal but opposite positions, which is
the primary method in which futures contracts are
liquidated. A cash-settled futures contract does not
require physical delivery of the underlying asset but
instead is settled for cash equal to the difference
between the values of the contract on the date it is
entered into and its maturity date.

- Forwards--A forward contract is an obligation by one
party to buy, and the other party to sell, a specific
quantity of an underlying commodity or other tangible
asset for an agreed upon price at a future date. Forward
contracts are customized, privately negotiated
agreements designed to satisfy the objectives of each
party. A forward contract usually results in the
delivery of the underlying asset upon maturity of the
contract in return for the agreed upon payment.

- Swaps--A swap is a customized, privately negotiated
agreement that obligates two parties to exchange a
series of cash flows at specified intervals (payment
dates) based upon or calculated by reference to changes
in specified prices or rates (interest rates in the case
of interest rate swaps, currency exchange rates in the

<PAGE>

case of currency swaps) for a specified amount of an
underlying asset (the "notional" principal amount). The
payment flows are netted against each other, with the
difference being paid by one party to the other. Except
for currency swaps, the notional principal amount is
used solely to calculate the payment streams but is not
exchanged. With respect to currency swaps, actual
principal amounts of currencies may be exchanged by the
counterparties at the initiation, and again upon the
termination, of the transaction.

Debt instruments that incorporate one or more of these building
blocks for the purpose of determining the principal amount of
and/or rate of interest payable on the debt instruments are often
referred to as "structured securities." An example of this type
of structured security is indexed commercial paper. The term is
also used to describe certain securities issued in connection
with the restructuring of certain foreign obligations. The term
"derivative" also is sometimes used to describe securities
involving rights to a portion of the cash flows from an
underlying pool of mortgages or other assets from which payments
are passed through to the owner of, or that collateralize, the
securities. These securities are described below under Mortgage-
Related Securities and Other Asset-Backed Securities.

While the judicious use of derivatives by highly-experienced
investment managers such as Alliance can be quite beneficial,
derivatives involve risks different from, and, in certain cases,
greater than, the risks presented by more traditional
investments. The following is a general discussion of important
risk factors and issues relating to the use of derivatives that
investors should understand before investing in a Portfolio.

- Market Risk--This is the general risk of all investments
that the value of a particular investment will change in
a way detrimental to the Portfolio's interest based on
changes in the bond market generally.

- Management Risk--Derivative products are highly
specialized instruments that require investment
techniques and risk analyses different from those
associated with stocks and bonds. The use of a
derivative requires an understanding not only of the
underlying instrument but also of the derivative itself,
without the benefit of observing the performance of the
derivative under all possible market conditions. In
particular, the use and complexity of derivatives
require the maintenance of adequate controls to monitor
the transactions entered into, the ability to assess the
risk that a derivative adds to a Portfolio, and the

<PAGE>

ability to forecast price, interest rate, or currency
exchange rate movements correctly.

- Credit Risk--This is the risk that a loss may be
sustained by a Portfolio as a result of the failure of a
derivative counterparty to comply with the terms of the
derivative contract. The credit risk for exchange-
traded derivatives is generally less than for privately
negotiated derivatives, since the clearing house, which
is the issuer or counterparty to each exchange-traded
derivative, provides a guarantee of performance. This
guarantee is supported by a daily payment system (i.e.,
margin requirements) operated by the clearing house in
order to reduce overall credit risk. For privately
negotiated derivatives, there is no similar clearing
agency guarantee. Therefore, the Portfolios consider
the creditworthiness of each counterparty to a privately
negotiated derivative in evaluating potential credit
risk.

- Liquidity Risk--Liquidity risk exists when a particular
instrument is difficult to purchase or sell. If a
derivative transaction is particularly large or if the
relevant market is illiquid (as is the case with many
privately negotiated derivatives), it may not be
possible to initiate a transaction or liquidate a
position at an advantageous price.

- Leverage Risk--Since many derivatives have a leverage
component, adverse changes in the value or level of the
underlying asset, rate or index can result in a loss
substantially greater than the amount invested in the
derivative itself. In the case of swaps, the risk of
loss generally is related to a notional principal
amount, even if the parties have not made any initial
investment. Certain derivatives have the potential for
unlimited loss, regardless of the size of the initial
investment.

- Other Risks--Other risks in using derivatives include
the risk of mispricing or improper valuation of
derivatives and the inability of derivatives to
correlate perfectly with underlying assets, rates and
indices. Many derivatives, in particular privately
negotiated derivatives, are complex and often valued
subjectively. Improper valuations can result in
increased cash payment requirements to counterparties or
a loss of value to a Portfolio. Derivatives do not
always perfectly or even highly correlate or track the
value of the assets, rates or indices they are designed
to closely track. Consequently, a Portfolio's use of

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derivatives may not always be an effective means of, and
sometimes could be counterproductive to, furthering the
Portfolio's investment objective.

Derivatives Used by the Portfolios. The following describes
specific derivatives that one or more of the Portfolios may use.

Eurodollar Instruments. Eurodollar instruments are essentially
U.S. Dollar-denominated futures contracts or options that are
linked to LIBOR. Eurodollar futures contracts enable purchasers
to obtain a fixed rate for the lending of funds and sellers to
obtain a fixed rate for borrowings.

Forward Foreign Currency Exchange Contracts. A Portfolio
purchases or sells forward foreign currency exchange contracts
("forward contracts") to minimize the risk from adverse changes
in the relationship between the U.S. Dollar and other currencies.
A Portfolio may enter into a forward contract, for example, when
it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S.
Dollar price of the security (a "transaction hedge"). When a
Portfolio believes that a foreign currency may suffer a
substantial decline against the U.S. Dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Portfolio's
securities denominated in such foreign currency, or when the
Portfolio believes that the U.S. Dollar may suffer a substantial
decline against a foreign currency, it may enter into a forward
purchase contract to buy that foreign currency for a fixed dollar
amount (a "position hedge"). Instead of entering into a position
hedge, a Portfolio may, in the alternative, enter into a forward
contract to sell a different foreign currency for a fixed U.S.
Dollar amount where the Portfolio believes that the U.S. Dollar
value of the currency to be sold pursuant to the forward contract
will fall whenever there is a decline in the U.S. Dollar value of
the currency in which portfolio securities of the Portfolio are
denominated (a "cross-hedge").

Futures Contracts and Options on Futures Contracts. A Portfolio
may buy and sell futures contracts on fixed-income or other
securities or foreign currencies, and contracts based on interest
rates or financial indices, including any index of U.S.
Government securities, foreign government securities or corporate
debt securities.

Options on futures contracts are options that call for the
delivery of futures contracts upon exercise. Options on futures
contracts written or purchased by a Portfolio will be traded on
U.S. or foreign exchanges and will be used only for hedging
purposes.

<PAGE>

Interest Rate Transactions (Swaps, Caps, and Floors). Each
Portfolio that may enter into interest rate swap, cap, or floor
transactions expects to do so primarily for hedging purposes,
which may include preserving a return or spread on a particular
investment or portion of its portfolio or protecting against an
increase in the price of securities the Portfolio anticipates
purchasing at a later date. The Portfolios do not intend to use
these transactions in a speculative manner.

Interest rate swaps involve the exchange by a Portfolio with
another party of their respective commitments to pay or receive
interest (e.g., an exchange of floating rate payments for fixed
rate payments). Interest rate swaps are entered on a net basis
(i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of
the two payments).

Interest rate caps and floors are similar to options in that the
purchase of an interest rate cap or floor entitles the purchaser,
to the extent that a specified index exceeds (in the case of a
cap) or falls below (in the case of a floor) a predetermined
interest rate, to receive payments of interest on a notional
amount from the party selling the interest rate cap or floor. A
Portfolio may enter into interest rate swaps, caps, and floors on
either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or liabilities.

The swap market has grown substantially in recent years, with a
large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap
documentation. As a result, the swap market has become well
established and relatively liquid. Caps and floors are less
liquid than swaps. These transactions do not involve the
delivery of securities or other underlying assets or principal.
Accordingly, unless there is a counterparty default, the risk of
loss to a Portfolio from interest rate transactions is limited to
the net amount of interest payments that the Portfolio is
contractually obligated to make.

Options on Foreign Currencies. A Portfolio invests in options on
foreign currencies that are privately negotiated or traded on
U.S. or foreign exchanges for the purpose of protecting against
declines in the U.S. Dollar value of foreign currency denominated
securities held by a Portfolio and against increases in the U.S.
Dollar cost of securities to be acquired. The purchase of an
option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates, although if rates move
adversely, a Portfolio may forfeit the entire amount of the
premium plus related transaction costs.

<PAGE>

Options on Securities. In purchasing an option on securities, a
Portfolio would be in a position to realize a gain if, during the
option period, the price of the underlying securities increased
(in the case of a call) or decreased (in the case of a put) by an
amount in excess of the premium paid; otherwise the Portfolio
would experience a loss not greater than the premium paid for the
option. Thus, a Portfolio would realize a loss if the price of
the underlying security declined or remained the same (in the
case of a call) or increased or remained the same (in the case of
a put) or otherwise did not increase (in the case of a put) or
decrease (in the case of a call) by more than the amount of the
premium. If a put or call option purchased by a Portfolio were
permitted to expire without being sold or exercised, its premium
would represent a loss to the Portfolio.

A Portfolio may write a put or call option in return for a
premium, which is retained by the Portfolio whether or not the
option is exercised. Except with respect to uncovered call
options written for cross-hedging purposes, none of the
Portfolios will write uncovered call or put options on
securities. A call option written by a Portfolio is "covered" if
the Portfolio owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or
exchange of another security it holds, or holds a call option on
the underlying security with an exercise price equal to or less
than that of the call option it has written. A put option
written by a Portfolio is covered if the Portfolio holds a put
option on the underlying securities with an exercise price equal
to or greater than that of the put option it has written.

The risk involved in writing an uncovered call option is that
there could be an increase in the market value of the underlying
security, and a Portfolio could be obligated to acquire the
underlying security at its current price and sell it at a lower
price. The risk of loss from writing an uncovered put option is
limited to the exercise price of the option.

A Portfolio may write a call option on a security that it does
not own in order to hedge against a decline in the value of a
security that it owns or has the right to acquire, a technique
referred to as "cross-hedging." A Portfolio would write a call
option for cross-hedging purposes, instead of writing a covered
call option, when the premium to be received from the cross-hedge
transaction exceeds that to be received from writing a covered
call option, while at the same time achieving the desired hedge.
The correlation risk involved in cross-hedging may be greater
than the correlation risk involved with other hedging strategies.

Some of the Portfolios generally purchase or write privately
negotiated options on securities. A Portfolio that does so will
effect such transactions only with investment dealers and other

<PAGE>

financial institutions (such as commercial banks or savings and
loan institutions) deemed creditworthy by Alliance. Privately
negotiated options purchased or written by a Portfolio may be
illiquid and it may not be possible for the Portfolio to effect a
closing transaction at an advantageous time.

Options on Securities Indices. An option on a securities index
is similar to an option on a security except that, rather than
taking or making delivery of a security at a specified price, an
option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the
closing level of the chosen index is greater than (in the case of
a call) or less than (in the case of a put) the exercise price of
the option.

Brady Bonds. Brady Bonds are created through the exchange of
existing commercial bank loans to foreign entities for new
obligations in connection with debt restructurings under a plan
introduced by former U.S. Secretary of the Treasury, Nicholas F.
Brady (the "Brady Plan"). Brady Bonds have been issued only
recently, and, accordingly, do not have a long payment history.
They may be collateralized or uncollateralized and issued in
various currencies (although most are U.S. Dollar-denominated)
and they are actively traded in the over-the-counter secondary
market.

U.S. Dollar-denominated, collateralized Brady Bonds, which may be
fixed-rate par bonds or floating rate discount bonds, are
generally collateralized in full as to principal due at maturity
by U.S. Treasury zero coupon obligations that have the same
maturity as the Brady Bonds. Interest payments on these Brady
Bonds generally are collateralized by cash or securities in an
amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments based on the
applicable interest rate at that time and is adjusted at regular
intervals thereafter. Certain Brady Bonds are entitled to "value
recovery payments" in certain circumstances, which in effect
constitute supplemental interest payments but generally are not
collateralized. Brady Bonds are often viewed as having up to
four valuation components: (i) collateralized repayment of
principal at final maturity, (ii) collateralized interest
payments, (iii) uncollateralized interest payments, and (iv) any
uncollateralized repayment of principal at maturity (these
uncollateralized amounts constitute the "residual risk"). In the
event of a default with respect to collateralized Brady Bonds as
a result of which the payment obligations of the issuer are
accelerated, the U.S. Treasury zero coupon obligations held as
collateral for the payment of principal will not be distributed
to investors, nor will such obligations be sold and the proceeds
distributed. The collateral will be held by the collateral agent
to the scheduled maturity of the defaulted Brady Bonds, which

<PAGE>

will continue to be outstanding, at which time the face amount of
the collateral will equal the principal payments that would have
then been due on the Brady Bonds in the normal course. In light
of the residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by
public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.

