AFD EXCHANGE RESERVES INC, 485APOS, 1998-11-24

AFD EXCHANGE RESERVES INC
485APOS, 1998-11-24

Previous: MECKLERMEDIA CORP, 15-12G, 1998-11-24

Next: CONTISECURITIES ASSET FUNDING CORP, 8-K, 1998-11-24

<PAGE>

As filed with the Securities and Exchange
Commission on November 24, 1998

File Nos. 33-74230 and 811-08294

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. 8
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940

Amendment No. 9

AFD EXCHANGE RESERVES
(Exact Name of Registrant as Specified in Charter)

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

Registrant's Telephone Number, including Area Code:(800) 221-5672
_________________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)

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

immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
X on February 1, 1999 pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of rule 485

<PAGE>

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
(Caption)
PART A

Item 1. Front and Back Cover Pages..........Cover Pages

Item 2. Risk/Return Summary:
Investments, Risks, and
Performance.........................Risk/Return
Summary

Item 3. Risk/Return Summary:
Fee Table...........................Risk/Return
Summary

Item 4. Investment Objectives,
Principal Investment Strategies,
And Related Risks...................Other
Information
About the
Fund's
Objectives,
Strategies, and
Risks

Item 5. Management's Discussion of
Fund Performance....................Not Applicable

Item 6. Management, Organization,
And Capital Structure...............Management of
the Fund

Item 7. Shareholder Information.............Purchase and
Sale of Shares

Item 8. Distribution Arrangements...........Distribution
Arrangements

Item 9. Financial Highlights
Information.........................Financial
Highlights

PART B Location in Statements
Of Additional Information
(Caption)

Item 10. Cover Page and
Table of Contents...................Cover Page

<PAGE>

Item 11. Fund History........................Management of
the Fund;
General
Information

Item 12. Description of the Fund And
Its Investments and Risks...........Investment
Objectives and
Policies;
Investment
Restrictions

Item 13. Management of the Fund..............Management of
the Fund

Item 14. Control Persons and Principal
Holders of Securities ..............Management of
the Fund

Item 15. Investment Advisory and Other
Services............................Management of
the Fund

Item 16. Brokerage Allocation and
Other Practices.....................General
Information

Item 17. Capital Stock and Other
Securities..........................Daily
Dividends -
Determination
of Net Asset
Value; General
Information

Item 18. Purchase, Redemption and Pricing
of Shares...........................Purchase and
Redemption of
Shares; Daily
Dividends -
Determination
of Net Asset
Value

Item 19. Taxation of the Fund................Taxes

Item 20. Underwriters........................General
Information

<PAGE>

Item 21. Calculation of Performance Data.....General
Information

Item 22. Financial Statements................Financial
Statements

<PAGE>

ALLIANCE CAPITAL [Logo]

AFD EXCHANGE RESERVES

PROSPECTUS

February 1, 1999

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

<PAGE>

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY..................................... 2
Performance and Bar Chart Information............... 3

EXPENSE INFORMATION..................................... 4

OTHER INFORMATION ABOUT THE FUND'S
OBJECTIVES, STRATEGIES, AND RISKS....................... 5
Investment Objective................................ 5
Investment Strategy................................. 5
Risk Considerations................................. 6

MANAGEMENT OF THE FUND.................................. 7

PURCHASE AND SALE OF SHARES............................. 7
How The Fund Values Its Shares...................... 8
How To Buy Shares................................... 8
How to Exchange Shares.............................. 8
How To Sell Shares.................................. 9
How To Sell Shares.................................. 9

DIVIDENDS, DISTRIBUTIONS AND TAXES...................... 10

DISTRIBUTION ARRANGEMENTS............................... 11

GENERAL INFORMATION..................................... 12

FINANCIAL HIGHLIGHTS.................................... 14

<PAGE>

AFD Exchange Reserves' investment adviser is Alliance Capital
Management L.P., a global investment manager providing
diversified services to institutions and individuals through a
broad line of investments including more than 100 mutual funds.
Since 1971, Alliance has earned a reputation as a leader in the
investment world with over $___ billion in assets under
management as of December 31, 1998. Alliance provides investment
management services to employee benefit plans for __ of the
FORTUNE 100 companies.

RISK/RETURN SUMMARY

The following is a summary of certain key information about the
Fund. You will find additional information about the Fund,
including a detailed description of the risks of an investment in
the Fund, after this summary. This prospectus has additional
descriptions of the Fund's investments in the discussion under
"Other Information About the Fund's Strategies and Risks." That
section also includes more information about the Fund, its
investments, and related risks.

OBJECTIVE: The Fund's investment objective is maximum current
income to the extent consistent with safety of principal and
liquidity.

PRINCIPAL INVESTMENT STRATEGY: The Fund is a "money market fund"
that seeks to maintain a stable net asset value of $1.00 per
share. The Fund invests in a portfolio of high-quality, U.S.
dollar-denominated money market securities.

PRINCIPAL RISKS: The principal risks of investing in the Fund
are:

-- INTEREST RATE RISK This is the risk that changes in
interest rates will affect the yield or value of the
Fund's investments in debt securities.

-- CREDIT RISK This is the risk that the issuer or
guarantor of a debt security, or the counterparty to a
derivatives contract, will be unable or unwilling to
make timely interest or principal payments, or to
otherwise honor its obligations. The degree of risk for
a particular security may be reflected in its credit
rating. Credit risk includes the possibility that any
of the Fund's investments will have its credit ratings
downgraded.

<PAGE>

Another important thing for you to note:

An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose
money by investing in the Fund.

<PAGE>

PERFORMANCE AND BAR CHART INFORMATION

The table shows the Fund's average annual returns and the bar
chart shows the Fund's annual returns. The table and the bar
chart provide an indication of the historical risk of an
investment in the Fund by showing:

-- the Fund's average annual returns for one year and the
life of the Fund; and

-- changes in the Fund's performance from year to year over
the life of the Fund.

The Fund's past performance does not necessarily indicate how it
will perform in the future.

PERFORMANCE TABLE

1 YEAR SINCE INCEPTION

Class A
Class B
Class C

You may obtain the most current yield information of the Fund by
calling 1-800-221-9513.

BAR CHART

The annual returns in the bar chart are for the Fund's Class A
shares and do not reflect sales loads. If sales loads were
reflected, returns would be less than those shown.

[Chart]

During the period shown in the bar chart, the highest return for
a quarter was [__]% (quarter ending _____) and the lowest return
for a quarter was [__]% (quarter ending _______).

<PAGE>

EXPENSE INFORMATION

This table describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.

<PAGE>

SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

CLASS A SHARES CLASS B SHARES CLASS C SHARES

Maximum Deferred Sales None 4.0% during 1.0% during the
Charge (Load) (as a the 1st year, 1st year, 0%
percentage of original decreasing thereafter
purchase price or 1.0% annually
redemption proceeds, to 0% after
whichever is lower) the 4th year*

* For Class B Shares purchased with cash. If purchased by
exchange from another Alliance Mutual Fund, the Deferred Sales
Charge is the one charged by that Fund. In addition, Class B
shares purchased with cash automatically convert to Class A
shares after 8 years. If purchased by exchange, the
conversion schedule is the same as the originally purchased
Alliance Mutual Fund shares. Currently, the longest
conversion period is 8 years.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS) AND EXAMPLE

The example is to help you compare the cost of investing in the
Fund with the cost of investing in other funds. It assumes that
you invest $10,000 in the Fund for the periods indicated and then
redeem all of your shares at the end of those periods. It also
assumes that your investment has a 5% return each year and that
the Fund's operating expenses stay the same. Your actual costs
may be higher or lower.

<TABLE>
OPERATING EXPENSES EXAMPLES
CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Management Fees % % % After 1st Yr. $ $ $ $ $
Rule 12b-1 Fees % % % After 3 IRS. $ $ $ $ $
Other Expenses % % % After 5 Yrs. $ $ $ $ $
After 10 Yrs. $ $* $* $ $

Total Fund
Operating Expenses % % %

<FN>
+ Assumes redemption at the end of the period.
++ Assumes no redemption at the end of the period.
* Assumes longest conversion schedule of 8 years.
</TABLE>

<PAGE>

OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS

INVESTMENT OBJECTIVE

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

INVESTMENT STRATEGY

The Fund pursues its objective by maintaining a portfolio of
high-quality, U.S. dollar-denominated money market securities.
The Fund may invest in:

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

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

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

-- adjustable rate obligations;

-- asset-backed securities;

-- restricted securities (i.e., securities subject to legal
or contractual restrictions on resale); and

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

The Fund buys and sells securities based on its objective of
maximizing current income consistent with safety of principal and
liquidity. The Fund's Adviser evaluates investments based on
credit analysis and the interest rate outlook.

<PAGE>

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

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

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

RISK CONSIDERATIONS

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

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

<PAGE>

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

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

The Fund also is subject to management risk because it is an
actively managed portfolio. Alliance will apply its investment
techniques and risk analyses in making investment decisions for
the Fund, but there is no guarantee that its techniques will
produce the intended result.

MANAGEMENT OF THE FUND

The Fund's Adviser is Alliance Capital Management, L.P., 1345
Avenue of the Americas, New York, NY 10105. Alliance is a
leading international investment adviser supervising client
accounts with assets as of December 31, 1998 totaling more than
$___ billion (of which approximately $___ billion represented
assets of investment companies). Alliance's clients are
primarily major corporate employee benefit plans, public employee
retirement systems, investment companies, foundations, and
endowment funds. The __ registered investment companies, with
more than ___ separate portfolios, managed by Alliance currently
have over two million shareholders. As of December 31, 1998,
Alliance was retained as investment manager for over __ of the
Fortune 100 Companies.

Alliance provides investment advisory services and order
placement facilities for the Fund. For these advisory services,
the Fund paid Alliance ___% as a percentage of net assets during
the fiscal year ended September 30, 1998.

The Fund's Statement of Additional Information has more
detailed information about Alliance and other Fund service
providers.

<PAGE>

PURCHASE AND SALE OF SHARES

GENERAL

You may purchase the Fund's shares for cash and subsequently
exchange them for shares of the same class of other Alliance
Mutual Funds. Under the Alliance Dollar Cost Averaging Program,
exchanges may be made automatically each month, thus producing a
dollar cost averaging effect. Exchanges also may be made at
other times of an investor's choosing. The Fund's shares should
be purchased for cash only as a temporary investment pending
exchange into another Alliance Mutual Fund and should not be held
as a long-term investment. You also may purchase the Fund's
shares through exchange if you hold shares of other Alliance
Mutual Funds.

HOW THE FUND VALUES ITS SHARES

The Fund's net asset value or NAV is expected to be constant
at $1.00 per share, although this value is not guaranteed. The
NAV is calculated at 4 p.m. Eastern time each day the New York
Stock Exchange (NYSE) is open for business. To calculate NAV,
the Fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the
number of shares outstanding. The Fund values its securities at
their amortized cost. This method involves valuing an instrument
at its cost and thereafter applying a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the investment.

Your order for purchase, sale, or exchange of shares is
priced at the next NAV calculated after your order is accepted by
the Fund. Your purchase of Fund shares may be subject to an
initial sales charge. Sales of Fund shares may be subject to a
contingent deferred sales charge or CDSC. See the next section
of this Prospectus, Distribution Arrangements, for details.

HOW TO BUY SHARES

You may purchase the Fund's shares through broker-dealers,
banks, or other financial intermediaries. You may purchase
shares directly from the Fund's principal underwriter, Alliance
Fund Distributors, Inc., or AFD, only if you have a financial
intermediary of record.

Minimum investment amounts are:

-- Initial: $250
-- Subsequent: $ 50
-- Automatic Investment Program: $ 25

<PAGE>

If you are an existing Fund shareholder, you may purchase
shares by electronic funds transfer in amounts not exceeding
$500,000 if you have completed the appropriate section of the
Shareholder Application. Call 800-221-5672 to arrange a transfer
from your bank account.

The Fund may refuse an order to purchase shares. In this
regard, the Funds' reserve the right to restrict purchases of
shares (including through exchanges) when they appear to evidence
a pattern of frequent purchases and sales made in response to
short-term considerations.

HOW TO EXCHANGE SHARES

You may exchange your Fund shares for shares of the same
class of other Alliance Mutual Funds. Exchanges of Class A
shares are made at the next-determined NAV less the amount of any
applicable initial sales charge, which is described in the
prospectus for the other Alliance Fund. Exchanges of Class B and
C shares are made at the next-determined NAV, without sales or
service charges. You may request an exchange by mail or
telephone. You must call by 4:00 p.m. Eastern time to receive
that day's NAV. The Fund may change, suspend, or terminate the
exchange service on 60 days' written notice.

Your exchange may be eligible for a reduced sales charge
under certain circumstances. Under the Alliance Mutual Funds'
Right of Accumulation, exchanges of Class A shares made under the
Alliance Dollar Cost Averaging Program or otherwise have an
initial sales change based on your total Alliance Mutual Fund
holdings, including your Fund shares. Consult with your
financial representative or Alliance to find out if you are
eligible for a reduced sales charge.

HOW TO SELL SHARES

You may "redeem" your shares (i.e., sell your shares to the
Fund) on any day the NYSE is open, either directly or through
your financial intermediary. Your sales price will be the next-
determined NAV, less any applicable CDSC, after the Fund receives
your sales request in proper form. Normally, proceeds will be
sent to you within 7 days. If you recently purchased your shares
by check or electronic funds transfer, you cannot redeem any
portion of it until the Fund is reasonably satisfied that the
check or electronic funds transfer has been collected (which may
take up to 15 days).

<PAGE>

-- Selling Shares Through Your Broker

Your broker must receive your sales request by 4:00 p.m.,
Eastern time, and submit it to the Fund by 5:00 p.m., Eastern
time, for you to receive that day's NAV, less any applicable
CDSC. Your broker is responsible for submitting all necessary
documentation to the Fund and may charge you for this service.

-- Selling Shares Directly to the Fund

BY MAIL:

- Send a signed letter of instruction or stock power,
along with certificates, to:

Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07906-1520
800-221-5672

- For your protection, a bank, a member firm of a national
stock exchange, or other eligible guarantor institution,
must guarantee signatures. Stock power forms are
available from your financial intermediary, AFS, and
many commercial banks. Additional documentation is
required for the sale of shares by corporations,
intermediaries, fiduciaries, and surviving joint owners.
If you have any questions about these procedures,
contact AFS.

BY TELEPHONE:

- You may redeem your shares for which no stock
certificates have been issued by telephone request.
Call AFS at 800-221-5672 with instructions on how you
wish to receive your sale proceeds.

- A telephone redemption request must be received by
4:00 p.m. Eastern time for you to receive that day's
NAV, less any applicable CDSC.

- If you have selected electronic funds transfer in your
Shareholder Application, the redemption proceeds may be
sent directly to your bank. Otherwise, the proceeds
will be mailed to you.

- Redemption requests by electronic funds transfer may not
exceed $100,000 per day and redemption requests by check
cannot exceed $50,000 per day.

<PAGE>

- Telephone redemption is not available for shares held in
nominee or "street name" accounts, retirement plan
accounts, or shares held by a shareholder who has
changed his or her address of record within the previous
30 calendar days.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund's net income is paid daily to shareholders and
automatically invested in additional shares in your account.
These additional shares are entitled to dividends on following
days resulting in compounding growth of income. The Fund expects
that its distributions will primarily consist of net income or,
if any, short-term capital gains as opposed to long-term capital
gains. For federal income tax purposes, the Fund's dividend
distributions of net income (or short-term taxable gains) will be
taxable to you as ordinary income. Any capital gains
distributions may be taxable to you as capital gains. The Fund's
distributions also may be subject to certain state and local
taxes.

