ACM INSTITUTIONAL RESERVES INC, 485APOS, 1998-04-14

ACM INSTITUTIONAL RESERVES INC
485APOS, 1998-04-14

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As filed with the Securities and Exchange
Commission on April 14, 1998

File Nos. 33-34001
811-6068

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. 14 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF l940

Amendment No. 14 X

ACM INSTITUTIONAL RESERVES, 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)

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)
60 days after filing pursuant to paragraph (a)

<PAGE>

on (date) pursuant to paragraph (a)
X 75 days after filing pursuant to paragraph (a)
(ii)
on (date) pursuant to paragraph (a) (ii) 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>

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

N-1A Item No. Location in Prospectuses

PART A

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

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

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

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

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

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

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

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

Item 9. Pending Legal Proceedings...Not Applicable

PART B Location in Statements
Of Additional Information

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

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

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

<PAGE>

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

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

Item 15. Control Persons and
Principal Holders of
Securities..................Not Applicable

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

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

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

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

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

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

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

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

<PAGE>

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

Shareholder Services

Shareholder representatives are available to answer your
questions about the status of your account or other Fund matters.
Call toll-free (800) 237-5822 or write the Fund, c/o Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey
07096-1520.

YIELDS. For recorded current yield information on the Class A
shares of the Portfolios, call on a touch-tone telephone
toll-free (800) 251-0539.

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

Alliance Institutional Reserves, Inc. (the "Fund") is an
open-end investment company. The Prime Portfolio, the Government
Portfolio, the Tax-Free Portfolio and the Treasury Portfolio
(each a "Portfolio" and collectively the "Portfolios"), each of
which is diversified, are offered by this prospectus. The Fund's
investment objectives are--in the following order of priority--
safety of principal, excellent liquidity and maximum current
income (which, in the case of the Tax-Free Portfolio, is exempt
from federal income taxes) to the extent consistent with the
first two objectives.

The Fund offers investors a convenient and economical way to
invest in managed portfolios.

This prospectus, which offers the Class A shares of each
Portfolio, sets forth information about the Portfolios that a
prospective investor should know before investing. Please retain
it for future reference.

AN INVESTMENT IN THE FUND IS (I) NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT; (II) NOT A DEPOSIT OR
OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK; AND (III)
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE
CAN BE NO ASSURANCE THAT A PORTFOLIO OF THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

A "Statement of Additional Information," dated
[ ], 1998, which provides a further discussion of
certain matters discussed in this prospectus and certain other

<PAGE>

matters and which may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, call or write
the Fund at the telephone number or address shown above.

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

ALLIANCE INSTITUTIONAL RESERVES
- Prime Portfolio
- Government Portfolio
- Tax-Free Portfolio
- Treasury Portfolio

Alliance Capital [LOGO](R)

Prospectus
Class A Shares
[ ], 1998

(R)This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

EXPENSE INFORMATION - CLASS A SHARES

SHAREHOLDER TRANSACTION EXPENSES

Class A shares of the Fund have no sales load on purchases or
reinvested dividends, deferred sales load, redemption fee or
exchange fee.

ANNUAL FUND OPERATING EXPENSES PRIME GOVERNMENT TAX-FREE TREASURY
(as a percentage of average net PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
assets, net of expense reimbursement --------- ---------- --------- ---------
or fee waiver) <C> <C> <C> <C>
<S>

Management Fees....................... .20% .20% .20% .20%
Other Expenses........................ None None None None
--- --- --- ------
Total Fund Operating Expenses......... .20% .20% .20% .20%
</TABLE>

EXAMPLE

You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return (cumulatively through the end of each
time period):
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Portfolio $2 $6 $11 $26
Government Portfolio $2 $6 $11 $26
Tax-Free Portfolio $2 $6 $11 $26
Treasury Portfolio $2 $6 $11 $26

The purpose of the foregoing table is to assist the investor
in understanding the various costs and expenses that an investor
in the Class A shares of the Prime, Government, Tax-Free and
Treasury Portfolios will bear directly and indirectly. The
expenses listed in the table for each Portfolio are net of
voluntary expense reimbursements and voluntary fee waivers. The
expenses of such Portfolios, before voluntary expense
reimbursements or fee waivers, would be: Prime Portfolio:
Management Fees--.20%, Other Expenses--.09% and Total Fund
Operating Expenses--.29%; Government Portfolio: Management Fees-
- -.20%, Other Expenses--.15% and Total Fund Operating Expenses-
- -.35%; Tax-Free Portfolio: Management Fees--.20%, Other Expenses-
- -.13% and Total Fund Operating Expenses--.33%; Treasury

<PAGE>

Portfolio: Management Fees--.20%, Other Expenses--[ ]% and
Total Operating Expenses--[ ]%. Such expenses for the Treasury
Portfolio are based on estimated amounts for the Fund's current
fiscal year. The example should not be considered a
representation of past or future expenses; actual expenses may be
greater or less than those shown.

<PAGE>

FINANCIAL HIGHLIGHTS

PER CLASS A SHARE OPERATING PERFORMANCE (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)

The following tables have been audited by McGladrey & Pullen LLP,
the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. This information should
be read in conjunction with the financial statements and notes
thereto included in the Statement of Additional Information. As
of the date of this Prospectus, the Treasury Portfolio had not
yet commenced operations and accordingly no operating performance
information is presented for such Portfolio.

<TABLE>
<CAPTION>
PRIME PORTFOLIO
---------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR AUG. 20, 1990(A)
ENDED ENDED ENDED ENDED ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30 APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income......... 0.0530 0.0560 0.0502 0.0325 0.0353 0.0535 0.0506
------- ------- ------- ------- ------- ------- -------
LESS:
DISTRIBUTIONS
Dividends from
net investment
income......... (0.0530) (0.0560) (0.0502) (0.0325) (0.0353) (0.0535) (0.0506)
------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= =======
TOTAL RETURNS
Total investment
return based on
net asset value(b) 5.44% 5.76% 5.15% 3.30% 3.59% 5.50 7.54%(c)

<PAGE>

======= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL
DATA
Net assets, end
of period (in
millions)...... $ 867.3 $ 493.3 $ 197.8 $ 108.1 $ 64.3 $25.0 $ 27.2
RATIO TO AVERAGE
NET ASSETS OF:
Expenses, net of
waivers and
reimbursements. 0.20% 0.20% 0.20% 0.20% 0.18% 0.02 -0-
Expenses, before
waivers and
reimbursements. 0.29% 0.32% 0.36% 0.42% 0.54% 0.81% 1.09%
Net investment
income(d)...... 5.31% 5.54% 5.24% 3.25% 3.42% 5.30% 6.84%(c)

<PAGE>

<CAPTION>
GOVERNMENT PORTFOLIO
------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR JUL. 22, 1991(A)
ENDED ENDED ENDED ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1998 1997 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
INCOME FROM
INVESTMENT
OPERATIONS Net
investment income 0.0519 0.0552 0.0493 0.0315 0.0339 0.0377
--------- --------- --------- --------- --------- ---------
LESS:
DISTRIBUTIONS Dividends
from net investment
investment income (0.0519) (0.0552) (0.0493) (0.0315) (0.0339) (0.0377)
--------- --------- --------- --------- --------- ----------
Net asset value,
end of period . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
TOTAL RETURNS
Total investment
return based on
net asset
value(b) ...... 5.33% 5.67% 5.06% 3.20% 3.45% 4.98%(c)
========= ========= ========= ========= ========= =========
RATIOS/SUPPLEMENTAL
DATA Net assets, end
of period $ 326.5 $ 150.8 $ 104.4 $ 76.6 $ 73.2 $ 24.7
(in millions)
RATIO TO AVERAGE
NET ASSETS OF:
Expenses, net of
waivers and
reimbursements. 0.20% 0.20% 0.20% 0.20% 0.18% 0.10%(c)
Expenses, before
waivers and
reimbursements. 0.35% 0.36% 0.38% 0.36% 0.49% 0.86%(c)
Net investment
income(d)...... 5.22% 5.50% 4.94% 3.15% 3.30% 4.86%(c)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
TAX-FREE PORTFOLIO
-------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR JUL. 22, 1991(A)
ENDED ENDED ENDED ENDED ENDED ENDED THROUGH
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30 APRIL 30, APRIL 30,
1998 1997 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>

Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------

INCOME FROM INVESTMENT
OPERATIONS

Net investment income... 0.0347 0.0372 0.0326 0.0240 0.0287 0.0334
Net unrealized loss on
investments............ --0-- --0-- (0.0048) --0-- --0-- --0--
-------- -------- -------- -------- -------- --------

Net increase in net asset
value from operations... 0.0347 0.0372 0.0278 0.0240 0.0287 0.0334
-------- -------- -------- -------- -------- --------

LESS: DISTRIBUTIONS

Dividends from net
investment income... (0.0347) (0.0372) (0.0326) (0.0240) (0.0287) (0.0334)
-------- -------- -------- -------- -------- --------

ADD: CAPITAL CONTRIBUTION

Capital Contributed by
the Adviser........ --0-- --0-- 0.0048 --0-- --0-- --0--
-------- -------- -------- -------- -------- --------
Net asset value,
end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========

TOTAL RETURNS

Total investment return
based on net asset value(b) 3.53% 3.79% 3.31%(e) 2.43% 2.92% 4.40%(c)
======== ======== ======== ======== ======== ========

<PAGE>

RATIOS/SUPPLEMENTAL DATA

Net assets, end of pe-
riod (in millions) .... $ 183.1 $ 183.6 $ 35.5 $ 35.6 $ 40.9 $ 8.5

RATIO TO AVERAGE NET AS-
SETS OF:

Expenses, net of waivers
and reimbursements..... 0.20% 0.20% 0.20% 0.20% 0.18% 0.10%(c)

Expenses, before waivers
and reimbursements..... 0.33% 0.48% 0.76% 0.69% 0.95% 2.08%(c)

Net investment income(d)... 3.46% 3.73% 3.31% 2.40% 2.73% 4.01%(c)
</TABLE>

(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial
investment made at the net asset value at the beginning of
the period, reinvestment of all dividends at net asset value
during the period and redemption on the last day of the
period.
(c) Annualized.
(d) Net of expenses reimbursed or waived by the Adviser.
(e) Capital contributed by the Adviser had no material effect on
net asset value, and therefore, no effect on total return.

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

<PAGE>

INTRODUCTION

The Fund consists of five distinct Portfolios, the Class A
shares of four of which, the Prime Portfolio, the Government
Portfolio, the Tax-Free Portfolio and the Treasury Portfolio, are
offered by this prospectus. Each Portfolio invests in a
diversified portfolio of money market securities. The Fund is
designed for investors who can benefit from money market income.
Investors in the Fund avoid certain administrative burdens that
they would incur by investing in money market instruments
directly, such as monitoring of maturity dates, safeguarding of
receipts and deliveries, and the maintenance of tax information
and other records. At the time of investment, no security
purchased by the Prime Portfolio, the Government Portfolio and
the Tax-Free Portfolio can have a maturity exceeding one year,
which maturity may extend to 397 days. The Treasury Portfolio
may invest in high-quality money market securities which, at the
time of investment, have remaining maturities of 397 days or
less. The average maturity of each Portfolio cannot exceed 90
days.

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives of each Portfolio are--in the
following order of priority--safety of principal, excellent
liquidity and maximum current income (which, in the case of the
Tax-Free Portfolio, is exempt from federal income taxes) to the
extent consistent with the first two objectives. As a matter of
fundamental policy, each Portfolio, except the Treasury
Portfolio, pursues its objectives by maintaining a portfolio of
high-quality U.S. dollar-denominated money market securities each
of which, at the time of investment, has a remaining maturity of
one year or less, which maturity may extend to 397 days or such
greater length of time as may be permitted from time to time
pursuant to Rule 2a-7 ("Rule 2a-7") under the Investment Company
Act of 1940, as amended (the "Act"). The Treasury Portfolio
pursues its objectives by maintaining a portfolio of high-quality
money market securities all of which, at the time of investment,
have remaining maturities of 397 days or less, which maturities
may extend to such greater length of time as may be permitted
from time to time pursuant to Rule 2a-7. The fundamental
investment policies described below may not be changed for a
Portfolio without shareholder approval. The non-fundamental
investment policies may be changed upon notice but without such
approval. The Fund may in the future establish additional
portfolios which may have different investment objectives. There
can be no assurance that any Portfolio's objectives will be
achieved.

<PAGE>

Each Portfolio will comply with Rule 2a-7, as amended from
time to time, including the diversification, quality and maturity
requirements imposed by the Rule (a more detailed description of
Rule 2a-7 is set forth in the Portfolios' Statement of Additional
Information under "Investment Objectives and Policies"). To the
extent that a Portfolio's limitations are more permissive than
Rule 2a-7, the Portfolio will comply with the more restrictive
provisions of the Rule.

PRIME PORTFOLIO

The money market securities in which the Prime Portfolio
invests include: (1) marketable obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities
(collectively, the "U.S. Government"); (2) certificates of
deposit, bankers' acceptances and interest bearing savings
deposits issued or guaranteed by banks or savings and loan
associations having total assets of more than $1 billion and
which are members of the Federal Deposit Insurance Corporation,
and certificates of deposit and bankers' acceptances denominated
in U.S. dollars and issued by U.S. branches of foreign banks
having total assets of at least $1 billion that are believed by
the Adviser to be of quality equivalent to that of other such
instruments in which it may invest; (3) commercial paper of prime
quality [i.e., rated A-1+ or A-1 by Standard & Poor's Corporation
("Standard & Poor's") or Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or, if not rated, issued by companies having
outstanding debt securities rated AAA or AA by Standard & Poor's,
or Aaa or Aa by Moody's] and participation interests in loans
extended by banks to such companies; and (4) repurchase
agreements that are collateralized fully as that term is defined
in Rule 2a-7. These agreements are entered into with "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities or State Street Bank and Trust
Company, the Fund's Custodian. For each repurchase agreement,
the Portfolio requires continual maintenance of the market value
of the underlying collateral in amounts equal to, or in excess
of, the agreement amount. In the event of a dealer default, the
Portfolio might suffer a loss to the extent the proceeds from the
sale of the collateral were less than the repurchase price. The
Portfolio may also invest in certificates of deposit issued by,
and time deposits maintained at, foreign branches of domestic
banks described in (2) above and prime quality dollar-denominated
commercial paper issued by foreign companies meeting the criteria
specified in (3) above. The Portfolio's commercial paper
investments may include variable amount master demand notes which
represent a direct borrowing arrangement involving periodically

<PAGE>

fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to
which the lender may determine to invest varying amounts.

The Portfolio may invest in asset-backed securities that meet
its existing diversification, quality and maturity criteria.
Asset-backed securities are securities issued by special purpose
entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may be in the form of a
beneficial interest in a special purpose trust, limited
partnership interest, or commercial paper or other debt
securities issued by a special purpose corporation. Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer. It is the
Portfolio's current intention to limit its investment in such
securities to not more than 5% of its net assets.

OTHER FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio
diversification and reduce investment risk, the Portfolio may not
(1) invest 25% or more of its total assets in the securities of
issuers conducting their principal business activities in any one
industry although there is no such limitation with respect to
U.S. Government securities or bank obligations, including
certificates of deposit, bankers' acceptances and interest
bearing savings deposits (such bank obligations are issued by
domestic banks, including U.S. branches of foreign banks subject
to the same regulation as U.S. banks); (2) invest more than 5% of
its assets in the securities of any one issuer (except the U.S.
Government) although with respect to 25% of its total assets it
may invest without regard to such limitation; (3) invest more
than 5% of its assets in the securities of any issuer (except the
U.S. Government) having less than three years of continuous
operation or purchase more than 10% of any class of the
outstanding securities of any issuer (except the U.S.
Government); (4) enter into repurchase agreements if, as a result
thereof, more than 10% of its assets would be committed to
repurchase agreements not terminable within seven days and other
illiquid investments; (5) borrow money except from banks on a
temporary basis in aggregate amounts not exceeding 15% of its
assets; the Portfolio will not purchase any investments while
borrowings in excess of 5% of total assets exist; and (6)
mortgage, pledge or hypothecate its assets except to secure such
borrowings.

<PAGE>

As a matter of operating policy, the Portfolio may invest no
more than 5% of its total assets in first tier securities (as
defined in Rule 2a-7) of any one issuer (as determined pursuant
to such Rule), except that the Portfolio may invest up to 25% of
its total assets in the first tier securities of a single issuer
for a period of up to three business days. Fundamental policy
number (2) would give the Portfolio the ability to invest, with
respect to 25% of its assets, more than 5% of its assets in any
one issuer only in the event Rule 2a-7 is amended in the future.

GOVERNMENT PORTFOLIO

The securities in which the Government Portfolio invests
include: (1) marketable obligations of, or guaranteed by, the
U.S. Government, including issues of the United States Treasury,
such as bills, certificates of indebtedness, notes and bonds, and
issues of agencies and instrumentalities established under the
authority of an act of Congress; and (2) repurchase agreements
that are collateralized fully as that term is defined in
Rule 2a-7. These agreements are entered into with "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities or State Street Bank and Trust
Company, the Fund's custodian. For each repurchase agreement,
the Portfolio requires continual maintenance of the market value
of the underlying collateral in amounts equal to, or in excess
of, the agreement amount. In the event of a dealer default, the
Portfolio might suffer a loss to the extent the proceeds from the
sale of the collateral were less than the repurchase price. The
Portfolio may commit up to 15% of its net assets to the purchase
of when-issued U.S. Government securities. To facilitate such
acquisitions, the Fund's Custodian will maintain, in a separate
account of the Portfolio, U.S. Government securities or other
liquid high-grade debt securities having value equal to, or
greater than, such commitments. The price of when-issued
securities, which is generally expressed in yield terms, is fixed
at the time the commitment to purchase is made, but delivery and
payment for such securities take place at a later time. Normally
the settlement date occurs from within ten days to one month
after the purchase of the issue. The value of when-issued
securities may fluctuate prior to their settlement, thereby
creating an unrealized gain or loss to the Portfolio.

As a matter of operating policy, which may be changed without
shareholder approval, the Government Portfolio attempts to invest
in securities that the Adviser believes are legal investments for
federal credit unions as set forth in Sections 107(7) and (8) of

<PAGE>

the Federal Credit Union Act and Part 703 of the National Credit
Union Administration regulations.

OTHER FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio
diversification and reduce investment risk, the Portfolio may not
(1) invest more than 5% of its assets in repurchase agreements
with any one counterparty thereof or more than 10% of its assets
in repurchase agreements not terminable within seven days and
other illiquid investments; (2) borrow money except from banks on
a temporary basis in aggregate amounts not exceeding 10% of its
assets; the Portfolio will not purchase any investments while
borrowings in excess of 5% of total assets exist; and (3) pledge,
hypothecate, or in any manner transfer, as security for
indebtedness, its assets except to secure such borrowings.

TAX-FREE PORTFOLIO

As a matter of fundamental policy, the Tax-Free Portfolio,
except when assuming a temporary defensive position, must
maintain at least 80% of its total assets in high-grade municipal
securities having maturities of one year or less (as opposed to
taxable investments described below). Normally, substantially
all of its income will be tax-exempt as described below.

The Portfolio seeks maximum current income that is exempt
from federal income taxes by investing principally in a
diversified portfolio of high-grade municipal securities. Such
income may be subject to state or local income taxes. Investors
should compare yields (which will fluctuate in response to market
conditions) and tax consequences before making an investment
decision.

Under current federal income tax law, (1) interest on tax-
exempt municipal securities issued after August 7, 1986 which are
"specified private activity bonds" will be treated as an item of
tax preference for purposes of the alternative minimum tax
("AMT") imposed on individuals and corporations, though for
regular federal income tax purposes such interest will remain
fully tax-exempt, and (2) interest on all tax-exempt obligations
will be included in "adjusted current earnings" of corporations
for AMT purposes. The Portfolio may purchase "private activity"
municipal securities because such issues have provided, and may
continue to provide, somewhat higher yields than other comparable
municipal securities. However, the Portfolio will limit its
investments so that no more than 20% of its total income is
derived from municipal securities that bear interest subject to
the AMT.

<PAGE>

MUNICIPAL SECURITIES. The municipal securities in which the
Portfolio invests include municipal notes and short-term
municipal bonds. Municipal notes are generally used to provide
for short-term capital needs and generally have maturities of one
year or less. Examples include tax anticipation and revenue
anticipation notes which are generally issued in anticipation of
various seasonal revenues, bond anticipation notes, and tax-
exempt commercial paper. Short-term municipal bonds may include
general obligation bonds, which are secured by the issuer's
pledge of its faith, credit and taxing power for payment of
principal and interest, and revenue bonds, which are generally
paid from the revenues of a particular facility or a specific
excise or other source.

The Portfolio may invest in securities that have variable or
floating rates of interest ("variable rate obligations") whose
interest rates are adjusted either at predesignated periodic
intervals or whenever there is a change in the market rate to
which the security's interest rate is tied. Such adjustments
minimize changes in the market value of the obligation and,
accordingly, enhance the ability of the Portfolio to maintain a
stable net asset value. Variable rate securities purchased may
include participation interests in private activity bonds backed
by letters of credit of Federal Deposit Insurance Corporation
member banks having total assets of more than $1 billion. The
Portfolio will comply with Rule 2a-7 with respect to its
investments in variable rate obligations supported by letters of
credit.

All of the Portfolio's municipal securities at the time of
purchase are rated within the two highest quality ratings of
Moody's (Aaa and Aa, MIG 1 and MIG 2 or VMIG 1 and VMIG 2) or
Standard & Poor's (AAA and AA or SP-1 and SP-2), or judged by the
Adviser to be of comparable quality. Securities must also meet
credit standards applied by the Adviser.

To further enhance the quality and liquidity of the
securities in which the Tax-Free Portfolio invests, such
securities frequently are supported by credit and liquidity
enhancements, such as letters of credit, from third party
financial institutions. The Portfolio continuously monitors the
credit quality of such third parties; however, changes in the
credit quality of such a financial institution could cause the
Portfolio's investments backed by that institution to lose value
and affect the Portfolio's share price.

The Portfolio also may invest in stand-by commitments, which
may involve certain expenses and risks, but such commitments are

<PAGE>

not expected to comprise a significant portion of its
investments. The Portfolio may commit up to 15% of its net
assets to the purchase of when-issued securities. For a
description of when-issued securities, see above.

TAXABLE INVESTMENTS. The taxable investments in which the
Portfolio may invest include obligations of the U.S. Government
and its agencies, high-quality certificates of deposit and
bankers' acceptances, prime commercial paper and repurchase
agreements.

OTHER FUNDAMENTAL INVESTMENT POLICIES. To reduce investment
risk, the Portfolio may not (1) invest more than 25% of its total
assets in municipal securities whose issuers are located in the
same state or in municipal securities the interest upon which is
paid from revenues of similar-type projects; (2) invest more than
5% of its total assets in the securities of any one issuer except
the U.S. Government, although with respect to 25% of its total
assets the Portfolio may invest up to 10% per issuer; (3)
purchase more than 10% of any class of the voting securities of
any one issuer except those of the U.S. Government; (4) invest
more than 10% of its assets in repurchase agreements not
terminable within seven days (whether or not illiquid) or other
illiquid investments; (5) have more than 5% of its assets
invested in repurchase agreements with the same vendor; and (6)
borrow money except from banks on a temporary basis for
extraordinary or emergency purposes in an aggregate amount not to
exceed 15% of the Portfolio's total assets; the Portfolio will
not purchase any investments while borrowings in excess of 5% of
total assets exist.

TREASURY PORTFOLIO

<PAGE>

These agreements are entered into with "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S.
Government securities or State Street Bank and Trust company, the
Fund's Custodian. For each repurchase agreement, the Portfolio
requires continual maintenance of the market value of the
underlying collateral in amounts equal to, or in excess of, the
agreement amount. In the event of a dealer default, the
Portfolio might suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase
price. The Treasury Portfolio may commit up to 15% of its net
assets to the purchase of when-issued U.S. Treasury securities.
Delivery and payment for when-issued securities takes place after
the transaction date. The payment amount and the interest rate
that will be received on the securities are fixed on the
transaction date. The value of such securities may fluctuate
prior to their settlement, thereby creating an unrealized gain or
loss to the Portfolio.

As a matter of operating policy, which may be changed without
shareholder approval, the Treasury Portfolio (i) attempts to
invest in securities that comply with the requirements of [New
Jersey Statutes Section 18A:20-37] so that it will be an eligible
investment for boards of education and other local government
units within the state of New Jersey, and (ii) does not invest in
securities maintained under the U.S. Treasury STRIPS program or
enter into repurchase agreements with respect to such
securities.