Convertible Securities. Prior to conversion, convertible
securities have the same general characteristics as non-
convertible debt securities, which provide a stable stream of
income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price
of the underlying equity security, although the higher yield
tends to make the convertible security less volatile than the
underlying equity security. As with debt securities, the market
value of convertible securities tends to decrease as interest
rates rise and increase as interest rates decline. While
convertible securities generally offer lower interest or dividend
yields than non-convertible debt securities of similar quality,
they enable investors to benefit from increases in the market
price of the underlying common stock. Convertible debt
securities that are rated Baa or lower by Moody's or BBB or lower
by S&P, Duff & Phelps or Fitch and comparable unrated securities
may share some or all of the risks of debt securities with those
ratings.

Currency Swaps. Currency swaps involve the individually
negotiated exchange by a Portfolio with another party of a series
of payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a
currency swap is subject to the risk that the other party to the
swap will default on its contractual delivery obligations. A
Portfolio will not enter into any currency swap unless the credit
quality of the unsecured senior debt or the claims-paying ability
of the counterparty is rated in the highest rating category of at
least one nationally recognized rating organization at the time
of entering into the transaction. If there is a default by the
counterparty to the transaction, the Portfolio will have
contractual remedies under the transaction agreements.

Depositary Receipts and Securities of Supranational Entities.
Depositary receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may be
converted. In addition, the issuers of the stock of unsponsored
depositary receipts are not obligated to disclose material
information in the United States and, therefore, there may not be
a correlation between such information and the market value of

<PAGE>

the depositary receipts. ADRs are depositary receipts typically
issued by an U.S. bank or trust company that evidence ownership
of underlying securities issued by a foreign corporation. GDRs
and other types of depositary receipts are typically issued by
foreign banks or trust companies and evidence ownership of
underlying securities issued by either a foreign or an U.S.
company. Generally, depositary receipts in registered form are
designed for use in the U.S. securities markets, and depositary
receipts in bearer form are designed for use in foreign
securities markets. For purposes of determining the country of
issuance, investments in depositary receipts of either type are
deemed to be investments in the underlying securities.

A supranational entity is an entity designated or supported by
the national government of one or more countries to promote
economic reconstruction or development. Examples of
supranational entities include, among others, the World Bank
(International Bank for Reconstruction and Development) and the
European Investment Bank. "Semi-governmental securities" are
securities issued by entities owned by either a national, state
or equivalent government or are obligations of one of such
government jurisdictions that are not backed by its full faith
and credit and general taxing powers.

Equity-Linked Debt Securities. Equity-linked debt securities are
securities on which the issuer is obligated to pay interest
and/or principal that is linked to the to the performance of a
specified index of equity securities. The interest or principal
payments may be significantly greater or less than payment
obligations for 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 Portfolio.
As with any debt securities, the values of equity-linked debt
securities will generally vary inversely with changes in interest
rates. A Portfolio'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.

Forward Commitments. Forward commitments for the purchase or
sale of securities may include purchases on a "when-issued basis"
or purchases or sales on a "delayed delivery basis." In some
cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt
restructuring or approval of a proposed financing by appropriate
authorities (i.e., a "when, as and if issued" trade).

When forward commitments with respect to fixed-income securities
are negotiated, the price, which is generally expressed in yield

<PAGE>

terms, is fixed at the time the commitment is made, but payment
for and delivery of the securities take place at a later date.
Normally, the settlement date occurs within two months after the
transaction, but settlements beyond two months may be negotiated.
Securities purchased or sold under a forward commitment are
subject to market fluctuation and no interest or dividends
accrues to the purchaser prior to the settlement date.

The use of forward commitments helps a Portfolio to protect
against anticipated changes in interest rates and prices. For
instance, in periods of rising interest rates and falling bond
prices, a Portfolio might sell securities in its portfolio on a
forward commitment basis to limit its exposure to falling bond
prices. In periods of falling interest rates and rising bond
prices, a Portfolio might sell a security in its portfolio and
purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.

A Portfolio's right to receive or deliver a security under a
forward commitment may be sold prior to the settlement date. The
Portfolios enter into forward commitments, however, only with the
intention of actually receiving securities or delivering them, as
the case may be. If a Portfolio, however, chooses to dispose of
the right to acquire a when-issued security prior to its
acquisition or dispose of its right to deliver or receive against
a forward commitment, it may realize a gain or incur a loss.

Illiquid Securities. Illiquid securities generally include (i)
direct placements or other securities that are not subject to
legal or contractual restrictions on resale or for which there is
no readily available market (e.g., when trading in the security
is suspended or, in the case of unlisted securities, when market
makers do not exist or will not entertain bids or offers),
including many currency swaps and any assets used to cover
currency swaps, (ii) over the counter options and assets used to
cover over the counter options, and (iii) repurchase agreements
not terminable within seven days.

A Portfolio that invests in illiquid securities may not be able
to sell such securities and may not be able to realize their full
value upon sale. Alliance will monitor each Portfolio's
investments in illiquid securities. Rule 144A securities will
not be treated as "illiquid" for the purposes of the limit on
investments so long as the securities meet liquidity guidelines
established by the Board of Directors.

Indexed Commercial Paper. Indexed commercial paper may have its
principal linked to changes in foreign currency exchange rates
whereby its principal amount is adjusted upwards or downwards
(but not below zero) at maturity to reflect changes in the

<PAGE>

referenced exchange rate. Each Portfolio that invests in indexed
commercial paper may do so without limitation. A Portfolio will
receive interest and principal payments on such commercial paper
in the currency in which such commercial paper is denominated,
but the amount of principal payable by the issuer at maturity
will change in proportion to the change (if any) in the exchange
rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While
such commercial paper entails the risk of loss of principal, the
potential for realizing gains as a result of changes in foreign
currency exchange rates enables a Portfolio to hedge (or cross-
hedge) against a decline in the U.S. Dollar value of investments
denominated in foreign currencies while providing an attractive
money market rate of return. A Portfolio will purchase such
commercial paper for hedging purposes only, not for speculation.

Investment in Other Investment Companies. Certain of the
Portfolios may invest in other investment companies whose
investment objectives and policies are consistent with those of
that Portfolio. If the Portfolio acquires shares in investment
companies, shareholders would bear both their proportionate share
of expenses in the Portfolio (including management and advisory
fees) and, indirectly, the expenses of such investment companies
(including management and advisory fees).

Loans of Portfolio Securities. A Portfolio may make secured
loans of portfolio securities to brokers, dealers and financial
institutions, provided that cash, liquid high grade debt
securities or bank letters of credit equal to at least 100% of
the market value of the securities loaned is deposited and
maintained by the borrower with the Portfolio. The risks in
lending portfolio securities, as with other secured extensions of
credit, consist of possible loss of rights in the collateral
should the borrower fail financially. In determining whether to
lend securities to a particular borrower, Alliance will consider
all relevant facts and circumstances, including the
creditworthiness of the borrower. While securities are on loan,
the borrower will pay the Portfolio any income earned from the
securities. The Portfolio may invest any cash collateral in
portfolio securities and earn additional income or receive an
agreed-upon amount of income from a borrower who has delivered
equivalent collateral.

Loan Participations and Assignments. A Portfolio's investments
in loans are expected in most instances to be in the form of
participations in loans and assignments of all or a portion of
loans from third parties. A Portfolio's investment in loan
participations typically will result in the Portfolio having a
contractual relationship only with the lender and not with the
borrower. A Portfolio will acquire participations only if the
lender interpositioned between the Portfolio and the borrower is

<PAGE>

a lender having total assets of more than $25 billion and whose
senior unsecured debt is rated investment grade or higher. When a
Portfolio purchases a loan assignment from a lender it will
acquire direct rights against the borrower on the loan. Because
loan assignments are arranged through private negotiations
between potential assignees and potential assignors, however, the
rights and obligations acquired by a Portfolio as the purchaser
of an assignment may differ from, and be more limited than, those
held by the assigning lender.

The assignability of certain sovereign foreign debt obligations,
with respect to certain Portfolios, is restricted by the
governing documentation as to the nature of the assignee such
that the only way in which the Portfolio may acquire an interest
in a loan is through a participation and not an assignment. A
Portfolio may have difficulty disposing of assignments and
participations because to do so it will have to assign such
securities to a third party. Because there may not be a liquid
market for such investments, they can probably be sold only to a
limited number of institutional investors. The lack of a liquid
secondary market may have an adverse effect on the value of such
investments and a Portfolio's ability to dispose of particular
participations and assignments when necessary to meet its
liquidity needs in response to a specific economic event such as
a deterioration in the creditworthiness of the borrower. The
lack of a liquid secondary market for participations and
assignments also may make it more difficult for the Portfolio to
assign a value to these investments for purposes of valuing its
portfolio of securities and calculating its net asset value.

Mortgage-Related Securities. The Portfolio's investments in
mortgage-related securities typically are securities representing
interests in pools of mortgage loans made to home owners. The
mortgage loan pools may be assembled for sale to investors (such
as a Portfolio) by governmental or private organizations.
Mortgage-related securities bear interest at either a fixed rate
or an adjustable rate determined by reference to an index rate.
Mortgage-related securities frequently provide for monthly
payments that consist of both interest and principal, unlike more
traditional debt securities, which normally do not provide for
periodic repayments of principal.

Securities representing interests in pools created by private
issuers generally offer a higher rate of interest than securities
representing interests in pools created by governmental issuers
because there are no direct or indirect governmental guarantees
of the underlying mortgage payments. Private issuers sometimes
obtain committed loan facilities, lines of credit, letters of
credit, surety bonds or other forms of liquidity and credit
enhancement to support the timely payment of interest and
principal with respect to their securities if the borrowers on

<PAGE>

the underlying mortgages fail to make their mortgage payments.
The ratings of such non-governmental securities are generally
dependent upon the ratings of the providers of such liquidity and
credit support and would be adversely affected if the rating of
such an enhancer were downgraded. A Portfolio may buy mortgage-
related securities without credit enhancement if the securities
meet the Portfolio's investment standards.

One type of mortgage-related security is of the "pass-through"
variety. The holder of a pass-through security is considered to
own an undivided beneficial interest in the underlying pool of
mortgage loans and receives a pro rata share of the monthly
payments made by the borrowers on their mortgage loans, net of
any fees paid to the issuer or guarantor of the securities.
Prepayments of mortgages resulting from the sale, refinancing, or
foreclosure of the underlying properties are also paid to the
holders of these securities, which, as discussed below,
frequently causes these securities to experience significantly
greater price and yield volatility than experienced by
traditional fixed-income securities. Some mortgage-related
securities, such as securities issued by GNMA, are referred to as
"modified pass-through" securities. The holders of these
securities are entitled to the full and timely payment of
principal and interest, net of certain fees, regardless of
whether payments are actually made on the underlying mortgages.

Another form of mortgage-related security is a "pay-through"
security, which is a debt obligation of the issuer secured by a
pool of mortgage loans pledged as collateral that is legally
required to be paid by the issuer, regardless of whether payments
are actually made on the underlying mortgages. CMOs are the
predominant type of "pay-through" mortgage-related security. In
a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of a CMO, often referred to as a "tranche,"
is issued at a specific coupon rate and has a stated maturity or
final distribution date. Principal prepayments on collateral
underlying a CMO may cause one or more tranches of the CMO to be
retired substantially earlier than the stated maturities or final
distribution dates of the collateral. The principal and interest
on the underlying mortgages may be allocated among several
classes of a series of a CMO in many ways. CMOs may be issued by
a U.S. Government instrumentality or agency or by a private
issuer. Although payment of the principal of, and interest on,
the underlying collateral securing privately issued CMOs may be
guaranteed by GNMA, FNMA or FHLMC, these CMOs represent
obligations solely of the private issuer and are not insured or
guaranteed by GNMA, FNMA, FHLMC, any other governmental agency or
any other person or entity.

Another type of mortgage-related security, known as ARMS, bears
interest at a rate determined by reference to a predetermined

<PAGE>

interest rate or index. There are two main categories of rates
or indices: (i) rates based on the yield on U.S. Treasury
securities; and (ii) indices derived from a calculated measure
such as a cost of funds index or a moving average of mortgage
rates. Some rates and indices closely mirror changes in market
interest rate levels, while others tend to lag changes in market
rate levels and tend to be somewhat less volatile.

ARMS may be secured by fixed-rate mortgages or adjustable-rate
mortgages. ARMS secured by fixed-rate mortgages generally have
lifetime caps on the coupon rates of the securities. To the
extent that general interest rates increase faster than the
interest rates on the ARMS, these ARMS will decline in value. The
adjustable-rate mortgages that secure ARMS will frequently have
caps that limit the maximum amount by which the interest rate or
the monthly principal and interest payments on the mortgages may
increase. These payment caps can result in negative amortization
(i.e., an increase in the balance of the mortgage loan). Since
many adjustable-rate mortgages only reset on an annual basis, the
values of ARMS tend to fluctuate to the extent that changes in
prevailing interest rates are not immediately reflected in the
interest rates payable on the underlying adjustable-rate
mortgages.