Each year shortly after December 31, the Fund will send you
tax information stating the amount and type of all its
distributions for the year.

The sale or exchange of Fund shares is a taxable transaction
for Federal income tax purposes.

<PAGE>

DISTRIBUTION ARRANGEMENTS

SHARE CLASSES. The Fund offers three classes of shares.

CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE

Class A shares offer investors the choice of investing
pending an investment by exchange into Class A shares of another
Alliance Mutual Fund. You can purchase shares for cash at NAV
without an initial sales charge. Your investment will be subject
to sales charge upon exchange of your Class A shares for the
Class A shares of other Alliance Mutual Funds with sales charges.

You may also purchase Class A shares without a sales charge
through exchange from another Alliance Mutual Fund.

Purchases of Class A Shares in the amount of $1,000,000 or
more will be subject to a 1% CDSC if you redeem your shares
within 1 year. The 1% CDSC also will apply to any Class A shares
purchased by exchange for Class A shares of another Alliance
Mutual Fund that did not have an initial sales charge because the
purchase was for $1,000,000 or more. The 1-year period for the
CDSC begins with the date of your original purchase not the date
of the exchange for the Fund's Class A shares.

There is no maximum investment limit on cash purchases of
Class A shares.

CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE

Class B shares offer investors the choice of investing
pending an investment by exchange into Class B shares of another
Alliance Mutual Fund. You can purchase Class B Shares for cash
at NAV without an initial sales charge. Your investment will be
subject to a CDSC if you redeem shares within 4 years of
purchase. The CDSC varies depending of the number of years you
hold the shares. The CDSC amounts are:

YEARS SINCE PURCHASE CDSC
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None

The Fund's Class B shares purchased for cash automatically
convert to Class A shares eight years after the end of the month
of your purchase. If you purchase shares by exchange for the
Class B shares of another Alliance Mutual Fund, the conversion
period runs from the date of your original purchase. If you
purchase the Fund's Class B shares by exchange from another

<PAGE>

Alliance Mutual Fund, your shares will convert to Class A shares
8 years after the date of the original purchase not the date of
exchange for the Fund's Class B shares.

The maximum cash purchase of Class B shares is $250,000.

CLASS C SHARES--ASSET-BASED SALES CHARGE ALTERNATIVE

Class C shares offer investors the choice in a money market
fund pending an investment by exchange into Class C shares of
another Alliance Mutual Fund. You can purchase shares for cash
at NAV without an initial sales charge. Your investment will be
subject to a 1% CDSC if you redeem your shares within 1 year. If
you exchange your shares for the Class C shares of another
Alliance Mutual Fund, the 1% CDSC also will apply to these
Class C shares. The 1-year period for the CDSC begins with the
date of your original purchase not the date of the exchange for
the Fund's Class C shares.

Class C shares do not convert to any other class of shares of
the Fund.

The maximum cash purchase of Class C shares is $1,000,000.

ASSET-BASED SALES CHARGE OR RULE 12B-1 FEES. The Fund has
adopted a plan under SEC Rule 12b-1 that allows the Fund to pay
asset-based sales charges or distribution and service fees for
the distribution and sale of its shares. The amount of these
fees for each class of the Fund's shares is:

RULE 12B-1 FEE (AS A PERCENT OF
AGGREGATE AVERAGE DAILY NET ASSETS)

Class A Shares .50%
Class B Shares 1.00%
Class C Shares .75%

Because these fees are paid out of the Fund's assets on an on-
going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales
fees. Class B and Class C shares are subject to higher
distribution fees than Class A shares (Class B shares are subject
to these higher fees for a period of eight years, after which
they convert to Class A shares). The higher fees mean a higher
expense ratio, so Class B and Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A
shares.

CHOOSING A CLASS OF SHARES. The decision as to which class
of shares is more beneficial to you depends on the amount and
intended length of your investment and whether you intend to

<PAGE>

subsequently exchange your shares for shares of another Alliance
Mutual Fund. If you are making a large cash purchase, thus
qualifying for a reduced sales charge on a subsequent exchange,
you might consider purchasing Class A shares. If you are making
a smaller cash purchase, you might consider purchasing Class B
shares because no subsequent sales charge will be assessed on
subsequent exchanges of those shares. If you are unsure of the
length of your investment, you might consider Class C shares
because there is no initial sales charge and no CDSC as long as
the shares are held for one year or more. Dealers and agents may
receive differing compensation for selling Class A, Class B, or
Class C shares.

You should consult your financial agent to assist in choosing
a class of Fund shares.

APPLICATION OF THE CDSC. The CDSC is applied to the lesser
of the original cost of shares being redeemed or NAV at the time
of redemption (or, as to Fund shares acquired through an
exchange, the cost of the Alliance Mutual Fund shares originally
purchased for cash). Shares obtained from dividend or
distribution reinvestment are not subject to the CDSC. The Fund
may waive the CDSC on redemptions of shares following the death
or disability of a shareholder, to meet the requirements of
certain qualified retirement plans, or under a monthly,
bimonthly, or quarterly systematic withdrawal plan. See the
Fund's Statement of Additional Information for further
information about CDSC waivers.

OTHER. 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 Class A, Class B,
or Class C shares made through such financial representative.
Such financial intermediaries also may 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,
including requirements as to the minimum initial and subsequent
investment amounts.

In addition to the discount or commission paid to dealers or
agents, AFD from time to time pays additional cash incentives to
dealers or agents, including EQ financial Consultants Inc., an
affiliate of AFD, for the sale of shares of the Fund. Such
additional amounts may be utilized, in whole or in part, in some
cases together with other revenues of such dealers or agents, to
provide additional compensation to registered representatives who
sell shares of the Fund. On some occasions, such cash or other
incentives will be conditioned on the sale of a specified minimum
dollar amount of the shares of the Fund and/or other Alliance
Mutual Funds during a specific period of time. Such incentives

<PAGE>

may take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel,
lodging, and entertainment incurred in connection with travel by
persons associated with a dealer or agent to urban or resort
locations within or outside the United States. Such dealer or
agent may elect to receive cash incentives of equivalent amounts
in lieu of such payments.

GENERAL INFORMATION

Under unusual circumstances, the Fund may suspend redemptions
or postpone payment for up to seven days or longer, as permitted
by federal securities law. The Fund reserves the right to close
an account that through redemption has remained below $200 for 90
days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed.

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

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

EMPLOYEE BENEFIT PLANS. Certain employee benefit plans,
including employer-sponsored tax-qualified 401(k) plans and other
defined contribution retirement plans ("Employee Benefit Plans"),
may have requirements as to the purchase, sale, or exchange of
shares, including maximum and minimum initial investment
requirements that are different from those described in this
Prospectus. Employee Benefit Plans also may not offer all
classes of shares of the Fund. In order to enable participants
investing through Employee Benefit Plans to purchase shares of
the Fund, the maximum and minimum investment amounts may be
different for shares purchased through Employee Benefit Plans
from those described in this Prospectus. In addition, the
Class A, Class B and Class C CDSC may be waived for investments
made through Employee Benefit Plans.

<PAGE>

YEAR 2000. Many computer systems and applications in use
today process transactions using two-digit date fields for the
year of the transaction, rather than the full four digits. If
these systems are not modified or replaced, transactions
occurring after 1999 could be processed as year "1900," which
could result in processing inaccuracies and computer system
failures. This is commonly known as the Year 2000 problem.
Should any of the computer systems employed by the Fund's major
service providers fail to process Year 2000 information properly,
that could have a significant negative impact on the Fund's
operations and the services that are provided to the Fund's
shareholders. The Fund has been advised that Alliance, Alliance
Fund Distributors, Inc. ("AFD"), and the Fund's registrar,
transfer agent, and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years
ago in connection with the replacement or upgrading of certain
computer systems and applications. During 1997, Alliance began a
formal Year 2000 initiative, which established a structured and
coordinated process to deal with the Year 2000 issue. Alliance
reports that it has completed its assessment of the Year 2000
issues on its domestic and international computer systems and
applications. Currently, management of Alliance expects that the
required modifications for the majority of its significant
systems and applications that will be in use on January 1, 2000
will be completed and tested by the end of 1998. Full
integration testing of these systems and testing of interfaces
with third-party suppliers will continue through 1999. At this
time, management of Alliance believes that the costs associated
with resolving this issue will not have a material adverse effect
on its operations or on its ability to provide the level of
services it currently provides to the Fund.

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

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you
understand the Fund's financial performance for the period of the
Fund's operations. Certain information reflects financial
information for a single Fund share. The total return in the
table represents the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming investment of all
dividends and distributions). The information has been audited
by McGladrey & Pullen LLP, the Fund's independent auditors, whose
report, along with Fund's financial statements, appears in the
Statement of Additional Information, which is available upon
request.

CLASS A

YEAR ENDED MAR. 25, 1994(A)
SEPTEMBER 30, TO
1998 1997 1996 1995 SEPT. 30,1994

Net asset value, beginning of
period $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
INCOME FROM INVESTMENT
OPERATIONS
Net investment income .0411 .0416 .0453 .0126
----- ----- ----- -----
LESS: DIVIDENDS
Dividends from net investment
income (.0411)(.0416) (.0453) (.0126)
------- ------ ------ -------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00

===== ===== ===== ======
TOTAL RETURN
Total investment return
based on net asset value 4.19% 4.24% 4.64% [2.45%](b)
===== ===== ===== ==========
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period
(in millions) $41 $41 $41 $18
Ratio of average net assets to:
Expenses, net of waivers 1.38% 1.29% 1.21% 1.82%(b)
Expenses, before waivers 1.38% 1.29% 1.21% 1.82%(b)
Net investment income 4.10% 4.15% 4.63%(c) 2.62%(b)

____________________
(a) Commencement of operations
(b) Annualized
(c) Net of expenses waived by the Adviser

<PAGE>

CLASS B

YEAR ENDED MAR. 25, 1994(a)
SEPTEMBER 30, TO
1998 1997 1996 1995 SEPT. 30,1994

Net asset value, beginning of
period $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0361 .0366 .0404 .0101
----- ----- ----- -----
LESS: DIVIDENDS
Dividends from net investment income (.0361)(.0366) .0404 .0101
------- ------ ----- -----
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
TOTAL RETURN
Total investment return based
on net asset value 3.67% 3.72% 4.12% [1.95%](b)
===== ===== ===== =========
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period
(in millions) $74 $65 $65 $31

Ratio of average net assets to:
Expenses, net of waivers 1.88% 1.79% 1.70% 2.35%(b)
Expenses, before waivers 1.88% 1.79% 1.78% 2.35%(b)
Net investment income 3.61% 3.67% 4.17%(c) 1.91%(b)

________________
(a) Commencement of operations
(b) Annualized
(c) Net of expenses waived by the Adviser

<PAGE>

CLASS C

YEAR ENDED MAR. 25, 1994(a)
SEPTEMBER 30, TO
1998 1997 1996 1995 SEPT. 30,1994

Net asset value, beginning
of period $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0386 .0390 .0430 .0112
----- ----- ----- -----
LESS: DIVIDENDS
Dividends from net investment
income (.0386)(.0390) (.0430) (.0112)
------- ------ ------ -------
Net asset value, end of period
$1.00 $1.00 $1.00 $1.00
====== ===== ===== ======
TOTAL RETURN
Total investment return
based on net asset value 3.93% 3.98% 4.39% [2.18%](b)
====== ===== ===== ==========
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period
(in millions) $24 $13 $10 $5
Ratio of average net assets to:
Expenses, net of waivers 1.61% 1.55% 1.45% 2.08%(b)
Expenses, before waivers 1.61% 1.55% 1.52% 2.08%(b)
Net investment income 3.90% 3.89% 4.41%(c) 2.14%(b)
____________________
(a) Commencement of operations
(b) Annualized
(c) Net of expenses waived by the Adviser

<PAGE>

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

ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The Fund has an SAI, which contains more detailed information
about the Fund, including its operations and investment policies.
The Fund's SAI is incorporated by reference into (and is legally
part of) this prospectus.

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

BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, N.J. 07096-1520

BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618

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

IN PERSON: at the SEC's Public Reference Room in
Washington, D.C.

BY PHONE: 1-800-SEC-0330

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

On the Internet: www.sec.gov

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

<PAGE>

Alliance Capital [Logo]

AFD EXCHANGE RESERVES

Advisor Class

PROSPECTUS

February 1, 1999

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

<PAGE>

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY..................................... 2
Performance and Bar Chart Information............... 3

EXPENSE INFORMATION..................................... 4

MANAGEMENT OF THE FUND.................................. 7

PURCHASE AND SALE OF SHARES............................. 7
How The Fund Values Its Shares...................... 8
How To Buy Shares................................... 8
How to Exchange Shares.............................. 9
How To Sell Shares.................................. 9
How To Sell Shares.................................. 9

DIVIDENDS, DISTRIBUTIONS AND TAXES...................... 11

CONVERSION FEATURE...................................... 11

GENERAL INFORMATION..................................... 12

FINANCIAL HIGHLIGHTS.................................... 14

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about the
Fund. You will find additional information about the Fund,
including a detailed description of the risks of an investment in
the Fund, after this summary. This prospectus has additional
descriptions of the Fund's investments in the discussion under
"Other Information About the Fund's Objectives, Strategies and
Risks." That section also includes more information about the
Fund, its investments, and related risks.

OBJECTIVE: The Fund's investment objective is maximum current
income to the extent consistent with safety of principal and
liquidity.

PRINCIPAL RISKS: The principal risks of investing in the Fund
are:

-- INTEREST RATE RISK This is the risk that changes in
interest rates will affect the yield or value of the
Fund's investments in debt securities.

Another important thing for you to note:

An investment in the Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00

<PAGE>

per share, it is possible to lose money by investing in the
Fund.

PERFORMANCE AND BAR CHART INFORMATION

-- the Fund's average annual returns for one year and the
life of the Fund; and

-- changes in the Fund's performance from year to year over
the life of the Fund.

The Fund's past performance does not necessarily indicate how it
will perform in the future.

PERFORMANCE TABLE

1 YEAR SINCE INCEPTION

Class A
Class B
Class C

You may obtain the most current yield information of the Fund by
calling 1-800-221-5672.

BAR CHART

The annual returns in the bar chart are for the Fund's Class A
shares and do not reflect sales loads. If sales loads were
reflected, returns would be less than those shown.

[CHART]

During the period shown in the bar chart, the highest return for
a quarter was [__]% (quarter ending _____) and the lowest return
for a quarter was [__]% (quarter ending _______).

<PAGE>

EXPENSE INFORMATION

This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your
investment)

ADVISOR CLASS SHARE

Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase
price or redemption proceeds, whichever
is lower) None

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Fund assets) and EXAMPLE

The example is to help you compare the cost of investing in the
Fund with the cost of investing in other funds. It assumes that
you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. It
also assumes that your investment has a 5% return each year and
that the Fund's operating expenses stay the same. Your actual
costs may be higher or lower.

OPERATING EXPENSES ADVISOR CLASS SHARE

Management Fees 25%
Rule 12b-1 Fees None
Other Expenses %

Total Fund Operating Expenses %

EXAMPLE ADVISOR CLASS SHARE

1 Year $
3 Years $
5 Years $
10 Years $

<PAGE>

OTHER INFORMATION ABOUT THE FUND'S OBJECTIVES, STRATEGIES, AND
RISKS

INVESTMENT OBJECTIVE

INVESTMENT STRATEGY

The Fund pursues its objective by maintaining a portfolio of
high-quality, U.S. dollar-denominated money market securities.
The Fund may invest in:

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

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

-- adjustable rate obligations;

-- asset-backed securities; and

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

The Fund may invest up to 25% of its total assets in money
market instruments issued by foreign branches of foreign banks.