OTHER FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio
diversification and reduce investment risk, the Treasury
Portfolio may not: (1) borrow money except (a) from banks on a
temporary basis or (b) by entering into reverse repurchase
agreements, in each case in an aggregate amount not exceeding 10%
of its assets and exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of
abnormally heavy redemption requests, if they should occur; such
borrowings may not be used to purchase investments and the
Portfolio will not purchase any investment while any such
borrowings exist; and (2) pledge, hypothecate or in any manner
transfer, as security for indebtedness, its assets except to
secure such borrowings.

GENERAL

<PAGE>

agreements not terminable within seven days. Except with respect
to the Tax-Free Portfolio, which is not permitted to invest in
restricted securities, restricted securities that are determined
by the Adviser to be liquid in accordance with procedures adopted
by the Directors, including securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act") and commercial paper issued in reliance upon
the exemption from registration in Section 4(2) of the Securities
Act, will not be treated as illiquid for purposes of the
restriction on illiquid securities. Restricted securities are
securities subject to the contractual or legal restrictions on
resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act.
As to these securities, a Portfolio is subject to a risk that,
should the Portfolio's desire to sell them when a ready buyer is
not available at a price the Portfolio deems representative of
their value, the value of the Portfolio's net assets could be
adversely affected.

Each of the Portfolios may invest in variable rate
obligations as permitted by Rule 2a-7. Variable rate obligations
have interest rates which are adjusted either at predesignated
periodic intervals or whenever there is a change in the market
rate to which the interest rate of the variable rate obligation
is tied. Some variable rate obligations allow the holder to
demand payment of principal and accrued interest at any time, or
at specified intervals. Each of the Portfolios follows Rule 2a-7
with respect to the diversification, quality and maturity of
variable rate obligations.

PURCHASE AND REDEMPTION OF SHARES

OPENING ACCOUNTS

(1) Telephone the Fund toll-free at (800) 237-5822. The Fund
will ask for the (a) name of the account as you wish it to be
registered, (b) address of the account, (c) taxpayer
identification number and (d) Portfolio of the Fund in which
you wish to invest. The Fund will then provide you with an
account number.

<PAGE>

(2) Instruct your bank to wire Federal Funds exactly as follows:

ABA 0110 0002 8
State Street Bank and Trust Company
Boston, MA 02101
Alliance Institutional Reserves, Inc.--Prime, Government,
Tax-Free or Treasury Portfolio
DDA 9903-279-9
Your account name ] as registered
Your account number] with the Fund

(3) Mail a completed Application Form to:

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

SUBSEQUENT INVESTMENTS

(1) Telephone Alliance Fund Services, Inc. toll-free at (800)
237-5822 to place your order for additional shares.

(2) Instruct your bank to wire Federal Funds to State Street Bank
and Trust Company ("State Street Bank") as in (2) above or
mail your check or negotiable bank draft payable to Alliance
Institutional Reserves, Inc. to Alliance Fund Services, Inc.
as in (3) above.

REDEMPTIONS

You may withdraw any amount from your account on any Fund
business day (any weekday exclusive of days on which the New York
Stock Exchange or State Street Bank is closed) between 9:00 a.m.
and 5:00 p.m. (Eastern time) via orders given to Alliance Fund
Services, Inc. by telephone toll-free (800) 237-5822. Redemption
orders must include your account name as registered with the Fund
and the account number.

Telephone redemptions may be made on any Fund business day
between 9:00 a.m. and 4:00 p.m. (Eastern time), as described
below. If your telephone redemption order is received by
Alliance Fund Services, Inc. prior to 4:00 p.m. (Eastern time)
for the Prime, Government and Treasury Portfolios and prior to
12:00 Noon (Eastern time) for the Tax-Free Portfolio on any Fund
business day, we will send the proceeds in Federal Funds by wire
to your designated bank account that day. Redemptions are made
without any charge to you.

<PAGE>

During periods of drastic economic or market developments it
is possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone. If a shareholder were
to experience such difficulty, the shareholder should issue
written instructions to Alliance Fund Services, Inc. at the
address shown on the cover of this prospectus. The Fund reserves
the right to suspend or terminate its telephone redemption
service at any time without notice. Alliance Fund Services, Inc.
will employ reasonable procedures in order to verify that
telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written
confirmation of the resulting transactions to be sent to
shareholders. If Alliance Fund Services, Inc. did not employ
such procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a fee for handling telephone
requests for redemptions.

OBTAINING AN APPLICATION FORM.

If you wish to obtain an Application Form, or you have
questions about the Form, purchasing shares, or other Fund
procedures, please telephone Alliance Fund Services, Inc. toll-
free at (800) 237-5822.

GENERAL

Each portfolio offers two other classes of shares, Class B
and Class C, by means of separate prospectuses. The three
classes of shares have a common investment objective and
investment portfolio and are identical, except that Class B and
Class C shares pay a distribution services fee. Because Class A
shares pay no distribution services fee, they are expected to
have performance different from Class B and Class C shares. You
can obtain more information regarding Class B and Class C shares
by calling Alliance Fund Services, Inc. toll-free at (800)
237-5822 or writing to them at P.O. Box 1520, Secaucus, New
Jersey 07096.

CHANGES IN APPLICATION FORM. If you decide to change
instructions or any other information already given on your
Application Form, send a written notice to Alliance Institutional
Reserves, Inc., c/o Alliance Fund Services, Inc., P.O. Box 1520,
Secaucus, New Jersey 07096, with your signature guaranteed by an
institution which is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.

<PAGE>

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

Proceeds from any subsequent redemption by you of Fund shares
that were purchased by check will not be forwarded to you until
the Fund is reasonably assured that your check has cleared,
normally up to fifteen days following the purchase date.

SHARE PRICE. Shares of each Portfolio of the Fund are sold
and redeemed on a continuous basis without sales or redemption
charges at their net asset value which is expected to be constant
at $1.00 per share, although this price is not guaranteed. The
net asset value of each Portfolio's shares, except the Tax-Free
Portfolio, is determined each Fund business day (as defined under
"Purchase and Redemption of Shares--Redemptions," above), at
12:00 Noon and 4:00 p.m. (Eastern time). The net asset value of
the Tax-Free Portfolio shares is determined each Fund business
day at 12:00 Noon (Eastern time). The net asset value per
Class A share of each Portfolio is calculated by taking the sum
of the value of the Portfolio's investments allocable to Class A
shares (amortized cost value is used for this purpose) and any
cash or other assets allocable to Class A shares, subtracting
liabilities allocable to Class A shares, and dividing by the
total number of Class A shares of the Portfolio outstanding. All
expenses, including the fees payable to the Adviser, are accrued
daily.

TIMING OF INVESTMENTS AND REDEMPTIONS. Each Portfolio,
except the Tax-Free Portfolio, has two transaction times each
business day, 12:00 Noon and 4:00 p.m. (Eastern time). The Tax-
Free Portfolio has one transaction time each Fund business day,
12:00 Noon (Eastern time). Investments receive the full dividend
for a day if the investor's telephone order is placed by 4:00
p.m. (Eastern time) for the Prime, Government or Treasury
Portfolio and Federal Funds or bank wire monies are received by
State Street Bank before 4:00 p.m. on that day. Investments
receive the full dividend for a day if the investor's telephone
order is placed by 12:00 Noon (Eastern time) and Federal Funds or
bank wire monies are secured by State Street Bank before 4:00
p.m. on that day with respect to the Tax-Free Portfolio.

<PAGE>

Redemption proceeds are normally wired the same business day
if a redemption request is received prior to 12:00 Noon, but in
no event later than seven days, unless redemptions have been
suspended or postponed due to the determination of an "emergency"
by the Securities and Exchange Commission or to certain other
unusual conditions. Shares do not earn dividends on the day a
redemption is effected.

MINIMUMS. An initial investment of at least $1,000,000 in
the aggregate among the Portfolios of the Fund is required.
There is no minimum for subsequent investments. The Fund
reserves the right at anytime to vary the initial and subsequent
investment minimums.

The Fund reserves the right to close out an account that is
below $500,000 after at least 60 days' written notice to the
shareholder unless the balance in such account is increased to at
least that amount during such period. For purposes of this
calculation, the sum of a shareholder's balance in all of the
Portfolios will be considered as one account.

ADDITIONAL INFORMATION

THE ADVISER. Alliance Capital Management L.P., which is a
Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been
retained under an advisory agreement to provide investment advice
and, in general, to conduct the management and investment program
of the Fund, subject to the general supervision and control of
the Directors of the Fund.

The Adviser is a leading international investment manager
supervising client accounts with assets as of December 31, 1997
totaling more than $218 billion (of which approximately $85
billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds. The 58 registered investment
companies managed by the Adviser comprising 122 separate
investment portfolios currently have over three million
shareholder accounts. As of December 31, 1997, the Adviser was
retained as an investment manager for employee benefit plan
assets of 31 of the Fortune 100 companies.

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

<PAGE>

Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States, which is a wholly-owned subsidiary of The
Equitable Companies Incorporated, a holding company controlled by
AXA-UAP, a French insurance holding company. Certain information
concerning the ownership and control of Equitable by AXA-UAP is
set forth in the Statement of Additional Information under
"Management of the Fund."

Each Portfolio pays the Adviser at an annual rate of .20 of
1% of the average daily value of its net assets. The Adviser has
undertaken until, at its request, the Fund notifies investors to
the contrary, that if, in any fiscal year, the aggregate expenses
with respect to the Class A shares of a Portfolio, exclusive of
taxes, brokerage, interest on borrowings and extraordinary
expenses, but including the management fee, exceed .20% of the
Portfolio's average net assets for the fiscal year attributable
to its Class A shares, the Portfolio may deduct from the payment
to be made to the Adviser, or the Adviser will bear, such excess
expense.

The Adviser may make payments from time to time from its own
resources, which may include the management fees paid by the
Portfolios of the Fund to compensate broker-dealers, depository
institutions, or other persons for providing distribution
assistance and administrative services and to otherwise promote
the sale of Class A shares of the Fund, including paying for the
preparation, printing and distribution of prospectuses and sales
literature or other promotional activities.

CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank
and Trust Company, P.O. Box 1912, Boston, MA 02105, is the Fund's
Custodian. Alliance Fund Services, Inc., P.O. Box 1520,
Secaucus, NJ 07096-1520, and Alliance Fund Distributors, Inc.,
1345 Avenue of the Americas, New York, NY 10105, are the Fund's
Transfer Agent and Distributor, respectively. The Transfer Agent
charges a fee for its services.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income
of the Tax-Free Portfolio is determined each business day at
12:00 Noon (Eastern time), and that of the Prime, Government and
Treasury Portfolios each business day at 4:00 p.m. (Eastern
time), and is paid immediately thereafter pro rata to
shareholders of record via automatic investment in additional
full and fractional shares of that Portfolio in each
shareholder's account. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

<PAGE>

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

Distributions out of tax-exempt interest income earned by the
Tax-Free Portfolio are not subject to federal income tax (other
than the AMT as described above), but may be subject to state or
local income taxes. Any exempt-interest dividends derived from
interest on municipal securities subject to the AMT will be a tax
preference item for purposes of the federal individual and
corporate AMT. Distributions out of taxable interest income,
other investment income, and short term capital gains are taxable
as ordinary income and distributions of long term capital gains,
if any, are taxable as long-term capital gains irrespective of
the length of time a shareholder held his shares.

YEAR 2000. Many computer software systems in use today
cannot properly process date-related information from and after
January 1, 2000. Should any of the computer systems employed by
the Fund's major service providers fail to process this type of
information properly, that could have a negative impact on the
Fund's operations and the services that are provided to the
Fund's shareholders. The Adviser, Alliance Fund Distributors,
Inc., the Fund's distributor, and Alliance Fund Services, Inc.,
the Fund's transfer agent, have advised the Fund that they are
reviewing all of their computer systems with the goal of
modifying or replacing such systems prior to January 1, 2000 to
the extent necessary to foreclose any such negative impact. In
addition, the Adviser has been advised by the Fund's custodian
that it is also in the process of reviewing its systems with the
same goal. As of the date of this Prospectus, the Fund and the
Adviser have no reason to believe that these goals will not be
achieved. Similarly, the values of certain of the portfolio
securities held by the Fund may be adversely affected by the
inability of the securities' issuers or of third parties to
process this type of information properly.

FUND ORGANIZATION. The Fund is an open-end management
investment company registered under the Act consisting of the
four Portfolios offered by this Prospectus, and the Trust
Portfolio, which is offered by a separate prospectus. The Fund
was organized as a Maryland corporation on March 21, 1990. The
Fund's activities are supervised by its Board of Directors.
Generally, shares of each portfolio and class will vote together
as a single class on matters, such as the election of Directors,

<PAGE>

that affect each portfolio and class in substantially the same
manner.

Maryland law does not require annual meetings of shareholders
and it is anticipated that shareholder meetings will be held only
when required by federal or Maryland law. Shareholders have
available certain procedures for the removal of directors.

REPORTS. Shareholders will receive a monthly summary of
their account, as well as semi-annual and annual reports.
Shareholders may arrange for a copy of each of their account
statements to be sent to other parties.

Shareholders requiring sub-accounting services should contact
Alliance Fund Services, Inc. for a description of such services
and fees.

<PAGE>

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

Shareholder Services

YIELDS. For recorded current yield information on the Class B
shares of the Portfolios, call on a touch-tone telephone
toll-free (800) 251-0539.

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

The Fund offers investors a convenient and economical way to
invest in managed portfolios.

This prospectus, which offers the Class B shares of each
Portfolio, sets forth information about the Portfolios that a
prospective investor should know before investing. Please retain
it for future reference.

A "Statement of Additional Information," dated
[ ], 1998, which provides a further discussion of
certain matters discussed in this prospectus and certain other
matters and which may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is

<PAGE>

incorporated herein by reference. For a free copy, call or write
the Fund at the telephone number or address shown above.

ALLIANCE INSTITUTIONAL RESERVES

- Prime Portfolio
- Government Portfolio
- Tax-Free Portfolio
- Treasury Portfolio

Alliance Capital [LOGO](R)

Prospectus
Class B Shares
[ ], 1998

(R)This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

EXPENSE INFORMATION - CLASS B SHARES

SHAREHOLDER TRANSACTION EXPENSES

Class B shares of the Fund have no sales load on purchases or
reinvested dividends, deferred sales load, redemption fee or
exchange fee.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES PRIME GOVERNMENT TAX-FREE TREASURY
(as a percentage of average net PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
assets, net of expense reimbursement --------- ---------- --------- ---------
or fee waiver) <C> <C> <C> <C>
<S>

Management Fees....................... .20% .20% .20% .20%
12b-1 Fees............................ .10% .10% .10% .10%
Other Expenses........................ None None None None
--- --- --- ------
Total Fund Operating Expenses......... .30% .30% .30% .30%
</TABLE>

EXAMPLE

You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return (cumulatively through the end of each
time period):
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Portfolio $[ ] $[ ] $[ ] $[ ]
Government Portfolio $[ ] $[ ] $[ ] $[ ]
Tax-Free Portfolio $[ ] $[ ] $[ ] $[ ]
Treasury Portfolio $[ ] $[ ] $[ ] $[ ]

The purpose of the foregoing table is to assist the investor
in understanding the various costs and expenses that an investor
in the Class B shares of the Prime, Government, Tax-Free and
Treasury Portfolios will bear directly and indirectly. The
expenses listed in the table for each Portfolio are net of
voluntary expense reimbursements and voluntary fee waivers. The
expenses of such Portfolios, before voluntary expense
reimbursements or fee waivers, would be: Prime Portfolio:
Management Fees--.20%, 12b-1 Fees--.10%, Other Expenses--.[ ]%
and Total Fund Operating Expenses--.[ ]%; Government Portfolio:
Management Fees--.20%, 12b-1 Fees--.10%, Other Expenses--.[ ]%
and Total Fund Operating Expenses--.[ ]%; Tax-Free Portfolio:
Management Fees--.20%, 12b-1 Fees--.10%, Other Expenses--.[ ]%

<PAGE>

and Total Fund Operating Expenses--.[ ]%; Treasury Portfolio:
Management Fees--.20%, 12b-1 Fees--.10%, Other Expenses--[ ]%
and Total Operating Expenses--[ ]%. Such expenses for the
Treasury Portfolio are based on estimated amounts for the Fund's
current fiscal year. The example should not be considered a
representation of past or future expenses; actual expenses may be
greater or less than those shown.

----------

<PAGE>

INTRODUCTION

The Fund consists of five distinct Portfolios, the Class B
shares of four of which, the Prime Portfolio, the Government
Portfolio, the Tax-Free Portfolio and the Treasury Portfolio, are
offered by this prospectus. Each Portfolio invests in a
diversified portfolio of money market securities. The Fund is
designed for investors who can benefit from money market income.
Investors in the Fund avoid certain administrative burdens that
they would incur by investing in money market instruments
directly, such as monitoring of maturity dates, safeguarding of
receipts and deliveries, and the maintenance of tax information
and other records. At the time of investment, no security
purchased by the Prime Portfolio, the Government Portfolio and
the Tax-Free Portfolio can have a maturity exceeding one year,
which maturity may extend to 397 days. The Treasury Portfolio
may invest in high-quality money market securities which, at the
time of investment, have remaining maturities of 397 days or
less. The average maturity of each Portfolio cannot exceed 90
days.

INVESTMENT OBJECTIVES AND POLICIES

<PAGE>

PRIME PORTFOLIO

<PAGE>

fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to
which the lender may determine to invest varying amounts.

As a matter of operating policy, the Portfolio may invest no
more than 5% of its total assets in first tier securities (as
defined in Rule 2a-7) of any one issuer (as determined pursuant

<PAGE>

to such Rule), except that the Portfolio may invest up to 25% of
its total assets in the first tier securities of a single issuer
for a period of up to three business days. Fundamental policy
number (2) would give the Portfolio the ability to invest, with
respect to 25% of its assets, more than 5% of its assets in any
one issuer only in the event Rule 2a-7 is amended in the future.

GOVERNMENT PORTFOLIO

OTHER FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio
diversification and reduce investment risk, the Portfolio may not

<PAGE>

(1) invest more than 5% of its assets in repurchase agreements
with any one counterparty thereof or more than 10% of its assets
in repurchase agreements not terminable within seven days and
other illiquid investments; (2) borrow money except from banks on
a temporary basis in aggregate amounts not exceeding 10% of its
assets; the Portfolio will not purchase any investments while
borrowings in excess of 5% of total assets exist; and (3) pledge,
hypothecate, or in any manner transfer, as security for
indebtedness, its assets except to secure such borrowings.

TAX-FREE PORTFOLIO

<PAGE>

anticipation notes which are generally issued in anticipation of
various seasonal revenues, bond anticipation notes, and tax-
exempt commercial paper. Short-term municipal bonds may include
general obligation bonds, which are secured by the issuer's
pledge of its faith, credit and taxing power for payment of
principal and interest, and revenue bonds, which are generally
paid from the revenues of a particular facility or a specific
excise or other source.

The Portfolio also may invest in stand-by commitments, which
may involve certain expenses and risks, but such commitments are
not expected to comprise a significant portion of its
investments. The Portfolio may commit up to 15% of its net
assets to the purchase of when-issued securities. For a
description of when-issued securities, see above.

<PAGE>

TREASURY PORTFOLIO

The securities in which the Treasury Portfolio invests are
(1) issues of the U.S. Treasury, such as bills, certificates of
indebtedness, notes and bonds; and (2) repurchase agreements that
are collateralized fully (as that term is defined in Rule 2a-7).
These agreements are entered into with "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S.
Government securities or State Street Bank and Trust company, the
Fund's Custodian. For each repurchase agreement, the Portfolio
requires continual maintenance of the market value of the
underlying collateral in amounts equal to, or in excess of, the

<PAGE>

agreement amount. In the event of a dealer default, the
Portfolio might suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase
price. The Treasury Portfolio may commit up to 15% of its net
assets to the purchase of when-issued U.S. Treasury securities.
Delivery and payment for when-issued securities takes place after
the transaction date. The payment amount and the interest rate
that will be received on the securities are fixed on the
transaction date. The value of such securities may fluctuate
prior to their settlement, thereby creating an unrealized gain or
loss to the Portfolio.

GENERAL

<PAGE>

issued in reliance upon the exemption from registration in
Section 4(2) of the Securities Act, will not be treated as
illiquid for purposes of the restriction on illiquid securities.
Restricted securities are securities subject to the contractual
or legal restrictions on resale, such as those arising from an
issuer's reliance upon certain exemptions from registration under
the Securities Act. As to these securities, a Portfolio is
subject to a risk that, should the Portfolio's desire to sell
them when a ready buyer is not available at a price the Portfolio
deems representative of their value, the value of the Portfolio's
net assets could be adversely affected.

PURCHASE AND REDEMPTION OF SHARES

Class B shares are available through your financial intermediary.

OPENING ACCOUNTS

(2) Instruct your bank to wire Federal Funds exactly as follows:

<PAGE>

(3) Mail a completed Application Form to:

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

SUBSEQUENT INVESTMENTS

(1) Telephone Alliance Fund Services, Inc. toll-free at (800)
237-5822 to place your order for additional shares.

REDEMPTIONS

You may withdraw any amount from your account on any Fund
business day (any weekday exclusive of days on which the New York
Stock Exchange or State Street Bank is closed) between 9:00 a.m.
and 5:00 p.m. (Eastern time) via orders given to your financial
intermediary or to Alliance Fund Services, Inc. by telephone
toll-free (800) 237-5822. Redemption orders must include your
account name as registered with the Fund and the account number.

Telephone redemptions may be made on any Fund business day
between 9:00 a.m. and 4:00 p.m. (Eastern time), as described
below. If your telephone redemption order is received by your
financial intermediary prior to 4:00 p.m. (Eastern time) for the
Prime, Government and Treasury Portfolios and prior to 12:00 Noon
(Eastern time) for the Tax-Free Portfolio on any Fund business
day, we will send the proceeds in Federal Funds by wire to your
designated bank account that day. Your financial intermediary is
responsible for furnishing all necessary documentation to the
Fund and may charge you for this service. Redemptions are made
without any charge to you.

<PAGE>

telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written
confirmation of the resulting transactions to be sent to
shareholders. If Alliance Fund Services, Inc. did not employ
such procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a fee for handling telephone
requests for redemptions.

OBTAINING AN APPLICATION FORM.

GENERAL

A transaction, service, administrative or other similar fee
may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to
the purchase, sale or exchange of shares made through such
financial representative. Such financial intermediaries may also
impose requirements with respect to the purchase, sale or
exchange of shares that are different from, or in addition to,
those imposed by the Fund.

Each portfolio offers two other classes of shares, Class A
and Class C, by means of separate prospectuses. The three
classes of shares have a common investment objective and
investment portfolio and are identical, except as to the level of
distribution services fee paid by each class. Because of the
different level of distribution services fees paid by the other
two classes of shares, Class B shares are expected to have
performance different from Class A and Class C shares. You can
obtain more information regarding the other classes by calling
Alliance Fund Services, Inc. toll-free at (800) 237-5822 or
writing to them at P.O. Box 1520, Secaucus, New Jersey 07096.

<PAGE>

.10% of the aggregate daily net assets attributable to the
Class B shares of each Portfolio. The Glass-Steagall Act and
other applicable laws may limit the ability of a bank or other
depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Fund's management,
based on the advice of counsel, these laws do not prohibit such
depository institutions from providing services for investment
companies such as the administrative, accounting and other
services referred to in the Agreement. In the event that a
change in these laws prevented a bank from providing such
services, it is expected that other service arrangements would be
made and that shareholders would not be adversely affected.

SHARE PRICE. Shares of each Portfolio of the Fund are sold
and redeemed on a continuous basis without sales or redemption
charges at their net asset value which is expected to be constant
at $1.00 per share, although this price is not guaranteed. The
net asset value of each Portfolio's shares, except the Tax-Free
Portfolio, is determined each Fund business day (as defined under
"Purchase and Redemption of Shares--Redemptions," above), at
12:00 Noon and 4:00 p.m. (Eastern time). The net asset value of
the Tax-Free Portfolio shares is determined each Fund business
day at 12:00 Noon (Eastern time). The net asset value per
Class B share of each Portfolio is calculated by taking the sum
of the value of the Portfolio's investments allocable to Class B
shares (amortized cost value is used for this purpose) and any
cash or other assets allocable to Class B shares, subtracting

<PAGE>

liabilities allocable to Class B shares, and dividing by the
total number of Class B shares of the Portfolio outstanding. All
expenses, including the fees payable to the Adviser, are accrued
daily.

ADDITIONAL INFORMATION

<PAGE>

of the Fund, subject to the general supervision and control of
the Directors of the Fund.

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

Each Portfolio pays the Adviser at an annual rate of .20% of
the average daily value of its net assets. The Adviser has
undertaken until, at its request, the Fund notifies investors to
the contrary, that if, in any fiscal year, the aggregate expenses
with respect to the Class B shares of a Portfolio, exclusive of
taxes, brokerage, interest on borrowings and extraordinary
expenses, but including the management fee and distribution
services fee, exceed .30% of the Portfolio's average net assets
for the fiscal year attributable to its Class B shares, the
Portfolio may deduct from the payment to be made to the Adviser,
or the Adviser will bear, such excess expense.