SMRS are mortgage-related securities that are usually structured
with two classes of securities collateralized by a pool of
mortgages or a pool of mortgaged-backed bonds or pass-through
securities, with each class receiving different proportions of
the principal and interest payments from the underlying assets.
A common type of SMRS has one class of interest-only securities
or IOs receiving all of the interest payments from the underlying
assets; while the other class of securities, principal-only
securities or POs, receives all of the principal payments from
the underlying assets. IOs and POs are extremely sensitive to
interest rate changes and are more volatile than mortgage-related
securities that are not stripped. IOs tend to decrease in value
as interest rates decrease, while POs generally increase in value
as interest rates decrease. If prepayments of the underlying
mortgages are greater than anticipated, the amount of interest
earned on the overall pool will decrease due to the decreasing
principal balance of the assets. Changes in the values of IOs
and POs can be substantial and occur quickly, such as occurred in
the first half of 1994 when the value of many POs dropped
precipitously due to increases in interest rates. For this
reason, none of the Portfolios relies on IOs and POs as the
principal means of furthering its investment objective.

The value of mortgage-related securities is affected by a number
of factors. Unlike traditional debt securities, which have fixed
maturity dates, mortgage-related securities may be paid earlier
than expected as a result of prepayments of underlying mortgages.

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Such prepayments generally occur during periods of falling
mortgage interest rates. If property owners make unscheduled
prepayments of their mortgage loans, these prepayments will
result in the early payment of the applicable mortgage-related
securities. In that event, a Portfolio may be unable to invest
the proceeds from the early payment of the mortgage-related
securities in investments that provide as high a yield as the
mortgage-related securities. Early payments associated with
mortgage-related securities cause these securities to experience
significantly greater price and yield volatility than is
experienced by traditional fixed-income securities. The
occurrence of mortgage prepayments is affected by the level of
general interest rates, general economic conditions, and other
social and demographic factors. During periods of falling
interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-
related securities. Conversely, during periods of rising
interest rates, a reduction in prepayments may increase the
effective life of mortgage-related securities, subjecting them to
greater risk of decline in market value in response to rising
interest rates. If the life of a mortgage-related security is
inaccurately predicted, a Portfolio may not be able to realize
the rate of return it expected.

Although the market for mortgage-related securities is becoming
increasingly liquid, those issued by certain private
organizations may not be readily marketable. In particular, the
secondary markets for CMOs, IOs, and POs may be more volatile and
less liquid than those for other mortgage-related securities,
thereby potentially limiting a Portfolio's ability to buy or sell
those securities at any particular time.

As with fixed-income securities generally, the value of mortgage-
related securities also can be adversely affected by increases in
general interest rates relative to the yield provided by such
securities. Such an adverse effect is especially possible with
fixed-rate mortgage securities. If the yield available on other
investments rises above the yield of the fixed-rate mortgage
securities as a result of general increases in interest rate
levels, the value of the mortgage-related securities will
decline. Although the negative effect could be lessened if the
mortgage-related securities were to be paid earlier (thus
permitting a Portfolio to reinvest the prepayment proceeds in
investments yielding the higher current interest rate), as
described above the rates of mortgage prepayments and early
payments of mortgage-related securities generally tend to decline
during a period of rising interest rates.

Although the values of ARMS may not be affected as much as the
values of fixed-rate mortgage securities by rising interest
rates, ARMS may still decline in value as a result of rising

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interest rates. Although, as described above, the yields on ARMS
vary with changes in the applicable interest rate or index, there
is often a lag between increases in general interest rates and
increases in the yield on ARMS as a result of relatively
infrequent interest rate reset dates. In addition, adjustable-
rate mortgages and ARMS often have interest rate or payment caps
that limit the ability of the adjustable-rate mortgages or ARMS
to fully reflect increases in the general level of interest
rates.

Other Asset-Backed Securities The securitization techniques used
to develop mortgage-related securities are being applied to a
broad range of financial assets. Through the use of trusts and
special purpose corporations, various types of assets, including
automobile loans and leases, credit card receivables, home equity
loans, equipment leases and trade receivables, are being
securitized in structures similar to the structures used in
mortgage securitizations. These asset-backed securities are
subject to risks associated with changes in interest rates and
prepayment of underlying obligations similar to the risks of
investment in mortgage-related securities discussed above.

Each type of asset-backed security also entails unique risks
depending on the type of assets involved and the legal structure
used. For example, credit card receivables are generally
unsecured obligations of the credit card holder and the debtors
are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right
to set off certain amounts owed on the credit cards, thereby
reducing the balance due. In some transactions, the value of the
asset-backed security is dependent on the performance of a third
party acting as credit enhancer or servicer. In some
transactions (such as those involving the securitization of
vehicle loans or leases) it may be administratively burdensome to
perfect the interest of the security issuer in the underlying
collateral and the underlying collateral may become damaged or
stolen.

Repurchase Agreements. A repurchase agreement arises when a
buyer purchases a security and simultaneously agrees to resell it
to the vendor at an agreed-upon future date, normally a day or a
few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon interest rate for the period the
buyer's money is invested in the security. Such agreements permit
a Portfolio to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-
term nature. A Portfolio requires continual maintenance of
collateral in an amount equal to, or in excess of, the resale
price. If a vendor defaults on its repurchase obligation, a
Portfolio would suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase

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price. If a vendor goes bankrupt, a Portfolio might be delayed
in, or prevented from, selling the collateral for its benefit.

Reverse Repurchase Agreements and Dollar Rolls. Reverse
repurchase agreements involve sales by a Portfolio of its assets
concurrently with an agreement by the Portfolio to repurchase the
same assets at a later date at a fixed price. During the reverse
repurchase agreement period, the Portfolio continues to receive
principal and interest payments on these securities. Generally,
the effect of such a transaction is that a Portfolio can recover
all or most of the cash invested in the portfolio securities
involved during the term of the reverse repurchase agreement,
while it will be able to keep the interest income associated with
those portfolio securities. Such transactions are advantageous
only if the interest cost to a Portfolio of the reverse
repurchase transaction is less than the cost of otherwise
obtaining the cash. Reverse repurchase agreements and dollar
rolls are speculative techniques and are considered borrowings by
the Portfolios.

Dollar rolls involve sales by a Portfolio of securities for
delivery in the current month and the Portfolio's simultaneously
contracting to repurchase substantially similar (same type and
coupon) securities on a specified future date. During the roll
period, a Portfolio forgoes principal and interest paid on the
securities. A Portfolio is compensated by the difference between
the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by
the interest earned on the cash proceeds of the initial sale.

Reverse repurchase agreements and dollar rolls involve the risk
that the market value of the securities a Portfolio is obligated
to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a
reverse repurchase agreement or dollar roll files for bankruptcy
or becomes insolvent, a Portfolio's use of the proceeds of the
agreement may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the
Portfolio's obligation to repurchase the securities. Reverse
repurchase agreements and dollar rolls are speculative techniques
and are considered borrowings by the Portfolios.

Rights and Warrants. Warrants are option securities permitting
their holders to subscribe for other securities. Rights are
similar to warrants except that they have a substantially shorter
duration. Rights and warrants do not carry with them dividend or
voting rights with respect to the underlying securities, or any
rights in the assets of the issuer. As a result, an investment
in rights and warrants may be considered more speculative than
certain other types of investments. In addition, the value of a
right or a warrant does not necessarily change with the value of

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the underlying securities, and a right or a warrant ceases to
have value if it is not exercised prior to its expiration date.

Short Sales. A short sale is effected by selling a security that
a Portfolio does not own, or if the Portfolio owns the security,
is not to be delivered upon consummation of the sale. A short
sale is "against the box" if a Portfolio owns or has the right to
obtain without payment securities identical to those sold short.

If the price of the security sold short increases between the
time of the short sale and the time a Portfolio replaces the
borrowed security, the Portfolio will incur a loss; conversely,
if the price declines, the Portfolio will realize a short-term
capital gain. Any gain will be decreased, and any loss
increased, by the transaction costs described above. Although a
Portfolio's gain is limited to the price at which it sold the
security short, its potential loss is theoretically unlimited.

Standby Commitment Agreements. Standby commitment agreements are
similar to put options that commit a Portfolio, for a stated
period of time, to purchase a stated amount of a security that
may be issued and sold to the Portfolio at the option of the
issuer. The price and coupon of the security are fixed at the
time of the commitment. At the time of entering into the
agreement, the Portfolio is paid a commitment fee regardless of
whether the security ultimately is issued. The Portfolios will
enter into such agreements only for the purpose of investing in
the security underlying the commitment at a yield and price
considered advantageous and unavailable on a firm commitment
basis. No Portfolio will enter into a standby commitment with a
remaining term in excess of 45 days. The Portfolios will limit
their investments in standby commitments so that the aggregate
purchase price of the securities subject to the commitments does
not exceed 20% of their assets.

There is no guarantee that the security subject to a standby
commitment will be issued. In addition, the value of the
security, if issued, on the delivery date may be more or less
than its purchase price. Since the issuance of the security is
at the option of the issuer, a Portfolio will bear the risk of
capital loss in the event the value of the security declines and
may not benefit from an appreciation in the value of the security
during the commitment period if the issuer decides not to issue
and sell the security to the Portfolio.

Structured Securities. Structured securities in which some
Portfolios may invest represent interests in entities organized
and operated solely for the purpose of restructuring the
investment characteristics of sovereign or foreign debt
obligations. This type of restructuring involves the deposit
with or purchase by an entity, such as a corporation or trust, of

<PAGE>

specified instruments (such as commercial bank loans or Brady
Bonds) and the issuance by that entity of one or more classes of
structured securities backed by, or representing interests in,
the underlying instruments. The cash flow on the underlying
instruments may be apportioned among the newly issued structured
securities to create securities with different investment
characteristics such as varying maturities, payment priorities
and interest rate provisions, and the extent of the payments made
with respect to structured securities is dependent on the extent
of the cash flow on the underlying instruments. Because
structured securities typically involve no credit enhancement,
their credit risk generally will be equivalent to that of the
underlying instruments. Structured securities of a given class
may be either subordinated or unsubordinated to the right of
payment of another class. Subordinated structured securities
typically have higher yields and present greater risks than
unsubordinated structured securities.

Variable, Floating and Inverse Floating Rate Instruments. Fixed-
income securities may have fixed, variable or floating rates of
interest. Variable and floating rate securities pay interest at
rates that are adjusted periodically, according to a specified
formula. A "variable" interest rate adjusts at predetermined
intervals (e.g., daily, weekly or monthly), while a "floating"
interest rate adjusts whenever a specified benchmark rate (such
as the bank prime lending rate) changes.

A Portfolio may invest in fixed-income securities that pay
interest at a coupon rate equal to a base rate, plus additional
interest for a certain period of time if short-term interest
rates rise above a predetermined level or "cap." The amount of
such an additional interest payment typically is calculated under
a formula based on a short-term interest rate index multiplied by
a designated factor.

Leveraged inverse floating rate debt instruments are sometimes
known as "inverse floaters." The interest rate on an inverse
floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse
floater may be considered to be leveraged to the extent that its
interest rate varies by a magnitude that exceeds the magnitude of
the change in the index rate of interest. The higher degree of
leverage inherent in inverse floaters is associated with greater
volatility in market value, such that, during periods of rising
interest rates, the market values of inverse floaters will tend
to decrease more rapidly than those of fixed rate securities.

Zero Coupon and Principal-Only Securities. Zero coupon
securities and principal-only (PO) securities are debt securities
that have been issued without interest coupons or stripped of
their unmatured interest coupons, and include receipts or

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certificates representing interests in such stripped debt
obligations and coupons. Such a security pays no interest to its
holder during its life. Its value to an investor consists of the
difference between its face value at the time of maturity and the
price for which it was acquired, which is generally an amount
significantly less than its face value. Such securities usually
trade at a deep discount from their face or par value and are
subject to greater fluctuations in market value in response to
changing interest rates than debt obligations of comparable
maturities and credit quality that make current distributions of
interest. On the other hand, because there are no periodic
interest payments to be reinvested prior to maturity, these
securities eliminate reinvestment risk and "lock in" a rate of
return to maturity.

Zero coupon Treasury securities are U.S. Treasury bills issued
without interest coupons. Principal-only Treasury securities are
U.S. Treasury notes and bonds that have been stripped of their
unmatured interest coupons, and receipts or certificates
representing interests in such stripped debt obligations.
Currently the only U.S. Treasury security issued without coupons
is the Treasury bill. Although the U.S. Treasury does not itself
issue Treasury notes and bonds without coupons, under the U.S.
Treasury STRIPS program interest and principal payments on
certain long-term Treasury securities may be maintained
separately in the Federal Reserve book entry system and may be
separately traded and owned. In addition, in the last few years
a number of banks and brokerage firms have separated ("stripped")
the principal portions from the coupon portions of U.S. Treasury
bonds and notes and sold them separately in the form of receipts
or certificates representing undivided interests in these
instruments (which are generally held by a bank in a custodial or
trust account).