<PAGE>

To the extent the Fund makes such investments, consideration will
be given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations,
the possible impact of interruptions in the flow of international
currency transactions, potential political and social instability
or expropriation, imposition of foreign taxes, the lower level of
government supervision of issuers, the difficulty in enforcing
contractual obligations, and the lack of uniform accounting and
financial reporting standards.

The Fund limits its investment in illiquid securities to 10%
of its net assets. The Fund does not invest more than 25% of its
assets in securities of issuers in any one industry except for
U.S. Government securities or certificates of deposit and
bankers' acceptances issued or guaranteed by, or interest bearing
savings deposits maintained at, banks and savings institutions
and loan associations (including foreign branches of U.S. banks
and U.S. branches of foreign banks).

RISK CONSIDERATIONS

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

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

<PAGE>

or confiscatory taxation, political changes or diplomatic
developments that could adversely affect the Fund's investments.

MANAGEMENT OF THE FUND

The Fund's Statement of Additional Information has more
detailed information about Alliance and other Fund service
providers.

PURCHASE AND SALE OF SHARES

GENERAL

You may purchase the Advisor Class shares for cash and
subsequently exchange them for Advisor Class shares of other
Alliance Mutual Funds. Under the Alliance Dollar Cost Averaging
Program, exchanges may be made automatically each month, thus
producing a dollar cost averaging effect. Exchanges also may be
made at other times of an investor's choosing. Advisor Class
shares should be purchased for cash only as a temporary
investment pending exchange into Advisor Class shares of another
Alliance Mutual Fund and should not be held as a long-term
investment. You may also purchase Advisor Class shares through
exchange if you hold shares of Advisor Class shares of other
Alliance Mutual Funds.

<PAGE>

HOW THE FUND VALUES ITS SHARES

Your order for purchase, sale, or exchange of shares is
priced at the next NAV calculated after your order is accepted by
the Fund.

HOW TO BUY SHARES

You may purchase Advisor shares through your financial
representative at NAV. Advisor Class shares are not subject to
any initial on contingent sales charges or distribution expenses.
You may purchase and hold shares solely:

-- through accounts established under a fee-based program,
sponsored and maintained by a registered broker-dealer
or other financial intermediary and approved by the
Fund's principal underwriter, Alliance Fund
Distributors, Inc., or AFD;

-- through a self-directed defined contribution employee
benefit plan (e.g., a 401(k) plan) that has at least
1,000 participants or $25 million in assets;

-- by investment advisory clients of, and certain other
persons associated with, Alliance and its affiliates or
the Fund; and

-- through registered investment advisers or other
financial intermediaries who charge a management,
consulting, or other fee for their services and who
purchase shares through a broker or agent approved by
AFD and clients of such registered investment advisers
or financial intermediaries whose accounts are linked to
the master account of such investment adviser or
financial intermediary on the books of such approved
broker or agent.

Generally, a fee-based program must charge an asset-based or
other similar fee and must invest at least $250,000 in Advisor

<PAGE>

Class shares to be approved by AFD for investment in Advisor
Class shares. The Fund's Statement of Additional Information as
more detailed information about who may purchase and hold Advisor
Class shares.

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

HOW TO EXCHANGE SHARES

You may exchange your Advisor Class shares for shares of
Advisor Class shares of other Alliance Mutual Funds. Exchanges
of Advisor Class shares are made at the next-determined NAV
without any sales or service charge. You may request an exchange
by mail or telephone. You must call by 4:00 p.m. Eastern time to
receive that day's NAV. The Fund may change, suspend, or
terminate the exchange service on 60 days' written notice.

HOW TO SELL SHARES

You may "redeem" your shares (i.e., sell your shares to the
Fund) on any day the NYSE is open, either directly or through
your financial intermediary. Your sales price will be the next-
determined NAV after the Fund receives your sales request in
proper form. Normally, proceeds will be sent to you within
7 days. If you recently purchased your shares by check or
electronic funds transfer, you cannot redeem any portion of it
until the Fund is reasonably satisfied that the check or
electronic funds transfer has been collected (which may take up
to 15 days). If you are in doubt about what procedures or
documents are required by your fee-based program or employee
benefit plan to sell your shares, you should contact your
financial representative.

-- Selling Shares Through Your Financial Representative

Your broker must receive your sales request by 4:00 p.m.,
Eastern time, and submit it to the Fund by 5:00 p.m., Eastern
time, for you to receive that day's NAV. Your broker is
responsible for submitting all necessary documentation to the
Fund and may charge you for this service.

-- Selling Shares Directly to the Fund

<PAGE>

BY MAIL:

- Send a signed letter of instruction or stock power,
along with certificates, to:

Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07906-1520
800-221-5672

BY TELEPHONE:

- You may redeem your shares for which no stock
certificates have been issued by telephone request.
Call AFS at 800-221-5672 with instructions on how you
wish to receive your sale proceeds.

- A telephone redemption request must be received by
4:00 p.m., Eastern time, for you to receive that day's
NAV.

- If you have selected electronic funds transfer in your
Shareholder Application, the redemption proceeds may be
sent directly to your bank. Otherwise the proceeds will
be mailed to you.

- Redemption requests by electronic funds transfer may not
exceed $100,000 per day and redemption requests by check
cannot exceed $50,000 per day.

OTHER

If you are a Fund shareholder through an account established
under a fee-based program, your fee-based program may impose
requirements with respect to the purchase, sales, or exchange of

<PAGE>

Advisor Class shares of the Fund that are different from those
described in this prospectus. 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
Advisor class shares made through such financial representative.
Such financial intermediaries also may impose requirements with
respect to the purchase, sale, or exchange of shares that are
different from, or in addition to, those imposed by a Fund,
including requirements as to the minimum initial and subsequent
investment amounts.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each year shortly after December 31, the Fund will send you
tax information stating the amount and type of all its
distributions for the year.

The sale or exchange of Fund shares is a taxable transaction
for Federal income tax purposes.

CONVERSION FEATURE

CONVERSION

As described above, Advisor Class shares may be held solely
through certain fee-based program accounts, employee benefit
plans, and registered investment advisory or financial
intermediary relationships, and by investment advisory clients
of, and certain persons associated with, Alliance and its
affiliates or the Fund. If a holder of Advisor Class shares
(i) ceases to participate in the fee-based program or plan, or to
be associated with an eligible investment advisory or financial
intermediary or (ii) is otherwise no longer eligible to purchase
Advisor Class shares ("Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically,
without notice, to Class A shares of the same Fund during the
calendar month following the month in which the Fund is informed

<PAGE>

of the occurrence of the Conversion Event. The failure of a
shareholder or a fee-based program to satisfy the minimum
investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee, or other charge.

DESCRIPTION OF CLASS A SHARES

The Class A shares have a distribution fee of .50% under the
Fund's Rule 12b-1 plan that allows the Fund to pay distribution
and service fees for the distribution and sale of its shares.
Because this fee is paid out of the Fund's assets, Class A shares
have a higher expense ratio and may pay lower dividends and have
a lower NAV than Advisor Class shares.

GENERAL INFORMATION

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

Year 2000. Many computer systems and applications in use
today process transactions using two-digit date fields for the
year of the transaction, rather than the full four digits. If
these systems are not modified or replaced, transactions
occurring after 1999 could be processed as year "1900," which
could result in processing inaccuracies and computer system
failures. This is commonly known as the Year 2000 problem.
Should any of the computer systems employed by the Fund's major
service providers fail to process Year 2000 information properly,
that could have a significant negative impact on the Fund's
operations and the services that are provided to the Fund's
shareholders. The Fund has been advised that Alliance, Alliance
Fund Distributors, Inc. ("AFD"), and the Fund's registrar,
transfer agent, and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years

<PAGE>

ago in connection with the replacement or upgrading of certain
computer systems and applications. During 1997, Alliance began a
formal Year 2000 initiative, which established a structured and
coordinated process to deal with the Year 2000 issue. Alliance
reports that it has completed its assessment of the Year 2000
issues on its domestic and international computer systems and
applications. Currently, management of Alliance expects that the
required modifications for the majority of its significant
systems and applications that will be in use on January 1, 2000
will be completed and tested by the end of 1998. Full
integration testing of these systems and testing of interfaces
with third-party suppliers will continue through 1999. At this
time, management of Alliance believes that the costs associated
with resolving this issue will not have a material adverse effect
on its operations or on its ability to provide the level of
services it currently provides to the Fund.

<PAGE>

FINANCIAL HIGHLIGHTS

______________________________________________
Net asset value, beginning of period

Income From Investment Operations
Net investment income

Less: Dividends
Dividends from net investment income

Net asset value, end of period

Total Return
Total investment return based on net asset value

Ratios/Supplemental Data
Net Assets, end of period (in millions)
Ratio of average net assets to:
Expenses, net of waivers
Expenses, before waivers
Net investment income

<PAGE>

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

ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS

STATEMENT OF ADDITIONAL INFORMATION (SAI)

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

BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, N.J. 07096-1520

BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618

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

IN PERSON: at the SEC's Public Reference Room in
Washington, D.C.

BY PHONE: 1-800-SEC-0330

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

On the Internet: www.sec.gov

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

<PAGE>

(LOGO) AFD EXCHANGE RESERVES
____________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618

____________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
February 1, 1999

____________________________________________________________
This Statement of Additional Information is not a prospectus
but supplements and should be read in conjunction with the
current Prospectus dated February 1, 1999 that offers Class A,
Class B and Class C shares of the Fund and the current Prospectus
dated February 1, 1999 that offers the Advisor Class shares of the
Fund (the "Advisor Class Prospectus" and, together with the
Prospectus for the Fund that offers the Class A, Class B and
Class C shares, the "Prospectus"). Copies of the Prospectuses
may be obtained by contacting Alliance Fund Services, Inc. at the
address or the "For Literature" telephone number shown above.

TABLE OF CONTENTS

Page

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS.............. 2

MANAGEMENT OF THE FUND....................................... 8

EXPENSES OF THE FUND.........................................13

PURCHASE OF SHARES...........................................16

REDEMPTION AND REPURCHASE OF SHARES..........................32

SHAREHOLDER SERVICES.........................................36

DAILY DIVIDENDS--DETERMINATION OF NET ASSET VALUE............43

TAXES........................................................44

BROKERAGE AND PORTFOLIO TRANSACTIONS.........................45

GENERAL INFORMATION..........................................46

<PAGE>

FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S
REPORT...................................................F-1

APPENDIX.....................................................A-1
__________________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

____________________________________________________________

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
____________________________________________________________

AFD Exchange Reserves (the "Fund") is a diversified,
open-end investment company. The Fund's objective is maximum
current income to the extent consistent with safety of principal
and liquidity. As is true with all investment companies, there
can be no assurance that the Fund's objective will be achieved.
The Fund pursues its objective by maintaining a portfolio of high
quality U.S. dollar-denominated money market securities. In
accordance with Rule 2a-7 under the Investment Company Act of
1940 (the "Act"), the Fund will invest in securities which at the
time of investment have remaining maturities not exceeding 397
days and the average maturity of the Fund's investment portfolio
will not exceed 90 days. Accordingly, the Fund may make the
following investments diversified by maturities and issuers:

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

2. Certificates of deposit and bankers' acceptances
issued or guaranteed by, or time deposits maintained at, banks or
savings and loan associations (including foreign branches of U.S.
banks or U.S. or foreign branches of foreign banks) having total
assets of more than $500 million. Certificates of deposit are
receipts issued by a depository institution in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited
plus interest to the bearer of the receipt on the date specified
on the certificate. The certificate usually can be traded in the
secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to
enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on
a bank by an exporter or an importer to obtain a stated amount of
funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date.

<PAGE>

The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the
going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most
acceptances have maturities of six months or less.

3. Commercial paper, including variable amount master
demand notes, of high quality (i.e., rated A-1 or A-2 by Standard
& Poor's Corporation ("Standard & Poor's"), Prime-1 or Prime-2 by
Moody's Investors Service, Inc. ("Moody's"), Fitch-1 or Fitch-2
by Fitch IBCA, Inc., or Duff 1 or Duff 2 by Duff & Phelps Inc.
or, if not rated, issued by U.S. or foreign companies which have
an outstanding debt issue rated AAA, AA or A by Standard &
Poor's, or Aaa, Aa or A by Moody's and participation interests in
loans extended by banks to such companies). For a description of
such ratings see the Appendix. Commercial paper consists of
short-term (usually from 1 to 270 days) unsecured promissory
notes issued by corporations in order to finance their current
operations. A variable amount master demand note represents a
direct borrowing arrangement involving periodically fluctuating
rates of interest under a letter agreement between a commercial
paper issuer and an institutional lender pursuant to which the
lender may determine to invest varying amounts. For a further
description of variable amount master demand notes, see "Floating
and Variable Rate Obligations" below.

4. Repurchase agreements that are collateralized in
full each day by liquid securities of the types listed above. A
repurchase agreement arises when a buyer purchases a security and
simultaneously agrees to resell it to the vendor at an agreed-
upon future date. The resale price is greater than the purchase
price, reflecting an agreed-upon market rate which is effective
for the period of time the buyer's money is invested in the
security and which is not related to the coupon rate on the
purchased security. Repurchase agreements may be entered into
only with those banks (including State Street Bank and Trust
Company, the Fund's Custodian) or broker-dealers that are
eligible under the procedures adopted by the Trustees of the
Trust for evaluating and monitoring such vendors'
creditworthiness. For each repurchase agreement, the Fund
requires continual maintenance of the market value of underlying
collateral in amounts equal to, or in excess of, the agreement
amount. While the maturities of the underlying collateral may
exceed 397 days, the term of the repurchase agreement is always
less than one year. If a counterparty defaulted on its
repurchase obligation, the Fund might suffer a loss to the extent
that the proceeds from the sale of the collateral were less than
the repurchase price. If the counterparty became bankrupt, the
Fund might be delayed in selling the collateral. Repurchase
agreements often are for short periods such as one day or a week,
but may be longer. Repurchase agreements not terminable within

<PAGE>

seven days will be limited to no more than 10% of the Fund's
assets. A repurchase agreement is deemed to be an acquisition of
the underlying securities if the obligation of the seller to
repurchase the securities from the fund is collateralized fully
(as defined in such Rule). Accordingly, the counterparty of a
fully collateralized repurchase agreement is deemed to be the
issuer of the underlying securities.

Floating and Variable Rate Obligations. The Fund may
purchase floating and variable rate obligations, including
floating and variable rate demand notes and bonds. The Fund may
invest in variable and floating rate obligations whose interest
rates are adjusted either at pre-designated periodic intervals or
whenever there is a change in the market rate to which the
security's interest rate is tied. The Fund may also purchase
floating and variable rate demand notes and bonds, which are
obligations ordinarily having stated maturities in excess of 397
days, but which permit the holder to demand payment of principal
at any time, or at specified intervals not exceeding 397 days, in
each case upon not more than 30 days' notice.

The Fund also invests in variable amount master demand
notes (which may have put features in excess of 30 days) which
are obligations that permit the Fund to invest fluctuating
amounts, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower.
Because these obligations are direct lending arrangements between
the lender and the borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they
are redeemable at face value, plus accrued interest.
Accordingly, when these obligations are not secured by letters of
credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay
principal and interest on demand.

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

Asset-Backed Securities. The Fund may invest in asset-
backed securities that meet its existing diversification, quality
and maturity criteria. 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,

<PAGE>

payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer. It is the
Fund's current intention to limit its investment in such
securities to not more than 5% of its net assets.