The Adviser may make payments from time to time from its own
resources, which may include the management fees paid by the
Portfolios of the Fund to compensate broker-dealers, depository
institutions, or other persons for providing distribution
assistance and administrative services and to otherwise promote
the sale of Class B shares of the Fund, including paying for the
preparation, printing and distribution of prospectuses and sales
literature or other promotional activities.

<PAGE>

impact. In addition, the Adviser has been advised by the Fund's
custodian that it is also in the process of reviewing its systems
with the same goal. As of the date of this Prospectus, the Fund
and the Adviser have no reason to believe that these goals will
not be achieved. Similarly, the values of certain of the
portfolio securities held by the Fund may be adversely affected
by the inability of the securities' issuers or of third parties
to process this type of information properly.

<PAGE>

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

Shareholder Services

YIELDS. For recorded current yield information on the Class C
shares of the Portfolios, call on a touch-tone telephone
toll-free (800) 251-0539.

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

The Fund offers investors a convenient and economical way to
invest in managed portfolios.

This prospectus, which offers the Class C shares of each
Portfolio, sets forth information about the Portfolios that a
prospective investor should know before investing. Please retain
it for future reference.

<PAGE>

incorporated herein by reference. For a free copy, call or write
the Fund at the telephone number or address shown above.

ALLIANCE INSTITUTIONAL RESERVES

- Prime Portfolio
- Government Portfolio
- Tax-Free Portfolio
- Treasury Portfolio

Alliance Capital [LOGO](R)

Prospectus
Class C Shares
[ ], 1998

(R)This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

EXPENSE INFORMATION - CLASS C SHARES

SHAREHOLDER TRANSACTION EXPENSES

Class C shares of the Fund have no sales load on purchases or
reinvested dividends, deferred sales load, redemption fee or
exchange fee.

Management Fees....................... .20% .20% .20% .20%
12b-1 Fees............................ .25% .25% .25% .25%
Other Expenses........................ None None None None
--- --- --- ------
Total Fund Operating Expenses......... .45% .45% .45% .45%
</TABLE>

EXAMPLE

You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return (cumulatively through the end of each
time period):
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Prime Portfolio $[ ] $[ ] $[ ] $[ ]
Government Portfolio $[ ] $[ ] $[ ] $[ ]
Tax-Free Portfolio $[ ] $[ ] $[ ] $[ ]
Treasury Portfolio $[ ] $[ ] $[ ] $[ ]

The purpose of the foregoing table is to assist the investor
in understanding the various costs and expenses that an investor
in the Class C shares of the Prime, Government, Tax-Free and
Treasury Portfolios will bear directly and indirectly. The
expenses listed in the table for each Portfolio are net of
voluntary expense reimbursements and voluntary fee waivers. The
expenses of such Portfolios, before voluntary expense
reimbursements or fee waivers, would be: Prime Portfolio:
Management Fees--.20%, 12b-1 Fees--.25% Other Expenses--.[ ]%
and Total Fund Operating Expenses--.[ ]%; Government Portfolio:
Management Fees--.20%, 12b-1 Fees--.25% Other Expenses--.[ ]%
and Total Fund Operating Expenses--.[ ]%; Tax-Free Portfolio:
Management Fees--.20%, 12b-1 Fees--.25%, Other Expenses--.[ ]%

<PAGE>

and Total Fund Operating Expenses--.[ ]%; Treasury Portfolio:
Management Fees--.20%, 12b-1 Fees--.25%, Other Expenses--[ ]%
and Total Operating Expenses--[ ]%. Such expenses for the
Treasury Portfolio are based on estimated amounts for the Fund's
current fiscal year. The example should not be considered a
representation of past or future expenses; actual expenses may be
greater or less than those shown.

----------

<PAGE>

INTRODUCTION

The Fund consists of five distinct Portfolios, the Class C
shares of four of which, the Prime Portfolio, the Government
Portfolio, the Tax-Free Portfolio and the Treasury Portfolio, are
offered by this prospectus. Each Portfolio invests in a
diversified portfolio of money market securities. The Fund is
designed for investors who can benefit from money market income.
Investors in the Fund avoid certain administrative burdens that
they would incur by investing in money market instruments
directly, such as monitoring of maturity dates, safeguarding of
receipts and deliveries, and the maintenance of tax information
and other records. At the time of investment, no security
purchased by the Prime Portfolio, the Government Portfolio and
the Tax-Free Portfolio can have a maturity exceeding one year,
which maturity may extend to 397 days. The Treasury Portfolio
may invest in high-quality money market securities which, at the
time of investment, have remaining maturities of 397 days or
less. The average maturity of each Portfolio cannot exceed 90
days.

INVESTMENT OBJECTIVES AND POLICIES

<PAGE>

PRIME PORTFOLIO

<PAGE>

fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to
which the lender may determine to invest varying amounts.

As a matter of operating policy, the Portfolio may invest no
more than 5% of its total assets in first tier securities (as
defined in Rule 2a-7) of any one issuer (as determined pursuant

<PAGE>

GOVERNMENT PORTFOLIO

OTHER FUNDAMENTAL INVESTMENT POLICIES. To maintain portfolio
diversification and reduce investment risk, the Portfolio may not

<PAGE>

TAX-FREE PORTFOLIO

<PAGE>

TREASURY PORTFOLIO

<PAGE>

GENERAL

<PAGE>

PURCHASE AND REDEMPTION OF SHARES

Class C shares are available through your financial intermediary.

OPENING ACCOUNTS

(2) Instruct your bank to wire Federal Funds exactly as follows:

<PAGE>

(3) Mail a completed Application Form to:

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

SUBSEQUENT INVESTMENTS

(1) Telephone Alliance Fund Services, Inc. toll-free at (800)
237-5822 to place your order for additional shares.

REDEMPTIONS

A. BY TELEPHONE

You may withdraw any amount from your account on any Fund
business day (any weekday exclusive of days on which the New York
Stock Exchange or State Street Bank is closed) between 9:00 a.m.
and 5:00 p.m. (Eastern time) via orders given to your financial
intermediary or to Alliance Fund Services, Inc. by telephone
toll-free (800) 237-5822. Redemption orders must include your
account name as registered with the Fund and the account number.

<PAGE>

service at any time without notice. Alliance Fund Services, Inc.
will employ reasonable procedures in order to verify that
telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written
confirmation of the resulting transactions to be sent to
shareholders. If Alliance Fund Services, Inc. did not employ
such procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a fee for handling telephone
requests for redemptions.

B. BY CHECK-WRITING

With this service, you may write checks made payable to any
payee. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account.
First, you must fill out the Signature Card which is available
from your financial intermediary. If you wish to establish this
check-writing service subsequent to the opening of your Fund
account, contact the Fund by telephone or mail. There is no
separate charge for the check-writing service, except that State
Street Bank will impose its normal charges for checks that are
returned unpaid because of insufficient funds or for checks upon
which you have placed a stop order. The check-writing service
enables you to receive the daily dividends declared on the shares
to be redeemed until the day that your check is presented to
State Street Bank for payment.

OBTAINING AN APPLICATION FORM.

GENERAL

Each portfolio offers two other classes of shares, Class A
and Class B, by means of separate prospectuses. The three

<PAGE>

classes of shares have a common investment objective and
investment portfolio and are identical, except as to the level of
the distribution services fee paid by each class. Because of the
different level of distribution services fees paid by the other
two classes of shares, Class C shares are expected to have
performance different from Class A and Class B shares. You can
obtain more information regarding the other classes by calling
Alliance Fund Services, Inc. toll-free at (800) 237-5822 or
writing to them at P.O. Box 1520, Secaucus, New Jersey 07096.

Rule 12b-1 adopted by the Commission under the 1940 Act
permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a duly adopted
plan. Effective [ ], 1998, the Fund adopted a "Rule 12b-
1 Plan" and entered into an amended Distribution Agreement (the
"Agreement") with Alliance Fund Distributors, Inc., the Fund's
distributor ("AFD"), in connection with the distribution of each
Portfolio's Class C shares. Pursuant to the Rule 12b-1 Plan, the
Fund pays AFD a distribution services fee at an annual rate of
.25% of the aggregate daily net assets attributable to the
Class C shares of each Portfolio. The Glass-Steagall Act and
other applicable laws may limit the ability of a bank or other
depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Fund's management,
based on the advice of counsel, these laws do not prohibit such
depository institutions from providing services for investment
companies such as the administrative, accounting and other
services referred to in the Agreement. In the event that a
change in these laws prevented a bank from providing such
services, it is expected that other service arrangements would be
made and that shareholders would not be adversely affected.

<PAGE>

SHARE PRICE. Shares of each Portfolio of the Fund are sold
and redeemed on a continuous basis without sales or redemption
charges at their net asset value which is expected to be constant
at $1.00 per share, although this price is not guaranteed. The
net asset value of each Portfolio's shares, except the Tax-Free
Portfolio, is determined each Fund business day (as defined under
"Purchase and Redemption of Shares--Redemptions," above), at
12:00 Noon and 4:00 p.m. (Eastern time). The net asset value of
the Tax-Free Portfolio shares is determined each Fund business
day at 12:00 Noon (Eastern time). The net asset value per
Class C share of each Portfolio is calculated by taking the sum
of the value of the Portfolio's investments allocable to Class C
shares (amortized cost value is used for this purpose) and any
cash or other assets allocable to Class C shares, subtracting
liabilities allocable to Class C shares, and dividing by the
total number of Class C shares of the Portfolio outstanding. All
expenses, including the fees payable to the Adviser, are accrued
daily.

MINIMUMS. An initial investment of at least $1,000,000 in
the aggregate among the Portfolios of the Fund is required.

<PAGE>

There is no minimum for subsequent investments. The Fund
reserves the right at anytime to vary the initial and subsequent
investment minimums.

ADDITIONAL INFORMATION

Each Portfolio pays the Adviser at an annual rate of .2% of
the average daily value of its net assets. The Adviser has

<PAGE>

undertaken until, at its request, the Fund notifies investors to
the contrary, that if, in any fiscal year, the aggregate expenses
with respect to the Class C shares of a Portfolio, exclusive of
taxes, brokerage, interest on borrowings and extraordinary
expenses, but including the management fee and distribution
services fee, exceed .45% of the Portfolio's average net assets
for the fiscal year attributable to the Class C shares, the
Portfolio may deduct from the payment to be made to the Adviser,
or the Adviser will bear, such excess expense.

The Adviser may make payments from time to time from its own
resources, which may include the management fees paid by the
Portfolios of the Fund to compensate broker-dealers, depository
institutions, or other persons for providing distribution
assistance and administrative services and to otherwise promote
the sale of Class C shares of the Fund, including paying for the
preparation, printing and distribution of prospectuses and sales
literature or other promotional activities.

<PAGE>

preference item for purposes of the federal individual and
corporate AMT. Distributions out of taxable interest income,
other investment income, and short term capital gains are taxable
as ordinary income and distributions of long term capital gains,
if any, are taxable as long-term capital gains irrespective of
the length of time a shareholder held his shares.

YEAR 2000. Many computer software systems in use today
cannot properly process date-related information from and after
January 1, 2000. Should any of the computer systems employed by
the Fund's major service providers fail to process this type of
information properly, that could have a negative impact on the
Fund's operations and the services that are provided to the
Fund's shareholders. The Adviser, AFD and Alliance Fund
Services, Inc., the Fund's transfer agent, have advised the Fund
that they are reviewing all of their computer systems with the
goal of modifying or replacing such systems prior to January 1,
2000 to the extent necessary to foreclose any such negative
impact. In addition, the Adviser has been advised by the Fund's
custodian that it is also in the process of reviewing its systems
with the same goal. As of the date of this Prospectus, the Fund
and the Adviser have no reason to believe that these goals will
not be achieved. Similarly, the values of certain of the
portfolio securities held by the Fund may be adversely affected
by the inability of the securities' issuers or of third parties
to process this type of information properly.

<PAGE>

The prospectus and statement of additional information
relating to the Trust Portfolio of the Registrant, each of which is
dated September 2, 1997, are incorporated herein by reference to
the Registrant's filing with the Securities and Exchange
Commission pursuant to Rule 497(c) on September 18, 1997.

<PAGE>

[LOGO] ALLIANCE INSTITUTIONAL RESERVES, INC.
-Prime Portfolio
-Government Portfolio
-Tax-Free Portfolio
-Treasury Portfolio

____________________________________________________________

c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672

____________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION

[ ], 1998

___________________________________________________________

This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Fund's current
Prospectuses dated [ ], 1998 (the "Prospectus")
which describe the Class A, Class B and Class C shares of
the Prime, Government, Tax-Free and Treasury Portfolios of
the Fund. A copy of this Prospectus may be obtained by
contacting Alliance Fund Services, Inc. at the address or
telephone number shown above.

TABLE OF CONTENTS

Page

The Fund..............................................
Investment Objectives and Policies....................
Investment Restrictions ..............................
Management............................................
Expenses of the Fund..................................
Purchase and Redemption of Shares.....................
Daily Dividends-Determination of Net Asset Value......
Taxes.................................................
General Information...................................
Appendix A - Commercial Paper and Bond Ratings........
Appendix B - Description of Municipal Securities......

<PAGE>

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

Report of Independent Auditors........................

___________________________
(R): This registered service mark used under license from
the owner, Alliance Capital Management L.P.

<PAGE>

____________________________________________________________

THE FUND
____________________________________________________________

Alliance Institutional Reserves, Inc. (the "Fund") is an
open-end investment company. The Prime Portfolio, the
Government Portfolio, the Tax-Free Portfolio and the
Treasury Portfolio, each of which is diversified
(collectively, the "Portfolios"), are described by the
Prospectus which supplements this Statement of Additional
Information. An additional Portfolio of the Fund, the Trust
Portfolio, is described in a separate Prospectus and
Statement of Additional Information.

____________________________________________________________

INVESTMENT OBJECTIVES AND POLICIES
____________________________________________________________

The investment objectives of each Portfolio are - in the
following order of priority - safety of principal, excellent
liquidity, and maximum current income (which, in the case of
the Tax-Free Portfolio, is exempt from Federal income taxes)
to the extent consistent with the first two objectives. As
a matter of fundamental policy, each of the Prime Portfolio,
the Government Portfolio and the Tax-Free Portfolio pursues
its objectives by maintaining a portfolio of high-quality
money market securities, all of which, at the time of
investment, have remaining maturities of one year or less
(which maturities, pursuant to Rule 2a-7 under the
Investment Company Act of 1940 as amended (the "Act"), may
extend to 397 days). The Treasury Portfolio, as a non-
fundamental policy, pursues its objectives by investing in
the following investments diversified by maturities not
exceeding 397 days: issues of the United States Treasury,
such as bills, certificates of indebtedness, notes and bonds
and repurchase agreements with respect to those instruments.
The Fund may in the future establish additional portfolios
which may have different investment objectives. There can
be no assurance that any of the Portfolio's objectives will
be achieved.

General

Each of the Portfolios will comply with Rule 2a-7 under
the Act, as amended from time to time, including the
diversification, quality and maturity conditions imposed by

<PAGE>

the Rule. To the extent that a Portfolio's limitations are
more permissive than Rule 2a-7, the Portfolio will comply
with the more restrictive provisions of the Rule.

Currently, pursuant to Rule 2a-7, each Portfolio may
invest only in U.S. dollar-denominated "eligible securities"
(as that term is defined in the Rule) that have been
determined by the Adviser to present minimal credit risks
pursuant to procedures approved by the Board of Directors.
Generally, an eligible security is a security that (i) has a
remaining maturity of 397 days or less and (ii) is rated, or
is issued by an issuer with short-term debt outstanding that
is rated, in one of the two highest rating categories by two
nationally recognized statistical rating organizations
("NRSROS") or, if only one NRSRO has issued a rating, by
that NRSRO (the "requisite NRSROs"). Unrated securities may
also be eligible securities if the Adviser determines that
they are of comparable quality to a rated eligible security
pursuant to guidelines approved by the Board of Directors.
A description of the ratings of some NRSROs appears in
Appendix A attached hereto. Securities in which the
Portfolios invest may be subject to liquidity or credit
[Benhancements. These securities are generally considered
to be Eligible Securities if the enhancement or the issuer
of the enhancement has received the appropriate rating from
the requisite NRSROs.

Under Rule 2a-7 the Prime, Government, Tax-Free
(effective July 1, l998) and Treasury Portfolios may not
invest more than five percent of their respective assets in
the first tier securities of any one issuer other than the
United States Government, its agencies and
instrumentalities. Generally, a first tier security is an
Eligible Security that has received a short-term rating from
the requisite NRSROs in the highest short-term rating
category for debt obligations, or is an unrated security
deemed to be of comparable quality. Government securities
are also considered to be first tier securities. In
addition, the Prime Portfolio and the Government Portfolio
may not invest in a security that has received, or is deemed
comparable in quality to a security that has received, the
second highest rating by the requisite number of NRSROs (a
"second tier security") if immediately after the acquisition
thereof either the Prime Portfolio or the Government
Portfolio would have invested more than (A) the greater of
one percent of its total assets or one million dollars in
securities issued by that issuer which are second tier
securities, or (B) five percent of its total assets in

<PAGE>

second tier securities (the "second tier security
restriction"). Effective July 1, 1998, the second tier
security restriction applies to the Tax-Free Portfolio with
respect to its investment in the "conduit" securities of
second tier issuers. A conduit security for purposes of
Rule 2a-7 is a security nominally issued by a municipality,
but dependent for principal and interest payments on non-
municipal issuer's revenues from a non-municipal
project.

Prime Portfolio

The Prime Portfolio may make the following investments
diversified by maturities and issuers:

1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the
authority of an act of Congress. The latter issues include,
but are not limited to, obligations of the bank for
cooperatives, Federal Financing Bank, Federal Home Loan
Bank, Federal Intermediate Credit Banks, Federal Land Bank,
Federal National Mortgage Association and Tennessee Valley
Authority. Some of the securities are supported by the full
faith and credit of the U.S. Treasury, others are supported
by the right of the issuer to borrow from the Treasury, and
still others are supported only by the credit of the agency
or instrumentality.

2. Certificates of deposit, bankers' acceptances and
interest-bearing savings deposits issued or guaranteed by
banks or savings and loan associations having total assets
of more than $1 billion and which are members of the Federal
Deposit Insurance Corporation and certificates of deposit
and bankers' acceptances denominated in U.S. dollars and
issued by U.S. branches of foreign banks having total assets
of at least $1 billion that are believed by the Adviser to
be of quality equivalent to that of other such instruments
in which the Portfolio may invest. Certificates of deposit
are receipts issued by a depository institution in exchange
for the deposit of Funds. The issuer agrees to pay the
amount deposited plus interest to the bearer of the receipt
on the date specified on the certificate. Such certificates
may include, for example, those issued by foreign
subsidiaries of such banks which are guaranteed by them.
The certificate usually can be traded in the secondary

<PAGE>

market prior to maturity. Bankers' acceptances typically
arise from short-term credit arrangements designed to enable
businesses to obtain Funds to finance commercial
transactions. Generally, an acceptance is a time draft
drawn on a bank by an exporter or an importer to obtain a
stated amount of Funds to pay for specific merchandise. The
draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be
sold in the secondary market at the going rate of discount
for a specific maturity. Although maturities for
acceptances can be as long as 270 days, most acceptances
have maturities of six months or less.

3. Commercial paper, including variable amount master
demand notes, of prime quality [rated A-1+ or A-1 by
Standard & Poor's Corporation ("Standard & Poor's") or
Prime-1 by Moody's Investors Service, Inc. ("Moody's") or,
if not rated, issued by domestic and foreign companies which
have an outstanding debt issued rated AAA or AA by Standard
& Poor's or Aaa or Aa by Moody's] and participation
interests in loans extended by banks to such companies. For
a description of such ratings see Appendix A. Commercial
paper consists of short-term (usually from 1 to 270 days)
unsecured promissory notes issued by corporations in order
to finance their current operations. A variable amount
master demand note represents a direct borrowing arrangement
involving periodically fluctuating rates of interest under a
letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may
determine to invest varying amounts. For a further
description of variable amount master demand notes, see
below, "Additional Investment Policies".

The Portfolio may invest up to 5% of its net assets in
high quality (as determined by the requisite number of
NRSROs or, if not rated, determined to be of high quality by
the Adviser) participation interests having remaining
maturities not exceeding one year in loans extended by banks
to U.S. and foreign companies. The staff of the Securities
and Exchange Commission is currently considering certain
issues relating to the effect on a registered investment
company of investing in participation interests on the
company's ability to meet the diversification requirements
of the Act and the Internal Revenue Code and its fundamental
policy regarding the concentration of its assets in
particular industries. The Adviser believes that the

<PAGE>

purchase of loan participation interests in accordance with
the Portfolio's investment policies will not give rise to
the possibility that, as a result of such purchases, the
Portfolio will no longer meet the diversification
requirements of the Act and the Internal Revenue Code or
violate any fundamental policy regarding the concentration
of the Portfolio's assets in particular industries, but
nevertheless has undertaken to invest in participation
interests only after the resolution of these issues by the
staff. In a typical corporate loan syndication, a number of
institutional lenders lend a corporate borrower a specified
sum pursuant to the term and conditions of a loan agreement.
One of the co-lenders usually agrees to act as the agent
bank with respect to the loan. The loan agreement among the
corporate borrower and the co-lenders identifies the agent
bank as well as sets forth the rights and duties of the
parties. The agreement often (but not always) provides for
the collateralization of the corporate borrower's
obligations thereunder and includes various types of
restrictive covenants which must be met by the borrower.

The participation interests acquired by the Portfolio
may, depending on the transaction, take the form of a direct
co-lending relationship with the corporate borrower, an
assignment of an interest in the loan by a co-lender or
another participant or a participation in the seller's share
of the loan. Typically, the Portfolio will look to the
agent bank to collect principal of and interest on a
participation interest, to monitor compliance with loan
covenants, to enforce all credit remedies, such as
foreclosures on collateral, and to notify co-lenders of any
adverse changes in the borrower's financial condition or
declarations of insolvency. The agent bank in such cases
will be qualified under the Act to serve as a custodian for
a registered investment company such as the Fund. The agent
bank is compensated for these services by the borrower
pursuant to the terms of the loan agreement.

When the Portfolio acts as a co-lender in connection
with a participation interest, or when the Portfolio
acquires a participation interest the terms of which provide
that the Portfolio will be in privity with the corporate
borrower, the Portfolio will have direct recourse against
the borrower in the event the borrower fails to pay
scheduled principal and interest. In cases where the
Portfolio lacks such direct recourse, the Portfolio will
look to the agent bank to enforce appropriate credit
remedies against the borrower.

<PAGE>

The Adviser believes that the principal credit risk
associated with acquiring participation interests from a
co-lender or another participant is the credit risk
associated with the underlying corporate borrower. The
Portfolio may incur additional credit risk, however, when
the Portfolio is in the position of participant rather than
a co-lender because the Portfolio must assume the risk of
insolvency of the co-lender from which the participation
interest was acquired and that of any person interpositioned
between the Portfolio and the co-lender. However, in
acquiring participation interests the Adviser will conduct
analysis and evaluation of the financial condition of each
such co-lender and participant to ensure that the
participation interest meet the Portfolio's high quality
standard and will continue to do so as long as it holds a
participation.

4. Repurchase agreements pertaining to the above
securities. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."

The Portfolio may make investments in certificates of
deposit issued by foreign branches of domestic banks and
certificates of deposit or bankers' acceptances issued by
U.S. branches of foreign banks specified in paragraph 2
above, and commercial paper issued by foreign companies
meeting the rating criteria specified in paragraph 3 above.
To the extent that the Portfolio invests in such
instruments, consideration is given to their domestic
marketability, the lower reserve requirements generally
mandated for overseas banking operations, the possible
impact of interruptions in the flow of international
currency transactions, potential political and social
instability or expropriation, imposition of foreign taxes,
less government supervision of issuers, difficulty in
enforcing contractual obligations and lack of uniform
accounting standards.

The Portfolio may invest in asset-backed securities that
meet its existing diversification, quality and maturity
criteria. Effective July 1, 1998, these securities must
generally be rated. The Portfolio may invest in unrated
asset backed securities whose assets consist of one or more
municipal issuers. Asset-backed securities are securities
issued by special purpose entities whose primary assets
consist of a pool of loans or accounts receivable. The

<PAGE>

securities may be in the form of a beneficial interest in a
special purpose trust, limited partnership interest, or
commercial paper or other debt securities issued by a
special purpose corporation. Although the securities may
have some form of credit or liquidity enhancement, payments
on the securities depend predominately upon collection of
the loans and receivables held by the issuer. Generally,
the special purpose entity is deemed to be the issuer of the
asset-backed security. However, the Portfolio is required
to treat any person whose obligations constitute ten percent
or more of the assets of the asset-backed security as the
issuer of the portion of the asset-backed security such
obligations represent. It is the Portfolio's current
intention to limit its investment in such securities to not
more than 5% of its net assets.