Future Developments. A Portfolio may, following written notice
to its shareholders, take advantage of other investment practices
that are not currently contemplated for use by the Portfolio, or
are not available but may yet be developed, to the extent such
investment practices are consistent with the Portfolio's
investment objective and legally permissible for the Portfolio.
Such investment practices, if they arise, may involve risks that
are different from or exceed those involved in the practices
described above.

Portfolio Turnover. The portfolio turnover rate for each
Portfolio is included in the Financial Highlights section. The
Portfolios are actively managed and, in some cases in response to
market conditions, a Portfolio's turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Portfolio and its
shareholders. High portfolio turnover also may result in the

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realization of substantial net short-term capital gains, which,
when distributed, are taxable to shareholders.

Temporary Defensive Position. For temporary defensive purposes,
each Portfolio may invest in certain types of short-term, liquid,
high grade or high quality (depending on the Portfolio) debt
securities. These securities may include U.S. Government
securities, qualifying bank deposits, money market instruments,
prime commercial paper and other types of short-term debt
securities, including notes and bonds. For Portfolios that may
invest in foreign countries, such securities may also include
short-term, foreign-currency denominated securities of the type
mentioned above issued by foreign governmental entities,
companies and supranational organizations. While the Portfolios
are investing for temporary defensive purposes, they may not meet
their investment objective.

ADDITIONAL RISK CONSIDERATIONS

Investment in certain of the Portfolios involves the special risk
considerations described below. Certain of these risks may be
heightened when investing in emerging markets.

Currency Considerations. Those Portfolios that invest some
portion of their assets in securities denominated in, and receive
revenues in, foreign currencies will be adversely affected by
reductions in the value of those currencies relative to the U.S.
Dollar. These changes will affect a Portfolio's net assets,
distributions and income. If the value of the foreign currencies
in which a Portfolio receives income falls relative to the U.S.
Dollar between receipt of the income and the making of Portfolio
distributions, a Portfolio may be required to liquidate
securities in order to make distributions if the Portfolio has
insufficient cash in U.S. Dollars to meet the distribution
requirements that the Portfolio must satisfy to qualify as a
regulated investment company for federal income tax purposes.
Similarly, if an exchange rate declines between the time a
Portfolio incurs expenses in U.S. Dollars and the time cash
expenses are paid, the amount of the currency required to be
converted into U.S. Dollars in order to pay expenses in U.S.
Dollars could be greater than the equivalent amount of such
expenses in the currency at the time they were incurred. In
light of these risks, a Portfolio may engage in certain currency
hedging transactions, as described above, which involve certain
special risks.

Effects of Borrowing. A Portfolio's loan agreements provide for
additional borrowings and for repayments and reborrowings from
time to time, and each Portfolio that may borrow expects to
effect borrowings and repayments at such times and in such
amounts as will maintain investment leverage in an amount

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approximately equal to its borrowing target. The loan agreements
provide for a selection of interest rates that are based on the
bank's short-term funding costs in the U.S. and London markets.

Borrowings by a Portfolio result in leveraging of the Portfolio's
shares. Utilization of leverage, which is usually considered
speculative, involves certain risks to a Portfolio's
shareholders. These include a higher volatility of the net asset
value of a Portfolio's shares and the relatively greater effect
on the net asset value of the shares. So long as a Portfolio is
able to realize a net return on its investment portfolio that is
higher than the interest expense paid on borrowings, the effect
of leverage will be to cause the Portfolio's shareholders to
realize a higher current net investment income than if the
Portfolio were not leveraged. On the other hand, interest rates
on U.S. Dollar-denominated and foreign currency-denominated
obligations change from time to time as does their relationship
to each other, depending upon such factors as supply and demand
forces, monetary and tax policies within each country and
investor expectations. Changes in such factors could cause the
relationship between such rates to change so that rates on U.S.
Dollar-denominated obligations may substantially increase
relative to the foreign currency-denominated obligations of a
Portfolio's investments. If the interest expense on
borrowings approaches the net return on a Portfolio's investment
portfolio, the benefit of leverage to the Portfolio's
shareholders will be reduced. If the interest expense on
borrowings were to exceed the net return to shareholders, a
Portfolio's use of leverage would result in a lower rate of
return. Similarly, the effect of leverage in a declining market
could be a greater decrease in net asset value per share. In an
extreme case, if a Portfolio's current investment income were not
sufficient to meet the interest expense on borrowings, it could
be necessary for the Portfolio to liquidate certain of its
investments and reduce the net asset value of
a Portfolio's shares.

In the event of an increase in rates on U.S. Government
securities or other changed market conditions, to the point where
leverage by some Portfolios could adversely affect the
Portfolios' shareholders, as noted above, or in anticipation of
such changes, a Portfolio may increase the percentage of its
investment portfolio invested in U.S. Government securities,
which would tend to offset the negative impact of leverage on
Portfolio shareholders. Each Portfolio may also reduce the
degree to which it is leveraged by repaying amounts borrowed.

Fixed-Income Securities. The value of each Portfolio's shares
will fluctuate with the value of its investments. The value of
each Portfolio's investments will change as the general level of
interest rates fluctuates. During periods of falling interest

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rates, the values of a Portfolio's securities will generally
rise, although if falling interest rates are viewed as a
precursor to a recession, the values of a Portfolio's securities
may fall along with interest rates. Conversely, during periods of
rising interest rates, the values of a Portfolio's securities
will generally decline. Changes in interest rates have a greater
effect on fixed-income securities with longer maturities and
durations than those with shorter maturities and durations.

In seeking to achieve a Portfolio's investment objective, there
will be times, such as during periods of rising interest rates,
when depreciation and realization of capital losses on securities
in a Portfolio will be unavoidable. Moreover, medium- and lower-
rated securities and non-rated securities of comparable quality
may be subject to wider fluctuations in yield and market values
than higher-rated securities under certain market conditions.
Such fluctuations after a security is acquired do not affect the
cash income received from that security but will be reflected in
the net asset value of a Portfolio.

Foreign Securities. The securities markets of many foreign
countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited
number of companies representing a small number of industries.
Consequently, a Portfolio whose investment portfolio includes
foreign securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in
securities of U.S. companies. These markets may be subject to
greater influence by adverse events generally affecting the
market, and by large investors trading significant blocks of
securities, than is usual in the United States.

Securities registration, custody and settlements may in some
instances be subject to delays and legal and administrative
uncertainties. Furthermore, foreign investment in the securities
markets of certain foreign countries is restricted or controlled
to varying degrees. These restrictions or controls may at times
limit or preclude investment in certain securities and may
increase the cost and expenses of a Portfolio. In addition, the
repatriation of investment income, capital or the proceeds of
sales of securities from certain of the countries is controlled
under regulations, including in some cases the need for certain
advance government notification or authority, and if a
deterioration occurs in a country's balance of payments, the
country could impose temporary restrictions on foreign capital
remittances.

A Portfolio also could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for
repatriation, as well as by the application to it of other
restrictions on investment. Investing in local markets may

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require a Portfolio to adopt special procedures or seek local
governmental approvals or other actions, any of which may involve
additional costs to a Portfolio. These factors may affect the
liquidity of a Portfolio's investments in any country and
Alliance will monitor the effect of any such factor or factors on
a Portfolio's investments. Furthermore, transaction costs
including brokerage commissions for transactions both on and off
the securities exchanges in many foreign countries are generally
higher than in the U.S.

Issuers of securities in foreign jurisdictions are generally not
subject to the same degree of regulation as are U.S. issuers with
respect to such matters as insider trading rules, restrictions on
market manipulation, shareholder proxy requirements, and timely
disclosure of information. The reporting, accounting, and
auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects, and
less information may be available to investors in foreign
securities than to investors in U.S. securities. Substantially
less information is publicly available about certain non-U.S.
issuers than is available about most U.S. issuers.

The economies of individual foreign countries may differ
favorably or unfavorably from the U.S. economy in such respects
as growth of gross domestic product or gross national product,
rate of inflation, capital reinvestment, resource self-
sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes, government regulation, political or social
instability, or diplomatic developments could affect adversely
the economy of a foreign country. In the event of
nationalization, expropriation or other confiscation, a Portfolio
could lose its entire investment in securities in the country
involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide
less protection to security holders such as the Portfolio than
that provided by U.S. laws.

Alliance believes that, except for currency fluctuations between
the U.S. Dollar and the Canadian Dollar, the matters described
above are not likely to have a material adverse effect on any
Portfolio's investments in the securities of Canadian issuers or
investments denominated in Canadian Dollars. The factors
described above are more likely to have a material adverse effect
on the Portfolio's investments in the securities of Mexican and
other non-Canadian foreign issuers, including investments in
securities denominated in Mexican Pesos or other non-Canadian
foreign currencies. If not hedged, however, currency
fluctuations could affect the unrealized appreciation and
depreciation of Canadian Government securities as expressed in
U.S. Dollars.

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Some of the Portfolios, may invest substantial amounts of their
assets in United Kingdom issuers, Japanese issuers, Canadian
issuers, Mexican issuers and Argentine issuers, respectively.
Please refer to Appendix B for a discussion of risks associated
with investments in these countries.

Investment in Privatized Enterprises by Worldwide Privatization
Portfolio. In certain jurisdictions, the ability of foreign
entities, such as the Portfolio, to participate in privatizations
may be limited by local law, or the price or terms on which the
Portfolio may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance
that governments that have embarked on privatization programs
will continue to divest their ownership of state enterprises,
that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been
privatized. Furthermore, in the case of certain of the
enterprises in which the Portfolio may invest, large blocks of
the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks
could have an adverse effect on the price of the stock of any
such enterprise.

Most state enterprises or former state enterprises go through an
internal reorganization of management prior to conducting an
initial equity offering in an attempt to better enable these
enterprises to compete in the private sector. However, certain
reorganizations could result in a management team that does not
function as well as the enterprise's prior management and may
have a negative effect on such enterprise. After making an
initial equity offering, enterprises that may have enjoyed
preferential treatment from the respective state or government
that owned or controlled them may no longer receive such
preferential treatment and may become subject to market
competition from which they were previously protected. Some of
these enterprises may not be able to effectively operate in a
competitive market and may suffer losses or experience bankruptcy
due to such competition. In addition, the privatization of an
enterprise by its government may occur over a number of years,
with the government continuing to hold a controlling position in
the enterprise even after the initial equity offering for the
enterprise.

Investment in Smaller, Emerging Companies. The Portfolios may
invest in smaller, emerging companies. Investment in such
companies involves greater risks than is customarily associated
with securities of more established companies. Companies in the
earlier stages of their development often have products and
management personnel which have not been thoroughly tested by
time or the marketplace; their financial resources may not be as

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substantial as those of more established companies. The
securities of smaller companies may have relatively limited
marketability and may be subject to more abrupt or erratic market
movements than securities of larger companies or broad market
indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also
contribute to stock price volatility.

Extreme Governmental Action; Less Protective Laws. In contrast
with investing in the United States, foreign investment may
involve in certain situations greater risk of nationalization,
expropriation, confiscatory taxation, currency blockage or other
extreme governmental action which could adversely impact a
Portfolio's investments. In the event of certain such actions, a
Portfolio could lose its entire investment in the country
involved. In addition, laws in various foreign countries,
including in certain respects each of the Greater China
countries, governing, among other subjects, business organization
and practices, securities and securities trading, bankruptcy and
insolvency may provide less protection to investors such as a
Portfolio than provided under United States laws.

Investment in the Banking Industry. Sustained increases in
interest rates can adversely affect the availability and cost of
funds for a bank's lending activities, and a deterioration in
general economic conditions could increase the exposure to credit
losses. The banking industry is also subject to the effects of
the concentration of loan portfolios in particular businesses
such as real estate, energy, agriculture or high technology-
related companies; competition within those industries as well as
with other types of financial institutions; and national and
local governmental regulation. In addition, a Portfolio's
investments in commercial banks located in several foreign
countries are subject to additional risks due to the combination
in such banks of commercial banking and diversified securities
activities. As discussed above, however, a Portfolio will seek
to minimize their exposure to such risks by investing only in
debt securities which are determined to be of high quality.

Investment in Fixed-Income Securities Rated Baa and BBB.
Securities rated Baa or BBB are considered to have speculative
characteristics and share some of the same characteristics as
lower-rated securities, as described below. Sustained periods of
deteriorating economic conditions or of rising interest rates are
more likely to lead to a weakening in the issuer's capacity to
pay interest and repay principal than in the case of higher-rated
securities.

Investment in Lower-Rated Fixed-Income Securities. Lower-rated
securities are subject to greater risk of loss of principal and
interest than higher-rated securities. They are also generally

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considered to be subject to greater market risk than higher-rated
securities, and the capacity of issuers of lower-rated securities
to pay interest and repay principal is more likely to weaken than
is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In
addition, lower-rated securities may be more susceptible to real
or perceived adverse economic conditions than investment grade
securities. Securities rated Ba or BB are judged to have
speculative elements or to be predominantly speculative with
respect to the issuer's ability to pay interest and repay
principal. Securities rated B are judged to have highly
speculative elements or to be predominantly speculative. Such
securities may have small assurance of interest and principal
payments. Securities rated Baa by Moody's are also judged to have
speculative characteristics.