Illiquid Securities. The Fund has adopted the following
investment policy which may be changed by the vote of the
Trustees: The Fund will not invest in illiquid securities if
immediately after such investment more than 10% of the Fund's net
assets (taken at market value) would be invested in such
securities. For this purpose, illiquid securities include, among
others, (a) securities that are illiquid by virtue of the absence
of a readily available market or legal or contractual restriction
on resale, other than restricted securities determined by
Alliance Capital Management L.P. ("Alliance") to be liquid in
accordance with procedures adopted by the Trustees of the Fund
and (b) repurchase agreements not terminable within seven days.
As to these securities, the Fund is subject to a risk that should
the Fund desire to sell them when a ready buyer is not available
at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.

The Fund may also purchase restricted securities that
are determined by Alliance to be liquid in accordance with
procedures adopted by the Trustees. Restricted securities are
securities subject to contractual or legal restrictions on
resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act of
1933, as amended (the "Securities Act"). For example, the Fund
may purchase restricted securities eligible for resale under Rule
144A under the Securities Act and commercial paper issued in
reliance upon the exemption from registration in Section 4(2) of
the Securities Act and, in each case, determined by Alliance to
be liquid in accordance with procedures adopted by the Trustees
of the Fund.

The Fund's Trustees have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
The Trustees have delegated the function of making day-to-day
determinations of liquidity to Alliance, pursuant to guidelines
approved by the Trustees.

Following the purchase of a restricted security by the
Fund, Alliance monitors continuously the liquidity of such
security and reports to the Trustees regarding purchases of
liquid restricted securities.

The Fund may invest up to 25% of its total assets in
money market instruments issued by foreign branches of foreign
banks.

<PAGE>

The Fund may make investments in dollar-denominated
certificates of deposit and bankers' acceptances issued or
guaranteed by, or dollar-denominated time deposits maintained at,
foreign branches of U.S. banks and U.S. and foreign branches of
foreign banks, and commercial paper issued by foreign companies.
To the extent that the Fund makes such investments, consideration
is given to their domestic marketability, the lower reserve
requirements generally mandated for overseas banking operations,
the possible impact of interruptions in the flow of international
currency transactions, potential political and social instability
or expropriation, imposition of foreign taxes, the lower level of
government supervision of issuers, the difficulty in enforcing
contractual obligations and the lack of uniform accounting and
financial reporting standards.

Net income to shareholders is aided both by the Fund's
ability to make investments in large denominations and by its
efficiencies of scale. Also, the Fund may seek to improve
portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that
occur in money markets. The Fund's investment objective may not
be changed without the affirmative vote of a majority of the
Fund's outstanding shares as defined below. Except as otherwise
provided, the Fund's investment policies are not designated
"fundamental policies" within the meaning of the Act and may,
therefore, be changed by the Trustees of the Fund without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to
shareholders.

Certain Fundamental Investment Policies

The following restrictions may not be changed without
the affirmative vote of a majority of the Fund's outstanding
shares, which means the vote of (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less.

As a matter of fundamental policy, the Fund:

(i) May not invest 25% or more of its assets in the
securities of issuers conducting their principal business
activities in any one industry; provided that, for purposes of
this restriction, there is no limitation with respect to
investments in securities issued or guaranteed by the United
States Government, its agencies or instrumentalities or
certificates of deposit and bankers' acceptances issued or
guaranteed by, or interest-bearing savings deposits maintained
at, banks and savings institutions and loan associations

<PAGE>

(including foreign branches of U.S. banks and U.S. branches of
foreign banks);

(ii) May not invest more than 5% of its assets in the
securities of any one issuer (exclusive of securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities), except that up to 25% of the value of the
Fund's total assets may be invested without regard to such 5%
limitation;*

(iii) May not invest in more than 10% of any one class
of an issuer's outstanding securities (exclusive of securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities);

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

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

(vi) May not make loans, provided that the Fund may
purchase money market securities and enter into repurchase
agreements; or

(vii) May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
____________________

* As a matter of operating policy, pursuant to Rule 2a-7,
the Fund will invest no more than 5% of its assets in the
securities of any one issuer. The issuer of a security is
determined pursuant to Rule 2a-7.

<PAGE>

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

As a matter of operating policy, fundamental investment
restriction number (ii) would give the Fund the ability to
invest, with respect to 25% of its assets, more than 5% of its
assets in any one issuer only in the event Rule 2a-7 is amended
in the future.

____________________________________________________________

MANAGEMENT OF THE FUND
____________________________________________________________

Alliance provides investment advice and, in general,
conducts the management and investment program of the Fund,
subject to the general supervision and control of the Trustees of
the Fund.

Trustees and Officers

The Trustees and principal officers of the Fund, their
ages and their principal occupations during the past five years
are set forth below. Unless otherwise specified, the address of
each such person is 1345 Avenue of the Americas, New York, New
York 10105. Each Trustee and officer is also a director, trustee
or officer of other registered investment companies sponsored by
Alliance.

Trustees

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

RUTH BLOCK, 67, is a Director of Ecolab Incorporated
(specialty chemicals) and Amoco Corporation (oil and gas). She
was formerly an Executive Vice President and the Chief Insurance
Officer of the Equitable Life Assurance Society of the United

<PAGE>

States since prior to 1993. Her address is P.O. Box 4653,
Stamford, Connecticut 06903.

DAVID H. DIEVLER, 69, is an independent consultant. He
was formerly a Senior Vice President of ACMC, with which he had
been associated since prior to 1993. His address is P.O. Box
167, Spring Lake, New Jersey 07762.

JOHN H. DOBKIN, 56, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1993.
Previously, he was Director of the National Academy of Design.
His address is 150 White Plains Road, Tarrytown, New York 10591

WILLIAM H. FOULK, JR., 66, is an investment adviser and
independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1993. His address is
2 Greenwich Plaza, Suite 100, Greenwich, CT 06830.

DR. JAMES M. HESTER, 74, is President of the Harry Frank
Guggenheim Foundation 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 25 Cleveland Lane, Princeton, New
Jersey 08540.

CLIFFORD L. MICHEL, 59, is a Partner in 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
a Director of Wenonah Development Company (investments) and a
Director of Placer Dome, Inc. (mining) and since 1996, he is
Director, Vice Chairman and Treasurer of Atlantic Health Systems
Inc. and Atlantic Hospital. His address is 80 Pine Street, New
York, New York 10005.

DONALD J. ROBINSON, 64, was formerly a Senior Partner of
the law firm of Orrick, Herrington & Sutcliffe and is currently
Senior Counsel to that firm. His address is 666 Fifth Avenue,
19th Floor, New York, New York 10103.

Officers

JOHN D. CARIFA, Chairman and President, see Biography
above.

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

<PAGE>

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

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

MARK D. GERSTEN, Treasurer and Chief Financial Officer,
48, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") with which he has been associated since prior to 1993.

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

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

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

EMILIE D. WRAPP, Assistant Secretary, 43, is a Vice
President and Assistant General Counsel of AFD, with which she
has been associated since prior to 1993.

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

The aggregate compensation paid by the Fund to each of
the Trustees during its fiscal year ended September 30, 1998, the
aggregate compensation paid to each of the Trustees 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 Trustees serves as a director
or trustee, are set forth below. Neither the Fund nor any other
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.

<PAGE>

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

John D. Carifa $0 $0 50 115
Ruth Block $3,664 $164,000 37 78
David H. Dievler $3,664 $188,474 43 80
John H. Dobkin $3,667 $125,225, 40 77
William H. Foulk, Jr. $3,661 $177,504 45 110
Dr. James M. Hester $3,667 $156,500 37 74
Clifford L. Michel $3,667 $194,500 38 90
Donald J. Robinson $3,664 $235,500 41 104

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

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 advisory agreement (the "Advisory Agreement") to provide
investment advice and, in general, to conduct the management and
investment program of the Fund under the supervision and control
of the Fund's Trustees.

The Adviser is a leading international investment
manager supervising client accounts with assets as of
September 30, 1998 totaling more than $241 billion (of which
approximately $99 billion represented the assets of investment
companies). The Adviser's clients are primarily major corporate
employee benefit funds, public employee retirement systems,
investment companies, foundations and endowment funds. As of
September 30, 1998 ,the Adviser was retained as an investment
manager for employee benefit plan assets for 34 of the FORTUNE
100 companies. As of July 31, 1998, the Adviser and its
subsidiaries employed approximately 2,000 employees who operate
out of domestic offices and the offices of subsidiaries in

<PAGE>

Bahrain, Bangalore, Cairo, Chennai, Hong Kong, Istanbul,
Johannesburg, London, Luxembourg, Madrid, Moscow, Mumbai, New
Delhi, Paris, Pune, Sao Paolo, Seoul, Singapore, Sydney, Tokyo,
Toronto, Vienna and Warsaw. The 54 registered investment
companies comprising 119 separate investment portfolios managed
by the Adviser currently have more than 3.5 million shareholders.

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

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

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

Under the Advisory Agreement, Alliance provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Trustees and officers of
the Fund who are affiliated persons of Alliance. Alliance or its
affiliates also furnish the Fund without charge with management
supervision and assistance and office facilities. Under the
Advisory Agreement, the Fund pays an advisory fee at an annual

<PAGE>

rate of .25 of 1% of the first $1.25 billion of the average daily
net value of the Fund's net assets, .24 of 1% of the next $.25
billion of such assets, .23 of 1% of the next $.25 billion of
such assets, .22 of 1% of the next $.25 billion of such assets,
.21 of 1% of the next $1 billion of such assets and .20 of 1% of
the average daily value of the Fund's net assets in excess of $3
billion. The fee is accrued daily and paid monthly. As to the
obtaining of clerical and accounting services not required to be
provided to the Fund by Alliance under the Advisory Agreement,
the Fund may employ its own personnel. For such services, it
also may utilize personnel employed by Alliance; if so done, the
services are provided to the Fund at cost and the payments
therefor must be specifically approved in advance by the
Trustees. For the fiscal year ended September 30, 1998, Alliance
received from the Fund advisory fees of $569,855. For the fiscal
year ended September 30, 1997 and 1996, Alliance received from
the Fund advisory fees of $338,864 and $297,876,
respectively.

Certain other clients of Alliance may have investment
objectives and policies similar to those of the Fund. Alliance
may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund. If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is
the policy of Alliance to allocate advisory recommendations and
the placing of orders in a manner which is deemed equitable by
Alliance to the accounts involved, including the Fund. When two
or more of the clients of Alliance (including the Fund) are
purchasing or selling the same security on a given day from the
same broker-dealer, such transactions may be averaged as to
price.

____________________________________________________________

EXPENSES OF THE FUND
____________________________________________________________

Distribution Services Agreement

The Fund has entered into a Distribution Services
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 A, 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 under the Act (the "Rule 12b-1
Plan").

<PAGE>

In approving the Agreement, the Trustees of the Fund
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders. 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.

During the Fund's fiscal year ended September 30, 1998,
the Fund paid distribution services fees for expenditures under
the Agreement to the Principal Underwriter with respect to
Class A shares, in amounts aggregating $427,298, which
constituted .50 of 1% of the average daily net assets
attributable to Class A during such fiscal year, and the Adviser
made payments from its own resources aggregating $724,103. Of
the $1,151,401 paid by the Fund and the Adviser under the
Agreement, $55,483 was spent on advertising, $4,539 on the
printing and mailing of prospectuses for persons other than
current shareholders, $278,324 for compensation to broker-
dealers, $433,324 for compensation to sales personnel and
$379,731 was spent on the printing of sales literature, due
diligence, travel, entertainment, occupancy, communications,
taxes, depreciation and other promotional expenses.

During the Fund's fiscal year ended September 30, 1998,
the Fund paid distribution services fees for expenditures under
the Agreement to The Principal Underwriter with respect to
Class B shares, in amounts aggregating $892,262, which
constituted 1% of the average daily net assets attributable to
Class B during such fiscal year, and the Adviser made payments
from its own resources aggregating $2,133,452. Of the $3,025,714
paid by the Fund and the Adviser under the Agreement in the case
of the Class B shares, $32,264 was spent on advertising, $2,362
on the printing and mailing of prospectuses for persons other
than current shareholders, $2,627,662 for compensation to broker-
dealers, $153,958 for compensation paid to sales personnel,
$101,995 for interest on Class B shares financing and $107,473
was spent on the printing of sales literature, due diligence,
travel, entertainment, occupancy, communications, taxes,
depreciation and other promotional expenses.

<PAGE>

for persons other than current shareholders, $484,440 for
compensation to broker-dealers, $85,976 for compensation to sales
personnel, $65,446 for interest on Class C shares financing and
$66,006 was spent on the printing of sales literature, due
diligence, travel, entertainment, occupancy, communications,
taxes, depreciation and other promotional expenses.

Distribution services fees are 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 without the assessment of an
initial sales charge, and, in the case of Class C shares, without
the assessment of a contingent deferred sales charge, and at the
same time to permit the Principal Underwriter to compensate
broker-dealers in connection with the sale of such shares. In
this regard, the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the
Class B shares, and the distribution services fee on the Class C
shares, are the same as those of the initial sales charge (or
contingent deferred sales charge, when applicable) and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the Fund's
shares.

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, 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.

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, Class B shares,
Class C shares and Advisor Class shares of the Fund, plus
reimbursement for out-of-pocket expenses. The transfer agency
fee with respect to the Class B shares and Class C shares is
higher than the transfer agency fee with respect to the Class A
shares and Advisor Class shares reflecting the additional costs
associated with the Class B and Class C contingent deferred sales
charges. For the fiscal year ended September 30, 1998, the Fund
paid AFS $213,994 pursuant the Transfer Agency Agreement.

<PAGE>

____________________________________________________________

PURCHASE OF SHARES
____________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares."

General

Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value. Shares of the Fund are
available to holders of shares of other Alliance Mutual Funds who
wish to exchange their shares for shares of a money market fund
and also may be purchased for cash.

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 Class A, Class B, Class C or
Advisor Class 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,
including requirements as to the minimum initial and subsequent
investment amounts.

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

The Fund's four classes of shares each represent an
interest in the same portfolio of investments of the Fund, have
the same rights and are identical in all respects, except that
(i) Class A and Class B shares bear the expense of their
respective contingent deferred sales charges, (ii) Class B and
Class C shares bear the expense of a higher distribution services
fee and higher transfer agency costs, (iii) each class has
exclusive voting rights with respect to provisions of the Rule
12b-1 Plan pursuant to which its distribution services fee is
paid which relates to a specific class and other matters for
which separate class voting is appropriate under applicable law,
provided that, if the Fund submits to a vote of both the Class A
shareholders and the Class B shareholders an amendment to the

<PAGE>

Rule 12b-1 Plan that would materially increase the amount to be
paid thereunder with respect to the Class A shares, the Class A
shareholders and the Class B shareholders will vote separately by
Class, and (iv) only the Class B shares are subject to a
conversion feature. Each class has different exchange privileges
and certain different shareholder service options available.

Acquisitions By Exchange

An exchange is effected through the redemption of the
Alliance Mutual Fund shares tendered for exchange and the
purchase of shares of the Fund at net asset value. A shareholder
exchanging shares of an Alliance Mutual Fund must give (i) proper
instructions and any necessary supporting documents as described
in such Fund's Prospectus, or (ii) a telephone request for such
exchange in accordance with the procedures set forth in the
following paragraph. Exchanges involving the redemption of
shares recently purchased by check will be permitted only after
the Alliance Mutual Fund whose shares have been tendered for
exchange is reasonably assured that the check has cleared, which
normally takes up to 15 calendar days following the purchase
date. Exchanges of shares of Alliance Mutual Funds will
generally result in the realization of gain or loss for federal
income tax purposes.

Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange, at (800) 221-5672
between 9:00 a.m. and 4:00 p.m., Eastern time, on a Fund business
day. A Fund business day is any day the New York Stock Exchange
(the "Exchange") is open for trading. Telephone requests for
exchanges received before 4:00 p.m. Eastern time on a Fund
business day will be processed as of the close of business on
that day. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
this Statement of Additional Information.

Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless AFS
receives written instructions to the contrary from the
shareholder or the shareholder declines the privilege by checking
the appropriate box on the Subscription Application found in the
Prospectus. Such telephone requests cannot be accepted with
respect to shares then represented by stock certificates. Shares
acquired pursuant to a telephone request for exchange will be

<PAGE>

held under the same account registration as the shares redeemed
through such exchange.

Purchases for Cash

Shares of the Fund should be purchased for cash only as
a temporary investment pending exchange into another Alliance
Mutual Fund and should not be held as a long-term investment.

Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge, and, as long as the shares are held for a
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
class shares without any initial, contingent deferred, or asset-
based sales charge, in each case described below. Shares of the
Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates that have entered
into selected agent agreements with the Principal Underwriter
("selected agents"), and (iii) the Principal Underwriter.

Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, (iii) by investment
management clients of Alliance or its affiliates, (iv) by
officers and present or former Trustees of the Fund; present or
former directors and trustees of other investment companies
managed by Alliance; present or retired full-time employees of
Alliance, the Principal Underwriter, AFS and their affiliates;
officers and directors of ACMC, the Principal Underwriter, AFS
and their affiliates; officers, directors and present full-time
employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendent (collectively, "relatives")
of any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund), (v) by Alliance, the Principal
Underwriter, AFS and their affiliates; certain employee benefit
plans for employees of Alliance, the Principal Underwriter, AFS
and their affiliates, (vi) registered investment advisers or
other financial intermediaries who charge a management,

<PAGE>

consulting or other fee for their service and who purchase shares
through a broker or agent approved by the Principal Underwriter
and clients of such registered investment advisers or financial
intermediaries whose accounts are linked to the master account of
such investment adviser or financial intermediary on the books of
such approved broker or agent; (vii) by persons participating in
a fee-based program, sponsored and maintained by a registered
broker-dealer or other financial intermediary and approved by the
Principal Underwriter, pursuant to which such persons pay an
asset-based fee to such broker-dealer, or its affiliate or agent,
for service in the nature of investment advisory or
administrative services; (viii) by persons who establish to the
Principal Underwriter's satisfaction that they are investing,
within such time period as may be designated by the Principal
Underwriter, proceeds of redemption of shares of such other
registered investment companies as may be designated from time to
time by the Principal Underwriter; (ix) by employer-sponsored
qualified pension or profit-sharing plans (including Section
401(k) plans), custodial accounts maintained pursuant to Section
403(b)(7) retirement plans and individual retirement accounts
(including individual retirement accounts to which simplified
employee pension ("SEP") contributions are made), if such plans
or accounts are established or administered under programs
sponsored by administrators or other persons that have been
approved by the Principal Underwriter; and (x) by directors and
present or retired full-time employees of CB Richard Ellis, Inc.

The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset value of
the Class A and Advisor Class shares, as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.

Investors may purchase shares of the Fund either through
selected dealers, agents or financial representatives or directly
through the Principal Underwriters. Sales personnel of selected
dealers and agents distributing the Fund's shares may receive
differing compensation for selling Class A, Class B, Class C or
Advisor Class shares. Shares may also be sold in foreign
countries where permissible. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.

<PAGE>

The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined as described below. Orders received
by the Principal Underwriter prior to the close of regular
trading on the Exchange on each day the Exchange is open for
trading are priced at the net asset value computed as of the
close of regular trading on the Exchange on that day. In the
case of orders for purchase of shares placed through selected
dealers, agents or financial representatives, as applicable, the
applicable public offering price will be the net asset value as
so determined, but only if the selected dealer, agent or
financial representative receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. Eastern time). The selected dealer, agent or
financial representative is responsible for transmitting such
orders by 5:00 p.m. (Certain selected dealers, agents or
financial representatives may enter into operating agreements
permitting them to transmit purchase information to the Principal
Underwriter after 5:00 p.m. Eastern time and receive that day's
net asset value.) If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative. If the
selected dealer, agent or financial representative, as
applicable, receives the order after the close of regular trading
on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on
the next day it is open for trading.

Following the initial purchase for cash of Fund shares,
a shareholder may place orders to purchase additional shares for
cash by telephone if the shareholder has completed the
appropriate portion of the Subscription Application or an
"Autobuy" application obtained by calling the "For Literature"
telephone number shown on the cover of this Statement of
Additional Information. Except with respect to certain Omnibus
accounts, telephone purchase orders may not exceed $500,000.
Payment for shares purchased by telephone can be made only by
Electronic Funds Transfer from a bank account maintained by the
shareholder at a bank that is a member of the National Automated
Clearing House Association ("NACHA"). If a shareholder's
telephone purchase request is received before 3:00 p.m. Eastern
time on a Fund business day, the order to purchase shares is
automatically placed the following Fund business day, and the
applicable public offering price will be the public offering
price determined as of the close of business on such following
business day. Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.

<PAGE>

The per share net asset value of the Fund's shares is
computed in accordance with the Fund's Agreement and Declaration
of Trust as of the next close of regular trading on the Exchange
(currently 4:00 p.m. Eastern time) by dividing the value of the
Fund's total assets, less its liabilities, by the total number of
its shares then outstanding. For purposes of this computation,
the securities in the Fund's portfolio are valued at their
amortized cost value. For more information concerning the
amortized cost method of valuation of securities, see "Daily
Dividends--Determination of Net Asset Value."

The Fund may refuse any order for the acquisition of
shares. The Fund reserves the right to suspend the sale of its
shares to the public in response to conditions in the securities
markets or for other reasons. In addition, the Fund reserves the
right, on 60 days' written notice to its shareholders to reject
any order to acquire its shares through exchange or otherwise to
modify, restrict or terminate the exchange privilege.

All shares purchased are confirmed to each shareholder
and are credited to his or her account at the net asset value.
As a convenience to the Subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request by the
shareholder or his or her authorized selected dealer or agent.
This facilitates later redemption and relieves the shareholder of
the responsibility for any inconvenience of lost or stolen stock
certificates. No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund. Shares for which certificates have been
issued are not eligible for any of the optional methods of
withdrawal, namely, the telephone, check-writing or periodic
redemption procedures. The Fund reserves the right to reject any
purchase order.

Advisor Class shares of the Fund are offered to holders
of Advisor Class shares of other Alliance Mutual Funds without
any sales charge at the time of purchase or redemption.

In addition to the discount or commission paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash bonuses or other incentives to dealers or
agents, including EQ Financial Consultants Inc., an affiliate of
the Principal Underwriter, in connection with the sale of shares
of the Fund. Such additional amounts may be utilized, in whole
or in part, to provide additional compensation to registered
representatives who sell shares of the Fund. On some occasions,
cash or other incentives will be conditioned upon the sale of a
specified minimum dollar amount of the shares of the Fund and/or
other Alliance Mutual Funds, as defined below, during a specific
period of time. On some occasions, such cash or other incentives

<PAGE>

may take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel,
lodging and entertainment incurred in connection with travel by
persons associated with a dealer or agent to urban or resort
locations within or outside the United States. Such dealer or
agent may elect to receive cash incentives of equivalent amount
in lieu of such payments.

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

Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C shares

The alternative purchase arrangements available with
respect to Class A, Class B and Class C shares permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, whether the investor intends to
subsequently exchange shares for shares of another Alliance
Mutual Fund and other circumstances. The Principal Underwriter
will reject any order (except orders from certain retirement
plans and certain employee benefit plans) for more than $250,000
for Class B shares. (See Appendix B for information concerning
the eligibility of certain employee benefit plans to purchase
Class B shares at net asset value without being subject to a
contingent deferred sales charge and the ineligibility of certain
such plans to purchase Class A shares.) In addition, the
Principal Underwriter will reject any order for more than
$1,000,000 of Class C shares.

Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because sales charges are deducted at the time Class A
shares are exchanged for Class A shares of other Alliance Mutual
Funds, investors not qualifying for reduced Class A sales charges
who expect to exchange their shares for Class A shares of another
Alliance Mutual Fund and to maintain their investment for an
extended period of time might consider purchasing Class A shares
because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that sales charges will be imposed at the time
Class A shares are exchanged for Class A shares of other Alliance
Mutual Funds.

<PAGE>

Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C
shares, although these classes are subject to higher continuing
distribution charges and, in the case of Class B shares, are
subject to a contingent deferred sales charge for a four-year
period. This might be true of investors who do not wish to pay
sales charges on subsequent exchanges of shares. Those investors
who prefer to have all of their funds invested initially but may
not wish to retain their investment for the four-year period
during which Class B shares are subject to a contingent deferred
sales charge may find it more advantageous to purchase Class C
shares.

Class A Shares

The public offering price of Class A shares is their net
asset value. No sales charge is imposed on Class A shares at the
time of purchase. If Class A shares of the Fund are purchased
for cash and are exchanged for Class A shares of another Alliance
Mutual Fund, the sales charge applicable to the other Alliance
Mutual Fund will be assessed at the time of the exchange.

With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Class A shares that were received in
exchange of Class A shares of another Alliance Mutual Fund that
were not subject to an initial sales charge when originally
purchased for cash because the purchase was of $1,000,000 or more
and that are redeemed within one year of the original purchase
will be subject to a 1% contingent deferred sales charge. No
charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions. The contingent
deferred sales charge on Class A shares will be waived on certain
redemptions. In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling
Class A shares. With respect to purchases of $1,000,000 or more

<PAGE>

made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.

Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions on Class A shares of
other Alliance Mutual Funds by combining purchases of shares of
the Fund and shares of other Alliance Mutual Funds into a single
"purchase," if the resulting "purchase" totals at least $100,000.
The term "purchase" refers to: (i) a single purchase by an
individual, or concurrent purchases, which in the aggregate are
at least equal to the prescribed amounts, by an individual, his
or her spouse and their children under the age of 21 years
purchasing shares for his, her or their own account(s); (ii) a
single purchase by a trustee or other fiduciary purchasing shares
for a single trust, estate or single fiduciary account although
more than one beneficiary is involved; or (iii) a single purchase
for the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company," as the term
is defined in the 1940 Act, but does not include purchases by any
such company which has not been in existence for at least six
months or which has no purpose other than the purchase of shares
of Alliance Mutual Funds or shares of other registered investment
companies at a discount. The term "purchase" does not include
purchases by any group of individuals whose sole organizational
nexus is that the participants therein are credit card holders of
a company, policy holders of an insurance company, customers of
either a bank or broker-dealer or clients of an investment
adviser. Currently, the Alliance Mutual Funds include:

AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
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 Institutional Funds, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.

<PAGE>

Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
-Premier Portfolio
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios
-Alliance Conservative Investors Fund
-Alliance Growth Fund
-Alliance Growth Investors Fund
-Alliance Short-Term U.S. Government Fund

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

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

(i) the investor's current purchase;

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

<PAGE>

held by the investor; and

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

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

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

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

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

<PAGE>

total amount being invested (i.e., the initial sales charge
applicable to an investment of $100,000).

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

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

Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of any
Alliance Mutual Fund, including through the exchanges of their
Class A shares of the Fund, at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase of that Alliance Mutual Fund's shares. The
sales charge applicable to such initial purchase of shares of
that Alliance Mutual Fund will be that normally applicable, under
the schedule of the sales charges set forth in the Statement of
Additional Information of that Alliance Mutual Fund, to an
investment 13 times larger than such initial purchase. The sales
charge applicable to each succeeding monthly purchase will be
that normally applicable, under such schedule, to an investment
equal to the sum of (i) the total purchase previously made during
the 13-month period and (ii) the current month's purchase
multiplied by the number of months (including the current month)

<PAGE>

remaining in the 13-month period. Sales charges previously paid
during such period will not be retroactively adjusted on the
basis of later purchases.

Class B Shares

Investors may purchase Class B shares for cash at the
public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition
of a sales charge at the time of purchase. The Class B shares
are sold without an initial sales charge so that the Fund will
receive the full amount of the investors purchase payment.

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

Class B shares of the Fund are also offered to holders
of Class B shares of other Alliance Mutual Funds without any
sales charge at the time of purchase in an exchange transaction.
When Class B shares acquired in an exchange are redeemed, the
applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied to Class B shares of
the Alliance Mutual Fund originally purchased by the shareholder
at the time of their purchase.

Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of their cash purchase will be
subject to a contingent deferred sales charge at the rates set
forth below charged as a percentage of the dollar amount subject
thereto. The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
cash payment for the purchase of Class B shares until the time of
redemption of such shares.

<PAGE>

Year Since Contingent Deferred Sales Charge as a
Cash Purchase % of Dollar Amount Subject to Charge

First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter None

In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions, and, second,
of shares held the longest during the time they are subject to
the sales charge. The contingent deferred sales charge is
applied to the lesser of the net asset value at the time of
redemption of the Class A shares or Class B shares being redeemed
and the cost of such shares (or, as to Fund shares acquired
through an exchange, the cost of the Alliance Mutual Fund shares
originally purchased for cash). Accordingly, no sales charge
will be imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.

The contingent deferred sales charges is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, or (ii) to the extent that the
redemption represents a minimum required distribution from an
individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2, or (iii) that had
been purchased by present or former Trustees of the Fund, by the
relative of any such person, by any trust, individual retirement
account or retirement plan for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a Systematic Withdrawal Plan (see "Shareholder
Services--Systematic Withdrawal Plan").

Conversion Feature. Class B shares of the Fund will
automatically convert to Class A shares of the Fund in accordance
with the conversion schedule applicable to the original Alliance
Mutual Fund Class B shares purchased, or in the case of Class B
shares of the Fund purchased for cash, on the tenth Fund business
day in the month following the month in which the eighth
anniversary date of the acceptance of the purchase order for the
Class B shares occurs, and will no longer be subject to a higher
distribution services fee following conversion. Such conversion
will occur on the basis of the relative net asset values of the
two classes, without the imposition of any sales charge, fee or
other charge. The purposes of the conversion feature are (i) to

<PAGE>

provide a mechanism whereby the time period for the automatic
conversion of Class B shares to Class A shares will continue to
elapse in the event the Class B shares originally purchased for
cash are subsequently exchanged for Class B shares of the Fund or
Class B shares of another Alliance Mutual Fund and (ii) to reduce
the distribution services fee paid by holders of Class B shares
that have been outstanding long enough for the Principal
Underwriter to have been compensated for distribution expenses
incurred in the original sale of such shares. See "Shareholder
Services--Exchange Privilege."

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

The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.

Class C Shares. Investors may purchase Class C shares
at the public offering price equal to the net asset value per
share of the Class C shares on the date of purchase without the
imposition of a sales charge either at the time of purchase or,
as long as the shares are held for one year or more, upon
redemption. Class C shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment and, as long as the shares are held
for one year or more, without a contingent deferred sales charge
so that the investor will receive as proceeds upon redemption the
entire net asset value of his or her Class C shares. The Class C
distribution services fee enables the Fund to sell Class C shares
without either an initial or contingent deferred sales charge, as
long as the shares are held for one year or more. Class C shares
do not convert to any other class of shares of the Fund and incur
higher distribution services fees and transfer agency fees than
Class A shares and Advisor Class shares, and will thus have a

<PAGE>

higher expense ratio and pay correspondingly lower dividends than
Class A shares and Advisor Class shares.

Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares
derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares."

In determining the contingent deferred sales charge
applicable to a redemption of Class C shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because the
shares have been held beyond the period during which the charge
applies or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge.

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

Class C shares of the Fund are also offered to holders
of Class C shares of other Alliance Mutual Funds without any
sales charge at the time of purchase or redemption.

Conversion of Advisor Class Shares to Class A Shares

Advisor Class shares may be held solely through the fee-
based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares--Purchase for Cash,"
and by investment advisory clients of, and by certain other
persons associated with, the Adviser and its affiliates or the

<PAGE>

Fund. If (i) a holder of Advisor Class shares ceases to
participate in the fee-based program or plan, or to be associated
with the investment adviser or financial intermediary, in each
case, that satisfies the requirements to purchase shares set
forth under "Purchase of Shares--Purchase for Cash" or (ii) the
holder is otherwise no longer eligible to purchase Advisor Class
shares as described in the Advisor Class Prospectus and this
Statement of Additional Information (each, a "Conversion Event"),
then all Advisor Class shares held by the shareholder will
convert automatically and without notice to the shareholder,
other than the notice contained in the Advisor Class Prospectus
and this Statement of Additional Information, to Class A shares
of the Fund during the calendar month following the month in
which the Fund is informed of the occurrence of the Conversion
Event. The failure of a shareholder or a fee-based program to
satisfy the minimum investment requirements to purchase Advisor
Class shares will not constitute a Conversion Event. The
conversion would occur on the basis of the relative net asset
values of the two classes and without the imposition of any sales
load, fee or other charge. Class A shares currently bear a .30%
distribution services fee and have a higher expense ratio than
Advisor Class shares. As a result, Class A shares may pay
correspondingly lower dividends and have a lower net asset value
than Advisor Class shares.

The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his or her Advisor Class shares, which would constitute a
taxable event under federal income tax law.

____________________________________________________________

REDEMPTION AND REPURCHASE OF SHARES
____________________________________________________________

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

<PAGE>

Redemption

Subject only to the limitations described below, the
Fund will redeem shares tendered to it, as described below, at a
redemption price equal to their net asset value, which is
expected to remain constant at $1.00 per share, following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within
seven days after the Fund's receipt of such tender for
redemption. If a shareholder is in doubt about what documents
are required by his or her fee-based program or employee benefit
plan, the shareholder should contact his or her financial
representative.

The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.

Payment of the redemption price may be made either in
cash or in portfolio securities (selected at the discretion of
the Trustees of the Fund and taken at their value used in
determining the redemption price), or partly in cash and partly
in portfolio securities. However, payments will be made wholly
in cash unless the Trustees believe that economic conditions
exist which would make such a practice detrimental to the best
interests of the Fund.

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

<PAGE>

shareholder's holding period and basis in respect of the shares
redeemed.

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

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

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

Telephone Redemption By Check. Each Fund shareholder is
eligible to request redemption by check of Fund shares for which
no stock certificates have been issued by telephone at
(800) 221-5672 before 4:00 p.m. Eastern time on a Fund business
day in an amount not exceeding $50,000. Proceeds of such
redemptions are remitted by check to the shareholder's address of
record. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the shareholder or options form.

<PAGE>

Telephone Redemption - General. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information. The
Fund reserves the right to suspend or terminate its telephone
redemption service at any time without notice. Telephone
redemption is not available with respect to shares (i) for which
certificates have been issued, (ii) held in nominee or "street
name" accounts, (iii) held by a shareholder who has changed his
or her address of record within the preceding 30 calendar days or
(iv) held in any retirement plan account. Neither the Fund nor
Alliance, AFD or Alliance Fund Services, Inc. will be responsible
for the authenticity of telephone requests for redemptions that
the Fund reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.

Repurchase

The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. (Certain selected
dealers, agents of financial representatives may enter into
operating agreements permitting them to transmit purchase
information to the Principal Underwriter after 5:00 p.m. Eastern
time and receive that day's net asset value.) If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A

<PAGE>

shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a selected dealer or
agent, the repurchase is settled by the shareholder as an
ordinary transaction with or through the selected dealer or
agent, who may charge the shareholder for this service. The
repurchase of shares of the Fund as described above is a
voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.

General

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

____________________________________________________________

SHAREHOLDER SERVICES
____________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.

Automatic Investment Program

Investors may purchase shares of the Fund through an
automatic investment program utilizing Electronic Funds Transfer
drafts drawn on the investor's own bank account. Under such a
program, pre-authorized monthly drafts for a fixed amount (at

<PAGE>

least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank. In electronic
form, drafts can be made on or about a date each month selected
by the shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact Alliance Fund Services, Inc. at the address or telephone
numbers shown on the cover of this Statement of Additional
Information to establish an automatic investment program.

Exchange Privilege

You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds. In addition,
(i) present officers and full-time employees of the Adviser,
(ii) present Directors or Trustees of any Alliance Mutual Fund
and (iii) certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates may, on a tax-free basis, exchange Class A
shares of the Fund for Advisor Class shares of the Fund.
Exchanges of shares are made at the net asset value next
determined and without sales or service charges. Exchanges may
be made by telephone or written request. Telephone exchange
requests must be received by Alliance Fund Services, Inc. by
4:00 p.m. Eastern time on a Fund business day in order to receive
that day's net asset value.

Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.

Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call Alliance Fund Services, Inc. at 800-221-5672 to exchange
uncertificated shares. Except with respect to exchanges of
Class A shares of the Fund for Advisor Class shares of the Fund,
exchanges of shares as described above in this section are
taxable transactions for federal income tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days' written notice.

<PAGE>

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.

Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc., receives written instruction to the
contrary from the shareholder or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange, at (800) 221-5672
before 4:00 p.m., Eastern time, on a Fund business day as defined
above. Telephone requests for exchange received before 4:00 p.m.
Eastern time on a Fund business day will be processed as of the
close of business on that day. During periods of drastic
economic or market developments, such as the market break of
October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

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

<PAGE>

None of the Alliance Funds, Alliance, the Principal
Underwriter or Alliance Fund Services, Inc. will be responsible
for the authenticity of telephone requests for exchanges that the
Fund reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers, agents or financial
representatives, as applicable, may charge a commission for
handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance funds being acquired may be legally sold.
Each Alliance fund reserves the right, at any time on 60 days'
notice to its shareholders, to reject any order to acquire its
shares through exchange or otherwise to modify, restrict or
terminate the exchange privilege.

Retirement Plans

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

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

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

<PAGE>

Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.

If the aggregate net asset value of shares of Alliance
funds held by a qualified plan reaches $5 million on or before
December 15 in any year, all Class B or Class C shares of the
Fund held by the plan can be exchanged at the plan's request,
without any sales charge, for Class A shares of the Fund.

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

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

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to Alliance as compensation for its services to the retirement
plan accounts maintained with the Fund.

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

Dividend Direction Plan

A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account(s) with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).

<PAGE>

Further information can be obtained by contacting Alliance Fund
Services, Inc. at the address or the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Investors wishing to establish a dividend direction
plan in connection with their initial investment should complete
the appropriate section of the Subscription Application found in
the Prospectus. Current shareholders should contact Alliance
Fund Services, Inc. to establish a dividend direction plan.

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

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such payments will be subject to any
taxes applicable to redemptions and, except as discussed below,
any applicable contingent deferred sales charge. Shares acquired
with reinvested dividends and distributions will be liquidated
first to provide such withdrawal payments and thereafter other
shares will be liquidated to the extent necessary, and depending
upon the amount withdrawn, the investor's principal may be
depleted. A systematic withdrawal plan may be terminated at any
time by the shareholder or the Fund.

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

Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current

<PAGE>

Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "For Literature" telephone number shown on the cover of this
Statement of Additional Information.

CDSC Waiver for Class B Shares and Class C Shares.
Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B or Class C shares in a shareholder's account may
be redeemed free of any contingent deferred sales charge.

With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held
the longest will be redeemed next. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.

With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.

Statements and Reports

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

Checkwriting

A new Class A or Class C investor may fill out a
Signature Card to authorize the Fund to arrange for a
checkwriting service through State Street Bank and Trust Company
(the "Bank") to draw against Class A or Class C shares of the
Fund redeemed from the investor's account. A Class A or Class C
shareholder wishing to establish this checkwriting service should
contact the Fund by telephone or mail. Under this service,
checks may be made payable to any payee in any amount not less
than $500 and not more than 90% of the net asset value of the
Class A or Class C shares in the investor's account (excluding
for this purpose the current month's accumulated dividends and

<PAGE>

shares for which certificates have been issued). Corporations,
fiduciaries and institutional investors are required to furnish a
certified resolution or other evidence of authorization. This
checkwriting service will be subject to the Bank's customary
rules and regulations governing checking accounts, and the Fund
and the Bank each reserve the right to change or suspend the
checkwriting service. There is no charge to the shareholder for
the initiation and maintenance of this service or for the
clearance of any checks.

When a check is presented to the Bank for payment, the
Bank, as the shareholder's agent, causes the Fund to redeem, at
the net asset value next determined, a sufficient number of full
and fractional shares in the shareholder's account to cover the
check. A shareholder should not attempt to close his or her
account by use of a check. In this regard, the Bank has the
right to return checks (marked "insufficient funds") unpaid to
the presenting bank if the amount of the check exceeds 90% of the
assets in the account. Cancelled (paid) checks are returned to
the shareholder. The checkwriting service enables the
shareholder to receive the daily dividends declared on the shares
to be redeemed until the day that the check is presented to the
Bank for payment.

____________________________________________________________

DAILY DIVIDENDS--DETERMINATION OF NET ASSET VALUE
____________________________________________________________

All net income of the Fund is determined after the close
of each business day, currently 4:00 p.m., Eastern time, (and at
such other times as the Trustees may determine) and is paid
immediately thereafter pro rata to shareholders of record via
automatic investment in additional full and fractional shares in
each shareholder's account at the rate of one share for each
dollar distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

Net income consists of all accrued interest income on
Fund portfolio assets less the Fund's expenses applicable to that
dividend period. Realized gains and losses are reflected in net
asset value and are not included in net income. Net asset value
per share of each class is expected to remain constant at $1.00
since all net income is declared as a dividend each time net
income is determined.

Dividends paid by the Fund, with respect to Class A,
Class B and Class C shares will be calculated in the same manner
at the same time on the same day and will be in the same amount,
except that the higher distribution services fees applicable to

<PAGE>

Class B and Class C shares, and any incremental transfer agency
costs relating to Class B shares, will be borne exclusively by
the class to which they relate.

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

The Fund maintains procedures designed to maintain its
share price at $1.00. Such procedures include review of the
Fund's portfolio holdings by the Trustees at such intervals as
they deem appropriate to determine whether and to what extent the
net asset value of the Fund calculated by using available market
quotations or market equivalents deviates from net asset value
based on amortized cost. There can be no assurance, however,
that the Fund's net asset value per share will remain constant at
$1.00.

The net asset value of the shares is determined each
business day as of the close of regular trading in the Exchange
currently 4:00 p.m., Eastern time. The net asset value per share
of each class is calculated by determining the amount of assets
attributable to each class of shares, subtracting liabilities,
and dividing by the total number of shares outstanding. All
expenses, including the fees payable to Alliance, are accrued
daily.

____________________________________________________________

TAXES
____________________________________________________________

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

For shareholders' Federal income tax purposes, all
distributions by the Fund out of interest income and net realized

<PAGE>

short-term capital gains are treated as ordinary income, and
distributions of long-term capital gains, if any, are treated as
long-term capital gains irrespective of the length of time the
shareholder held shares in the Fund. Since the Fund derives
nearly all of its gross income in the form of interest and the
balance in the form of short-term capital gains, it is expected
that for corporate shareholders, none of the Fund's distributions
will be eligible for the dividends-received deduction under
current law.

____________________________________________________________

BROKERAGE AND PORTFOLIO TRANSACTIONS
____________________________________________________________

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

The Fund has no obligations to enter into transactions
in portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser, in its discretion, purchases and sells
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under Advisory Agreement, and the
expenses of the the Adviser will not necessarily be reduced as a
result of the receipt of such information. During the fiscal
years ended September 30, 1996, 1997 and 1998, the Fund incurred
no brokerage commissions.

<PAGE>

____________________________________________________________

GENERAL INFORMATION
____________________________________________________________

Capitalization

The Fund is a Massachusetts business trust that was
organized on January 14, 1994. The Fund has an unlimited number
of authorized Class A, Class B, Class C and Advisor Class shares
of beneficial interest par value $.001 per share, which may,
without shareholder approval, be divided into an unlimited number
of series. All shares of the Fund, when issued, are fully paid
and non-assessable. The Trustees are authorized to reclassify
and issue any unissued shares to any number of additional classes
or series without shareholder approval. Accordingly, the
Trustees in the future, for reasons such as the desire to
establish one or more additional portfolios with different
investment objectives, policies or restrictions, may create
additional classes or series of shares. Shares of each class
participate equally in dividends and distributions from that
class, including any distributions in the event of a liquidation
except that each class bears its own transfer agency expenses,
each of Class A, Class B and Class C shares bears its own
distribution expenses and Class B shares and Advisor shares
convert to Class A shares under certain circumstances. Shares of
the Fund are normally entitled to one vote for all purposes.
Generally, shares of the Fund vote as a single series for the
election of Trustees and on any other matter affecting the Fund.
As to matters affecting a class differently, such as approval of
the Rule 12b-1 plan, each class votes separately. Certain
procedures for the removal by shareholders of Trustees of
investment trusts, such as the Fund, are set forth in Section
16(c) of the Act. Shareholder meetings will be held only when
required by federal or state law.

As of the close of business on November 9, 1998, there
were 364,156,927 shares of beneficial interest of the Fund
outstanding. Of this amount, 141,034,197 shares were Class A
shares, 151,969,644 shares were Class B shares, 67,751,203 shares
were Class C shares and 3,401,883 were Advisor Class shares. Set
forth below is certain information as to all persons who, of
record or beneficially, held 5% or more of any of the classes of
the Fund's shares outstanding at November 9, 1998:

<PAGE>

No. of
% of % of
Name and Address Shares Class

Class A Shares

Unibank Sa Luxembourg 9,327,139 6.61%
672 Rue De Neudorf
Findel
PO Box 562
L-2015 Luxembourg

Unibank Sa Luxembourg 7,124,314 5.05%
Findel
PO Box 562
L-2015 Luxembourg

Advisor Class Shares

Alliance Plans Div/FTC C/F 191,222 5.62%
Robert D Weedon Jr
12 Harvard Drive
Tinton Falls, NJ 07724-9765

Bank of New York C/F 1,842,496 54.16%
Equity League Pension Trust Fd
Amivest Corp Disc Investment Mgr
1 Wall Street
New York, NY 10005-2500

Ryne A Nishimi & 400,810 11.78%
Michelle B Nishimi JTTEN
27001 La Paz Rd Ste 342
Mission Viejo, CA 92691-5526

Bank of New York C/F 240,664 7.07%
AFM & EPW FD 9
Amivest Corp Discretionary
Investment Advisor
1 Wall Street
New York, NY 10005-2500

Alliance Plans Div/FTC 292,835 8.61%
FBO Maurice S Mandel Rollover IRA
14 Hillside Avenue
Port Washington, NY 11050-2747

<PAGE>

Shareholder Liability

Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Fund. However, the Agreement and Declaration
of Trust disclaims shareholder liability for acts or obligations
of the Fund and requires that the Trustees use their best efforts
to ensure that notice of such disclaimer be given in each note,
bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or officers of the Fund. The Agreement
and Declaration of Trust provides for indemnification out of the
property of the Fund for all loss and expense of any shareholder
of the Fund held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances
in which the Fund would be unable to meet its obligations. In
the view of Alliance, such risk is not material.