Floating and Variable Rate Obligations. The Portfolio may
purchase floating and variable rate demand notes and bonds,
which are obligations ordinarily having stated maturities in
excess of 13 months, but which permit the holder to demand
payment of principal and accrued interest at any time, or at
specified intervals not exceeding 13 months, in each case
upon not more than 30 days notice. Variable rate demand
notes include mater demand notes which are obligations that
permit the Prime Portfolio to invest fluctuating amounts, at
varying rates of interest, pursuant to direct arrangements
between the Prime Portfolio, as lender, and the borrower.
These obligations permit daily changes in the amounts
borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded,
and there generally is no established secondary market for
these obligations, although they are redeemable at face
value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other
credit support arrangements, the Prime Portfolios right to
redeem is dependent on the ability of the borrower to pay
principal and interest on demand.

The Portfolio's investment objectives may not be changed
without the affirmative vote of a majority of the
Portfolio's outstanding shares as defined below. Except as
otherwise provided, the investment policies are not
designated "fundamental policies" within the meaning of the
Act and may, therefore, be changed by the Directors without
a shareholder vote. However, the Portfolio will not change
its investment policies without contemporaneous written
notice to shareholders.

<PAGE>

Government Portfolio

The Government Portfolio pursues its objectives by
maintaining a portfolio of the following investments
diversified by maturities not exceeding one year (which
maturities, pursuant to Rule 2a-7 under the Act, may extend
to 397 days).

As a matter of operating policy which may be changed
without shareholder approval, the Government Portfolio
attempts to invest in securities that the Adviser believes
are legal investments for federal credit unions as set forth
in Sections 107(7) and (8) of the Federal Credit Union Act
and Part 703 of the National Credit Union Administration
regulations.

The Government Portfolio may make the following
investments:

1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the United States Treasury, such as
bills, certificates of indebtedness, notes and bonds, and
issues of agencies and instrumentalities established under
the authority of an act of Congress. The latter issues
include, but are not limited to, obligations of the Bank for
Cooperatives, Federal Financing Bank, Federal Home Loan
Bank, Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association and Tennessee Valley
Authority. Some of these securities are supported by the
full faith and credit of the U.S. Treasury, others are
supported by the right of the issuer to borrow from the
Treasury, and still others are supported only by the credit
of the agency or instrumentality.

2. Repurchase agreements pertaining to the above
securities. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."

Floating and Variable Rate Obligations. The Portfolio
may also purchase floating and variable rate obligations,
including floating and variable rate demand notes and bonds.
The Portfolio may invest in variable and floating rate
obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest

<PAGE>

rate is tied. The Portfolio may also purchase floating and
variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months,
but which permit the holder to demand payment of principal
and accrued interest at any time, or at specified intervals
not exceeding 13 months, in each case upon not more than 30
days' notice.

Tax-Free Portfolio

As a matter of fundamental policy, the Tax-Free
Portfolio, except when assuming a temporary defensive
position, must maintain at least 80% of its total assets in
high-grade municipal securities having maturities of one
year or less (which maturities, pursuant to Rule 2a-7 under
the Act, may extend to 397 days), as opposed to taxable
investments described below. Normally, substantially all of
its income will be tax-exempt as described below.

To the extent consistent with its other objectives, the
Portfolio seeks maximum current income that is exempt from
Federal income taxes by investing principally in a
diversified portfolio of high-grade municipal securities.
Such income may be subject to state or local income taxes.

Municipal Securities

The term "municipal securities," as used in the
Prospectus and this Statement of Additional Information,
means obligations issued by or on behalf of states,
territories, and possessions of the United States or their
political subdivisions, agencies and instrumentalities, the
interest from which is exempt from Federal income taxes.
The municipal securities in which the Portfolio invests
include those obligations which at the time of purchase:

1. are backed by the full faith and credit of the
United States; or

2. are municipal notes rated MIG-1/VMIG-1 or
MIG-2/VMIG-2 by Moody's or SP-1 or SP-2 by Standard
& Poor's or, if not rated, are of equivalent
investment quality as determined by the Adviser and
ultimately reviewed by the Directors; or

3. are municipal bonds rated Aa or higher by Moody's,
AA or higher by Standard & Poor's or, if not rated,
are of equivalent investment quality as determined

<PAGE>

by the Adviser and ultimately reviewed by the
Directors; or

4. are other types of municipal securities, provided
that such obligations are rated Prime-1 by Moody's,
A-1 or higher by Standard & Poor's or, if not
rated, are of equivalent investment quality as
determined by the Adviser and ultimately reviewed
by the Directors. (See Appendix B for a
description of municipal securities and Appendix A
for a description of these ratings.)

No Portfolio will invest 25% or more of its total assets
in the securities of non-governmental issuers conducting
their principal business activities in any one industry.

Alternative Minimum Tax

Under current Federal income tax law, (1) interest on
tax-exempt municipal securities issued after August 7, 1986
which are "specified private activity bonds" will be treated
as an item of tax preference for purposes of the alternative
minimum tax ("AMT") imposed on individuals and corporations,
though for regular Federal income tax purposes such interest
will remain fully tax-exempt, and (2) interest on all
tax-exempt obligations will be included in "adjusted current
earnings" of corporations for AMT purposes. The Portfolio
may purchase "private activity" municipal securities because
such issues may provide somewhat higher yields than other
comparable municipal securities. However, the Portfolio
will limit its investments so that no more than 20% of its
total income is derived from municipal securities that bear
interest subject to the AMT.

Investors should consider that, in most instances, no
state, municipality or other governmental unit with taxing
power will be obligated with respect to AMT-subject bonds.
AMT-subject bonds are in most cases revenue bonds and do not
generally have the pledge of the credit or the taxing power,
if any, of the issuer of such bonds. AMT-subject bonds are
generally limited obligations of the issuer supported by
payments from private business entities and not by the full
faith and credit of a state or any governmental subdivision.
Typically the obligation of the issuer of AMT-subject bonds
is to make payments to bond holders only out of and to the
extent of, payments made by the private business entity for
whose benefit the AMT-subject bonds were issued. Payment of
the principal and interest on such revenue bonds depends

<PAGE>

solely on the ability of the user of the facilities financed
by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide
specific detail on each of these obligations in which Fund
assets may be invested.

Taxable Securities

Although the Portfolio expects to be largely invested in
municipal securities, the Portfolio may elect to invest up
to 20% of its total assets in taxable money market
securities when such action is deemed to be in the best
interests of shareholders. Such taxable money market
securities also are limited to remaining maturities of one
year (which maturities may extend to 397 days pursuant to
Rule 2a-7) or less at the time of the Portfolio's
investment, and the Portfolio's municipal and taxable
securities are maintained at a dollar-weighted average of 90
days or less. Taxable money market securities purchased by
the Portfolio include those described below:

1. marketable obligations of, or guaranteed by, the
United States Government, its agencies or
instrumentalities; or

2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having
total assets of more than $1 billion and which are
members of the Federal Deposit Insurance
Corporation; or

3. commercial paper of prime quality rated A-1 or
higher by Standard & Poor's or Prime-1 by Moody's
or, if not rated, issued by companies which have
an outstanding debt issue rated AA or higher by
Standard & Poor's, or Aa or higher by Moody's.
(See Appendix A for description of these ratings.)

The Portfolio may also enter into repurchase agreements
pertaining to the types of securities in which it may
invest. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."

<PAGE>

Variable Rate Obligations

The interest rate payable on certain municipal
securities in which the Portfolio may invest, called
"variable rate" obligations, is not fixed and may fluctuate
based upon changes in market rates. The interest rate
payable on a variable rate municipal security is adjusted
either at predesignated periodic intervals or whenever there
is a change in the market rate to which the security's
interest rate is tied. Other features may include the right
of the Portfolio to demand prepayment of the principal
amount and accrued interest of the obligation prior to its
stated maturity and the right of the issuer to prepay the
principal amount and accrued interest prior to maturity.
The main benefit of a variable rate municipal security is
that the interest rate adjustment minimizes changes in the
market value of the obligation. As a result, the purchase
of variable rate municipal securities enhances the ability
of the Portfolio to maintain a stable net asset value per
share and to sell an obligation prior to maturity at a price
approximating the full principal amount. The payment of
principal and interest by issuers of certain municipal
securities purchased by the Portfolio may be guaranteed by
letter of credit or other credit facilities offered by banks
or other financial institutions. Such guarantees will be
considered in determining whether a municipal security meets
the Portfolio's investment quality requirements.

Variable rate obligations purchased by the Portfolio may
include participation interests in variable rate industrial
development bonds that are backed by irrevocable letters of
credit or guarantees of banks that meet criteria for banks
described above in "Taxable Securities." Purchase of a
participation interest gives the Portfolio an undivided
interest in certain such bonds. The Portfolio can exercise
the right, on not more than 30 days' notice, to sell such an
instrument back to the bank from which it purchased the
instrument and draw on the letter of credit for all or any
part of the principal amount of the Portfolio's
participation interest in the instrument, plus accrued
interest, but will generally do so only (i) as required to
provide liquidity to the Portfolio, (ii) to maintain a high
quality investment portfolio, or (iii) upon a default under
the terms of the demand instrument. Banks retain portions
of the interest paid on such variable rate industrial
development bonds as their fees for servicing such
instruments and the issuance of related letters of credit
and repurchase commitments. The Portfolio follows Rule 2a-7

<PAGE>

with respect to its investments in variable rate instruments
supported by letters of credit and participation interests.

The Portfolio will not purchase participation interests
in variable rate industrial development bonds unless the
interest earned by the Portfolio from the bonds in which it
holds participation interests is considered to be exempt
from Federal income taxes. The Adviser will monitor the
pricing, quality and liquidity of variable rate demand
obligations and participation interests therein held by the
Portfolio on the basis of published financial information,
rating agency reports and other research services to which
the Adviser may subscribe.

Standby Commitments

The Portfolio may purchase municipal securities together
with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to
their maturity dates. Such a right to resell is commonly
known as a "standby commitment," and the aggregate price
which the Portfolio pays for securities with a standby
commitment may be higher than the price which otherwise
would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable
in municipal securities while preserving the necessary
flexibility and liquidity to meet unanticipated redemptions.
In this regard, the Portfolio acquires standby commitments
solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. Since
the value of a standby commitment is dependent on the
ability of the standby commitment writer to meet its
obligation to repurchase, the Portfolio's policy is to enter
into standby commitment transactions only with municipal
securities dealers which are determined to present minimal
credit risks.

The acquisition of a standby commitment does not affect
the valuation or maturity of underlying municipal securities
which continue to be valued in accordance with the amortized
cost method. Standby commitments acquired by the Portfolio
are valued at zero in determining net asset value. Where
the Portfolio pays directly or indirectly for a standby
commitment, its cost is reflected as unrealized depreciation
for the period during which the commitment is held. Standby
commitments do not affect the average weighted maturity of
the Portfolio's portfolio of securities. The Portfolio does

<PAGE>

not currently intend to invest more than 5% of its net
assets in standby commitments in the coming year.

General

Yields on municipal securities are dependent on a
variety of factors, including the general condition of the
money market and of the municipal bond and municipal note
market, the size of a particular offering, the maturity of
the obligation and the rating of the issue. Municipal
securities with longer maturities tend to produce higher
yields and are generally subject to greater price movements
than obligations with shorter maturities. The achievement
of the Portfolio's investment objectives is dependent in
part on the continuing ability of the issuers of municipal
securities in which the Portfolio invests to meet their
obligations for the payment of principal and interest when
due. Municipal securities historically have not been
subject to registration with the Securities and Exchange
Commission, although there have been proposals which would
require registration in the future.

After purchase by the Portfolio, a security may cease to
be rated or its rating may be reduced below the minimum
required for purchase by the Portfolio. Neither event
requires sales of such security by the Portfolio, but the
Adviser will consider such event in its determination of
whether the Portfolio should continue to hold the security.
To the extent that the ratings given by Moody's or Standard
& Poor's may change as a result of changes in such
organizations or their rating systems, the Adviser will
attempt to substitute comparable ratings.

Obligations of issuers of municipal securities are
subject to the provisions of bankruptcy, insolvency, and
other laws affecting the rights and remedies of creditors,
such as the Bankruptcy Code. In addition, the obligations
of such issuers may become subject to laws enacted in the
future by Congress, state legislatures, or referenda
extending the time for payment of principal and/or interest,
or imposing other constraints upon enforcement of such
obligations or upon ability of municipalities to levy taxes.
There is also the possibility that, as a result of
litigation or other conditions, the ability of any issuer to
pay, when due, the principal or the interest on its
municipal securities may be materially affected.

<PAGE>

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

Treasury Portfolio

The Portfolio pursues its objectives by maintaining a
portfolio of the following investments diversified by
maturities not exceeding 397 days:

1. Issues of the United States Treasury, such as
bills, certificates of indebtedness, notes and bonds. Such
issues are supported by the full faith and credit of the
U.S. Treasury.

2. Repurchase agreements pertaining to the above
securities. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees to resell it
to the vendor at an agreed-upon market rate which is
effective for the period of time the buyer's money is
invested in the security and which is not related to the
coupon rate on the purchased security. Repurchase
agreements may be entered into with member banks of the
Federal Reserve System or "primary dealers" (as designated
by the Federal Reserve Bank of New York) in U.S. Government
securities or with State Street Bank and Trust Company. It
is the Portfolio's current practice, which may be changed at
any time without shareholder approval, to enter into
repurchase agreements only with such primary dealers or
State Street Bank and Trust Company, the Fund's Custodian.
For each repurchase agreement, the Portfolio requires
continual maintenance of the market value of the underlying
collateral in amounts equal to, or in excess of, the
agreement amount. While the maturities of the underlying
collateral may exceed 397 days, the term of the repurchase
agreement is always less than 397 days. In the event that a
vendor defaulted on its repurchase obligation, the Portfolio
might suffer a loss to the extent that the proceeds from the
sale of the collateral were less than the repurchase price.
If the vendor became bankrupt, the Portfolio might be
delayed in selling the collateral. Repurchase agreements
often are for short periods such as one day or a week, but
may be longer. Repurchase agreements not terminable within
seven days will be limited to no more than 10% of the Fund's

<PAGE>

assets. Pursuant to Rule 2a-7 under the Investment Company
Act of 1940, as amended (the "Act"), a repurchase agreement
is deemed to be an acquisition of the underlying securities
provided that the obligation of the seller to repurchase the
securities from the money market fund is collateralized
fully (as defined in such Rule). Accordingly, the vendor of
a fully collateralized repurchase agreement is deemed to be
the issuer of the underlying securities.

Reverse Repurchase Agreements. While the Portfolio has
no present plans to do so, it may enter into reverse
repurchase agreements, which have the characteristics of
borrowing and which involve the sale of securities held by
the Fund with an agreement to repurchase the securities at
an agreed-upon price, date and interest payment.

When-Issued Securities. Certain new issues that the
Portfolio is permitted to purchase are available on a "when-
issued" basis - that is, delivery and payment for the
securities take place after the transaction date, normally
within ten days (the Portfolio will not make any such
commitments of more than thirty days). The payment amount
and the interest rate that will be received on the
securities are fixed on the transaction date. The Portfolio
will make commitments for such when-issued transactions only
with the intention of actually acquiring the securities and,
to facilitate such acquisitions, the Fund's Custodian will
maintain, in a separate account, cash, U.S. Government or
other appropriate high-grade debt obligations of the
Portfolio having value equal to or greater than such
commitments. Similarly, a separate account will be
maintained to meet obligations in respect of reverse
repurchase agreements. On delivery dates for such
transactions, the Portfolio will meet its obligations from
maturities or sales of the securities held in the separate
account and/or from then available cash flow. If the
Portfolio chooses to dispose of the right to acquire a when-
issued security prior to its acquisition, it could, as with
the disposition of any other portfolio obligation, incur a
gain or loss due to market fluctuation. No when-issued
commitments will be made if, as a result, more than 15% of
the Portfolio's net assets would be so committed.

While there are many kinds of short-term securities used
by money market investors, the Portfolio, in keeping with
its primary investment objective of safety of principal,
generally restricts its portfolio to the types of
investments listed above. Net income to shareholders is

<PAGE>

aided both by the Portfolio's ability to make investments in
large denominations and by its efficiencies of scale. Also,
the Portfolio may seek to improve its income by selling
certain portfolio securities prior to maturity in order to
take advantage of yield disparities that occur in money
markets. The market value of the Portfolio's investments
tends to decrease during periods of rising interest rates
and to increase during intervals of falling rates. Except
as otherwise provided, the Portfolio's investment policies
are not designated "fundamental policies" within the meaning
of the Act and may, therefore, be changed by the Directors
of the Fund without a shareholder vote. However, the
Portfolio will not change its investment policies without
contemporaneous written notice to shareholders. There can
be no assurance, as is true with all investment companies,
that the Portfolio's objectives will be achieved.

Floating and Variable Rate Obligations. The Portfolio
may purchase floating and variable rate obligations,
including floating and variable rate demand notes and bonds.
The Portfolio may invest in variable and floating rate
obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest
rate is tied. The Portfolio may also purchase floating and
variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months,
but which permit the holder to demand payment of principal
and accrued interest at any time, or at specified intervals
not exceeding 13 months, in each case upon not more than 30
days' notice.

Additional Investment Policies

The following investment policies supplement those set
forth above for each Portfolio. Except as otherwise
indicated below, such additional policies apply to all
Portfolios.

Repurchase Agreements

A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the
vendor on an agreed-upon future date. The resale price is
greater than the purchase price, reflecting an agreed-upon
market rate which is effective for the period of time the
buyer's money is invested in the security and which is not
related to the coupon rate on the purchased security.

<PAGE>

Repurchase agreements may be entered into with member banks
of the Federal Reserve System or "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S.
Government securities or with State Street Bank and Trust
Company ("State Street Bank"), the Fund's Custodian. It is
each Portfolio's current practice, which may be changed at
any time without shareholder approval, to enter into
repurchase agreements only with such primary dealers and
State Street Bank. For each repurchase agreement, each
Portfolio requires continual maintenance of the market value
of underlying collateral in amounts equal to, or in excess
of, the agreement amount. While the maturities of the
underlying collateral may exceed one year, the term of the
repurchase agreement is always less than one year. In the
event that a counterparty defaulted on its repurchase
obligation, a Portfolio might suffer a loss to the extent
that the proceeds from the sale of the collateral were less
than the repurchase price. If the vendor became bankrupt, a
Portfolio might be delayed in selling the collateral.
Repurchase agreements often are for short periods such as
one day or a week, but may be longer. Repurchase agreements
not terminable within seven days will be limited to no more
than 10% of a Portfolio's assets. Pursuant to Rule 2a-7, a
repurchase agreement is deemed to be an acquisition of the
underlying securities, provided that the obligation of the
seller to repurchase the securities from the money market
fund is collateralized fully (as defined in such Rule).
Accordingly, the counterparty of a fully collateralized
repurchase agreement is deemed to be the issuer of the
underlying securities.

Reverse Repurchase Agreements

Each Portfolio may also enter into reverse repurchase
agreements, which involve the sale of money market
securities held by a Portfolio with an agreement to
repurchase the securities at an agreed-upon price, date and
interest payment. The Portfolios do not currently intend to
enter into such agreements during the coming year.

When-Issued Securities

Certain issues that the Government, Tax-Free and
Treasury Portfolios are permitted to purchase are offered on
a "when-issued" basis. When so offered, the price, which is
generally expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for
the when-issued securities take place at a later date.

<PAGE>

Normally, the settlement date occurs from within ten days to
one month after the purchase of the issue. The Government
Portfolio will not make any such commitments of more than
thirty days. During the period between purchase and
settlement, no payment is made by a Portfolio to the issuer
and, thus, no interest accrues to a Portfolio from the
transaction. When-issued securities may be sold prior to
the settlement date, but each Portfolio makes when-issued
commitments only with the intention of actually acquiring
the securities. To facilitate such acquisitions, the Fund's
Custodian will maintain, in a separate account of each
Portfolio, U.S. Government securities or other liquid high
grade debt securities having value equal to or greater than
commitments held by that Portfolio. Similarly, a separate
account will be maintained to meet obligations in respect of
reverse repurchase agreements. On delivery dates for such
transactions, a Portfolio will meet its obligations from
maturities or sales of the securities held in the separate
account and/or from the available cash flow. If a
Portfolio, however, chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
can incur a gain or loss. At the time a Portfolio makes the
commitment to purchase a security on a when-issued basis, it
records the transaction and reflects the value of the
security in determining its net asset value. No when-issued
commitments will be made if, as a result, more than 15% of a
Portfolio's net assets would be so committed.

Illiquid Securities and Restricted Securities

None of the Portfolios will maintain more than 10% of
its net assets in illiquid securities. Illiquid securities
may include securities that are not readily marketable,
securities subject to legal or contractual restrictions on
resale and repurchase agreements not terminable within seven
days. Except with respect to the Tax-Free Portfolio, which
is not permitted to invest in restricted securities,
restricted securities that are determined by the Adviser to
be liquid in accordance with procedures adopted by the
Directors, including securities eligible for resale under
Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act") and commercial paper issued in reliance
upon the exemption from registration in Section 4(2) of the
Securities Act, will not be treated as illiquid for purposes
of the restriction on illiquid securities. Restricted
securities are securities subject to the contractual or
legal restrictions on resale, such as those arising from an
issuer's reliance upon certain exemptions from registration

<PAGE>

under the Securities Act. As to these securities, a
Portfolio is subject to a risk that, should the Portfolio's
desire to sell them when a ready buyer is not available at a
price the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely
affected.

In recent years, a large institutional market has
developed for certain types of restricted securities
including, among others, private placements, repurchase
agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often
restricted securities because they are sold in transactions
not requiring registration. For example, commercial paper
issues in which the Prime Portfolio may invest include,
among others, securities issued by major corporations
without registration under the Securities Act in reliance on
the exemption from registration afforded by Section 3(a)(3)
of such Act and commercial paper issued in reliance on the
private placement exemption from registration which is
afforded by Section 4(2) of the Securities Act ("Section
4(2) paper"). Section 4(2) paper is restricted as to
disposition under the Federal securities laws in that any
resale must also be made in an exempt transaction. Section
4(2) paper is normally resold to other institutional
investors through or with the assistance of investment
dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often
depend on an efficient institutional market in which such
restricted securities can be readily resold in transactions
not involving a public offering. In many instances,
therefore, the existence of contractual or legal
restrictions on resale to the general public does not, in
practice, impair the liquidity of such investments from the
perspective of institutional holders.

In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the SEC
adopted Rule 144A under the Securities Act to establish a
safe harbor from the Securities Act's registration
requirements for resale of certain restricted securities to
qualified institutional buyers. Section 4(2) paper that is
issued by a company that files reports under the Securities
Exchange Act of 1934 is generally eligible to be resold in
reliance on the safe harbor of Rule 144A. Pursuant to Rule
144A, the institutional restricted securities markets may
provide both readily ascertainable values for restricted

<PAGE>

securities and the ability to liquidate an investment in
order to satisfy share redemption orders on a timely basis.
An insufficient number of qualified institutional buyers
interested in purchasing certain restricted securities held
by the Prime Portfolio, however, could affect adversely the
marketability of such portfolio securities and the Prime
Portfolio might be unable to dispose of such securities
promptly or at reasonable prices. Rule 144A has already
produced enhanced liquidity for many restricted securities,
and market liquidity for such securities may continue to
expand as a result of Rule 144A and the consequent inception
of the PORTAL System sponsored by the National Association
of Securities Dealers, Inc., an automated system for the
trading, clearance and settlement of unregistered
securities.

The Fund's Directors have the ultimate responsibility
for determining whether specific securities are liquid or
illiquid. The Directors have delegated the function of
making day-to-day determinations of liquidity to the
Adviser, pursuant to guidelines approved by the Directors.
The Adviser takes into account a number of factors in
determining whether a restricted security being considered
for purchase is liquid, including at least the following:

(i) the frequency of trades and quotations for the
security;

(ii) the number of dealers making quotations to
purchase or sell the security;

(iii) the number of other potential purchasers of
the security;

(iv) the number of dealers undertaking to make a
market in the security;

(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time
needed to dispose of the security, the method
of soliciting offers and the mechanics of
transfer); and

(vi) any applicable Securities and Exchange
Commission interpretation or position with
respect to such types of securities.

<PAGE>

To make the determination that an issue of Section 4(2)
paper is liquid, the Adviser must conclude that the
following conditions have been met:

(i) the Section 4(2) paper must not be traded flat
or in default as to principal or interest; and

(ii) the Section 4(2) paper must be rated in one of
the two highest rating categories by at least
two NRSROs, or if only one NRSRO rates the
security, by that NRSRO; if the security is
unrated, Alliance must determine that the
security is of equivalent quality.