The market for lower-rated securities may be thinner and less
active than that for higher-rated securities, which can adversely
affect the prices at which these securities can be sold. To the
extent that there is no established secondary market for lower-
rated securities, a Portfolio may experience difficulty in
valuing such securities and, in turn, the Portfolio's assets.

Alliance will try to reduce the risk inherent in investment in
lower-rated securities through credit analysis, diversification,
and attention to current developments and trends in interest
rates and economic and political conditions. There can be no
assurance, however, that losses will not occur. Since the risk of
default is higher for lower-rated securities, Alliance's research
and credit analysis are a correspondingly more important aspect
of its program for managing a Portfolio's securities than would
be the case if a Portfolio did not invest in lower-rated
securities. In considering investments for the Portfolio,
Alliance will attempt to identify those high-yielding securities
whose financial condition is adequate to meet future obligations,
has improved, or is expected to improve in the future.
Alliance's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage,
earnings prospects, and the experience and managerial strength of
the issuer.

Sovereign Debt Obligations. No established secondary markets may
exist for many of the sovereign debt obligations in which a
Portfolio may invest. Reduced secondary market liquidity may
have an adverse effect on the market price and a Portfolio's
ability to dispose of particular instruments when necessary to
meet its liquidity requirements or in response to specific
economic events such as a deterioration in the creditworthiness
of the issuer. Reduced secondary market liquidity for certain
sovereign debt obligations may also make it more difficult for a
Portfolio to obtain accurate market quotations for the purpose of

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valuing its portfolio. Market quotations are generally available
on many sovereign debt obligations only from a limited number of
dealers and may not necessarily represent firm bids of those
dealers or prices for actual sales.

By investing in sovereign debt obligations, the Portfolios will
be exposed to the direct or indirect consequences of political,
social, and economic changes in various countries. Political
changes in a country may affect the willingness of a foreign
government to make or provide for timely payments of its
obligations. The country's economic status, as reflected, among
other things, in its inflation rate, the amount of its external
debt and its gross domestic product, will also affect the
government's ability to honor its obligations.

The sovereign debt obligations in which the Portfolios will
invest in many cases pertain to countries that are among the
world's largest debtors to commercial banks, foreign governments,
international financial organizations, and other financial
institutions. In recent years, the governments of some of these
countries have encountered difficulties in servicing their
external debt obligations, which led to defaults on certain
obligations and the restructuring of certain indebtedness.
Restructuring arrangements have included, among other things,
reducing and rescheduling interest and principal payments by
negotiating new or amended credit agreements or converting
outstanding principal and unpaid interest to Brady Bonds, and
obtaining new credit to finance interest payments. Certain
governments have not been able to make payments of interest on or
principal of sovereign debt obligations as those payments have
come due. Obligations arising from past restructuring
agreements may affect the economic performance and political and
social stability of those issuers.

The Portfolios are permitted to invest in sovereign debt
obligations that are not current in the payment of interest or
principal or are in default so long as Alliance believes it to be
consistent with the Portfolios' investment objectives. The
Portfolios may have limited legal recourse in the event of a
default with respect to certain sovereign debt obligations it
holds. For example, remedies from defaults on certain sovereign
debt obligations, unlike those on private debt, must, in some
cases, be pursued in the courts of the defaulting party itself.
Legal recourse therefore may be significantly diminished.
Bankruptcy, moratorium and other similar laws applicable to
issuers of sovereign debt obligations may be substantially
different from those applicable to issuers of private debt
obligations. The political context, expressed as the willingness
of an issuer of sovereign debt obligations to meet the terms of
the debt obligation, for example, is of considerable importance.
In addition, no assurance can be given that the holders of

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commercial bank debt will not contest payments to the holders of
securities issued by foreign governments in the event of default
under commercial bank loan agreements.

U.S. and Foreign Taxes. A Portfolio's investment in foreign
securities may be subject to taxes withheld at the source on
dividend or interest payments. Foreign taxes paid by a Portfolio
may be creditable or deductible by U.S. shareholders for U.S.
income tax purposes. No assurance can be given that applicable
tax laws and interpretations will not change in the future.
Moreover, non-U.S. investors may not be able to credit or deduct
such foreign taxes.

Unrated Securities. Unrated securities will also be considered
for investment by certain Portfolios when Alliance believes that
the financial condition of the issuers of such securities, or the
protection afforded by the terms of the securities themselves,
limits the risk to the Portfolio to a degree comparable to that
of rated securities which are consistent with the Portfolio's
objective and policies.

U.S. Corporate Fixed-Income Securities. The U.S. corporate
fixed-income securities in which certain Portfolios invest may
include securities issued in connection with corporate
restructurings such as takeovers or leveraged buyouts, which may
pose particular risks. Securities issued to finance corporate
restructurings may have special credit risks due to the highly
leveraged conditions of the issuer. In addition, such issuers
may lose experienced management as a result of the restructuring.
Furthermore, the market price of such securities may be more
volatile to the extent that expected benefits from the
restructuring do not materialize. The Portfolios may also invest
in U.S. corporate fixed-income securities that are not current in
the payment of interest or principal or are in default, so long
as Alliance believes such investment is consistent with the
Portfolio's investment objectives. The Portfolios' rights with
respect to defaults on such securities will be subject to
applicable U.S. bankruptcy, moratorium and other similar laws.

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

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issuers of securities held by the Portfolios are impaired by the
Year 2000 problem, or prices of securities held by the Portfolios
decline as a result of real or perceived problems relating to the
Year 2000, the value of the Portfolios' shares may be materially
affected.

With respect to the Year 2000, the Portfolio has been advised
that Alliance, the Portfolio's investment adviser, Alliance Fund
Distributors, Inc. ("AFD"), the Portfolio's principal
underwriter, and Alliance Fund Services, Inc. ("AFS"), the
Portfolio's registrar, transfer agent and dividend disbursing
agent, (collectively, "Alliance"), began to address the Year 2000
issue several years ago in connection with the replacement or
upgrading of certain computer systems and applications. During
1997, Alliance began a formal Year 2000 initiative, which
established a structured and coordinated process to deal with the
Year 2000 issue. Alliance reports that it has completed its
assessment of the Year 2000 issues on its domestic and
international computer systems and applications. Currently,
management of Alliance expects that the required modifications
for the majority of its significant systems and applications that
will be in use on January 1, 2000, will be completed and tested
in early 1999. Full integration testing of these systems and
testing of interfaces with third-party suppliers will continue
through 1999. At this time, management of Alliance believes that
the costs associated with resolving this issue will not have a
material adverse effect on its operations or on its ability to
provide the level of services it currently provides to the
Portfolio.

The Portfolios and Alliance have been advised by the Portfolios'
Custodians that they are also in the process of reviewing their
systems with the same goals. As of the date of this Prospectus,
the Portfolio and Alliance have no reason to believe that the
Custodians will be unable to achieve these goals.

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Management of the Portfolios

Investment Adviser

Each Portfolio's Adviser is Alliance Capital Management, L.P.,
1345 Avenue of the Americas, New York, New York 10105. Alliance
is a leading international investment manager supervising client
accounts with assets as of December 31, 1998, totaling more than
$286 billion (of which approximately $118 billion represented 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 54 registered investment companies, with
more than 118 separate portfolios, managed by Alliance currently
have over 3.6 million shareholder accounts. As of December 31,
1998, Alliance was retained as an investment manager for employee
benefit plan assets of 35 of the FORTUNE 100 companies.

Alliance provides investment advisory services and order
placement facilities for the Portfolios. For these advisory
services, the Portfolios paid Alliance as a percentage of net
assets:

Fee as a Fiscal
percentage Year
Portfolio of net assets* Ending
_____________________________________________________________________________

Alliance Money Market Portfolio

Alliance Premier Growth Portfolio

Alliance Growth and Income Portfolio

U.S. Government/High Grade Securities
Portfolio

Alliance High Yield Portfolio

Alliance Total Return Portfolio

Alliance International Portfolio

Alliance Short-Term Multi-Market
Portfolio

Alliance Global Bond Portfolio

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Alliance North American Government
Income Portfolio

Alliance Global Dollar Government
Portfolio

Alliance Utility Income Portfolio

Alliance Conservative Investors
Portfolio

Alliance Growth Investors Portfolio

Alliance Growth Portfolio

Alliance Worldwide Privatization
Portfolio

Alliance Technology Portfolio

Alliance Quasar Portfolio

Alliance Real Estate Investment
Portfolio

* Fees are stated net of waivers and/or reimbursements.

AIGAM International Limited, Unit 1/11, Harbor Yard, Chelsea,
London, England, is the Sub-Adviser for the Global Bond
Portfolio. The Sub-Adviser is an asset management firm
specializing in global fixed-income money management. It manages
a range of institutional specialty funds, investment companies,
and dedicated institutional portfolios.

In connection with investments in real estate securities,
Alliance has, at its expense, retained as a consultant CB Richard
Ellis, Inc. ("CBRE"). CBRE is a publicly held company and the
largest real services company in the United States, comprised of
real estate brokerage, property, and facilities management, and
real estate finance, and investment advisory services.

PORTFOLIO MANAGERS

The following table lists the person or persons who are primarily
responsible for the day-to-day management of each Portfolio, the
length of time that each person has been primarily responsible
for the Portfolio, and each person's principal occupation during
the past five years.

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PRINCIPAL OCCUPATION
EMPLOYEE; TIME PERIOD; DURING THE PAST FIVE
PORTFOLIO TITLE WITH ACMC YEARS*
_________ ______________________ ____________________

Alliance Money Market Raymond J. Papera; Associated with
Portfolio since 1997; Vice Alliance since
President of Alliance prior to 1993
Capital Management
Corporation (ACMC)**

Alliance Premier Alfred Harrison; Associated with
Growth Portfolio since inception; Alliance since
Vice Chairman of ACMC prior to 1993

Alliance Growth and Paul C. Rissman; since Associated with
Income Portfolio inception; Senior Vice Alliance since
President of ACMC prior to 1993

Alliance U.S. Paul J. DeNoon; since Associated with
Government/High Grade inception; Vice President Alliance since
Securities Portfolio of ACMC prior to 1993

Alliance High Yield Nelson R. Jantzen; since Associated with
inception; Senior Vice Alliance since
President of ACMC July, 1993***

Wayne C. Tappe; since Associated with
inception; Senior Vice Alliance since
President of ACMC July, 1993***

Alliance Total Return Paul C. Rissman; since (see above)
Portfolio inception; (see above)

Alliance International Steven Beinhacker; since Associated with
Portfolio 1996; Vice President of Alliance since
ACMC prior to 1993

Alliance Short-Term Douglas J. Peebles; since Associated with
Multi-Market Portfolio inception; Senior Vice Alliance since
President of ACMC prior to 1993

Alliance Global Bond Ian Coulman; since Associated with
Portfolio inception; Investment Alliance since
Manager of the Sub- prior to 1993
Advisor

Alliance North American Wayne D. Lyski; since Associated with
Government Income inception; Executive Alliance since
Portfolio Vice President of ACMC prior to 1993

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Alliance Global Dollar Wayne D. Lyski; since (see above)
Government Portfolio inception; (see above)

Alliance Utility Income Paul C. Rissman; since (see above)
Portfolio inception; (see above)

Alliance Conservative Nicholas D.P. Carn; Associated with
Investors Portfolio since 1997; Vice Alliance since
President of AMC 1997; prior thereto,
Chief Investment
Officer and
Portfolio Manager of
Draycott Partners
since 1993

Alliance Growth Nicholas D.P. Carn; (see above)
Investors Portfolio since 1997; (see above)

Alliance Growth Tyler J. Smith; since Associated with
Portfolio inception; Senior Vice Alliance since
President of ACMC July, 1993; prior
thereto, associated
with Equitable
Capital Management
Corporation***

Alliance Worldwide Mark H. Breedon; since Associated with
Privatization Portfolio inception; Senior Vice Alliance since
President of ACMC and prior to 1993
Vice President of
Alliance Capital
Limited****

Alliance Technology Peter Anastos; since Associated with
Portfolio 1992; Senior Vice Alliance since
President of ACMC prior to 1993

Gerald T. Malone; Associated with
since 1992; Senior Alliance since
Vice President of ACMC prior to 1993

Alliance Quasar Alden M. Stewart; Associated with
Portfolio since inception; Alliance since
Executive Vice prior to July,
President of ACMC 1993**

Randall E. Hasse; Associated with
since inception; Alliance since
Senior Vice President prior to 1993
of ACMC

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Alliance Real Estate Daniel G. Pine; since Associated with
Investment Portfolio inception; Senior Vice Alliance since
President of ACMC May, 1996; prior
thereto associated
with Desai Capital
Management since
prior to 1993

David Kruth; since Associated with
1997; Vice President Alliance since
of ACMC 1997; prior thereto;
Senior Vice
President of
Yarmouth Group

* Unless indicated otherwise, persons associated with Alliance have
been employed in a portfolio management, research or investment
company.
** The sole general partner of Alliance.
*** Prior to July 22, 1993, with Equitable Capital Management Corporation
(Equitable Capital). On that date, Alliance acquired the business
and substantially all of the assets of Equitable Capital.
**** An indirect wholly-owned subsidiary of Alliance.