Registrar, Transfer Agent and Dividend Disbursing Agent

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of Alliance, located at 500 Plaza Drive, Secaucus, New
Jersey 07094, acts as the Fund's registrar, transfer agent and
dividend disbursing agent for a fee based upon the number of
shareholder accounts maintained for the Fund. The transfer
agency fee for the Class B shares will be higher than the
transfer agency fee for the Class A, Class C or Advisor shares.

Custodian

State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, acts as custodian for the
securities and cash of the Fund but plays no part in deciding the
purchase or sale of portfolio securities.

Principal Underwriter

Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, an indirect wholly-owned
subsidiary of Alliance, serves as the Fund's principal
underwriter, and as such may solicit orders from the public to
purchase shares of the Fund. AFD is not obligated to sell any
specific amount of shares and will purchase shares for resale
only against orders for shares. Under the Agreement between the
Fund and AFD, the Fund has agreed to indemnify the distributors,
in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder,
against certain civil liabilities, including liabilities under
the Securities Act, as amended.

<PAGE>

Independent Auditors

An opinion relating to the Fund's financial statements
is given herein by McGladrey & Pullen LLP, 555 Fifth Avenue, New
York, New York, independent auditors for the Fund.

Counsel

Legal matters in connection with the issuance of the
shares offered hereby have been passed upon by Seward & Kissel,
One Battery Park Plaza, New York, New York, counsel for the Fund
and the Adviser. Seward & Kissel has relied upon the opinion of
Sullivan & Worcester, Boston, Massachusetts, for matters relating
to Massachusetts law.

Yield Quotations

Advertisements containing yield quotations which are
computed separately for Class A, Class B, Class C and Advisor
Class shares may from time to time be sent to investors or placed
in newspapers, magazines or other media on behalf of the Fund.
Such yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act. Yield quotations are thus determined by (i) computing the
net changes over a seven-day period, exclusive of capital
changes, in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of such period,
(ii) dividing the net change in account value by the value of the
account at the beginning of such period, and (iii) multiplying
such base period return by (365/7)--with the resulting yield
figure carried to the nearest hundredth of one percent.
Effective annual yield represents a compounding of the annualized
yield according to the following formula:

effective yield = ((base period return + 1)365/7) - 1.

Dividends for the seven days ended September 30, 1998
for Class A amounted to an annualized yield of 4.47% equivalent
to an effective yield of 4.57%, for Class B an annualized yield
of 3.97% equivalent to an effective yield of 4.05%, for Class C
an annualized yield of 4.25% equivalent to an effective yield of
4.34% and for Advisor Class an annualized yield of 4.98%
equivalent to an effective yield of 5.11%. Current yield
information can be obtained by a recorded message by telephoning
toll-free at (800) 221-9513 or in New York State at
(212) 785-9106.

<PAGE>

Additional Information

Any shareholder inquiries may be directed to the
shareholder's broker or AFS at the address or telephone numbers
shown on the front cover of this Statement of Additional
Information. This Statement of Additional Information does not
contain all the information set forth in the Registration
Statement filed by the Trust with the Commission under the
Securities Act. Copies of the Registration Statement may be
obtained at a reasonable charge from the Commission or may be
examined, without charge, at the Commission's offices in
Washington, D.C.

<PAGE>

_______________________________________________________________

FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT
_______________________________________________________________

<PAGE>

____________________________________________________________

APPENDIX A
____________________________________________________________

Prime-1, Prime-2, A-1, A-2, Fitch-1, Fitch-2,
Duff 1 and Duff 2 Commercial Paper Ratings

The Fund will invest only in paper maintaining a high
quality rating.

"Prime-1" is the highest commercial paper rating
assigned by Moody's Investors Services, Inc. ("Moody's"), and
indicates superior ability for repayment of senior short-term
debt obligations. "Prime-2" is the second highest, and denotes a
strong, but somewhat lesser degree of assurance. Commercial
paper issuers rated "Prime" have the following characteristics:
their short-term debt obligations carry the smallest degree of
investment risk; margins of support for current indebtedness are
large or stable with cash flow and asset protection well assured;
current liquidity provides ample coverage of near-term
liabilities and unused alternative financing arrangements are
generally available; and while protective elements may change
over the intermediate or longer term, such changes are most
unlikely to impair the fundamentally strong position of short-
term obligations.

Commercial paper issuers rate "A" by Standard & Poor's
have the following characteristics: liquidity ratios are better
than industry average; long term debt is "A" or better; the
issuer has access to at least two additional channels of
borrowing; basic earnings and cash flow are in an upward trend;
and typically, the issuer is a strong company in a well-
established industry with superior management. Standard & Poor's
uses the numbers 1+, 1, 2 and 3 to denote relative strength
within its highest classification of "A". The numbers 1 and 2
indicate the relative degree of safety regarding timely payment
with "A-1" paper being somewhat higher than "A-3".

Commercial paper rated "Fitch-1" is considered to be the
highest grade paper and is regarded as having the strongest
degree of assurance for timely payment. "Fitch-2" is considered
very good grade paper and reflects an assurance of timely payment
only slightly less in degree than the strongest issue.

Commercial paper issues rated "Duff 1" by Duff & Phelps,
Inc. have the following characteristics: very high certainty of
timely payment, excellent liquidity factors supported by strong
fundamental protection factors, and risk factors which are very
small. Issues rated "Duff 2" have a good certainty of timely

A-1

<PAGE>

payment, sound liquidity factors and company fundamentals, small
risk factors, and good access to capital markets.

Bonds rated "AAA" and "Aaa" have the highest ratings
assigned to debt obligations by Standard & Poor's and Moody's,
respectively. Standard & Poor's "AAA" rating indicates an
extremely strong capacity to pay principal and interest. Bonds
rated "AA" by Standard & Poor's also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from "AAA"
issues only in small degree. Standard & Poor's "A" rated bonds
have a strong capacity to pay interest and repay principal but
are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than are higher rated
bonds.

Moody's "Aaa" rating indicates the ultimate degree of
protection as to principal and interest. Moody's "Aa" rated
bonds, though also high-grade issues, are rated lower than "Aaa"
bonds because margins of protection may not be as large,
fluctuations of protective elements may be of greater amplitude
or there may be other elements present which make the long term
risks appeal somewhat larger. Moody's "A" rated bonds are
considered upper medium grade obligations possessing many
favorable investment attributes. Although factors giving
security to principal and interest are considered adequate,
elements may exist which suggest that the bonds may be
susceptible to impairment sometime in the future.

A-2

<PAGE>

APPENDIX B:

CERTAIN EMPLOYEE BENEFIT PLANS

Employee benefit plans described below which are
intended to be tax-qualified under section 401(a) of the Internal
Revenue Code of 1986, as amended ("Tax Qualified Plans"), for
which Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate thereof ("Merrill Lynch") is recordkeeper (or with
respect to which recordkeeping services are provided pursuant to
certain arrangements as described in paragraph (ii) below)
("Merrill Lynch Plans") are subject to specific requirements as
to the Fund shares which they may purchase. Notwithstanding
anything to the contrary contained elsewhere in this Statement of
Additional Information, the following Merrill Lynch Plans are not
eligible to purchase Class A shares and are eligible to purchase
Class B shares of the Fund at net asset value without being
subject to a contingent deferred sales charge:

(i) Plans for which Merrill Lynch is the recordkeeper
on a daily valuation basis, if when the plan is
established as an active plan on Merrill Lynch's
recordkeeping system:

(a) the plan is one which is not already investing
in shares of mutual funds or interests in
other commingled investment vehicles of which
Merrill Lynch Asset Management, L.P. is
investment adviser or manager ("MLAM Funds"),
and either (A) the aggregate assets of the
plan are less than $3 million or (B) the total
of the sum of (x) the employees eligible to
participate in the plan and (y) those persons,
not including any such employees, for whom a
plan account having a balance therein is
maintained, is less than 500, each of (A) and
(B) to be determined by Merrill Lynch is
established as an active plan on Merrill
Lynch's recordkeeping system (an "Active
Plan"); or

(b) the plan is one which is already investing in
shares of or interests in MLAM Funds and the assets
of the plan have an aggregate value of less than $5
million, as determined by Merrill Lynch as of the
date the plan becomes an Active Plan.

For purposes of applying (a) and (b), there are to
be aggregated all assets of any Tax-Qualified Plan
maintained by the sponsor of the Merrill Lynch Plan

B-1

<PAGE>

(or any of the sponsor's affiliates) (determined to
be such by Merrill Lynch) which are being invested
in shares of or interests in MLAM Funds, Alliance
Mutual Funds or other mutual funds made available
pursuant to an agreement between Merrill Lynch and
the principal underwriter thereof (or one of its
affiliates) and which are being held in a Merrill
Lynch account.

(ii) Plans for which the recordkeeper is not Merrill
Lynch, but which are recordkept on a daily
valuation basis by a recordkeeper with which
Merrill Lynch has a subcontracting or other
Alliance arrangement for the performance of
recordkeeping services, if the plan is determined
by Merrill Lynch to be so eligible and the assets
of the plan are less than $3 million.

Class B shares of the Fund held by any of the above-
described Merrill Lynch Plans are to be replace at Merrill
Lynch's direction through conversion, exchange or otherwise by
Class A shares of the Fund on the earlier of the date that the
value of the plan's aggregate assets first equals or exceeds $5
million or the date on which any Class B share of the Fund held
by the plan would convert to a Class A share of the Fund as
described under "Purchase of Shares" and "Redemption and
Repurchase of Shares."

Any Tax Qualified Plan, including any Merrill Lynch
Plan, which does not purchase Class B shares of the Fund without
being subject to a contingent deferred sales charge under the
above criteria is eligible to purchase Class B shares subject to
a contingent deferred sales charge as well as other classes of
shares of the Fund as set forth above under "Purchase of Shares"
and "Redemption and Repurchase of Shares."

B-2

<PAGE>

PART C
OTHER INFORMATION

ITEM 23. Exhibits

(a) (1) Agreement and Declaration of Trust of the
Registrant - Incorporated by reference to
Exhibit 1 to Post-Effective Amendment
No. 8 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-
74230 and 811-08294) filed with the
Securities and Exchange Commission on
January 30, 1998.

(2) Certificate of Amendment of the Agreement
and Declaration of Trust dated November
8, 1995 - Incorporated by reference to
Exhibit 1(a) to Post-Effective Amendment
No. 3 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-
74230 and 811-08294) filed with the
Securities and Exchange Commission on
January 26, 1996.

(3) Certificate of Amendment of the Agreement
and Declaration of Trust dated September
30, 1996 - Incorporated by reference to
Exhibit 1 to Post-Effective Amendment
No. 6 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-
74230 and 811-08294) filed with the
Securities and Exchange Commission on
February 3, 1997.

(b) By-Laws of the Registrant - Incorporated by
reference to Exhibit 2 to Post-Effective
Amendment No. 8 of the Registrant's
Registration Statement on Form N-1A (File Nos.
33-74230 and 811-08294) filed with the
Securities and Exchange Commission on
January 30, 1998.

(d) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. -
Incorporated by reference to Exhibit 5 to
Post-Effective Amendment No. 8 of the
Registrant's Registration Statement on
Form N-1A (File Nos. 33-74230 and 811-08294)

C-1

<PAGE>

filed with the Securities and Exchange
Commission on January 30, 1998.

(e) (1) Distribution Services Agreement between
the Registrant and Alliance Fund
Distributors, Inc. - Incorporated by
reference to Exhibit 6(a) to
Post-Effective Amendment No. 8 of the
Registrant's Registration Statement on
Form N-1A (File Nos. 33-74230 and 811-
08294) filed with the Securities and
Exchange Commission on January 30, 1998.

(2) Amendment to Distribution Services
Agreement between Registrant and Alliance
Fund Distributors, Inc. dated June 4,
1996 - Incorporated by reference to
Exhibit No. 6(a) to Post-Effective
Amendment No. 6 of the Registrant's
Registration Statement on Form N-1A (File
Nos. 33-74230 and 811-08294) filed with
the Securities and Exchange Commission on
February 3, 1997.

(3) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and
selected dealers offering shares of
Registrant - Incorporated by reference to
Exhibit 6(c) to Post-Effective Amendment
No. 8 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-
74230 and 811-08294) filed with the
Securities and Exchange Commission on
January 30, 1998.

(4) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and
selected agents making available shares
of Registrant - Incorporated by reference
to Exhibit 6(d) to Post-Effective
Amendment No. 8 of the Registrant's
Registration Statement on Form N-1A (File
Nos. 33-74230 and 811-08294) filed with
the Securities and Exchange Commission on
January 30, 1998.

(f) Not applicable.

(g) Custodian Contract between the Registrant and
State Street Bank and Trust Company -
Incorporated by reference to Exhibit 8 to

C-2

<PAGE>

Post-Effective Amendment No. 9 of the
Registrant's Registration Statement on
Form N-1A (File Nos. 33-74230 and 811-08294)
filed with the Securities and Exchange
Commission on January 30, 1998.

(h) Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc. -
Incorporated by reference to Exhibit 8 to
Post-Effective Amendment No. 9 of the
Registrant's Registration Statement on
Form N-1A (File Nos. 33-74230 and 811-08294)
filed with the Securities and Exchange
Commission on January 30, 1998.

(i) Opinion and Consent of Seward & Kissel - Filed
herewith.

(j) Not applicable.

(k) Not applicable.

(l) Investment representation letter of Alliance
Capital Management L.P. - Incorporated by
reference to Exhibit 13 to Post-Effective
Amendment No. 8 of the Registrant's
Registration Statement on Form N-1A (File Nos.
33-74230 and 811-08294) filed with the
Securities and Exchange Commission on
January 30, 1998.

(m) Rule 12b-1 Plan - See Exhibit e(1) hereto.

(n) Not applicable.

(o) Rule 18f-3 Plan -Incorporated by reference to
Exhibit No. 18 to Post-Effective Amendment
No. 6 of the Registrant's Registration
Statement on Form N-1A (File Nos. 33-74230 and
811-08294) filed with the Securities and
Exchange Commission on February 3, 1997.

Other Exhibits: Power of Attorney of Ruth
Block, John D. Carifa, David H. Dievler,
John H. Dobkin, William H. Foulk, Jr., Dr.
James M. Hester, Clifford L. Michel, Donald J.
Robinson - Filed herewith.

C-3

<PAGE>

ITEM 24. Persons Controlled by or Under Common Control with
Registrant.

None.

ITEM 25. Indemnification.

It is the Registrant's policy to indemnify its
trustees and officers, employees and other agents
as set forth in Article VIII and Article III of
Registrant's Agreement and Declaration of Trust,
filed as Exhibit (a) in response to Item 23 and
Section 10 of the proposed Distribution Services
Agreement filed as Exhibit (e)(1), all as set forth
below. The liability of the Registrant's trustees
and officers is dealt with in Article VIII of
Registrant's Agreement and Declaration of Trust, 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 proposed Advisory
Agreement filed as Exhibit (d)in response to Item
23 of this Registration Statement, as set forth
below.