The Adviser must also consider the trading market for
the specific security, taking into account all relevant
factors.

Following the purchase of a restricted security by a
Portfolio, the Adviser monitors continuously the liquidity
of such security and reports to the Directors regarding
purchases of liquid restricted securities.

General

While there are many kinds of short-term securities used
by money market investors, the Portfolios, in keeping with
their primary investment objective of safety of principal,
generally restrict their investments to the types summarized
above. Net income to shareholders is aided both by each
Portfolio's ability to make investments in large
denominations and by efficiencies of scale. Also, each
Portfolio may seek to improve its income by selling certain
portfolio securities prior to maturity in order to take
advantage of yield disparities that occur in money markets.
The market value of each Portfolio's investments tends to
decrease during periods of rising interest rates and to
increase during intervals of falling rates. There can be no
assurance, as is true with all investment companies, that a
Portfolio's objectives will be achieved.

<PAGE>

____________________________________________________________

INVESTMENT RESTRICTIONS
____________________________________________________________

Unless otherwise specified to the contrary, the
following restrictions may not be changed with respect to a
Portfolio without the affirmative vote of (1) 67% or more of
the shares represented at a meeting at which more than 50%
of the outstanding shares are present in person or by proxy
or (2) more than 50% of the outstanding shares, whichever is
less. If a percentage restriction is adhered to at the time
of an investment, a later increase or decrease in percentage
resulting from a change in values of portfolio securities or
in the amount of the Portfolio's assets will not constitute
a violation of that restriction.

Prime Portfolio

The Portfolio may not:

1. purchase any security which has a maturity date
more than one year1 from the date of the Portfolio's
purchase;

2. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry provided that for purposes of
this restriction (a) there is no limitation with respect to
investments in securities issued or guaranteed by the United
States Government, its agencies or instrumentalities, or
bank obligations, including certificates of deposit,
bankers' acceptances and interest-bearing savings deposits
(such bank obligations are issued by domestic banks,
including U.S. branches of foreign banks subject to the same
regulation as U.S. banks) and (b) consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries;

3. invest more than 5% of its assets in the securities
of any one issuer2 (exclusive of securities issued or
_________________________

1. Which maturity, pursuant to Rule 2a-7, may extend to 397
days.

2. The issuer of a security is determined pursuant to Rule
2a-7.

<PAGE>

guaranteed by the United States Government, its agencies or
instrumentalities), except that up to 25% of the value of
the Portfolio's total assets may be invested without regard
to such 5% limitation;

4. invest in more than 10% of any one class of an
issuer's outstanding securities (exclusive of securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities);

5. borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements in an
aggregate amount not to exceed 15% of the Portfolio's assets
and to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests, if they
should occur; such borrowings may not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;

6. pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by
the Fund except as may be necessary in connection with any
borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 15% of
the Portfolio's assets;

7. make loans, provided that the Portfolio may
purchase money market securities and enter into repurchase
agreements;

8. enter into repurchase agreements if, as a result
thereof, more than 10% of the Portfolio's assets would be
committed to repurchase agreements not terminable within
seven days and other illiquid investments; or

9. (a) make investments for the purpose of exercising
control; (b) purchase securities of other investment
companies, except in connection with a merger,
consolidation, acquisition or reorganization; (c) invest in
real estate (other than money market securities secured by
real estate or interests therein or money market securities
issued by companies which invest in real estate, or
interests therein), commodities or commodity contracts,
including futures contracts, interests in oil, gas and other
mineral exploration or other development programs; (d)
purchase securities on margin; (e) make short sales of

<PAGE>

securities or maintain a short position or write, purchase
or sell puts, call, straddles, spreads or combinations
thereof; (f) invest in securities of issuers (other than
agencies and instrumentalities of the United States
Government) having a record, together with predecessors, of
less than three years of continuous operation if more than
5% of the Portfolio's assets would be invested in such
securities; (g) purchase or retain securities of any issuers
if those officers and directors of the Fund and employees of
the Adviser who own individually more than 1/2% of the
outstanding securities of such issuer together own more than
5% of the securities of such issuer; or (h) act as an
underwriter of securities.

Government Portfolio

The Portfolio may not:

1. purchase any security which has a maturity date
more than one year3
from the date of the Portfolio's purchase;

2. purchase securities other than marketable
obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, or repurchase
agreements pertaining thereto;

3. enter into repurchase agreements if, as a result
thereof, more than 10% of the Portfolio's assets would be
committed to repurchase agreements not terminable within
seven days and other illiquid investments or with any one
seller if, as a result thereof, more than 5% of the
Portfolio's assets would be invested in repurchase
agreements purchased from such seller;4 and may not enter
into any reverse repurchase agreements if, as a result
thereof, the Portfolio's obligations with respect to reverse
repurchase agreements would exceed 10% of the Portfolio's
assets;

_________________________

3. Which maturity, pursuant to Rule 2a-7, may extend to 397
days.

4. Pursuant to Rule 2a-7, acquisition of a fully
collateralized repurchase agreement is deemed to be the
acquisition of the underlying securities.

<PAGE>

4. borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements in
aggregate amounts not to exceed 10% of the Portfolio's
assets and to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests, if they
should occur; such borrowings may not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;

5. pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by
the Portfolio except as may be necessary in connection with
any borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 10% of
the Portfolio's assets;

6. make loans, provided that the Portfolio may
purchase securities of the type referred to in paragraph 2
above and enter into repurchase agreements with respect
thereto; or

7. act as an underwriter of securities.

Tax-Free Portfolio

The Portfolio may not:

1. purchase any security which has a maturity date
more than one year5 from the date of the Portfolio's
purchase;

2. invest more than 25% of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, provided that for purposes
of this policy (a) there is no limitation with respect to
investments in municipal securities (including industrial
development bonds), securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, and bank
obligations, including certificates of deposit, bankers'
acceptances and interest-bearing savings deposits, (such
bank obligations are issued by domestic banks, including
U.S. branches of foreign banks subject to the same
_________________________

5. Which maturity, pursuant to Rule 2a-7, may extend to 397
days.

<PAGE>

regulation as U.S. banks) and (b) consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries. For purposes of this restriction
and those set forth in restrictions 4 and 5 below, the
Portfolio will regard the entity which has the primary
responsibility for the payment of interest and principal as
the issuer;

3. invest more than 25% of its total assets in
municipal securities (a) whose issuers are located in the
same state, or (b) the interest upon which is paid from
revenues of similar-type projects;

4. invest more than 5% of its total assets in the
securities of any one issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities) except that with respect to 25% of its
total assets it may invest not more than 10% of such total
assets in the securities of any one issuer.6 For purposes
of such 5% and 10% limitations, the issuer of the letter of
credit or other guarantee backing a participation interest
in a variable rate industrial development bond is deemed to
be the issuer of such participation interest;

5. purchase more than 10% of any class of the voting
securities of any one issuer except securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;

6. borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements for
extraordinary or emergency purposes in an aggregate amount
not to exceed 15% of the Portfolio's total assets. Such
borrowings may be used, for example, to facilitate the
orderly maturation and sale of portfolio securities during
periods of abnormally heavy redemption requests, if they
should occur, such borrowings may not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;

_________________________

6. As a matter of operating policy, pursuant to Rule 2a-7
the Tax-Free Portfolio, effective July l, l998, will
invest no more than 5% of its assets in first tier
securities of any one issuer. The issuer of a security
is determined pursuant to Rule 2a-7.

<PAGE>

7. pledge, hypothecate, mortgage or otherwise encumber
its assets except to secure borrowings, including reverse
repurchase agreements, effected within the limitations set
forth in restriction 6. To meet the requirements of
regulations in certain states, the Portfolio, as a matter of
operating policy, will limit any such pledging,
hypothecating or mortgaging to 10% of its total assets,
valued at market, so long as shares of the Portfolio are
being sold in those states;

8. make loans of money or securities except by the
purchase of debt obligations in which the Portfolio may
invest consistent with its investment objectives and
policies and by investment in repurchase agreements;

9. enter into repurchase agreements (i) not terminable
within seven days if, as a result thereof, more than 10% of
the Portfolio's total assets would be committed to such
repurchase agreements (whether or not illiquid) or other
illiquid investments, or (ii) with a particular vendor7 if
immediately thereafter more than 5% of the Portfolio's
assets would be committed to repurchase agreements entered
into with such vendor; or

10. (a) make investments for the purpose of exercising
control; (b) purchase securities of other investment
companies, except in connection with a merger,
consolidation, acquisition or reorganization; (c) invest in
real estate (other than securities secured by real estate or
interests therein or securities issued by companies which
invest in real estate or interests therein), commodities or
commodity contracts; (d) purchase any restricted securities
or securities on margin; (e) make short sales of securities
or maintain a short position or write, purchase or sell puts
(except for standby commitments as described in the
Prospectus and above), calls straddles, spreads or
combinations thereof; (f) invest in securities of issuers
(other than agencies and instrumentalities of the United
States Government) having a record, together with
predecessors, of less than three years of continuous
operation if more than 5% of the Portfolio's assets would be
invested in such securities; (g) purchase or retain
securities of any issuer if those officers and directors of
the Fund and of the Adviser who own individually more than
_________________________

7. Pursuant to Rule 2a-7, acquisition of a fully
collateralized repurchase agreement is deemed to be the
acquisition of the underlying securities.

<PAGE>

1/2 of 1% of the outstanding securities of such issuer
together own more than 5% of the securities of such issuer;
or (h) act as an underwriter of securities.

Treasury Portfolio

The Portfolio:

1. May not borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements in aggregate amounts not to exceed 10% of the
Portfolio's assets and to be used exclusively to facilitate
the orderly maturation and sale of portfolio securities
during any periods of abnormally heavy redemption requests,
if they should occur; such borrowings may not be used to
purchase investments and the Portfolio will not purchase any
investment while any such borrowings exist;

2. May not pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned
or held by the Portfolio except as may be necessary in
connection with any borrowing mentioned above, including
reverse repurchase agreements, and in an aggregate amount
not to exceed 10% of the Portfolio's assets;

3. May not make loans, provided that the Portfolio may
purchase securities of the type referred to in paragraph 2
above and enter into repurchase agreements with respect
thereto;

4. May not invest in real estate (other than money
market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; and

5. May not act as an underwriter of securities.

<PAGE>

____________________________________________________________

MANAGEMENT
____________________________________________________________

Directors and Officers

The Directors and principal officers of the Fund and
their primary occupations during the past five years are set
forth below. Unless otherwise specified, the address of
each such person is 1345 Avenue of the Americas, New York,
New York 10105. Those Directors whose names are followed by
an asterisk are "interested persons" of the Fund as
determined under the Act. Each Director and officer is
affiliated as such with one or more of the other registered
investment companies that are advised by the Adviser.

Directors

JOHN D. CARIFA,8 [53], is the President, the Chief
Operating Officer and a Director of Alliance Capital
Management Corporation ("ACMC"),9 with which he has been
associated since prior to 1993.

RUTH BLOCK, [66], is a Director of Ecolab Incorporated
(specialty chemicals) and Amoco Corporation (oil and gas).
Previously, she was an Executive Vice President and Chief
Insurance Officer of The Equitable Life Assurance Society of
the United States since prior to 1993. Her address is Box
4653, Stamford, Connecticut 06903.

DAVID H. DIEVLER, [67], was formerly a Senior Vice
President of ACMC, with which he had been associated since
prior to 1993. He is currently an independent consultant.
His address is P.O. Box 167, Spring Lake, New Jersey
07762.

JOHN H. DOBKIN, [55], has been the President of Historic
Hudson Valley (historic preservation) since prior to 1993.

_________________________

8. An interested person as defined in the Act.

9. For purposes of this Statement of Additional
Information, ACMC refers Alliance Capital Management
Corporation, the sole general partner of the Adviser,
and to the predecessor general partner of the Adviser of
the same name

<PAGE>

From 1987 to 1992, he was a Director of ACMC. His address
is 105 West 55th Street, New York, New York 10019.

WILLIAM H. FOULK, JR., [65], is an Independent
Consultant. He was formerly Senior Manager of Barrett
Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1993. His
address is 2 Hekma Road, Greenwich, CT 06831.

DR. JAMES M. HESTER, [73], is President of the Harry
Frank Guggenheim Foundation and a Director of Union Carbide
Corporation with which he has been associated since prior to
1993. He was formerly President of New York University, the
New York Botanical Garden and Rector of the United Nations
University. His address is 45 East 89th Street, Apt. 39C,
New York, New York 10128.

CLIFFORD L. MICHEL, [58], is a Partner of the law firm
of Cahill Gordon & Reindel, with which he has been
associated since prior to 1993. He is also President, Chief
Executive Officer and Director of Wenonah Development
Company (investment holding company) since 1976 and a
Director and Member of the Human Resources, Environmental
and Safety, and Executive Committees of Placer Dome, Inc.
(mining) and since 1996 he is Director, vice Chairman and
Treasurer of Atlantic Health Systems Inc. and Atlantic
Hospital. From 1988-1994 he was Director of Faber-Castell
Corporation (writing instruments),from 1988 to 1993 he was
President of the Board of Trustees of St. Marks School and
from 1991 to 1996 he was Chairman of the Board of Trustees
of Morristown Memorial Hospital (and Memorial Health
Foundation). His address is St. Bernard's Road, Gladstone,
New Jersey 07934.

DONALD J. ROBINSON, [63], is currently Senior Counsel of
the law firm of Orrick, Herrington & Sutcliffe, from July
1987 to December 1994 he was Senior Partner of that firm and
from January to December 1994 he was a Member of the
Executive Committee. He was a Trustee of the Museum of the
City of New York from 1977 to 1995. His address is 666
Fifth Avenue, 19th Floor, New York, New York 10103.

Officers

RONALD M. WHITEHILL - President, [59], is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services, with which he has been associated since 1993.

<PAGE>

Previously, he was Senior Vice President and Managing
Director of Reserve Fund since prior to 1993.

KATHLEEN A. CORBET - Senior Vice President, [38], has
been a Senior Vice President of ACMC since July 1993.
Previously, she held various responsibilities as head of
Equitable Capital Management Corporation's Fixed Income
Management Department, Private Placement Secondary Trading
and Fund Management since prior to 1993.

DREW A. BIEGEL - Senior Vice President, [46], is a Vice
President of ACMC, with which he has been associated since
prior to 1993.

RAYMOND J. PAPERA - Senior Vice President, [41], is a
Vice President of ACMC with which he has been associated
since prior to 1993.

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

JOHN F. CHIODI, JR. - Vice President, [31], is a Vice
President of ACMC with which he has been associated since
prior to 1993.

MARIA R. CONA - Vice President, [42], is an Assistant
Vice President of ACMC with which she has been associated
since prior to 1993.

FRANCIS M. DUNN - Vice President, [27], is an
Administrative Officer of ACMC with which she has been
associated since prior to 1993. Previously, she was a
mutual fund accountant for Dreyfus.

JOSEPH R. LASPINA - Vice President, [37], is an
Assistant Vice President of ACMC with which he has been
associated since prior to 1993.</R.

EDMUND P. BERGAN, Jr. - Secretary, [47], is a Senior
Vice President and the General Counsel of Alliance Fund
Distributors, Inc. ("AFD") and Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to
1993.

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

<PAGE>

VINCENT S. NOTO - Controller, [32], is a Money Market
Fund Manager, Mutual Funds of Alliance Fund Services, Inc.,
with which he has been associated since prior to 1993.

The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended April 30, 1998,
the aggregate compensation paid to each of the Directors
during calendar year 1997 by all of the registered
investment companies to which the Adviser provides
investment advisory services (collectively, the "Alliance
Fund Complex"), and the total number of registered
investment companies (and separate investment portfolios
within those companies) in the Alliance Fund Complex with
respect to which each of the Directors serves as a director
or trustee, are set forth below. Neither the Fund nor any
registered investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement
benefits to any of its directors or trustees. Each of the
Directors is a director or trustee of one or more other
registered investment companies in the Alliance Fund
Complex.

Total Number
Total Number of Investment
of Registered Portfolios
Investment within the
Companies in Alliance
the Alliance Fund Complex,
Fund Complex, Including
Total Including the the Fund,
Compensation Fund, as to which as to which
Aggregate from the the Director the Director
Compensation Alliance is a Director is a Director
Name of Director From the Fund Fund Complex or Trustee or Trustee

John D. Carifa $[ ] $-0- 54 118
Ruth Block $[ ] $164,000 40 80
David H. Dievler $[ ] $188,500 47 83
John H. Dobkin $[ ] $126,500 44 80
William H. Foulk, Jr. $[ ] $176,250 48 113
Dr. James M. Hester $[ ] $156,500 40 76
Clifford L. Michel $[ ] $194,500 41 92
Donald J. Robinson $[ ] $235,500 41 94

<PAGE>

As of [ ], 1998, the Directors and officers of the
Fund as a group owned less than 1% of the outstanding shares
of each Portfolio.

The Adviser

Alliance Capital Management L.P., a New York Stock
Exchange listed company with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been
retained under an investment advisory agreement (the
"Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of
the Fund under the supervision and control of the Fund's
Directors.

The Adviser is a leading international investment
manager supervising client accounts with assets as of
December 31, 1997 of more than $218 billion (of which more
than $85 billion represented the assets of investment
companies). The Adviser's clients are primarily major
corporate employee benefit funds, public employee retirement
systems, investment companies, foundations and endowment
Funds and included as of December 31, 1997, 31 of the
FORTUNE 100 companies. As of that date, the Adviser and its
subsidiaries employ approximately 1,500 employees who
operate out of domestic offices and the offices of
subsidiaries in Bahrain, Bangalore, Chennai, Istanbul,
London, Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto
and affiliate offices in Vienna, Warsaw, Hong Kong, Sao
Paulo and Moscow. The 58 registered investment companies
comprising 122 separate investment portfolios managed by the
Adviser currently have more than three million shareholder
accounts.

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general
partnership interest in, the Adviser, is an indirect wholly-
owned subsidiary of the Equitable Life Assurance Society of
the United States ("Equitable"), one of the largest life
insurance companies in the United States and a wholly-owned
subsidiary of the Equitable Companies Incorporated ("ECI").
ECI is a holding company controlled by AXA-UAP a French
insurance holding company which at September 30, 1997,
beneficially owned approximately 59% of the outstanding
voting shares of ECI. As of June 30, 1997, ACMC, Inc. and
Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable,
together with Equitable, owned in the aggregate

<PAGE>

approximately 57% of the issued and outstanding units
representing assignments of beneficial ownership of limited
partnership interests in the Adviser.

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

Based on information provided by AXA-UAP, as of
September 30, 1997, more than 25% of the voting power of
AXA-UAP was controlled directly and indirectly by FINAXA, a
French holding company. As of September 30, 1997 more than
25% of the voting power of FINAXA was controlled directly
and indirectly by four French mutual insurance companies
(the "Mutuelles AXA"), one of which, AXA Assurances I.A.R.D.
Mutuelle, itself controlled directly and indirectly more
than 25% of the voting power of FINAXA. Acting as a group,
the Mutuelles AXA control AXA-UAP and FINAXA.

Under the Advisory Agreement, the Adviser provides each
Portfolio of the Fund and pays all compensation of Directors
of the Fund who are affiliated persons of the Adviser. The
Adviser or its affiliates also furnish the Fund without
charge with management supervision and assistance and office
facilities. Under the Advisory Agreement, each Portfolio
pays the Adviser at an annual rate of .20% of the average
daily value of its net assets. The fee is accrued daily and
paid monthly.

The Adviser has undertaken, until, at its request, the
Fund notifies investors to the contrary that if, in any
fiscal year, the aggregate expenses with respect to a class
of shares of a Portfolio, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, but
including the management fee and any applicable distribution
services fee, exceed .20%, .30% or .45% of a Portfolio's
average net assets for the fiscal year attributable to the
Portfolio's Class A shares, Class B shares or Class C
shares, respectively, the Portfolio may deduct from the
payment to be made to the Adviser, or the Adviser will

<PAGE>

otherwise bear, such excess expenses. For the fiscal year
ended April 30, 1998, the Adviser reimbursed $[ ],
all of which represented advisory fees, $[ ], all of
which represented advisory fees and $[ ], all of
which represented advisory fees for the Prime, Government
and Tax-Free Portfolios, respectively. For the fiscal year
ended April 30, 1997, the Adviser reimbursed $661,792, all
of which represented advisory fees, $289,896, all of which
represented advisory fees and $257,876, all of which
represented advisory fees for the Prime, Government and Tax-
Free Portfolios, respectively. For the fiscal year ended
April 30, 1996 the Adviser reimbursed $374,443, all of which
represented advisory fees; $241,498, all of which
represented advisory fees and $253,985, of which $183,789
represented advisory fees for the Prime, Government and Tax-
Free Portfolios, respectively. No information is presented
regarding the Class B and Class C shares as those classes
will initially be offered on July 1, 1998. The Adviser may
make payments from time to time from its own resources,
which may include the management fees paid by the Portfolios
of the Fund, to compensate broker-dealers, depository
institutions and other financial intermediaries that engage
in or support the distribution of shares of the Fund, and to
pay for the preparation, printing and distribution of
prospectuses and other literature or other promotional
activities.

The Advisory Agreement will remain in effect until
December 31, 1998, and thereafter for successive twelve
month periods computed from each January 1, provided that
such continuance is specifically approved at least annually
by a vote of a majority of each Portfolio's outstanding
voting securities or by the Fund's Board of Directors,
including in either case approval by a majority of the
Directors who are not parties to the Advisory Agreement or
interested persons as defined in the Act. The Advisory
Agreement may be terminated with respect to any Portfolio
without penalty on 60 days' written notice at the option of
either party or by vote of a majority of the outstanding
voting securities of such Portfolio; it will automatically
terminate in the event of assignment. The Adviser is not
liable for any action or inaction with regard to its
obligations under the Advisory Agreement as long as it does
not exhibit willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations.

<PAGE>

____________________________________________________________

EXPENSES OF THE FUND
____________________________________________________________

Distribution Agreement

The Fund has entered into a Distribution Agreement (the
"Agreement") with Alliance Fund Distributors, Inc., the
Fund's principal underwriter (the "Principal Underwriter"),
to permit the Fund to pay distribution services fees to
defray expenses associated with distribution of its Class B
and Class C shares in accordance with a plan of distribution
which is included in the Agreement and has been duly adopted
and approved in accordance with Rule 12b-1 adopted by the
Commission under the Act (the "Rule 12b-1 Plan").

Under the Agreement, the Treasurer of the Fund will
report the amounts expended under the Rule 12b-1 Plan and
the purposes for which such expenditures were made to the
Directors of the Fund for their review on a quarterly basis.
Also, the Agreement provides that the selection and
nomination of Directors who are not interested persons of
the Fund (as defined in the Act) are committed to the
discretion of such disinterested Directors then in office.
The Agreement was initially approved by the Directors of the
Fund at a meeting held on [ ], 199[ ].

In approving the Agreement, the Directors of the Fund
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders.
Information with respect to distribution services fees and
other revenues and expenses of the Principal Underwriter
will be presented to the Directors each year for their
consideration in connection with their deliberations as to
the continuance of the Agreement. In their review of the
Agreement, the Directors will be asked to take into
consideration separately with respect to each class the
distribution expenses incurred with respect to such class.
The distribution services fee of a particular class will not
be used to subsidize the provision of distribution services
with respect to any other class.

Distribution services fees will be accrued daily and
paid monthly and are charged as expenses of the Fund as
accrued. The distribution services fees attributable to the
Class B shares and Class C shares are designed to permit an
investor to purchase such shares through broker-dealers,

<PAGE>

depository institutions or other financial intermediaries
and at the same time to permit the Principal Underwriter to
compensate such broker-dealers, depository institutions or
other financial intermediaries in connection with the sale
of such shares. The distribution services fee for a
Portfolio is an amount equal to, on an annualized basis,
.10% of the aggregate average daily net assets attributable
to the Class B shares of the Portfolio and .25% of the
aggregate average daily net assets attributable to the
Class C shares of the Portfolio.

The Agreement became effective on [ ], 199[ ] with
respect to the Class A shares, and was amended to become
effective with respect to the Class B shares and Class C
shares on [ ], 1998. The Agreement will continue in
effect until December 31, 1998 and thereafter with respect
to a class of shares of a Portfolio, provided, however, that
such continuance with respect to that class is specifically
approved annually by the Directors of the Fund or by vote of
the holders of a majority of the outstanding voting
securities (as defined in the Act) of that class, and in
either case, by a majority of the Directors of the Fund who
are not parties to this agreement or interested persons, as
defined in the Act, of any such party (other than as
trustees of the Fund) and who have no direct or indirect
financial interest in the operation of the Rule 12b-1 Plan
or any agreement related thereto. In the event that the
Agreement is terminated or not continued with respect to the
Class B shares or Class C shares, (i) no distribution
services fees (other than current amounts accrued but not
yet paid) would be owed by the Fund to the Principal
Underwriter with respect to that class, and (ii) the Fund
would not be obligated to pay the Principal Underwriter for
any amounts expended under the Agreement not previously
recovered by the Principal Underwriter from distribution
services fees in respect of shares of such class or through
deferred sales charges.