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PURCHASE AND SALE OF SHARES

How The Portfolios Value Their Shares

The Portfolios' net asset value or NAV is calculated at 4:00
p.m., Eastern time, each day the Exchange is open for business.
To calculate NAV, a Portfolio's assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets,
is divided by the number of shares outstanding. The Portfolios'
value their securities 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 Portfolios'
Directors or Trustees believe accurately reflect fair market
value.

Your order for purchase or sale of shares is priced at the next
NAV calculated after your order is received by the Portfolio.

How To Purchase and Sell Shares

The Portfolios' offer their shares through the separate accounts
of life insurance companies. You may only purchase and sell
shares through these separate accounts. See the Prospectus of
the separate account of the participating insurance company for
information on the purchase and sale of the Portfolios' shares.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Money Market Portfolio declares income dividends each
business day at 4:00 p.m., Eastern time. The dividends are paid
monthly via automatic investment in additional full and
fractional shares. As these additional shares are entitled to
income, a compounding of income occurs.

The other Portfolios declare dividends on their shares at least
annually. The income and capital gains distribution will be made
in shares of each Portfolio.

See the Prospectus of the separate account of the participating
insurance company for federal income tax information.

Investment income received by a Portfolio from sources within
foreign countries may be subject to foreign income taxes withheld
at the source. Provided that certain code requirements are met,
a Portfolio may "pass-through" to its shareholders credits or
deductions to foreign income taxes paid.

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FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you
understand the Portfolio's financial performance for the period
of the Portfolio's operations. Certain information reflects
financial results for a single share of each Portfolio. The
total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Portfolio
(assuming reinvestment of all dividends and distributions). The
information has been audited by ______________, the Portfolios'
independent accountants, whose report, along with each
Portfolio's financial statements, is included in the SAI, which
is available upon request.

[To Follow]

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Appendix A

Bond Ratings

Moody's Investors Service, Inc.

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 larger
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.

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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 in a high degree. Such issues are often in default
or have other marked shortcomings.

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

Absence of Rating--When no rating has been assigned or where a
rating has been suspended or withdrawn, it may be for reasons
unrelated to the quality of the issue.

Should no rating be assigned, the reason may be one of the
following:

1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are unrated as a matter of policy.
3. There is a lack of essential data pertaining to the
issue or issuer.
4. The issue was privately placed, in which case the rating
is not published in Moody's publications.

Suspension or withdrawal may occur if: new and material
circumstances arise, the effects of which preclude satisfactory
analysis; there is no longer available reasonable up-to-date data
to permit a judgment to be formed; or a bond is called for
redemption; or for other reasons.

Note--Moody's applies numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa through B in its corporate
bond rating system. The modifier 1 indicates that the security
ranks in the higher end of its generic 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 generic
rating category.

Standard & Poor's RATINGS SERVICES

AAA--Debt rated AAA has the highest rating assigned by S&P.
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 highest rated issues only in
small degree.

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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 normally exhibits adequate protection
parameters. However, 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
in higher rated categories.

BB, B, CCC, CC, C--Debt rated BB, B, CCC, CC or C is regarded as
having significant speculative characteristics. BB indicates the
lowest degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to
adverse conditions.

BB--Debt rated BB is less vulnerable to nonpayment than other
speculative debt. However, it faces major ongoing uncertainties
or exposure to adverse business, financial or economic conditions
which could lead to an inadequate capacity to pay interest and
repay principal.

B--Debt rated B is more vulnerable to nonpayment than debt rated
BB, but there is capacity to pay interest and repay principal.
Adverse business, financial or economic conditions will likely
impair the capacity or willingness to pay principal or repay
interest.

CCC--Debt rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial and economic
conditions to pay interest and repay principal. In the event of
adverse business, financial or economic conditions, there is not
likely to be capacity to pay interest or repay principal.

CC--Debt rated CC is currently highly vulnerable to nonpayment.

C--The C rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been
taken, but payments are being continued.

D--The D rating, unlike other ratings, is not prospective;
rather, it is used only where a default has actually occurred.

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

NR--Not rated.

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DUFF & PHELPS CREDIT RATING CO.

AAA--Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.

AA+,AA, AA- --High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

A+, A, A- --Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.

BBB+, BBB, BBB- --Below average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.

BB+, BB, BB- --Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down frequently
within this category.

B+, B, B- --Below investment grade and possessing risk that
obligations will not be met when due. Financial protection
factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists for
frequent changes in the rating within this category or into a
higher or lower rating grade.

CCC--Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal, interest or
preferred dividends. Protection factors are narrow and risk can
be substantial with unfavorable economic/industry conditions,
and/or with unfavorable company developments.

DD--Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP--Preferred stock with dividend arrearages.

FITCH IBCA, INC.

AAA--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds

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rated AAA. Because bonds rated in the AAA and AA categories are
not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F- 1+.

A--Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely
to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds
will fall below investment grade is higher than for bonds with
higher ratings.

BB--Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.

CCC--Bonds have certain identifiable characteristics which, if
not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.

CC--Bonds are minimally protected. Default in payment of
interest and/or principal seems probable over time.

C--Bonds are in imminent default in payment of interest or
principal.

DDD, DD, D--Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the
highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

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Plus (+) Minus (-)--Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the AAA, DDD, DD or D categories.

NR--Indicates that Fitch does not rate the specific issue.

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Appendix B

General Information
About United Kingdom, Japan, Canada, Mexico
and Argentina

General Information About the United Kingdom

Investment in securities of United Kingdom issuers involves
certain considerations not present with investment in securities
of U.S. issuers. As with any investment not denominated in the
U.S. Dollar, the U.S. Dollar value of a Portfolio's investment
denominated in the British pound sterling will fluctuate with
pound sterling-dollar exchange rate movements. Between 1972,
when the pound sterling was allowed to float against other
currencies, and the end of 1992, the pound sterling generally
depreciated against most major currencies, including the U.S.
Dollar. Between September and December 1992, after the United
Kingdom's exit from the Exchange Rate Mechanism of the European
Monetary System, the value of the pound sterling fell by almost
20% against the U.S. Dollar. The pound sterling has since
recovered due to interest rate cuts throughout Europe and an
upturn in the economy of the United Kingdom. The average
exchange rate of the U.S. Dollar to the pound sterling was 1.50
in 1993 and 1.66 in 1998. On January 22, 1999 the U.S. Dollar-
pound sterling exchange rate was 1.66.

The United Kingdom's largest stock exchange is the London Stock
Exchange, which is the third largest exchange in the world. As
measured by the FT-SE 100 index, the performance of the 100
largest companies in the United Kingdom reached 5,882.6 at the
end of 1998, up approximately 15% from the end of 1997. On
October 5, 1998 the FT-SE 100 index closed at 4648.7, the lowest
close in the 12-month period prior to that date, after reaching a
high of 6179.0 on July 20, 1998. The FT-SE 100 index closed at
5861.2 on January 22, 1999.

The Economic and Monetary Union ("EMU") became effective on
January 1, 1999. When fully implemented in 2002, the EMU will
establish a common currency for European countries that meet the
eligibility criteria and choose to participate. Although the
United Kingdom meets the eligibility criteria, the government has
not taken any action to join the EMU.

From 1979 until 1997 the Conservative Party controlled
Parliament. In the May 1, 1997 general elections, however, the
Labour Party, led by Tony Blair, won a majority in Parliament,
holding 418 of 658 seats in the House of Commons. Mr. Blair, who
was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy
framework intended to protect monetary policy from political

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<PAGE>

forces by vesting responsibility for setting interest rates in a
new Monetary Policy Committee headed by the Governor of the Bank
of England, as opposed to the Treasury. Prime Minister Blair has
also undertaken a comprehensive restructuring of the regulation
of the financial services industry.

General Information About Japan

Investment in securities of Japanese issuers involves certain
considerations not present with investment in securities of U.S.
issuers. As with any investment not denominated in the U.S.
Dollar, the U.S. Dollar value of each Portfolio's investments
denominated in the Japanese yen will fluctuate with yen-dollar
exchange rate movements. Between 1985 and 1995, the Japanese yen
generally appreciated against the U.S. Dollar, but has since
fallen from its post-World War II high (in 1995) against the U.S.
Dollar.

Japan's largest stock exchange is the Tokyo Stock Exchange, the
First Section of which is reserved for larger, established
companies. As measured by the TOPIX, a capitalization-weighted
composite index of all common stocks listed in the First Section,
the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 50% through the end
of 1997. On December 31, 1998 the TOPIX closed at 1086.99, down
approximately 7% from the end of 1997. Certain valuation
measures, such as price-to-book value and price-to-cash flow
ratios, indicate that the Japanese stock market is near its
lowest level in the last twenty years relative to other world
markets.

In recent years, Japan has consistently recorded large current
account trade surpluses with the U.S. that have caused
difficulties in the relations between the two countries. On
October 1, 1994, the U.S. and Japan reached an agreement that may
lead to more open Japanese markets with respect to trade in
certain goods and services. In June 1995, the two countries
agreed in principle to increase Japanese imports of American
automobiles and automotive parts. Nevertheless it is expected
that the continuing friction between the U.S. and Japan with
respect to trade issues will continue for the foreseeable future.

Each Portfolio's investments in Japanese issuers will be subject
to uncertainty resulting from the instability of recent Japanese
ruling coalitions. From 1955 to 1993, Japan's government was
controlled by a single political party. Between August 1993 and
October 1996 Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20,
1996, however, Japan returned to a single-party government led by
Ryutaro Hashimoto, a member of the Liberal Democratic Party
("LDP"). While the LDP does not control a majority of the seats

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<PAGE>

in the parliament, subsequent to the 1996 elections it
established a majority in the House of Representatives as
individual members joined the ruling party. The popularity of
the LDP declined, however, due to the dissatisfaction with
Mr. Hashimoto's leadership. In the July 1998 House of
Councillors election, the LDP's representation fell to 103 seats
from 120 seats. As a result of the LDP's defeat, Mr. Hashimoto
resigned as prime minister and leader of the LDP. Mr. Hashimoto
was replaced by Keizo Obuchi. On January 14, 1999, the LDP
formed a coalition government with a major opposition party. As
a result, Mr. Obuchi's administration strengthened its position
in the parliament, where it increased its majority in the House
of Representatives and reduced its shortfall in the House of
Councillors. For the past several years, Japan's banking
industry has been weakened by a significant amount of problem
loans. Japan's banks also have significant exposure to the
current financial turmoil in other Asian markets. Following the
insolvency of one of Japan's largest banks in November 1997, the
government proposed several plans designed to strengthen the
weakened banking sector. In October 1998, the Japanese
parliament approved several new laws that will make $508 billion
in public funds available to increase the capital of Japanese
banks, to guarantee depositors' accounts and to nationalize the
weakest banks. It is unclear whether these new laws will achieve
their intended effect.

General Information About Canada

Canada consists of a federation of ten Provinces and two federal
territories (which generally fall under federal authority) with a
constitutional division of powers between the federal and
Provincial governments. The Parliament of Canada has
jurisdiction over all areas not assigned exclusively to the
Provincial legislatures, and has jurisdiction over such matters
as the federal public debt and property, the regulation of trade
and commerce, currency and coinage, banks and banking, national
defense, the postal services, navigation and shipping and
unemployment insurance.

The Canadian economy is based on the free enterprise system, with
business organizations ranging from small owner-operated
businesses to large multinational corporations. Manufacturing
and resource industries are large contributors to the country's
economic output, but as in many other highly developed countries,
there has been a gradual shift from a largely goods-producing
economy to a predominantly service-based one. Agriculture and
other primary production play a small but key role in the
economy. Canada is also an exporter of energy to the United
States in the form of natural gas (of which Canada has
substantial reserves) and hydroelectric power, and has
significant mineral resources.

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<PAGE>

Canadian Dollars are fully exchangeable into U.S. Dollars without
foreign exchange controls or other legal restriction. Since the
major developed-country currencies were permitted to float freely
against one another, the range of fluctuation in the U.S.
Dollar/Canadian Dollar exchange rate generally has been narrower
than the range of fluctuation between the U.S. Dollar and most
other major currencies. Since 1991, Canada generally has
experienced a weakening of its currency. The Canadian Dollar
reached an all-time low of 1.5770 Canadian Dollars per U.S.
Dollar on August 27, 1998. On February 22, 1999 the Canadian
Dollar-U.S. Dollar exchange rate was 1.4968:1. The range of
fluctuation that has occurred in the past is not necessarily
indicative of the range of fluctuation that will occur in the
future. Future rates of exchange cannot be accurately predicted.

General Information About The United Mexican States

The United Mexican States ("Mexico") is a nation formed by 31
states and a Federal District (Mexico City). The Political
Constitution of Mexico, which took effect on May 1, 1917,
established Mexico as a Federal Republic and provides for the
separation of executive, legislative and judicial branches. The
President and the members of the General Congress are elected by
popular vote.