All material amendments to the Agreement will become
effective only upon approval as provided in the preceding
paragraph; and the Agreement may not be amended in order to
increase materially the costs that of the Fund may bear
pursuant to the Agreement without the approval of a majority
of the holders of the outstanding voting shares of the Fund
or the class or classes of the Fund affected. The Agreement
may be terminated (a) by the Fund without penalty at any
time by a majority vote of the holders of the Fund's
outstanding voting securities, voting separately by class,

<PAGE>

or by a majority vote of the disinterested Directors or
(b) by the Principal Underwriter. To terminate the
Agreement, any party must give the other parties 60 days'
written notice; to terminate the Rule 12b-1 Plan only, the
Fund is not required to give prior notice to the Principal
Underwriter. The Agreement will terminate automatically in
the event of its assignment.

Transfer Agency Agreement

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of Alliance, receives a transfer agency fee per
account holder of each of the Class A shares and Class B
shares, Class C shares of the Fund, plus reimbursement for
out-of-pocket expenses.

____________________________________________________________

PURCHASE AND REDEMPTION OF SHARES
____________________________________________________________

The Fund may refuse any order for the purchase of
shares. The Fund reserves the right to suspend the sale of
a Portfolio's shares to the public in response to conditions
in the securities markets or for other reasons.

Shareholders maintaining accounts in a Portfolio of the
Fund through brokerage firms, depository institutions or
other financial intermediaries should be aware that such
institutions necessarily set deadlines for receipt of
transaction orders from their clients that are earlier than
the transaction times of the Fund itself so that the
institutions may properly process such orders prior to their
transmittal to State Street Bank. Should an investor place
a transaction order with such an institution after its
deadline, the institution may not effect the order with the
Fund until the next business day. Accordingly, an investor
should familiarize himself or herself with the deadlines set
by his or her institution.

Except with respect to telephone orders, investors whose
payment in Federal Funds or bank wire monies are received by
State Street Bank by 4:00 p.m. (Eastern time) will become
shareholders on, and will receive the dividend declared,
that day, with respect to the Prime, Government and Treasury
Portfolios. An investor's purchase order with respect to
the Tax-Free Portfolio must be received by State Street Bank
by 12:00 Noon (Eastern time). A telephone order for the

<PAGE>

purchase of shares will become effective, and the shares
purchased will receive the dividend on shares declared on
that day, if such order is placed by 4:00 p.m. (Eastern
time) and Federal Funds or bank wire monies are received by
State Street bank prior to 4:00 p.m. (Eastern time) of such
day, with respect to the Prime, Government and Treasury
Portfolios. With respect to the Tax-Free Portfolio, a
telephone order for the purchase of shares will become
effective, and the shares purchased will receive the
dividend on shares declared on that day, if such order is
placed by 12:00 Noon (Eastern time) and Federal Funds or
bank wire monies are received by State Street bank prior to
12:00 Noon (Eastern time) of such day. Federal Funds are a
bank's deposits in a Federal Reserve Bank. These Funds can
be transferred by Federal Reserve wire from the account of
one member bank to that of another member bank on the same
day and are considered to be immediately available Funds;
similar immediate availability is accorded monies received
at State Street Bank by bank wire. Money transmitted by a
check drawn on a member of the Federal Reserve System is
converted to Federal Funds in one business day following
receipt. Checks drawn on banks which are not members of the
Federal Reserve System may take longer. All payments
(including checks from individual investors) must be in
United States dollars.

All shares purchased are confirmed to each shareholder
and are credited to his or her account at net asset value.
To avoid unnecessary expense to the Fund and to facilitate
the immediate redemption of shares, stock certificates, for
which no charge is made, are not issued except upon the
written request of the shareholder. Certificates are not
issued for fractional shares. Shares for which certificates
have been issued are not eligible for any of the optional
methods of withdrawal. The Fund reserves the right to
reject any purchase order.

The Fund reserves the right to close out an account that
is below $500,000 after at least 60 days' written notice to
the shareholder unless the balance in such account is
increased to at least that amount during such period. For
purposes of this calculation, the sum of a shareholder's
balance in all of the Portfolios will be considered as one
account.

A "business day," during which purchases and redemptions
of Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund

<PAGE>

purposes as any weekday exclusive of national holidays on
which the New York Stock Exchange is closed and Good Friday;
if one of these holidays falls on a Saturday or Sunday,
purchases and redemptions will likewise not be processed on
the preceding Friday or the following Monday, respectively.
On any such day that is an official bank holiday in
Massachusetts, neither purchases nor wire redemptions can
become effective because Federal Funds cannot be received or
sent by State Street Bank. On such days, therefore, the
Fund can only accept redemption orders for which
shareholders desire remittance by check. The right of
redemption may be suspended or the date of a redemption
payment postponed for any period during which the New York
Stock Exchange is closed (other than customary weekend and
holiday closings), when trading on the New York Stock
Exchange is restricted, or an emergency (as determined by
the Securities and Exchange Commission) exists, or the
Securities and Exchange Commission has ordered such a
suspension for the protection of shareholders. The value of
a shareholder's investment at the time of redemption may be
more or less than his cost, depending on the market value of
the securities held by the Fund at such time and the income
earned.

____________________________________________________________

DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
____________________________________________________________

All net income of each Portfolio, except the Tax-Free
Portfolio, is determined at 12:00 Noon and 4:00 p.m.
(Eastern time) and is paid immediately thereafter pro rata
to shareholders of record of that Portfolio via automatic
investment in additional full and fractional shares in each
shareholder's account at the rate of one share for each
dollar distributed. All net income of the Tax-Free
Portfolio is determined at 12:00 Noon (Eastern time) and is
paid immediately thereafter pro rata to shareholders of
record of the Tax-Free Portfolio via automatic investment in
additional full and fractional shares in each shareholder's
account at the rate of one share for each dollar
distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

A Portfolio's net income consists of all accrued
interest income on assets less expenses allocable to that
Portfolio (including accrued expenses and fees payable to

<PAGE>

the Adviser) applicable to that dividend period. Realized
gains and losses of each Portfolio are reflected in its net
asset value and are not included in net income. Net asset
value per share of each Portfolio is expected to remain
constant at $1.00 since all net income of each Portfolio is
declared as a dividend each time net income is determined
and net realized gains and losses, if any, are expected to
be relatively small.

The valuation of each Portfolio's portfolio securities
is based upon their amortized cost which does not take into
account unrealized securities gains or losses as measured by
market valuations. The amortized cost method involves
valuing an instrument at its cost and thereafter applying a
constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest
rates on the market value of the instrument. During periods
of declining interest rates, the daily yield on shares of a
Portfolio may be higher than that of a fund with identical
investments utilizing a method of valuation based upon
market prices for its portfolio instruments; the converse
would apply in a period of rising interest rates.

Each Portfolio of the Fund utilizes the amortized cost
method of valuation of portfolio securities in accordance
with the provisions of Rule 2a-7 under the Act. Pursuant to
such rule, each Portfolio maintains a dollar-weighted
average portfolio maturity of 90 days or less and invests
only in securities of high quality. Each Portfolio also
purchases instruments having remaining maturities of no more
than one year, which maturities may extend to 397 days. The
Portfolios determine the maturity of a security which has a
variable or floating rate of interest pursuant to Rule 2a-7.
The Fund maintains procedures designed to stabilize, to the
extent reasonably possible, the price per share of each
Portfolio as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of a
Portfolio's portfolio holdings by the Directors at such
intervals as they deem appropriate to determine whether and
to what extent the net asset value of each Portfolio
calculated by using available market quotations or market
equivalents deviates from net asset value based on amortized
cost. If such deviation as to any Portfolio exceeds 1/2 of
1%, the Directors will promptly consider what action, if
any, should be initiated. In the event the Directors
determine that such a deviation may result in material
dilution or other unfair results to new investors or
existing shareholders, they will consider corrective action

<PAGE>

which might include (1) selling instruments held by the
affected Portfolio prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity;
(2) withholding dividends of net income on shares of that
Portfolio; or (3) establishing a net asset value per share
of the Portfolio by using available market quotations or
equivalents.

The net asset value of the shares of each Portfolio,
except the Tax-Free Portfolio, is determined each Fund
business day (and on such other days as the Directors deem
necessary) at 12:00 Noon and 4:00 p.m. (Eastern time). The
net asset value of the shares of the Tax-Free Portfolio is
determined each Fund business day (and on such other days as
the Directors deem necessary) at 12:00 Noon (Eastern time).
The net asset value per share of a Portfolio is calculated
by taking the sum of the value of the Portfolio's
investments and any cash or other assets, subtracting
liabilities, and dividing by the total number of shares of
that Portfolio outstanding. All expenses, including the
fees payable to the Adviser, are accrued daily.

____________________________________________________________

TAXES
____________________________________________________________

Federal Income Tax Considerations

The Prime, Government, Tax-Free and Treasury Portfolios
intend to qualify for each taxable year as "regulated
investment companies" under the Internal Revenue Code of
1986, as amended (the "Code") and, as such, will not be
liable for Federal income and excise taxes on the investment
company taxable income and net capital gains distributed to
their shareholders. Since each Portfolio of the Fund
distributes all of its investment company taxable income and
net capital gains, each Portfolio should thereby avoid all
Federal income and excise taxes.

Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable
to shareholders as ordinary income. Since each Portfolio's
investment income is derived from interest rather than
dividends, no portion of such distributions is eligible for
the dividends-received deduction available to corporations.
Long-term capital gains, if any, distributed by a Portfolio
to a shareholder are taxable to the shareholder as long-term

<PAGE>

capital gain, irrespective of the length of time he may have
held his shares. Any loss realized on shares held for six
months or less will be treated as a long-term loss for
Federal income tax purposes to the extent of any long-term
capital gain distributions received on such shares.
Distributions of short and long-term capital gains, if any,
are normally made once each year shortly before the close of
the Fund's fiscal year, although such distributions may be
made more frequently if necessary in order to maintain the
Portfolio's net asset value at $1.00 per share.

With respect to the Tax-Free Portfolio, for
shareholder's Federal income tax purposes, distributions to
shareholders out of tax-exempt interest income earned by
such Portfolio generally is not subject to Federal income
tax. Any loss realized on shares of the Tax-Free Portfolio
that are held for six months or less will not be realized
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. Shareholders of
the Tax-Free Portfolio may be subject to state and local
taxes on distributions. Each investor should consult his
own tax adviser to determine the status of distributions in
his particular state or locality. See, however, above
"Alternative Minimum Tax."

Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Tax-Free Portfolio is not
deductible for Federal income tax purposes. Under rules of
the Internal Revenue Service for determining when borrowed
Funds are used for purchasing or carrying particular assets,
Tax-Free Portfolio shares may be considered to have been
purchased or carried with borrowed Funds even though those
Funds are not directly linked to the shares. Further, with
respect to the Tax-Free Portfolio, persons who are
"substantial users" (or related persons) of facilities
financed by private activity bonds (within the meaning of
Section 147(a) of the Internal Revenue Code) should consult
their tax advisers before purchasing shares of the Tax-Free
Portfolio.

Substantially all of the dividends paid by the Tax-Free
Portfolio are anticipated to be exempt from Federal income
taxes. Shortly after the close of each calendar year, a
notice is sent to each shareholder advising him of the total
dividends paid into his or her account for the year and the
portion of such total that is exempt from Federal income
taxes. This portion is determined by the ratio of the
tax-exempt income to total income for the entire year and,

<PAGE>

thus, is an annual average rather than day-by-day
determination for each shareholder.

____________________________________________________________

GENERAL INFORMATION
____________________________________________________________

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

The Portfolios have no obligation to enter into
transactions in portfolio securities with any dealer,
issuer, underwriter or other entity. In placing orders, it
is the policy of each Portfolio to obtain the best price and
execution for its transactions. Where best price and
execution may be obtained from more than one dealer, the
Adviser may, in its discretion, purchase and sell securities
through dealers who provide research, statistical and other
information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the
Adviser in connection with a Portfolio. The supplemental
information received from a dealer is in addition to the
services required to be performed by the Adviser under the
Advisory Agreement, and the expenses of the Adviser will not
necessarily be reduced as a result of the receipt of such
information.

<PAGE>

Capitalization

All shares of each Portfolio participate equally in
dividends and distributions from that Portfolio, including
any distributions in the event of a liquidation. Each share
of a Portfolio is entitled to one vote for all purposes.
Shares of all classes vote for the election of Directors and
on any other matter that affects all Portfolios in
substantially the same manner as a single class, except as
otherwise required by law. As to matters affecting each
Portfolio differently, such as approval of the Advisory
Agreement, shares of each Portfolio vote as a separate
class. There are no conversion or preemptive rights in
connection with any shares of the Fund. Since voting rights
are noncumulative, holders of more than 50% of the shares
voting for the election of Directors can elect all of the
Directors. Procedures for calling a shareholders' meeting
for the removal of Directors of the Fund, similar to those
set forth in Section 16(c) of the Act and in the Fund's
By-Laws, will be available to shareholders of each
Portfolio. Special meetings of stockholders for any purpose
may be called by 10% of its outstanding shareholders. All
shares of each Portfolio when duly issued will be fully paid
and non-assessable. The rights of the holders of shares of
a class may not be modified except by the vote of a majority
of the outstanding shares of such class.

The Board of Directors is authorized to reclassify and
issue any unissued shares to any number of additional series
without shareholder approval. Accordingly, the Directors in
the future, for reasons such as the desire to establish one
or more additional portfolios with different investment
objectives, policies or restrictions, may create additional
series of shares. Any issuance of shares of another class
would be governed by the Act and Maryland law.

As of the close of business on [ ], 1998, there
were [set forth capitalization].

No. of % of
Name and Address Shares Class

Legal Matters. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, New York, New York, counsel
for the Fund and the Adviser. Seward & Kissel has relied upon
the opinion of Venable, Baetjer and Howard LLP, Baltimore,
Maryland 21201, for matters relating to Maryland law.

<PAGE>

Accountants. McGladrey & Pullen LLP, New York, New York, are
the independent auditors for the Fund.

Yield Quotations and Performance Information. Advertisements
containing yield quotations for one or more Portfolios for the
Fund may from time to time be sent to investors or placed in
newspapers, magazines or other media on behalf of the Fund.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933.

From time to time each Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical
earnings and are not intended to indicate future performance. To
calculate the "yield," the amount of dividends paid on a share
during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the
investment. To calculate "effective yield," which will be higher
than the "yield" because of compounding, the dividends paid are
assumed to be reinvested. Dividends for the Prime Portfolio for
the seven days ended [ ], 1998, after expense
reimbursement, amounted to an annualized yield of [ ]%,
equivalent to an effective yield of [ ]%. Absent such
reimbursement, the annualized yield for such period would have
been [ ]%, equivalent to an effective yield of [ ]%.
Dividends for the Government Portfolio for the seven days ended
[ ], 1998, after expense reimbursement, amounted to an
annualized yield of [ ]%, equivalent to an effective yield of
[ ]%. Absent such reimbursement, the annualized yield for such
period would have been [ ]%, equivalent to an effective yield
of [ ]%. Dividends for the Tax-Free Portfolio for the seven
days ended [ ], 1998 amounted to an annualized yield of
[ ]%, equivalent to an effective yield of [ ]%. Absent such
reimbursement, the annualized yield for such period would have
been [ ]%, equivalent to an effective yield of [ ]%.

Yield quotations for a Portfolio are thus determined by
(i) computing the net change over a seven-day period, exclusive
of the capital changes, in the value of a hypothetical
pre-existing account having a balance of one share of such
Portfolio at the beginning of such period, (ii) dividing the net

<PAGE>

change in account value by the value of the account at the
beginning of the base period to obtain the base period return,
and (iii) multiplying the base period return by (365/7) with the
resulting yield figure carried to the nearest hundredth of one
percent. A Portfolio's effective annual yield represents a
compounding of the annualized yield according to the formula:
effective yield + [(base period return + 1) 365/7] - 1.

<PAGE>

FINANCIAL STATEMENTS TO BE ADDED
BY SUBSEQUENT POST-EFFECTIVE AMENDMENT

<PAGE>

____________________________________________________________

APPENDIX A
COMMERCIAL PAPER AND BOND RATINGS
____________________________________________________________

Municipal and Corporate Bonds

The two higher ratings of Moody's Investors Service, Inc.
("Moody"s) for municipal and corporate bonds are Aaa an Aa.
Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds 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. Moody's states that Aa bonds are
rated lower than the best bonds because margins of protection or
other elements make long-term risks appear somewhat larger than
Aaa securities. The generic rating Aa may be modified by the
addition of the numerals 1, 2 or 3. The modifier 1 indicates
that the security ranks in the higher end of the Aa rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
such rating category.

The two highest ratings of Standard & Poor's for municipal
and corporate bonds AAA and AA. Bonds rated AAA have the highest
rating assigned by Standard & Poor's to debt obligation.
Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
a small degree. The AA rating may be modified by the addition of
a plus (+) or Minus (-) sign to show relative standing within
rating category.

Short-Term Municipal Securities

Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of Funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.

Standard & Poor's highest rating for short-term municipal
loans is SP-1. Standard & Poor's stated that short-term
municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those

A-1

<PAGE>

issues rated SP-1 which are determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
Issues rate SP-2 have satisfactory capacity to pay principal and
interest.

Other Municipal Securities and Commercial Paper

"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+"
and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2,
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow an asset protection well assured, current liquidity provides
ample coverage of near-term liabilities and unused alternative
financing arrangements are generally available. While protective
elements may change over the intermediate or longer term, such
changes are most unlikely to impair the fundamentally strong
position of short-term obligations. Commercial paper issuers
rates "A" by Standard & Poor's have the following
characteristics: liquidity ratios are better than industry
average, long-term debt rating is A or better, the issuer has
access to at least two additional channels of borrowing, and
basic earnings and cash flow are in an upward trend. Typically,
the issuer is a strong company in a well-established industry and
has superior management.

A-2

<PAGE>

____________________________________________________________

APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
____________________________________________________________

Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:

1. Project Notes, which carry a U.S. Government guarantee,
are issued by public bodies (called "local issuing
agencies") created under the laws of a state, territory,
or U.S. possession. They have maturities that range up
to one year from the date of issuance.. Project Notes
are backed by an agreement between the local issuing
agency and the Federal Department of Housing and Urban
Development . These Notes provide financing for a wide
range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income
housing programs and renewal programs).

2. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenues,
such as income, sales use and business taxes, and are
payable from these specific future taxes.

3. Revenue Anticipation Notes are issued in expectation of
receipt of other types of revenues, such as Federal
revenues available under the Federal Revenue Sharing
Programs.

4. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money
for the repayment of the Notes.

5. Construction Loan Notes are sold to provide construction
financing. After successful completion and Acceptance,
many projects receive permanent financing through the
Federal Housing Administration under the Federal
National Mortgage Association or the Government National
Mortgage Association.

6. Tax-Exempt Commercial Paper is a short-term obligation
with a state maturity of 365 days or less. It is issued
by agencies of state and local governments to finance

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<PAGE>

seasonal working capital needs or as short-term
financing in anticipation of longer term financing.

Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:

1. General Obligation Bonds are issued by such entities as
states, countries, cities, towns, and regional
districts. The proceeds of these obligations are used
to fund a wide range of public projects, including
construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security
behind General Obligation Bonds is the issuer's pledge
of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can
be levied for the payment of debt service may be limited
or unlimited as to the rate or amount of special
assessments.

2. Revenue Bonds generally are secured by the net revenues
derived from a particular facility, group of facilities,
or, in some cases, the proceeds of a special excise of
other specific revenue source. Revenue Bonds are issued
to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways,
bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of
these Bonds provide additional security in the form of a
debt service reserve fund to be used to make principal
and interest payments. Housing authorities have a wide
range of security, including partially or fully insured
mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further
security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service
reserve fund.

3. Industrial Development Bonds are considered municipal
bonds if the interest paid thereon is exempt from
Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various
privately operated facilities for business and
manufacturing, housing, sports, and pollution control.
These Bonds are also used to finance public facilities
such as airports, mass transit systems, ports, and
parking. The payment of the principal and interest on

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<PAGE>

such Bonds is dependent solely on the ability of the
facility's user to meet its financial obligations and
the pledge, if any, of real and personal property as
security for such payment.

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<PAGE>

PART C
OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

(a) Financial Statements

Included in the Prospectus:
Financial Highlights

Included in the Statement of Additional Information
dated September 2, 1997 for the Trust Portfolio of
the Registrant, which is incorporated herein by
reference:

(1) Portfolio of Investments for fiscal year ended
April 30, 1997.
(2) Statement of Assets and Liabilities for fiscal
year ended April 30, 1997.
(3) Statement of Operations for fiscal year ended
April 30, 1997.
(4) Statement of Changes in Net Assets for fiscal
years ended April 30, 1997 and April 30, 1996.
(5) Notes to Financial Statements April 30, 1997.
(6) Report of Independent Auditors.

(b) Exhibits

(1)(a) Articles of Incorporation - Incorporated
by reference to Exhibit 1(a) to Post-
Effective Amendment No. 13 to
Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on August 28, 1997.

Certificate of Correction to Articles of
Incorporation - Incorporated by reference
to Exhibit 1(a) to Post-Effective
Amendment No. 13 to Registrant's
Registration Statement on Form N-1A,
filed with the Securities and Exchange
Commission on August 28, 1997.

(b) Articles Supplementary - Incorporated by
reference to Exhibit 1(b) to Post-
Effective Amendment No. 13 to
Registrant's Registration Statement on

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Form N-1A, filed with the Securities and
Exchange Commission on August 28, 1997.

(2) By-Laws - Amended and Restated -
Incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 13 to
Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on August 28, 1997.

(3) Not applicable.

(4) Specimen of Stock Certificate -
Incorporated by reference to Exhibit 4 to
Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on
Form N-1A, filed on June 18, 1990.

(5) Advisory Agreement between the Registrant
and Alliance Capital Management L.P. -
Incorporated by reference to Exhibit 5 to
Post-Effective Amendment No. 13 to
Registrant's Registration Statement on
Form N-1A, filed with the Securities and
Exchange Commission on August 28, 1997.

(6) Form of Amended and Restated Distribution
Agreement between the Registrant and
Alliance Fund Distributors, Inc.- filed
herewith.

Distribution Agreement between the
Registrant and Alliance Fund
Distributors, Inc. - Incorporated by
reference to Exhibit No. 6 to Post-
Effective Amendment No. 13 of the
Registrant's Form N-1A, filed August 28,
1997.

(7) Not applicable.

(8) Custodian Contract between the Registrant
and State Street Bank - Incorporated by
reference to Exhibit 8 to Post-Effective
Amendment No. 13 to Registrant's
Registration Statement on Form N-1A,
filed with the Securities and Exchange
Commission on August 28, 1997.

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<PAGE>

(9) Transfer Agency Agreement between the
Registrant and Alliance Fund Services,
Inc. - Incorporated by reference to
Exhibit 9 to Post-Effective Amendment No.
13 to Registrant's Registration Statement
on Form N-1A, filed with the Securities
and Exchange Commission on August 28,
1997.

(10)(a) Opinion of Messrs. Seward & Kissel -
Incorporated by reference to Exhibit
10(a) to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on
Form N-1A, filed on June 18, 1990.

(b) Opinion of Messrs. Venable, Baetjer and
Howard - Incorporated by reference to
Exhibit 10(b) to Pre-Effective Amendment
No. 2 to Registrant's Registration
Statement on Form N-1A, filed on June 18,
1990.

(11) Not applicable.

(12) Not applicable.

(13) Not applicable.

(14) Not applicable.

(15) Not applicable.

(16) Not applicable.

(18) Form of Rule 18f-3 Plan - filed herewith.

Other Exhibits:

Powers of Attorney of Messrs. Carifa, Dievler,
Dobkin, Foulk, Hester, Michel, Robinson and Ms.
Block - filed herewith.

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<PAGE>

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

Registrant does not control any person.
Information regarding the persons under common
control with the Registrant is contained in Exhibit
22 to the Registration Statement on Form S-1 under
the Securities Act of 1933 of The Equitable Holding
Companies Incorporated (Registration No. 33-48115).

ITEM 26. Number of Holders of Securities.

Number of Record Holders
Title of Class (as of [ ], 1998)

Common Stock -
Prime Portfolio [ ]
Common Stock -
Government Portfolio [ ]
Common Stock - Tax-Free
Portfolio [ ]
Common Stock - Trust Portfolio [ ]

ITEM 27. Indemnification

It is the Registrant's policy to indemnify its
directors and officers, employees and other agents
to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of
Maryland and as set forth in Articles EIGHTH and
NINTH of Registrant's Articles of Incorporation,
filed as Exhibit 1, and Section 7 of the
Distribution Services Agreement filed as
Exhibit 6(a), all as set forth below. The
liability of the Registrant's directors and
officers is dealt with in Articles EIGHTH and NINTH
of Registrant's Articles of Incorporation, as set
forth below. The Adviser's liability for any loss
suffered by the Registrant or its shareholders is
set forth in Section 4 of the Advisory Agreement
filed as Exhibit 5 to this Registration Statement,
as set forth below.

Section 2-418 of the Maryland General Corporation
Law reads as follows:

"2-418 INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS.--(a) In this

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<PAGE>

section the following words have the meaning
indicated.

(1) "Director" means any person who is or was
a director of a corporation and any person who,
while a director of a corporation, is or was
serving at the request of the corporation as a
director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation,
partnership, joint venture, trust, other
enterprise, or employee benefit plan.

(2) "Corporation" includes any domestic or
foreign predecessor entity of a corporation in a
merger, consolidation, or other transaction in
which the predecessor's existence ceased upon
consummation of the transaction.

(3) "Expenses" include attorney's fees.

(4) "Official capacity" means the following:

(i) When used with respect to a
director, the office of director in the
corporation; and

(ii) When used with respect to a person
other than a director as contemplated in subsection
(j), the elective or appointive office in the
corporation held by the officer, or the employment
or agency relationship undertaken by the employee
or agent in behalf of the corporation.

(iii) "Official capacity" does not
include service for any other foreign or domestic
corporation or any partnership, a person who was,
is, or is threatened to be made a named defendant
or respondent in a proceeding.

(6) "Proceeding" means any threatened,
pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or
investigative.

(b)(1) A corporation may indemnify any
director made a party to any proceeding by reason
of service in that capacity unless it is
established that:

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<PAGE>

(i) The act or omission of the director was
material to the matter giving rise to the
proceeding; and

1. Was committed in bad faith; or

2. Was the result of active and
deliberate dishonesty; or

(ii) The director actually received an
improper personal benefit in money, property, or
services; or

(iii) In the case of any criminal proceeding,
the director had reasonable cause to believe that
the act or omission was unlawful.

(2) (i) Indemnification may be against
judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the
director in connection with the proceeding.

(ii) However, if the proceeding was one
by or in the right of the corporation,
indemnification may not be made in respect of any
proceeding in which the director shall have been
adjudged to be liable to the corporation.

(3) (i) The termination of any proceeding by
judgment, order or settlement does not create a
presumption that the director did not meet the
requisite standard of conduct set forth in this
subsection.

(ii) The termination of any proceeding
by conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption
that the director did not meet that standard of
conduct.

(c) A director may not be indemnified under
subsection (b) of this section in respect of any
proceeding charging improper personal benefit to
the director, whether or not involving action in
the director's official capacity, in which the

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<PAGE>

director was adjudged to be liable on the basis
that personal benefit was improperly received.

(d) Unless limited by the charter:

(1) A director who has been successful, on
the merits or otherwise, in the defense of any
proceeding referred to in subsection (b) of this
section shall be indemnified against reasonable
expenses incurred by the director in connection
with the proceeding.

(2) A court of appropriate jurisdiction upon
application of a director and such notice as the
court shall require, may order indemnification in
the following circumstances:

(i) If it determines a director is entitled
to reimbursement under paragraph (1) of this
subsection, the court shall order indemnification,
in which case the director shall be entitled to
recover the expenses of securing such
reimbursement; or

(ii) If it determines that the director is
fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether
or not the director has met the standards of
conduct set forth in subsection (b) of this section
or has been adjudged liable under the circumstances
described in subsection (c) of this section, the
court may order such indemnification as the court
shall deem proper. However, indemnification with
respect to any proceeding by or in the right of the
corporation or in which liability shall have been
adjudged in the circumstances described in
subsection (c) shall be limited to expenses.

(3) A court of appropriate jurisdiction may
be the same court in which the proceeding involving
the director's liability took place.

(e)(1) Indemnification under subsection (b)
of this section may not be made by the corporation
unless authorized for a specific proceeding after a
determination has been made that indemnification of
the director is permissible in the circumstances
because the director has met the standard of

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<PAGE>

conduct set forth in subsection (b) of this
section.

(2) Such determination shall be made:

(i) By the board of directors by a majority
vote of a quorum consisting of directors not, at
the time, parties to the proceeding, or, if such a
quorum cannot be obtained, then by a majority vote
of a committee of the board consisting solely of
two or more directors not, at the time, parties to
such proceeding and who were duly designated to act
in the matter by a majority vote of the full board
in which the designated directors who are parties
may participate;

(ii) By special legal counsel selected by the
board or a committee of the board by vote as set
forth in subparagraph (I) of this paragraph, or, if
the requisite quorum of the full board cannot be
obtained therefor and the committee cannot be
established, by a majority vote of the full board
in which director who are parties may participate;
or

(iii) By the stockholders.

(3) Authorization of indemnification and
determination as to reasonableness of expenses
shall be made in the same manner as the
determination that indemnification is permissible.
However, if the determination that indemnification
is permissible is made by special legal counsel,
authorization of indemnification and determination
as to reasonableness of expenses shall be made in
the manner specified in subparagraph (ii) of
paragraph (2) of this subsection for selection of
such counsel.

(4) Shares held by directors who are parties
to the proceeding may not be voted on the subject
matter under this subsection.

(f)(1) Reasonable expenses incurred by a
director who is a party to a proceeding may be paid
or reimbursed by the corporation in advance of the
final disposition of the proceeding, upon receipt
by the corporation of:

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<PAGE>

(i) A written affirmation by the director of
the director's good faith belief that the standard
of conduct necessary for indemnification by the
corporation as authorized in this section has been
met; and

(ii) A written undertaking by or on behalf of
the director to repay the amount if it shall
ultimately be determined that the standard of
conduct has not been met.

(2) The undertaking required by subparagraph
(ii) of paragraph (1) of this subsection shall be
an unlimited general obligation of the director but
need not be secured and may be accepted without
reference to financial ability to make the
repayment.

(3) Payments under this subsection shall be
made as provided by the charter, bylaws, or
contract or as specified in subsection (e) of this
section.

(g) The indemnification and advancement of
expenses provided or authorized by this section may
not be deemed exclusive of any other rights, by
indemnification or otherwise, to which a director
may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an
agreement or otherwise, both as to action in an
official capacity and as to action in another
capacity while holding such office.

(h) This section does not limit the
corporation's power to pay or reimburse expenses
incurred by a director in connection with an
appearance as a witness in a proceeding at a time
when the director has not been made a named
defendant or respondent in the proceeding.

(i) For purposes of this section:

(1) The corporation shall be deemed to have
requested a director to serve an employee benefit
plan where the performance of the director's duties
to the corporation also imposes duties on, or

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<PAGE>

otherwise involves services by, the director to the
plan or participants or beneficiaries of the plan:

(2) Excise taxes assessed on a director with
respect to an employee benefit plan pursuant to
applicable law shall be deemed fines; and

(3) Action taken or omitted by the director
with respect to an employee benefit plan in the
performance of the director's duties for a purpose
reasonably believed by the director to be in the
interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which
is not opposed to the best interests of the
corporation.

(j) Unless limited by the charter:

(1) An officer of the corporation shall be
indemnified as and to the extent provided in
subsection (d) of this section for a director and
shall be entitled, to the same extent as a
director, to seek indemnification pursuant to the
provisions of subsection (d);

(2) A corporation may indemnify and advance
expenses to an officer, employee, or agent of the
corporation to the same extent that it may
indemnify directors under this section; and

(3) A corporation, in addition, may indemnify
and advance expenses to an officer, employee, or
agent who is not a director to such further extent,
consistent with law, as may be provided by its
charter, bylaws, general or specific action of its
board of directors or contract.

(k)(1) A corporation may purchase and maintain
insurance on behalf of any person who is or was a
director, officer, employee, or agent of the
corporation, or who, while a director, officer,
employee, or agent of the corporation, is or was
serving at the request, of the corporation as a
director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation,
partnership, joint venture, trust, other
enterprise, or employee benefit plan against any
liability asserted against and incurred by such

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<PAGE>

person in any such capacity or arising out of such
person's position, whether or not the corporation
would have the power to indemnify against liability
under the provisions of this section.

(2) A corporation may provide similar
protection, including a trust fund, letter of
credit, or surety bond, not inconsistent with this
section.

(3) The insurance or similar protection may
be provided by a subsidiary or an affiliate of the
corporation.

(l) Any indemnification of, or advance of
expenses to, a director in accordance with this
section, if arising out of a proceeding by or in
the right of the corporation, shall be reported in
writing to the stockholders with the notice of the
next stockholders' meeting or prior to the
meeting."

Articles EIGHTH and NINTH of the
Registrant's Articles of Incorporation provide as
follows:

EIGHTH: (a) To the full extent that limitations on the
liability of directors and officers are permitted
by the Maryland General Corporation Law, no
director or officer of the Corporation shall have
any liability to the Corporation or its
stockholders for damages. This limitation on
liability applies to events occurring at the time a
person serves as a director or officer of the
Corporation whether or not such person is a
director or officer at the time of any proceeding
in which liability is asserted.

(b) The Corporation shall indemnify and advance
expenses to its currently acting and its former
directors to the full extent that indemnification
of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify
and advance expenses to its officers to the same
extent as its directors and to such further extent
as is consistent with law. The Board of Directors
may by By-Law, resolution or agreement make further
provisions for indemnification of directors,

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<PAGE>

officers, employees and agents to the full extent
permitted by the Maryland General Corporation Law.

(c) No provision of this Article shall be effective
to protect or purport to protect any director or
officer of the Corporation against any liability to
the Corporation or its stockholders to which he
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of his office.

(d) References to the Maryland General Corporation
Law in this Article are to that law as from time to
time amended. No amendment to the Charter of the
Corporation shall affect any right of any person
under this Article based on any event, omission or
proceeding prior to the amendment."

NINTH: A director or officer of the Corporation, in his
capacity as such director or officer, shall not be
personally liable to the Corporation or its
stockholders for monetary damages except for
liability (i) to extent that it is proved that the
person actually received an improper benefit or
profit in money, property or services, for the
amount of the benefit or profit in money, property
or services actually received, or (ii) to the
extent that a judgment or other final adjudication
adverse to the person is entered in a proceeding
based on a finding in the proceeding that the
person's actions, or failure to act, was the result
of active and deliberate dishonesty and was
material to the cause of action adjudicated in the
proceeding; provided that nothing herein shall
protect any director or officer of the Corporation
against any liability to the Corporation or to its
security holders to which he would otherwise be
subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
If the Maryland General Corporation Law is amended
to authorize corporate action further eliminating
or limiting the personal liability of directors or
officers, then the liability of the director or
officer of the Corporation shall be eliminated to
the fullest extent permitted by the Maryland
General Corporation Law, as so amended. Any repeal

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<PAGE>

or modification of this Article NINTH by the
stockholders of the Corporation shall not adversely
affect any right or protection of a director or
officer of the Corporation existing at the time of
such repeal or modification based on events or
omissions prior thereto.

The Advisory Agreement between the Registrant and
Alliance Capital Management L.P. provides that Alliance
Capital Management L.P. will not be liable under such
agreement for any mistake of judgment or in any event
whatsoever except for lack of good faith and that nothing
therein shall be deemed to protect Alliance Capital
Management L.P. against any liability to the Registrant or
its security holders to which it would otherwise be subject
by reason of wilful misfeasance, bad faith or gross
negligence in the performance of its duties thereunder, or
by reason of reckless disregard of its duties and
obligations thereunder.

The Distribution Agreement between the Registrant
and Alliance Fund Distributors, Inc. provides that the
Registrant will indemnify, defend and hold Alliance Fund
Distributors, Inc., and any person who controls it within
the meaning of Section 15 of the Investment Company Act of
1940, free and harmless from and against any and all claims,
demands, liabilities and expenses which Alliance Fund
Distributors, Inc. or any controlling person may incur
arising out of or based upon any alleged untrue statement of
a material fact contained in Registrant's Registration
Statement, Prospectus or Statement of Additional Information
or arising out of, or based upon any alleged omission to
state a material fact required to be stated in any one of
the foregoing or necessary to make the statements in any one
of the foregoing not misleading.

The foregoing summaries are qualified by the entire
text of Registrant's Articles of Incorporation, the Advisory
Agreement between Registrant and Alliance Capital Management
L.P. and the Distribution Agreement between Registrant and
Alliance Fund Distributors, Inc. which are filed herewith as
Exhibits 1, 5 and 6(a), respectively, in response to Item 24
and each of which are incorporated by reference herein.

Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Securities Act") may
be permitted to directors, officer and controlling persons
of the Registrant pursuant to the foregoing provisions, or

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<PAGE>

otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The Registrant participates in a joint directors
and officers liability insurance policy issued by the ICI
Mutual Insurance Company. Coverage under this policy has
been extended to directors, trustees and officers of the
investment companies managed by Alliance Capital Management
L.P. Under this policy, outside trustees and directors
would be covered up to the limits specified for any claim
against them for acts committed in their capacities as
trustee or director. A pro rata share of the premium for
this coverage is charged to each investment company and to
the Adviser.

ITEM 28. Business and Other Connections of Investment
Adviser.

The descriptions of Alliance Capital
Management L.P. under the caption "The Adviser" in
the Prospectus and "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B,
respectively, of this Registration Statement are
incorporated by reference herein.

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

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<PAGE>

Item 29. Principal Underwriters

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

ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance International Fund
Alliance International Premier Growth Fund,
Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund , Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.

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Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios

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

Positions and Offices Positions and Offices
Name With Underwriter With Registrant

Michael J. Laughlin Chairman

Robert L. Errico President

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

Karen J. Bullot Senior Vice President

James S. Comforti Senior Vice President

James L. Cronin Senior Vice President

Daniel J. Dart Senior Vice President

Richard A. Davies Senior Vice President,
Managing Director

Byron M. Davis Senior Vice President

Anne S. Drennan Senior Vice President
and Treasurer

Mark J. Dunbar Senior Vice President

Bradley F. Hanson Senior Vice President

Geoffrey L. Hyde Senior Vice President

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

Richard E. Khaleel Senior Vice President

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Stephen R. Laut Senior Vice President

Daniel D. McGinley Senior Vice President

Ryne A. Nishimi Senior Vice President

Antonios G. Poleonadkis Senior Vice President

Robert E. Powers Senior Vice President

Richard K. Sacculo Senior Vice President

Gregory K. Shannahan Senior Vice President

Joseph F. Sumanski Senior Vice President

Peter J. Szabo Senior Vice President

Nicholas K. Willett Senior Vice President

Richard A. Winge Senior Vice President

Jamie A. Atkinson Vice President

Benji A. Baer Vice President

Kenneth F. Barkoff Vice President

Casimir F. Bolanowski Vice President

Michael E. Brannan Vice President

Timothy W. Call Vice President

Kevin T. Cannon Vice President

John R. Carl Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Richard W. Dabney Vice President

John F. Dolan Vice President

John C. Endahl Vice President

C-17

<PAGE>

Sohaila S. Farsheed Vice President

William C. Fisher Vice President

Gerard J. Friscia Vice President
& Controller

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

Mark D. Gersten Vice President Treasurer and
Chief Financial
Officer

Joseph W. Gibson Vice President

Charles M. Greenberg Vice President

Alan Halfenger Vice President

William B. Hanigan Vice President

Scott F. Heyer Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Scott Hutton Vice President

Thomas K. Intoccia Vice President

Larry P. Johns Vice President

Richard D. Keppler Vice President

Gwenn M. Kessler Vice President

Donna M. Lamback Vice President

James M. Liptrot Vice President

James P. Luisi Vice President

Christopher J. MacDonald Vice President

Michael F. Mahoney Vice President

C-18

<PAGE>

Shawn P. McClain Vice President

Thomas F. Monnerat Vice President

Joanna D. Murray Vice President

Nicole Nolan-Koester Vice President

John C. O'Connell Vice President

John J. O'Connor Vice President

James J. Posch Vice President

Domenick Pugliese Vice President Assistant
and Assistant Secretary
General Counsel

Bruce W. Reitz Vice President

Karen C. Satterberg Vice President

Robert C. Schultz Vice President

Raymond S. Sclafani Vice President

Richard J. Sidell Vice President

Teris A. Sinclair Vice President

Andrew D. Strauss Vice President

Michael J. Tobin Vice President

Joseph T. Tocyloski Vice President

Martha D. Volcker Vice President

Patrick E. Walsh Vice President

William C. White Vice President

Emilie D. Wrapp Vice President Assistant
and Special Counsel Secretary

C-19

<PAGE>

Michael W. Alexander Assistant Vice
President

Richard J. Appaluccio Assistant Vice
President

Charles M. Barrett Assistant Vice
President

Robert F. Brendli Assistant Vice
President

Maria L. Carreras Assistant Vice
President

John P. Chase Assistant Vice
President

Russell R. Corby Assistant Vice
President

John W. Cronin Assistant Vice
President

Terri J. Daly Assistant Vice
President

Joseph A. DiMeglio Assistant Vice
President

Faith C. Dunn Assistant Vice
President

John E. English Assistant Vice
President

Duff C. Ferguson Assistant Vice
President

John Grambone Assistant Vice
President

Brian S. Hanigan Assistant Vice
President

C-20

<PAGE>

James J. Hill Assistant Vice
President

Edward W. Kelly Assistant Vice
President

Michael Laino Assistant Vice
President

Nicholas J. Lapi Assistant Vice
President

Kristine J. Luisi Assistant Vice
President

Patrick Look Assistant Vice President
& Assistant Treasurer

Richard F. Meier Assistant Vice
President

Richard J. Olszewski Assistant Vice
President

Catherine N. Peterson Assistant Vice
President

Carol H. Rappa Assistant Vice
President

Clara Sierra Assistant Vice
President

Gayle S. Stamer Assistant Vice
President

Vincent T. Strangio Assistant Vice
President

Wesley S. Williams Assistant Vice
President

Christopher J. Zingaro Assistant Vice
President

Mark R. Manley Assistant Secretary

C-21

<PAGE>

ITEM 30. Location of Accounts and Records.

The accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder are maintained as follows:
journals, ledgers, securities records and other original
records are maintained principally at the offices of
Alliance Fund Services, Inc. 500 Plaza Drive, Secaucus, New
Jersey 07094 and at the offices of State Street Bank and
Trust Company, the Registrant's Custodian, 225 Franklin
Street, Boston, Massachusetts 02110. All other records so
required to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.

ITEM 3l. Management Services.

Not applicable.

ITEM 32. Undertakings.

Subject to the terms and conditions of Section
15(d) of the Securities Exchange Act of 1934, the
undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and
periodic information, documents and reports as may be
prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority
conferred in that section.

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

C-22

<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Act
of 1933, as amended, and the Investment Company Act of 1940,
as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New
York and State of New York on the 14th day of April, 1998.

ACM INSTITUTIONAL RESERVES, INC.

By /s/ John D. Carifa
___________________________
John D. Carifa
Chairman

Pursuant to the requirements of the Securities Act
of l933, as amended, this Amendment to the Registration
Statement has been signed below by the following persons in
the capacities and on the date indicated:

Signature Title Date

1) Principal
Executive Officer

/s/ John D. Carifa Chairman April 14, 1998
_____________________
John D. Carifa

2) Principal Financial and
Accounting Officer

/s/ Mark D. Gersten Treasurer April 14, 1998
_____________________ and Chief
Mark D. Gersten Financial
Officer

All of the Directors:
____________________

Ruth Block
John D. Carifa
David H. Dievler

C-23

<PAGE>

John H. Dobkin
William H. Foulk, Jr.
James M. Hester
Clifford L. Michel
Donald J. Robinson

By: /s/ Edmund P. Bergan, Jr. April 14, 1998
_______________________
(Attorney-in-Fact)
Edmund P. Bergan, Jr.

C-24

<PAGE>

Index to Exhibits

(6) Form of Amended and Restated Distribution Agreement

(18) Form of Rule 18f-3 Plan

Other Exhibits: Powers of Attorney of Messrs. Carifa,
Dievler, Dobkin, Foulk, Hester, Michel, Robinson and Ms.
Block.

C-25
00250072.AO5

<PAGE>

DISTRIBUTION AGREEMENT

ALLIANCE INSTITUTIONAL RESERVES, INC.
1345 Avenue of the Americas
New York, New York 10105

July 22, 1992 (as amended as
of [ ], 1998

Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

This is to confirm that, on the terms and conditions set
forth herein, we have agreed that you shall be, for the
period of this Distribution Agreement ("the Agreement"), a
distributor, as our agent, for the unsold portion of such
number of shares of common stock of our Fund (the "Shares")
as may from time to time be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act").

1. We hereby agree to offer through you as our agent,
and to solicit, through you as our agent, offers to
subscribe to, the unsold balance of the Shares as shall then
be effectively registered under the 1933 Act, and you are
appointed our agent for such purpose. All subscriptions for
Shares obtained by you shall be directed to us for
acceptance and shall not be binding on us until accepted by
us. You shall have no authority to make binding
subscriptions on our behalf. We reserve the right to sell
Shares through other distributors or directly to investors
through subscriptions received by us at our principal office
in New York, New York. The right given to you under this
agreement shall not apply to Shares issued in connection
with (a) the merger or consolidation of any other investment
company with us, (b) our acquisition by purchase or
otherwise of all or substantially all of the assets or stock
of any other investment company or (c) the reinvestment in
Shares by our shareholders of dividends or other
distributions or any other offering of shares to our
shareholders.

<PAGE>

2. You will use your best efforts to obtain
subscriptions to Shares upon the terms and conditions
contained herein and in the then current Prospectuses and
Statements of Additional Information, including the offering
price. You will send to us promptly all subscriptions
placed with you. We shall advise you of the approximate net
asset value per share or net asset value per share (as used
in the Prospectuses and Statements of Additional
Information) on any date requested by you and at such other
times as it shall have been determined by us. We shall
furnish you from time to time, for use in connection with
the offering of Shares, such other information with respect
to us and the Shares as you may reasonably request. We
shall supply you with such copies of our current
Prospectuses and Statements of Additional Information in
effect from time to time as you may request. You are not
authorized to give any information or to make any
representations, other than those contained in the
Registration Statement, Prospectuses and Statements of
Additional Information, as then in effect, filed under the
1933 Act covering Shares or which we may authorize in
writing. You may use employees and agents at your cost and
expense to assist you in carrying out your obligations
hereunder but no such employee or agent shall be deemed to
be our agent or have any rights under this Agreement.

3. We reserve the right to suspend the offering of
Shares at any time, in the absolute discretion of our Board
of Directors, and upon notice of such suspension you shall
cease to offer Shares hereunder.

4. Both of us will cooperate with each other in taking
such action as may be necessary to qualify Shares for sale
under the securities laws of such states as we may
designate. Pursuant to our Advisory Agreement dated July
22, 1992 (as amended as of [ ], 1998) with
Alliance Capital Management L.P. (the "Adviser"), we will
pay all fees and expenses of registering Shares under the
1933 Act and of qualification of Shares and our
qualification under applicable state securities laws. You
shall pay all expenses relating to your broker-dealer
qualification.

5. We represent to you that our Registration
Statement, Prospectuses and Statements of Additional
Information (as in effect from time to time) under the 1933
Act have been or will be, as the case may be, carefully
prepared in conformity with the requirements of the 1933 Act
and the rules and regulations of the Securities and Exchange
Commission thereunder. We represent and warrant to you that
our Registration Statement, Prospectuses and Statements of

<PAGE>

Additional Information contain or will contain all
statements required to be stated therein in accordance with
the 1933 Act and the rules and regulations of said
Commission, and that all statements of fact contained or to
be contained therein are or will be true and correct at the
time indicated or the effective date as the case may be;
that none of our Registration Statement, our Prospectuses or
our Statements of Additional Information, when it shall
become effective or be authorized for use, will include an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading to a purchaser of
Shares. We will from time to time file such amendment or
amendments to our Registration Statement, Prospectuses and
Statements of Additional Information as, in the light of
future developments, shall, in the opinion of our counsel,
be necessary in order to have our Registration Statement,
Prospectuses and Statements of Additional Information at all
times contain all material facts required to be stated
therein or necessary to make any statements therein not
misleading to a purchaser of Shares, but, if we shall not
file such amendment or amendments within fifteen days after
receipt by us of a written request from you to do so, you
may, at your option, terminate this Agreement immediately.
We shall not file any amendment to our Registration
Statement, Prospectuses or Statements of Additional
Information without giving you reasonable notice thereof in
advance; provided, however, that nothing contained in this
agreement shall in any way limit our right to file at any
time such amendments to our Registration Statement,
Prospectuses or Statements of Additional Information, of
whatever character, as we may deem advisable, such right
being in all respects absolute and unconditional. We
represent and warrant to you that any amendment to our
Registration Statement, Prospectuses or Statements of
Additional Information hereafter filed by us will, when it
becomes effective, contain all statements required to be
stated therein in accordance with the 1933 Act and the rules
and regulations of said Commission, that all statements of
fact contained therein will, when the same shall become
effective, be true and correct and that no such amendment,
when it becomes effective, will include an untrue statement
of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares.