Prior to 1994, when Mexico experienced an economic crisis that
led to the devaluation of the Peso in December 1994, the Mexican
economy experienced improvement in a number of areas, including
growth in gross domestic product and a substantial reduction in
the rate of inflation and in the public sector financial deficit.
Much of the past improvement in the Mexican economy was due to a
series of economic policy initiatives intended to modernize and
reform the Mexican economy, control inflation, reduce the
financial deficit, increase public revenues through the reform of
the tax system, establish a competitive and stable currency
exchange rate, liberalize trade restrictions and increase
investment and productivity, while reducing the government's role
in the economy. In this regard, the Mexican government launched
a program for privatizing certain state owned enterprises,
developing and modernizing the securities markets, increasing
investment in the private sector and permitting increased levels
of foreign investment.

In 1994, Mexico faced internal and external conditions that
resulted in an economic crisis that continues to affect the
Mexican economy adversely. Growing trade and current account
deficits, which could no longer be financed by inflows of foreign
capital, were factors contributing to the crisis. A weakening
economy and unsettling political and social developments caused
investors to lose confidence in the Mexican economy. This
resulted in a large decline in foreign reserves followed by a

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<PAGE>

sharp and rapid devaluation of the Mexican Peso. The ensuing
economic and financial crisis resulted in higher inflation and
domestic interest rates, a contraction in real gross domestic
product and a liquidity crisis.

In response to the adverse economic conditions that developed at
the end of 1994, the Mexican government instituted a new economic
program; and the government and the business and labor sectors of
the economy entered into a new accord in an effort to stabilize
the economy and the financial markets. To help relieve Mexico's
liquidity crisis and restore financial stability to Mexico's
economy, the Mexican government also obtained financial
assistance from the United States, other countries and certain
international agencies conditioned upon the implementation and
continuation of the economic reform program.

In October 1995, and again in October 1996, the Mexican
government announced new accords designed to encourage economic
growth and reduce inflation. While it cannot be accurately
predicted whether these accords will continue to achieve their
objectives, the Mexican economy has stabilized since the economic
crisis of 1994, and the high inflation and high interest rates
that continued to be a factor after 1994 have subsided as well.
After declining for five consecutive quarters beginning with the
first quarter of 1995, Mexico's gross domestic product began to
grow in the second quarter of 1996. That growth was sustained in
1996 and 1997, resulting in increases of 5.2% and 7.0%,
respectively. The growth rate for 1998 was 4.8%. In addition,
inflation dropped from a 52% annual rate in 1995 to a 27.7%
annual rate in 1996 and a 15.7% annual rate in 1997. In 1998,
the inflation rate was 18.6%. Mexico's economy is influenced by
international economic conditions, particularly those in the
United States, and by world prices for oil and other commodities.
The recovery of the economy will require continued economic and
fiscal discipline as well as stable political and social
conditions. In addition, there is no assurance that Mexico's
economic policy initiatives will be successful or that succeeding
administrations will continue these initiatives.

Under economic policy initiatives implemented on and after
December 1987, the Mexican government introduced a series of
schedules allowing for the gradual devaluation of the Mexican
Peso against the U.S. Dollar. These gradual devaluations
continued until December 1994. On December 22, 1994, the Mexican
government announced that it would permit the Peso to float
freely against other currencies, resulting in a precipitous
decline against the U.S. Dollar. By December 31, 1996, the Peso-
Dollar exchange rate had decreased approximately 40% from that on
December 22, 1994. After dropping approximately 55% from 1994
through 1996, in 1997, the average annual Peso-Dollar exchange
rate decreased approximately 4% from that in 1996. In 1998, the

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<PAGE>

average annual Peso-Dollar exchange rate was approximately 16%
less than that in 1997.

Mexico has in the past imposed strict foreign exchange controls.
There is no assurance that future regulatory actions in Mexico
would not affect the Portfolio's ability to obtain U.S. Dollars
in exchange for Mexican Pesos.

General Information About The Republic of Argentina

The Republic of Argentina ("Argentina") consists of 23 provinces
and the federal capital of Buenos Aires. Its federal
constitution provides for an executive branch headed by a
President, a legislative branch and a judicial branch. Each
province has its own constitution, and elects its own governor,
legislators and judges, without the intervention of the federal
government. The military has intervened in the political process
on several occasions since 1930 and has ruled the country for 22
of the past 68 years. The most recent military government ruled
the country from 1976 to 1983. Four unsuccessful military
uprisings have occurred since 1983, the most recent in December
1990.

Shortly after taking office in 1989, the country's current
President adopted market-oriented and reformist policies,
including an aggressive privatization program, a reduction in the
size of the public sector and an opening of the economy to
international competition.

In the decade prior to the announcement of a new economic plan in
March 1991, the Argentine economy was characterized by low and
erratic growth, declining investment rates and rapidly worsening
inflation. Despite its strengths, which include a well-balanced
natural resource base and a high literacy rate, the Argentine
economy failed to respond to a series of economic plans in the
1980's. The 1991 economic plan represented a pronounced
departure from its predecessors in calling for raising revenues,
cutting expenditures and reducing the public deficit. The
extensive privatization program commenced in 1989 was
accelerated, the domestic economy deregulated and opened up to
foreign trade and the frame-work for foreign investment reformed.
As a result of the economic stabilization reforms, gross domestic
product has increased each year since 1991, with the exception of
1995. During 1998, gross domestic product increased an estimated
4.7% from 1997. The rate of inflation is generally viewed to be
under control. Significant progress was also made between 1991
and 1994 in rescheduling Argentina's debt with both external and
domestic creditors, which improved fiscal cash flows in the
medium term and allowed a return to voluntary credit markets.
There is no assurance that Argentina's economic policy

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<PAGE>

initiatives will be successful or that succeeding administrations
will continue these initiatives.

In 1995, economic policy was directed toward the effects of the
Mexican currency crisis. The Mexican currency crisis led to a run
on Argentine bank deposits, which was brought under control by a
series of measures designed to strengthen the financial system.
The measures included the "dollarization" of banking reserves,
the establishment of two trust funds and strengthening bank
reserve requirements.

In 1991, the Argentine government enacted currency reforms, which
required the domestic currency to be fully backed by
international reserves, in an effort to make the Argentine Peso
fully convertible into the U.S. Dollar at a rate of one to one.

The Argentine Peso has been the Argentine currency since
January 1, 1992. Since that date, the rate of exchange from the
Argentine Peso to the U.S. Dollar has remained approximately one
to one. The fixed exchange rate has been instrumental in
stabilizing the economy, but has not reduced pressures from high
rates of unemployment. It is not clear that the government will
be able to resist pressure to devalue the currency. However, the
historic range is not necessarily indicative of fluctuations that
may occur in the exchange rate over time and future rates of
exchange cannot be accurately predicted. The Argentine foreign
exchange market was highly controlled until December 1989, when a
free exchange rate was established for all foreign currency
transactions. Argentina has eliminated restrictions on foreign
direct investment and capital repatriation. In 1993, legislation
was adopted abolishing previous requirements of a three-year
waiting period for capital repatriation. Under the legislation,
foreign investors are permitted to remit profits at any time.

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<PAGE>

For more information about the Portfolios, the following
documents are available upon request:

Annual/Semi-annual Reports to Shareholders

The Portfolios' annual and semi-annual reports to shareholders
contain additional information on the Portfolios' investments.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected
a Portfolio's performance during its last fiscal year.

Statement of Additional Information (SAI)

Each Portfolio has an SAI, which contains more detailed
information about the Portfolio, including its operations and
investment policies. The Portfolios' SAIs are incorporated by
reference into (and are legally part of) this Prospectus.

You may request a free copy of the current annual/semi-annual
report or the SAI, by contacting your broker or other financial
intermediary, or by contacting Alliance:

By mail: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520

By phone: For Information: (800) 221-5672
For Literature: (800) 227-4618

Or you may view or obtain these documents from the Commission:

In person: at the Commission's Public Reference Room in
Washington, D.C.

By phone: 1-800-SEC-0330

By mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)

On the Internet: www.sec.gov

You also may find more information about Alliance and the
Portfolios on the internet at: www.Alliancecapital.com.

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<PAGE>

Class B Prospectus

ALLIANCE VARIABLE PRODUCTS
SERIES FUND

[DATE]

The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense.

<PAGE>

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY

GLOSSARY

DESCRIPTION OF THE PORTFOLIOS
Investment Objectives and Policies
Description of Investment Practices
Additional Risk Considerations

MANAGEMENT OF THE PORTFOLIOS

PURCHASE AND SALE OF SHARES
How The Portfolios Value Their Shares
How To Purchase and Sell Shares

DIVIDENDS, DISTRIBUTIONS AND TAXES

DISTRIBUTION ARRANGEMENTS

FINANCIAL HIGHLIGHTS

<PAGE>

RISK/RETURN SUMMARY

- changes in the Portfolio's performance from year to year
over 10 years (or over the life of the Portfolio if the
Portfolio is less than 10 years old).

A Portfolio's past performance, of course, does not necessarily
indicate how it will perform in the future.

Other important things for you to note:

- You may lose money by investing in the Portfolios.

<PAGE>

- An investment in the Portfolios is not a deposit in a
bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government
agency.

<PAGE>

Money Market Portfolio

Among the principal risks of investing in the Portfolio
are interest rate risk and credit risk.

The table and bar chart provide an indication of the historical
risk of an investment in the Portfolio. The information in the
table and bar chart is for the Portfolio's Class A shares, which,
although not offered in the Prospectus, have returns that are
substantially similar to the Portfolio's Class B shares because
the classes invest in the same portfolio of securities. The
returns of the classes differ only to the extent that the classes
do not have the same expenses.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Premier Growth Portfolio

- Objective: The Portfolio's investment objective is
growth of capital by pursuing aggressive investment
policies.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth and Income Portfolio

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
The Portfolio's investments in foreign securities have
foreign risk and currency risk.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance U.S. Government/High Grade Securities Portfolio

- Objective: The Portfolio's investment objective is high
current income consistent with preservation of capital.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Government Bond
Index

Bar Chart

[INSERT CHART]

<PAGE>

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance High-Yield Portfolio

Performance Information and Bar Chart

Performance Table

1 Year Since Inception
Portfolio % %
First Boston High
Yield Index

Bar Chart

[INSERT CHART]

<PAGE>

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Total Return Portfolio

- Objective: The Portfolio's investment objective is to
achieve a high return through a combination of current
income and capital appreciation.

Among the principal risks of investing in the Portfolio
are interest rate risk, credit risk, and market risk.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Aggregate Bond Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance International Portfolio

Among the principal risks of investing in the Portfolio
are market risk, foreign risk, and currency risk.

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
MSCI World Index (minus
the U.S.)

Bar Chart

[Graphic to be Inserted]

You should consider an investment in the Portfolio as a long-term
investment. The Portfolio's returns will fluctuate over long and

<PAGE>

short periods. For example, during the period shown in the bar
chart, the Portfolio's:

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Short-Term Multi-Market Portfolio

The Portfolio also may:

- use derivatives strategies;

- invest in prime commercial paper or unrated paper
of equivalent quality;

- enter into repurchase agreements; and

- invest in variable, floating, and inverse floating
rate instruments.

<PAGE>

more significant effect, either negative or positive, on
the Fund's net asset value.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Merrill Lynch 1-3
Year Government Bond
Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Global Bond Portfolio

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year 5 Years Since
Inception
Portfolio % % %
Lehman Brothers
Aggregate Bond
Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance North American Government Income Portfolio

The Portfolio may use significant borrowings for
leverage. The Portfolio also may:

- use derivative strategies; and
- invest in variable, floating, and inverse floating
rate instruments.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Lehman Brothers
Aggregate Bond
Index

Bar Chart

[INSERT CHART]

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Global Dollar Government Portfolio

- Objective: The Portfolio's investment objectives are to
seek a high level of current income and, secondarily,
capital appreciation.

The Portfolio may use significant borrowings and reverse
repurchase agreements and dollar rolls for leverage.
The Portfolio also may:

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Lehman Brother
Aggregate Bond
Index

Bar Chart

[INSERT CHART]

Best quarter was up ___%, ________ quarter, 19__; and

Worst quarter was [up/down] ___%, _________ quarter, 19__.

<PAGE>

Alliance Utility Income Portfolio

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
Because the Portfolio invests a substantial portion of
its assets in companies in a specific industry, there is
the risk that factors affecting utility companies will
have a significant effect on the value of the
Portfolio's investments. To the extent the Portfolio
invests in lower-rated securities, your investment is
subject to more credit risk than a Portfolio that
invests in higher-rated securities.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
NYSE Utilities Index

<PAGE>

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Conservative Investors Portfolio

- Objective: The Portfolio's investment objective is to
achieve a high total return without, in the view of
Alliance, undue risk to principal.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

<PAGE>

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth Investors Portfolio

- Objective: The Portfolio's investment objective is to
achieve the highest total return consistent with what
Alliance considers to be reasonable risk.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

You should consider an investment in the Portfolio as a long-term
investment. The Portfolio's returns will fluctuate over long and

<PAGE>

short periods. For example, during the period shown in the bar
chart, the Portfolio's:

Best quarter was up ____%, ________ quarter, 19__; and

Worst quarter was [up/down] ____%, _______quarter, 19__.