6. (a) It is understood that paragraphs 6, 11 and 15
together constitute a plan of distribution (the "Plan")
within the meaning of Rule 12b-1 ("Rule 12b-1") under the
Investment Company Act of 1940, as amended (the "1940 Act").

<PAGE>

(b) Except as may be required by the Conduct Rules
of the National Association of Securities Dealers, Inc. (the
"NASD") and any interpretation thereof ("NASD rules and
interpretations"), we will pay you each month a distribution
services fee with respect to each Portfolio equal, on an
annualized basis, to .10% of the aggregate average daily net
assets of the Portfolio attributable to the Class B shares
and .25% of the aggregate average daily net assets of the
Portfolio attributable to the Class C shares. You may spend
such amounts as you deem appropriate on any activities or
expenses primarily intended to result in the sale of shares
of the Portfolio, including, but not limited to,
compensation of your employees, compensation and expenses,
including overhead and telephone and other communication
expenses, of you and other broker-dealers, depository
institutions and other financial intermediaries that engage
in or support the distribution of shares of the Portfolio,
the preparation, printing and distribution of Prospectuses,
Statements of Additional Information, sales literature and
advertising materials, and other promotional activities.
You may, if you wish, retain all or any portion of the
distribution services fees received pursuant hereto for your
own purposes. All or a portion of the distribution services
fee will constitute a service fee that will used by you for
personal service and/or the maintenance of shareholder
accounts within the meaning of NASD rules and
interpretations.

(d) Payments to broker-dealers, depository
institutions and other financial intermediaries for the
purposes set forth in paragraph 6(b) are subject to the
terms and conditions of the written agreements between you
and each broker-dealer, depository institution or other
financial intermediary. Such agreements will be in a form
satisfactory to our directors.

(e) Our Treasurer will prepare and furnish to our
directors, and our directors will review, at least
quarterly, a written report complying with the requirements
of Rule 12b-1 setting forth all amounts expended hereunder
and the purposes for which such expenditures were made.

(f) We are not obligated to pay any distribution
expense in excess of the distribution services fee described
in paragraph 6(b). The amount of distribution services fees
payable by us with respect to each of the Class B shares and
the Class C shares is not related directly to the amount of

<PAGE>

expenses incurred by you with respect to each such class in
connection with providing distribution services, which
expenses may be greater or less than such fees and we will
not be obligated to reimburse you for such expenses. The
distribution services fee payable by us with respect to each
such class of shares may be paid in respect of services
rendered and expenses borne in the past in connection with
each such class of shares as to which, on account of the
limitations described in paragraph 6(b), no distribution
services fee was paid. The distribution services fees
payable by us with respect to each such class of shares are
to be paid to you until either the Plan or this Agreement is
terminated or is not continued with respect to that class as
provided in paragraph 11. In the event this Agreement is
terminated by either party or is not continued with respect
to a class of shares as provided in paragraph 11 below:
(i) no distribution services fees (other than current
amounts accrued but not yet paid) will be owed by us to you
with respect to that class, and (ii) we will not be
obligated to pay you for any amounts expended hereunder not
previously reimbursed by us from distribution services fees
in respect of shares of such class. The distribution
services fee of a particular class of shares may not be used
to subsidize the sale of shares of any other class.

7. (a) You shall have the right to enter into selected
dealer agreements with securities dealers of your choice
("selected dealers") and selected agent agreements with
depository institutions and other financial intermediaries
of your choice ("selected agents") for the sale of shares;
provided, that we shall approve the forms of agreements with
selected dealers and selected agents and the selected dealer
and selected agent compensation set forth therein. Shares
sold to selected dealers or through selected agents shall be
for resale by such selected dealers and for sale through
such selected agents only at the public offering price set
forth in the Prospectuses and/or Statements of Additional
Information.

(b) Within the United States, you shall offer and
sell shares only to such selected dealers as are members in
good standing of the NASD.

8. We agree to indemnify, defend and hold you, and any
person who controls you within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or
liabilities and any reasonable counsel fees incurred in
connection therewith) which you or any such controlling
person may incur, under the 1933 Act, or under common law or

<PAGE>

otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in our Registration
Statement, Prospectuses or Statements of Additional
Information in effect from time to time under the 1933 Act
or arising out of or based upon any alleged omission to
state a material fact required to be stated in any one
thereof or necessary to make the statements in any one
thereof not misleading; provided, however, that in no event
shall anything herein contained be so construed as to
protect you against any liability to us or our security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence, in the
performance of your duties, or by reason of your reckless
disregard of your obligations and duties under this
agreement. Our agreement to indemnify you and any such
controlling person as aforesaid is expressly conditioned
upon our being notified of any action brought against you or
any such controlling person, such notification to be given
by letter or by telegram addressed to us at our principal
office in New York, New York, and sent to us by the person
against whom such action is brought within ten days after
the summons or other first legal process shall have been
served. The failure to so notify us of any such action
shall not relieve us from any liability which we may have to
the person against whom such action is brought by reason of
any such alleged untrue statement or omission otherwise than
on account of our indemnity agreement contained in this
paragraph 8. We will be entitled to assume the defense of
any suit brought to enforce any such claim, and to retain
counsel of good standing chosen by us and approved by you.
In the event we do elect to assume the defense of any such
suit and retain counsel of good standing approved by you,
the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of
them; but in case we do not elect to assume the defense of
any such suit, or in case you do not approve of counsel
chosen by us, we will reimburse you or the controlling
person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by
you or them. Our indemnification agreement contained in
this paragraph 8 and our representations and warranties in
this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf
of you or any controlling person and shall survive the sale
of any of the Shares made pursuant to subscriptions obtained
by you. This agreement of indemnity will inure exclusively
to your benefit, to the benefit of your successors and
assigns, and to the benefit of any controlling persons and
their successors and assigns. We agree promptly to notify
you of the commencement of any litigation or processing

<PAGE>

against us in connection with the issue and sale of any
Shares.

9. You agree to indemnify, defend and hold us, our
several officers and directors, and any person who controls
us within the meaning of Section 15 of the 1933 Act, free
and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any reasonable counsel fees incurred in
connection therewith) which we, our officers or directors,
or any such controlling person may incur under the 1933 Act
or under common law or otherwise, but only to the extent
that such liability, or expense incurred by us, our officers
or directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our
Registration Statement, Prospectuses or Statements of
Additional Information in effect from time to time under the
1933 Act, or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such
information required to be stated in the Registration
Statement, Prospectuses or Statements of Additional
Information or necessary to make such information not
misleading. Your agreement to indemnify us, our officers
and directors, and any such controlling person as aforesaid
is expressly conditioned upon your being notified of any
action brought against us, our officers or directors or any
such controlling person, such notification to be given by
letter or telegram addressed to you at your principal office
in New York, New York, and sent to you by the person against
whom such action is brought, within ten days after the
summons or other first legal process shall have been
served. You shall have a right to control the defense of
such action, with counsel of your own choosing, satisfactory
to us, if such action is based solely upon such alleged
misstatement or omission on your part, and in any other
event you and we, our officers or directors or such
controlling person shall each have the right to participate
in the defense or preparation of the defense of any such
action. The failure to so notify you of any such action
shall not relieve you from any liability which you may have
to us, to our officers or directors, or to such controlling
person by reason of any such untrue statement or omission on
your part otherwise than on account of your indemnity
agreement contained in this paragraph 9.

10. We agree to advise you immediately:

<PAGE>

(a) of any request by the Securities and Exchange
Commission for amendments to our Registration Statement,
Prospectuses or Statements of Additional Information or for
additional information,

(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending the
effectiveness of our Registration Statement, Prospectuses or
Statements of Additional Information or the initiation of
any proceedings for that purpose,

(c) of the happening of any material event which
makes untrue any statement made in our Registration
Statement, Prospectuses or Statements of Additional
Information or which requires the making of a change in any
one thereof in order to make the statements therein not
materially misleading, and

(d) of all action of the Securities and Exchange
Commission with respect to any amendments to our
Registration Statement, Prospectuses or Statements of
Additional Information which may from time to time be filed
with the Securities and Exchange Commission under the 1933
Act or the 1940 Act.

11. (a) This Agreement shall become effective on the
date hereof, shall remain in effect until December 31, 1998
and shall continue in effect thereafter with respect to a
class of shares of a Portfolio so long as its continuance
with respect to that class is specifically approved annually
by our directors or by vote of the holders of a majority of
the outstanding voting securities (as defined in the 1940
Act) of that class, and, in either case, by a majority of
our directors who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such
party (other than as our directors) and who have no direct
or indirect financial interest in the operation of the Plan
or any agreement related thereto; provided, however, that if
the continuation of this Agreement is not approved as to a
class or a Portfolio, you may continue to render to such
class or Portfolio the services described herein in the
manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder. Upon effectiveness of
this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter
hereof. This Agreement may be terminated (i) by us with
respect to any class or Portfolio at any time, without the
payment of any penalty, by the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act)
of such class or Portfolio, or by a vote of a majority of
our directors who are not interested persons (as defined in

<PAGE>

the 1940 Act) of any such party (other than as our
directors) and have no direct and indirect financial
interest in the operation of the Plan or any agreement
related thereto, in any such event on sixty days' written
notice to you; provided, however, that no such notice shall
be required if such termination is stated by us to relate
only to paragraphs 6 and 15 (in which event paragraphs 6 and
15 shall be deemed to have been severed herefrom and all
other provisions of this Agreement shall continue in full
force and effect), or (ii) by you with respect to any class
or Portfolio on sixty days' written notice to us.

(b) This Agreement may be amended at any time with
the approval of our directors, provided that (i) any
material amendments of the terms hereof will become
effective only upon approval as provided in the first
sentence of paragraph 11(a), and (ii) any amendment to
increase materially the amount to be expended for
distribution services fees pursuant to paragraph 6(b) will
be effective only upon the additional approval by a vote of
a majority of the outstanding voting securities (as defined
in the 1940 Act) of the class or Portfolio affected.

12. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by either
party hereto, and this Agreement shall terminate
automatically in the event of any such transfer, assignment,
sale, hypothecation or pledge. The terms "transfer",
"assignment", and "sale" as used in this paragraph shall
have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations
promulgated by the Securities and Exchange Commission
thereunder.

13. Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to
limit or restrict your right, or the right of any of your
officers, directors or employees who may also be a director,
officer or employee of ours, to engage in any other business
or to devote time and attention to the management or other
aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any
other corporation, firm, individual or association.

14. Notice is hereby given that this Agreement is
entered into on our behalf by an officer of our Fund in his
capacity as an officer and not individually and that the
obligations of or arising out of this Agreement are not
binding upon any of our directors, officers, shareholders,
employees or agents individually but are binding only upon
the assets and property of our Fund.

<PAGE>

15. While this Agreement is in effect, the selection
and nomination of our directors who are not "interested
persons" (as defined in the 1940 Act) of our Fund will be
committed to the discretion of such disinterested directors.

If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.

Very truly yours,

ALLIANCE INSTITUTIONAL RESERVES,
INC.

Accepted as of [ ], 1998

ALLIANCE FUND DISTRIBUTORS, INC.

ALLIANCE CAPITAL MANAGEMENT L.P.

By Alliance Capital Management Corporation,
general partner

10
00250072.AN6

<PAGE>

ALLIANCE INSTITUTIONAL RESERVES, INC.

Plan pursuant to Rule 18f-3
under the Investment Company Act of 1940

This Plan (the "Plan") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "Act") of Alliance
Institutional Reserves, Inc. (the "Fund") sets forth the general
characteristics of, and the general conditions under which the
Fund may offer, multiple classes of shares of its now existing
and hereafter created portfolios.1 This Plan may be revised or
amended from time to time as provided below.

Class Designations

The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares and
Class C shares. Each of the three classes of shares will
represent interests in the same portfolio of investments of the
Fund and, except as described herein, shall have the same rights
and obligations as each other class. Each class shall be subject
to such investment minimums and other conditions of eligibility
as are set forth in one or more prospectuses or statements of
additional information through which such shares are issued, as
from time to time in effect (collectively, the "Prospectus").

Class Characteristics

Each class of shares is offered at a public offering
price that is equal to net asset value without any initial,
deferred or asset-based sales charge. Class B and Class C shares
may also be subject to a Rule 12b-1 fee, which may include a
service fee.

____________________

1. This Plan is intended to allow the Fund to offer multiple
classes of shares to the full extent and in the manner
permitted by Rule 18f-3 under the Act (the "Rule"), subject
to the requirements and conditions imposed by the Rule.

2. For purposes of this Plan, when the Fund has existing more
than one portfolio pursuant to which multiple classes of
shares are issued, then references in this Plan to the "Fund"
shall be deemed to refer instead to each portfolio.

<PAGE>

Allocations to Each Class

Expense Allocations

Rule 12b-1 fees payable by the Fund to the distributor
or principal underwriter of the Fund's shares (the "Distributor")
shall be allocated on a class-by-class basis. Subject to the
approval of the Fund's Board of Directors, including a majority
of the independent Directors, the following expenses may be
allocated on a class-by-class basis and designated as "Class
Expenses": (a) printing and postage expenses related to preparing
and distributing materials such as shareholder reports,
prospectuses and proxy statements to current shareholders of a
specific class, (b) SEC registration fees incurred with respect
to a specific class, (c) blue sky and foreign registration fees
and expenses incurred with respect to a specific class, (d) the
expenses of administrative personnel and services required to
support shareholders of a specific class (including, but not
limited to, maintaining telephone lines and personnel to answer
shareholder inquiries about their accounts or about the Fund),
(e) litigation and other legal expenses relating to a specific
class of shares, (f) Directors' fees or expenses incurred as a
result of issues relating to a specific class of shares,
(g) accounting and consulting expenses relating to a specific
class of shares, (h) any fees imposed pursuant to a non-Rule 12b-
1 shareholder services plan that relate to a specific class of
shares, (i) transfer agency costs attributable to a specific
class and (j) any additional expenses, not including advisory or
custodial fees or other expenses related to the management of the
Fund's assets, if these expenses are actually incurred in a
different amount with respect to a class, or if services are
provided with respect to a class that are of a different kind or
to a different degree than with respect to one or more other
classes.

All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.

However, notwithstanding the above, and subject to
compliance with the Rule, the Fund may allocate Fund Expenses to
each share without regard to class or on the basis of relative
net assets (settled shares).

Waivers and Reimbursements

The Adviser or Distributor may choose to waive or
reimburse Rule 12b-1 fees or any Class Expenses on a voluntary,
temporary basis. Such waiver or reimbursement may be applicable

<PAGE>

to some or all of the classes and may be in different amounts for
one or more classes.

Income, Gains and Losses

Income, and realized and unrealized capital gains and
losses shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of
the Fund.

However, notwithstanding the above, and subject to
compliance with the Rule, income, and realized and unrealized
capital gains and losses may be allocated to each share without
regard to class or on the basis of relative net assets (settled
shares).

Exchange Features

Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another portfolio of the Fund and shares of certain other
money market funds sponsored by the Adviser. All exchange
features applicable to each class will be described in the
Prospectus.

Dividends

Dividends paid by the Fund with respect to its Class A,
Class B and Class C shares, to the extent any dividends are paid,
will be calculated in the same manner, at the same time and will
be in the same amount, except that any Rule 12b-1 fee payments
relating to a class of shares will be borne exclusively by that
class and, if applicable, any Class Expenses relating to a class
shall be borne exclusively by that class.

Voting Rights

Each share of a Fund entitles the shareholder of record
to one vote. Each class of shares of the Fund will vote
separately as a class with respect to the Rule 12b-1 plan
applicable to that class and on other matters for which class
voting is required under applicable law.

Responsibilities of the Directors

On an ongoing basis, the Directors will monitor the Fund
for the existence of any material conflicts among the interests
of the classes of shares. The Directors shall further monitor on
an ongoing basis the use of waivers or reimbursement by the
Adviser and the Distributor of expenses to guard against cross-
subsidization between classes. The Directors, including a

<PAGE>

majority of the independent Directors, shall take such action as
is reasonably necessary to eliminate any such conflict that may
develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.

Reports to the Directors

The Adviser and Distributor will be responsible for
reporting any potential or existing conflicts among the classes
of shares to the Directors. In addition, the Directors will
receive quarterly and annual statements concerning distributions
and shareholder servicing expenditures complying with paragraph
(b)(3)(ii) of Rule 12b-1. In the statements, only expenditures
properly attributable to the sale or servicing of a particular
class of shares shall be used to justify any distribution or
service fee charged to that class. The statements, including the
allocations upon which they are based, will be subject to the
review of the independent Directors in the exercise of their
fiduciary duties. At least annually, the Directors shall receive
a report from an expert, acceptable to the Directors, (the
"Expert"), with respect to the methodology and procedures for
calculating the net asset value, dividends and distributions for
the classes, and the proper allocation of income and expenses
among the classes. The report of the Expert shall also address
whether the Fund has adequate facilities in place to ensure the
implementation of the methodology and procedures for calculating
the net asset value, dividends and distributions for the classes,
and the proper allocation of income and expenses among the
classes. The Fund and the Adviser will take immediate corrective
measures in the event of any irregularities reported by the
Expert.

Amendments

The Plan may be amended from time to time in accordance
with the provisions and requirements of Rule 18f-3 under the Act.

Adopted by action of the Board of Directors as of the day of
[ ], 1998.

By:
Edmund P. Bergan, Jr.
Secretary

4
00250072.AN7

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital
Reserves, Alliance Developing Markets Fund, Inc. Alliance
Global Dollar Government Fund, Inc., Alliance Global
Environment Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Global Strategic Income Trust, Inc., Alliance
Government Reserves, Alliance Greater China 97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance
New Europe Fund, Inc., Alliance North American Government
Income Trust, Inc., Alliance Premier Growth Fund, Inc.,
Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Short-Term Multi-Market Trust, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance World
Income Trust, Inc., Alliance Worldwide Privatization Fund,
Inc., Fiduciary Management Associates, The Alliance Fund,
Inc., The Alliance Portfolios, and The Hudson River Trust,
and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact, or their substitute or
substitutes, may do or cause to be done by virtue hereof.

/s/ John D. Carifa
___________________________
John D. Carifa

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Growth and Income
Fund, Inc., Alliance High Yield Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance Limited Maturity Government
Fund, Inc., Alliance Mortgage Securities Income Fund, Inc.,
Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund
II, Alliance North American Government Income Trust, Inc.,
Alliance Premier Growth Fund, Inc., Alliance Quasar Fund,
Inc., Alliance Real Estate Investment Fund, Inc.,
Alliance/Regent Sector Opportunity Fund, Inc., Alliance
Short-Term Multi-Market Trust, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates,
The Alliance Fund, Inc. and The Alliance Portfolios, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.

/s/ Ruth Block
___________________________
Ruth Block

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Developing
Markets Fund, Inc. Alliance Global Dollar Government Fund,
Inc., Alliance Global Environment Fund, Inc., Alliance
Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Greater China 97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Mortgage Securities Income Fund, Inc.,
Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund
II, Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate
Investment Fund, Inc., Alliance/Regent Sector Opportunity
Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc.,
Alliance Technology Fund, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates
and The Alliance Fund, Inc. and filing the same, with
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.

/s/ David H. Dievler
___________________________
David H. Dievler

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Developing
Markets Fund, Inc., Alliance Global Dollar Government Fund,
Inc., Alliance Global Environment Fund, Inc., Alliance
Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Growth and Income Fund, Inc.,
Alliance High Yield Fund, Inc., Alliance Income Builder
Fund, Inc., Alliance International Fund, Alliance Limited
Maturity Government Fund, Inc., Alliance Mortgage Securites
Incoem Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance New Europe Fund, Inc.,
Alliance North American Government Income Trust, Inc.,
Alliance Premier Growth Fund, Inc., Alliance Quasar Fund,
Inc., Alliance Real Estate Investment Fund, Inc.,
Alliance/Regent Sector Opportunity Fund, Inc., Alliance
Short-Term Multi-Market Trust, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates,
The Alliance Fund, Inc., and filing the same, with exhibits
thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by
virtue hereof.

/s/ John H. Dobkin
___________________________
John H. Dobkin

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Capital Reserves, Alliance Global
Dollar Government Fund, Inc., Alliance Global Small Cap
Fund, Inc., Alliance Global Strategic Income Trust, Inc.,
Alliance Government Reserves, Alliance Greater China 97
Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance
High Yield Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance Limited Maturity Government Fund, Inc., Alliance
Money Market Fund, Alliance Mortgage Securities Income Fund,
Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund
II, Alliance Municipal Trust, Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate
Investment Fund, Inc., Alliance/Regent Sector Opportunity
Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc.,
Alliance Technology Fund, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates,
The Alliance Fund, Inc., The Alliance Portfolios and the
Hudson River Trust, and filing the same, with exhibits
thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by
virtue hereof.

/s/ William H. Foulk, Jr.
___________________________
William H. Foulk, Jr.

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior powers
granted by the undersigned to the extent inconsistent herewith
and constitutes and appoints John D. Carifa, Edmund P. Bergan,
Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and
each of them, to act severally as attorneys-in-fact and agents,
with power of substitution and resubstitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the respective Registration Statements, and any
amendments thereto, on Form N-1A of ACM Institutional Reserves,
Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc.,
Alliance Bond Fund, Inc., Alliance Global Dollar Government Fund,
Inc., Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Growth and Income Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Income Builder
Fund, Inc., Alliance Limited Maturity Government Fund, Inc.,
Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-
Market Strategy Trust, Inc., Alliance Municipal Income Fund,
Inc., Alliance Municipal Income Fund II, Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Short-Term Multi-Market Trust, Inc., Alliance Utility
Income Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates and The
Alliance Fund, Inc., and filing the same, with exhibits thereto,
and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.

/s/ Dr. James M. Hester
___________________________
Dr. James M. Hester

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior powers
granted by the undersigned to the extent inconsistent herewith
and constitutes and appoints John D. Carifa, Edmund P. Bergan,
Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and
each of them, to act severally as attorneys-in-fact and agents,
with power of substitution and resubstitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the respective Registration Statements, and any
amendments thereto, on Form N-1A of ACM Institutional Reserves,
Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc.,
Alliance Bond Fund, Inc., Alliance Global Dollar Government Fund,
Inc., Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Growth and Income Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Income Builder
Fund, Inc., Alliance Limited Maturity Government Fund, Inc.,
Alliance Money Market Fund, Alliance Mortgage Securities Income
Fund, Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund II,
Alliance North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance
Real Estate Investment Fund, Inc., Alliance/Regent Sector
Opportunity Fund, Inc., Alliance Short-Term Multi-Market Trust,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance World Income Trust, Inc.,
Alliance Worldwide Privatization Fund, Inc., Fiduciary Management
Associates, The Alliance Fund, Inc. and The Hudson River Trust,
and filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.

/s/ Clifford L. Michel
___________________________
Clifford L. Michel

Dated: September 9, 1997

<PAGE>

POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior powers
granted by the undersigned to the extent inconsistent herewith
and constitutes and appoints John D. Carifa, Edmund P. Bergan,
Jr., Domenick Pugliese, Andrew L. Gangolf and Emilie D. Wrapp and
each of them, to act severally as attorneys-in-fact and agents,
with power of substitution and resubstitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the respective Registration Statements, and any
amendments thereto, on Form N-1A of ACM Institutional Reserves,
Inc., AFD Exchange Reserves, Alliance Balanced Shares, Inc.,
Alliance Bond Fund, Inc., Alliance Capital Reserves, Alliance
Global Dollar Government Fund, Inc., Alliance Global Small Cap
Fund, Inc., Alliance Global Strategic Income Trust, Inc.,
Alliance Government Reserves, Alliance Growth and Income Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Income Builder
Fund, Inc., Alliance Limited Maturity Government Fund, Inc.,
Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-
Market Strategy Trust, Inc., Alliance Municipal Income Fund,
Inc., Alliance Municipal Income Fund II, Alliance Municipal
Trust, Alliance North American Government Income Trust, Inc.,
Alliance Premier Growth Fund, Inc., Alliance Quasar Fund, Inc.,
Alliance Real Estate Investment Fund, Inc., Alliance/Regent
Sector Opportunity Fund, Inc., Alliance Short-Term Multi-Market
Trust, Inc., Alliance Utility Income Fund, Inc., Alliance
Variable Products Series Fund, Inc., Alliance World Income Trust,
Inc., Alliance Worldwide Privatization Fund, Inc., Fiduciary
Management Associates, The Alliance Fund, Inc., The Alliance
Portfolios and The Hudson River Trust, and filing the same, with
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute
or substitutes, may do or cause to be done by virtue hereof.

/s/ Donald J. Robinson
___________________________
Donald J. Robinson

Dated: September 9, 1997

00250072.AO8