<PAGE>

Alliance Growth Portfolio

- Objective: The Portfolio's investment objective is to
provide long-term growth of capital. Current income is
incidental to the Portfolio's objective.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

You should consider an investment in the Portfolio as a long-term
investment. The Portfolio's returns will fluctuate over long and

<PAGE>

short periods. For example, during the period shown in the bar
chart, the Portfolio's:

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Worldwide Privatization Portfolio

- Objective: The Portfolio's investment objective is to
seek long-term capital appreciation.

<PAGE>

the classes invest in the same portfolio of securities. The
returns of the classes differ only to the extent that the classes
do not have the same expenses.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
MSCI EAFE Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Technology Portfolio

- Objective: The Portfolio's objective is growth of
capital. Current income is incidental to the
Portfolio's objective.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

<PAGE>

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Quasar Portfolio

- Objective: The Portfolio's investment objective is
growth of capital by pursuing aggressive investment
policies. Current income is incidental to the
Portfolio's objective.

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
Russell 2000 Index

<PAGE>

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

Alliance Real Estate Investment Portfolio

Among the principal risks of investing in the Portfolio
are market risk, interest rate risk, and credit risk.
Because the Portfolio invests a substantial portion of
its assets in the real estate market, it has many of the
same risks as direct ownership of real estate including
the risk that the value of real estate could decline due
to a variety of factors affecting the real estate
market. In addition, REITs are dependent on the
capability of their managers, may have limited
diversification, and could be significantly affected by
changes in tax laws. Because the Portfolio invests in
mortgage-backed securities, it is subject to the risk
that mortgage loans will be prepaid when interest rates
decline, forcing the Portfolio to reinvest in securities
with lower interest rates. For this and other reasons,
mortgage-backed securities may have significantly
greater price and yield volatility than traditional
fixed-income securities.

<PAGE>

Performance Information and Bar Chart

Performance Table

1 Year Since
Inception
Portfolio % %
S&P 500 Index

Bar Chart

[Graphic to be Inserted]

Best quarter was up ___%, ______quarter, 19__; and

Worst quarter was [up/down] ___%, ______quarter, 19__.

<PAGE>

SUMMARY OF PRINCIPAL RISKS

<PAGE>

- Foreign Risk This is the risk of investments in issuers
located in foreign countries. All Alliance Portfolios

<PAGE>

- Allocation Risk Those Portfolios that allocate their
investments between equity and debt securities may have
a more significant risk that poor performance of one

<PAGE>

asset class will have a greater effect on the
Portfolio's net asset value.

<PAGE>

Principal Risks By Portfolio

The following chart summarizes the principal risks of each
Portfolio. Risks not marked for a particular Portfolio may,
however, still apply to some extent to that Portfolio at various
times.

Country or
PORTFOLIO Interest Credit Market Foreign Geographic Currency
Rate Risk Risk Risk Risk Risk Risk

Money Market
Portfolio X X

Premier Growth
Portfolio X

Growth and Income
Portfolio X X X X X

U.S. Government/
High Grade
Securities
Portfolio X X X

High Yield X X X X X

Total Return
Portfolio X X X

International
Portfolio X X X X

Short-Term Multi-
Market Portfolio X X X X X

Global Bond
Portfolio X X X X X

North American
Government Income X X X X X X

Global Dollar
Government X X X X X

Utility Income
Portfolio X X X

<PAGE>

Conservative
Investors
Portfolio X X X X X

Growth Investors
Portfolio X X X X X

Growth Portfolio X X X X

Worldwide
Privatization
Portfolio X X X X

Technology
Portfolio X

Quasar Portfolio X

Real Estate
Investment
Portfolio X X X

<PAGE>

<TABLE>
Focused
PORTFOLIO Derivatives Liquidity Management Portfolio Allocation Capitalization Sector Leveraging
Risk Risk Risk Risk Risk Risk Risk Risk

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market
Portfolio

Premier
Growth Portfolio X X

Growth and Income
Portfolio X

U.S. Government/
High Grade
Securities
Portfolio X X

High Yield X X X X

Total Return
Portfolio X

International
Portfolio X

Short-Term
Multi-Market
Portfolio X X X X

Global Bond
Portfolio X

North American
Government Income X X X X

Global Dollar
Government X X X X

Utility Income
Portfolio X X

Conservative
Investors
Portfolio X

<PAGE>

Growth Investors
Portfolio X

Growth
Portfolio X X

Worldwide
Privatization
Portfolio X

Technology
Portfolio X X

Quasar Portfolio X X

Real Estate
Investment
Portfolio X X
</TABLE>

<PAGE>

GLOSSARY

This Prospectus uses the following terms.

Types of Securities

Bonds are fixed, floating, and variable rate debt obligations.

Convertible securities are fixed-income securities that are
convertible into common and preferred stock.

Debt securities are bonds, debentures, notes, and bills.

Depositary receipts include American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs") and other types of
depositary receipts.

Fixed-income securities are debt securities and preferred stocks,
including floating rate and variable rate instruments.

- ARMS, which are adjustable-rate mortgage securities;

- SMRS, which are stripped mortgage-related securities;

- CMOs, which are collateralized mortgage obligations;

<PAGE>

- GNMA certificates, which are securities issued by the
Government National Mortgage Association or GNMA;

- FNMA certificates, which are securities issued by the
Federal National Mortgage Association or FNMA; and

- FHLMC certificates, which are securities issued by the
Federal Home Loan Mortgage Corporation or FHLMC.

Rule 144A securities are securities that may be resold under Rule
144A of the Securities Act.

U.S. Government securities are securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.

Rating Agencies, Rated Securities and Indexes

Duff & Phelps is Duff & Phelps Credit Rating Company.

EAFE Index is Morgan Stanley Capital International Europe,
Australasia and Far East ("EAFE") Index.

Fitch is Fitch IBCA, Inc.

Higher-quality commercial paper is commercial paper rated at
least Prime-2 by Moody's, A-2 by S&P, Fitch-2 by Fitch, or Duff 2
by Duff & Phelps.

Investment grade securities are fixed-income securities rated Baa
and above by Moody's or B and above by S&P, Duff & Phelps or
Fitch, or determined by Alliance to be of equivalent quality.

Moody's is Moody's Investors Service, Inc.

NRSRO is a nationally recognized statistical rating organization.

<PAGE>

S&P is Standard & Poor's Ratings Services.

S&P 500 Index is S&P's 500 Composite Stock Price Index, a widely
recognized unmanaged index of market activity.

Other

1940 Act is the Investment Company Act of 1940, as amended.

Code is the Internal Revenue Code of 1986, as amended.

Commission is the Securities and Exchange Commission.

Exchange is the New York Stock Exchange.

LIBOR is the London Interbank Offered Rate.

Securities Act is the Securities Act of 1933, as amended.

World Bank is the commonly used name for the International Bank
for Reconstruction and Development.

<PAGE>

Description of the Portfolios

Please note that:

- Additional discussion of the Portfolios' investments,
including the risks of the investments, can be found in
the discussion under Description of Investment Practices
following this section.

- Additional descriptions of each Portfolio's strategies,
investments and risks can be found in the Portfolio's
Statement of Additional Information or SAI.

INVESTMENT OBJECTIVE AND POLICIES

Alliance Money Market Portfolio

The Portfolio pursues its objectives by investing in high-quality
U.S. Dollar-denominated money market securities. The Portfolio
may invest in:

- marketable obligations issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities;

<PAGE>

- high-quality commercial paper issued by U.S. or foreign
companies (rated or determined by Alliance to be of
comparable quality) and participation interests in loans
extended to such companies;

- adjustable rate obligations;

- asset-backed securities;

- repurchase agreements collateralized by the types of
liquid securities listed above.

<PAGE>

Alliance Premier Growth Portfolio

<PAGE>

The Portfolio also may:

- - invest up to 20% of its net assets in convertible securities;

- - invest up to 5% of its net assets in rights or warrants;

- - invest up to 15% of its total assets in foreign securities;

<PAGE>

- - purchase and sell exchange-traded index options and stock
index futures contracts;

- - make short sales "against the box" of up to 15% of its net
assets; and

- - invest in illiquid securities of up to 10% of its total
assets.

Alliance Growth and Income Portfolio

The Portfolio seeks appreciation through investments primarily in
dividend-paying common stocks of good quality. The Portfolio
also may invest in fixed-income securities and convertible
securities.

Alliance U.S. Government/High Grade Securities Portfolio

<PAGE>

total assets in non-U.S. Government mortgage-related and asset-
backed securities. The average weighted maturity of the Fund's
investments varies between one year or less and 30 years.

The Portfolio also may:

- - enter into reverse repurchase agreements and dollar rolls;

- - enter into interest rate swaps, caps and floors for hedging
purposes;

- - purchase and sell futures contracts for hedging purposes;

- - enter into forward contracts;

- - invest in qualifying bank deposits;

- - purchase call and put options on futures contracts or on
securities for hedging purposes; and

- - enter into repurchase agreements.

Alliance High-Yield Portfolio

<PAGE>

As of December 31, 1998, the Portfolio's investments were rated
(or equivalent quality):

- - A and above %
- - Ba or BB %
- - B %
- - CCC %
- - Unrated %

The Portfolio also may:

- invest in foreign securities;

- invest in U.S. Government securities;

- invest in municipal securities of up to 20% of its
assets;

- invest in mortgage-related and asset-backed securities;

- invest in loan participations and assignments of loans
to corporate, governmental, or other borrowers
originally made by institutional lenders or lending
syndicates;

- enter into forward commitments;

- purchase or write privately negotiated or exchange-
traded options on securities;

<PAGE>

- enter into futures contracts and options on futures
contracts;

- invest up to 10% of its total assets in illiquid
securities;

- make secured loans of portfolio securities of up to 30%
of its net assets; and

- enter into repurchase agreements.

Alliance Total Return Portfolio

Alliance International Portfolio

<PAGE>

The Portfolio also may:

- - purchase or sell forward foreign currency exchange contracts
of up to 50% of its assets;

- - invest in warrants;

- - make loans of portfolio securities of up to 30% of its total
assets;

- - invest in illiquid securities of up to 10% of its total
assets; and

- - enter into repurchase agreements of up to seven days'
duration for up to 10% of the Portfolio's total assets.

Alliance Short-Term Multi-Market Portfolio

<PAGE>

The Portfolio seeks to minimize investment risk by limiting its
investments to debt securities of high-quality and invests in:

- - U.S. Government securities;

- - high-quality foreign government securities;

- - obligations issued by supranational entities and corporate
debt securities having a high-quality rating;

<PAGE>

- - prime commercial paper (or unrated commercial paper of
equivalent quality) issued by U.S. or foreign companies
having outstanding high-quality debt securities.

The Portfolio also may:

- - invest in indexed commercial paper;

- - enter into futures contracts and purchase and write options
on futures contracts and privately negotiated options on
securities;

- - purchase and write put and call options on foreign
currencies;

- - purchase or sell forward foreign currency exchange contracts;

- - enter into interest rate swaps, caps and floors;

- - invest in variable, floating, and inverse floating rate
instruments;

- - make secured loans of its portfolio securities of up to 20%
of its net assets;

- - invest in illiquid securities of up to 15% of its total
assets; and

- - enter into repurchase agreements.

Alliance Global Bond Portfolio

<PAGE>

The Portfolio seeks to minimize investment risk by limiting its
portfolio investments to high-quality debt securities and invests
in:

- - U.S. Government securities;

- - high-quality foreign government securities;

- - obligations issued by supranational organizations and
corporate debt obligations; and

- - prime commercial paper.

Alliance North American Government Income Portfolio

<PAGE>

The Portfolio also may:

- enter into futures contracts and purchase and write
options on futures contracts for hedging purposes of up
to 50% of its total assets with initial margins deposits
of up to 5% of its total assets;

- purchase and write put and call options on foreign
currencies;

- purchase or sell forward foreign currency exchange
contracts;

- enter into interest rate swaps (involving payments in
the same currency or in different currencies), caps, and
floors;

<PAGE>

- enter into forward commitments for the purchase or sale
of securities for up 30% of its total assets;

- invest in variable, floating, and inverse floating rate
instruments;

- invest up to 10% of its net assets in illiquid
securities;

- make secured loans of its portfolio securities of up to
20% of net assets;

- invest in illiquid securities of up to 15% of its total
assets; and

- enter into repurchase agreements.

Alliance Global Dollar Government Portfolio

- for U.S. fixed-income securities, nine to 15 years;

- for non-U.S. fixed-income securities, 15 to 25 years;
and

- for sovereign debt obligations longer than 25 years.

<PAGE>

As of December 31, 1998, securities ratings (or equivalent
quality) of the Portfolio's securities were:

- A and above %
- Baa or BBB %
- Ba or BB %
- B %
- CC %
- C %
- Unrated %

<PAGE>

The Portfolio also may:

- invest in structured securities of up to 25% of its
total assets;