Article VIII of Registrant's Agreement and
Declaration of Trust reads as follows:

"Section 8.1. Trustees, Shareholders, etc. Not
Personally Liable; Notice. The Trustees and
officers of the Trust, in incurring any debts,
liabilities or obligations, or in limiting or
omitting any other actions for or in connection
with the Trust, are or shall be deemed to be acting
as Trustees or officers of the Trust and not in
their own capacities. No Shareholder shall be
subject to any personal liability whatsoever in
tort, contract or otherwise to any other Person or
Persons in connection with the assets or the
affairs of the Trust or of any Portfolio, and
subject to Section 8.4 hereof, no Trustee, officer,
employee or agent of the Trust shall be subject to
any personal liability whatsoever in tort,
contract, or otherwise, to any other Person or
Persons in connection with the assets or affairs of
the Trust or of any Portfolio, save only that
arising from his own willful misfeasance, bad
faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office or
the discharge of his functions. The Trust (or if
the matter relates only to a particular Portfolio,

C-4

<PAGE>

that Portfolio) shall be solely liable for any and
all debts, claims, demands, judgments, decrees,
liabilities or obligations of any and every kind,
against or with respect to the Trust or such
Portfolio in tort, contract or otherwise in
connection with the assets or the affairs of the
Trust or such Portfolio, and all Persons dealing
with the Trust or any Portfolio shall be deemed to
have agreed that resort shall be had solely to the
Trust Property of the Trust or the Portfolio Assets
of such Portfolio, as the case may be, for the
payment or performance thereof.

The Trustees shall use their best efforts to ensure
that every note, bond, contract, instrument,
certificate of undertaking made or issued by the
Trustees or by any officers or officer shall give
notice that this Declaration of Trust is on file
with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that
the same was executed or made by or on behalf of
the Trust or by them as Trustees or Trustee or as
officers or officer, and not individually, and that
the obligations of such instrument are not binding
upon any of them or the Shareholders individually
but are binding only upon the assets and property
of the Trust, or the particular Portfolio in
question, as the case may be, but the omission
thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or
Shareholder individually, or to subject the
Portfolio Assets of any Portfolio to the
obligations of any other Portfolio.

SECTION 8.2. Trustees' Good Faith Action; Expert
Advice; No Bond or Surety. The exercise by the
Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. Subject
to Section 8.4 hereof, a Trustee shall be liable
for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee,
and for nothing else, and shall not be liable for
errors of judgment or mistakes of fact or law.
Subject to the foregoing, (i) the Trustees shall
not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent,
employee, consultant, Investment Adviser,
Administrator, Distributor or Principal
Underwriter, Custodian or Transfer Agent, Dividend
Disbursing Agent, Shareholder Servicing Agent or

C-5

<PAGE>

Accounting Agent of the Trust, nor shall any
Trustee be responsible for the act or omission of
any other Trustee; (ii) the Trustees may take
advice of counsel or other experts with respect to
the meaning and operation of this Declaration of
Trust and their duties as Trustees, and shall be
under no liability for any act or omission in
accordance with such advice or for failing to
follow such advice; and (iii) in discharging their
duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account
of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any
independent public accountant, and (with respect to
the subject matter of the contract involved) any
officer, partner or responsible employee of a
Contracting Party appointed by the Trustees
pursuant to Section 5.2 hereof. The trustees as
such shall not be required to give any bond or
surety or any other security for the performance of
their duties.

SECTION 8.3. Indemnification of Shareholders. If
any Shareholder (or former Shareholder) of the
Trust shall be charged or held to be personally
liable for any obligation or liability of the Trust
solely by reason of being or having been a
Shareholder and not because of such Shareholder's
acts or omissions or for some other reason, the
Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such
charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or the heirs,
executors, administrators or other legal
representatives thereof, or in the case of a
corporation or other entity, its corporate or other
general successor) shall be entitled (but solely
out of the assets of the Portfolio of which such
Shareholder or former Shareholder is or was the
holder of Shares) to be held harmless from and
indemnified against all loss and expense arising
from such liability.

SECTION 8.4. Indemnification of Trustees,
Officers, etc. Subject to the limitations set
forth hereinafter in this Section 8.4, the Trust
shall indemnify (from the assets of the Portfolio
or Portfolios to which the conduct in question
relates) each of its Trustees and officers
(including Persons who serve at the Trust's request
as directors, officers or trustees of another

C-6

<PAGE>

organization in which the Trust has any interest as
a shareholder, creditor or otherwise [hereinafter,
together with such Person's heirs, executors,
administrators or personal representative, referred
to as a "Covered Person"]) against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred
by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any
court or administrative or legislative body, in
which such Covered Person may be or may have been
involved as a party or otherwise or with which such
Covered Person may be or may have been threatened,
while in office or thereafter, by reason of being
or having been such a Trustee or officer, director
or trustee, except with respect to any matter as to
which it has been determined that such Covered
Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action
was in or not opposed to the best interests of the
Trust or (ii) had acted with willful misfeasance,
bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such
Covered Person's office (either and both of the
conduct described in clauses (i) and (ii) of this
sentence being referred to hereafter as "Disabling
Conduct"). A determination that the Covered Person
is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other
body before whom the proceeding was brought that
the Covered Person to be indemnified was not liable
by reason of Disabling Conduct, (ii) dismissal of a
court action or an administrative proceeding
against a Covered Person for insufficiency of
evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by
reason of Disabling Conduct by (a) a vote of a
majority of a quorum of Trustees who are neither
"interested persons" of the Trust as defined in
Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in
a written opinion. Expenses, including
accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time
by the Portfolio or Portfolios to which the conduct

C-7

<PAGE>

in question related in advance of the final
disposition of any such action, suit or proceeding;
provided, that the Covered Person shall have
undertaken to repay the amounts so paid to such
Portfolio or Portfolios if it is ultimately
determined that indemnification of such expenses is
not authorized under this Article 8 and (i) the
Covered Person shall have provided security for
such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the
disinterested Trustees, or an independent legal
counsel in a written opinion, shall have
determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered
Person ultimately will be found entitled to
indemnification.

SECTION 8.5. Compromise Payment. As to any matter
disposed of by a compromise payment by any such
Covered Person referred to in Section 8.4 hereof,
pursuant to a consent decree or otherwise, no such
indemnification either for said payment or for any
other expenses shall be provided unless such
indemnification shall be approved (i) by a majority
of a quorum of the disinterested Trustees or
(ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to
clause (i) or by independent legal counsel pursuant
to clause (ii) shall not prevent the recovery from
any Covered Person of any amount paid to such
Covered Person in accordance with either of such
clauses as indemnification if such Covered Person
is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action
was in or not opposed to the best interests of the
Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered
Person's office.

SECTION 8.6. Indemnification Not Exclusive, etc.
The right of indemnification provided by this
Article 8 shall not be exclusive of or affect any
other rights to which any such Covered Person may
be entitled. As used in this Article 8, a
"disinterested" Person is one against whom none of
the actions, suits or other proceedings in

C-8

<PAGE>

question, and no other action, suit or other
proceeding on the same or similar grounds is then
or has been pending or threatened. Nothing
contained in this Article 8 shall affect any rights
to indemnification to which personnel of the Trust,
other than Trustees and officers, and other Persons
may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such Person.

SECTION 8.7. Liability of Third Persons Dealing
with Trustees. No person dealing with the Trustees
shall be bound to make any inquiry concerning the
validity of any transaction made by the Trustees or
to see to the application of any payments made or
property transferred to the Trust or upon its
order."

Article III of Registrant's Agreement and
Declaration of Trust reads, in pertinent part, as
follows:

"Without limiting the foregoing and to the extent
not inconsistent with the 1940 Act or other
applicable law, the Trustees shall have power and
authority:

(s) Indemnification. In addition to the
mandatory indemnification provided for in
Article 8 hereof and to the extent
permitted by law, to indemnify or enter
into agreements with respect to
indemnification with any Person with whom
this Trust has dealings, including,
without limitation, any independent
contractor, to such extent as the
Trustees shall determine."

The Advisory Agreement to be between the Registrant
and Alliance Capital Management L.P. provides that
Alliance Capital Management L.P. will not be liable
under such agreements 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 willful 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.

C-9

<PAGE>

The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
provides that the Registrant will indemnify, defend
and hold Alliance Fund Distributors, Inc., and any
person who controls it within the meaning of
Section 15 of the Securities Act of 1933 (the
"Securities Act"), 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 the 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 Agreement and Declaration of
Trust, the proposed Advisory Agreement between
Registrant and Alliance Capital Management L.P. and
the proposed Distribution Services Agreement
between Registrant and Alliance Fund Distributors,
Inc. which are filed herewith as Exhibits (a), (d)
and (e)(1), respectively, in response to Item 23
and each of which are incorporated by reference
herein.

Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange
Commission, such indemnification is against public
policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a
claim for indemnification against such liabilities
(other than the payment by the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or
controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against
public policy as expressed in the Securities Act

C-10

<PAGE>

and will be governed by the final adjudication of
such issue.

In accordance with Release No. IC-11330
(September 2, 1980), the Registrant will indemnify
its trustees, officers, investment manager and
principal underwriters only if (1) a final decision
on the merits was issued by the court or other body
before whom the proceeding was brought that the
person to be indemnified (the "indemnitee") was not
liable by reason or willful misfeasance, bad faith,
gross negligence or reckless disregard of the
duties involved in the conduct of his office
("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the
facts, that the indemnitee was not liable by reason
of disabling conduct, by (a) the vote of a majority
of a quorum of the trustees who are neither
"interested persons" of the Registrant as defined
in section 2(a)(19) of the Investment Company Act
of 1940 nor parties to the proceeding
("disinterested non-party trustees"), or (b) an
independent legal counsel in a written opinion.
The Registrant will advance attorneys fees or other
expenses incurred by its trustees, officers,
investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or
on behalf of the indemnitee to repay the advance
unless it is ultimately determined that he is
entitled to indemnification and, as a condition to
the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant
shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a
quorum of disinterested, non-party trustees of the
Registrant, or an independent legal counsel in a
written opinion, shall determine, based on a review
of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be
found entitled to indemnification.

The Registrant participates in a joint
trustees/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 are covered up to the limits specified
for any claim against them for acts committed in

C-11

<PAGE>

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 26. Business and Other Connections of Investment
Adviser.

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

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

ITEM 27. Principal Underwriters.

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

Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance Institutional Reserves, Inc.
Alliance International Fund
Alliance International Premier Growth Fund,
Inc.

C-12

<PAGE>

Alliance Limited Maturity Government Fund,
Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios

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

Positions and Positions and
Offices With Offices with
Name Underwriter Registrant

Michael J. Laughlin Director and Chairman
John D. Carifa Director

Robert L. Errico Director and President

Geoffrey L. Hyde Director and Senior
Vice President
Dave H. Williams Director

David Conine Executive Vice
President

Richard K. Saccullo Executive Vice
President

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

C-13

<PAGE>

Richard A. Davies Senior Vice President
Managing Director

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

Anne S. Drennan Senior Vice President
and Treasurer

Karen J. Bullot Senior Vice President

James S. Comforti Senior Vice President

James L. Cronin Senior Vice President

Daniel J. Dart Senior Vice President

Byron M. Davis Senior Vice President

Mark J. Dunbar Senior Vice President

Donald N. Fritts Senior Vice President

Bradley F. Hanson Senior Vice President

Richard E. Khaleel Senior Vice President

Stephen R. Laut Senior Vice President

Susan L. Matteson-King Senior Vice President

Daniel D. McGinley Senior Vice President

Ryne A. Nishimi Senior Vice President

Antonios G. Poleondakis Senior Vice President

Robert E. Powers Senior Vice President

Raymond S. Sclafani Senior Vice President

Gregory K. Shannahan Senior Vice President

Joseph F. Sumanski Senior Vice President

Peter J. Szabo Senior Vice President

Nicholas K. Willett Senior Vice President

Richard A. Winge Senior Vice President

C-14

<PAGE>

Gerard J. Friscia Vice President and
Controller

Jamie A. Atkinson Vice President

Benji A. Baer Vice President

Kenneth F. Barkoff Vice President

Casimir F. Bolanowski Vice President

Michael E. Brannan Vice President

Timothy W. Call Vice President

Kevin T. Cannon Vice President

John R. Carl Vice President

William W. Collins, Jr. Vice President

Leo H. Cook Vice President

Richard W. Dabney Vice President

Stephen J. Demetrovits Vice President

John F. Dolan Vice President

John C. Endahl Vice President

Sohaila S. Farsheed Vice President

Shawn C. Gage Vice President

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

Mark D. Gersten Vice President Treasurer
and Chief
Financial
Officer

Joseph W. Gibson Vice President

John Grambone Vice President

George C. Grant Vice President

Charles M. Greenberg Vice President

C-15

<PAGE>

Alan Halfenger Vice President

William B. Hanigan Vice President

Scott F. Heyer Vice President

George R. Hrabovsky Vice President

Valerie J. Hugo Vice President

Scott Hutton Vice President

Richard D. Keppler Vice President

Gwenn M. Kessler Vice President

Donna M. Lamback Vice President

Henry Michael Lesmeister Vice President

James M. Liptrot Vice President

James P. Luisi Vice President

Jerry W. Lynn Vice President

Christopher J. MacDonald Vice President

Michael F. Mahoney Vice President

Shawn P. McClain Vice President

Jeffrey P. Mellas Vice President

Thomas F. Monnerat Vice President

Christopher W. Moore Vice President

Timothy S. Mulloy Vice President

Joanna D. Murray Vice President

Nicole Nolan-Koester Vice President

John C. O'Connell Vice President

John J. O'Connor Vice President

James J. Posch Vice President

C-16

<PAGE>

Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel

Bruce W. Reitz Vice President

Karen C. Satterberg Vice President

John P. Schmidt Vice President

Robert C. Schultz Vice President

Richard J. Sidell Vice President

Teris A. Sinclair Vice President

Scott C. Sipple Vice President

Elizabeth Smith Vice President

Martine H. Stansbery, Jr. Vice President

Andrew D. Strauss Vice President

Michael J. Tobin Vice President

Joseph T. Tocyloski Vice President

Martha D. Volcker Vice President

Patrick E. Walsh Vice President

Mark E. Westmoreland Vice President

William C. White Vice President

David E. Willis Vice President

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

Patrick Look Assistant Vice President
and Assistant Treasurer

Michael W. Alexander Assistant Vice President

Richard J. Appaluccio Assistant Vice President

Charles M. Barrett Assistant Vice President

C-17

<PAGE>

Robert F. Brendli Assistant Vice President

Maria L. Carreras Assistant Vice President

John P. Chase Assistant Vice President

Russell R. Corby Assistant Vice President

Jean A. Cronin Assistant Vice President

John W. Cronin Assistant Vice President

Terri J. Daly Assistant Vice President

Ralph A. DiMeglio Assistant Vice President

Faith C. Deutsch Assistant Vice President

John E. English Assistant Vice President

Duff C. Ferguson Assistant Vice President

James J. Hill Assistant Vice President

Theresa Iosca Assistant Vice President

Erik A. Jorgensen Assistant Vice President

Eric G. Kalender Assistant Vice President

Edward W. Kelly Assistant Vice President

Michael Laino Assistant Vice President

Nicholas J. Lapi Assistant Vice President

Kristine J. Luisi Assistant Vice President

Kathryn Austin Masters Assistant Vice President

Richard F. Meier Assistant Vice President

Mary K. Moore Assistant Vice President

Richard J. Olszewski Assistant Vice President

Catherine N. Peterson Assistant Vice President

Rizwan A. Raja Assistant Vice President

Carol H. Rappa Assistant Vice President

C-18

<PAGE>

Clara Sierra Assistant Vice President

Gayle S. Stamer Assistant Vice President

Eileen Stauber Assistant Vice President

Vincent T. Strangio Assistant Vice President

Marie R. Vogel Assistant Vice President

Wesley S. Williams Assistant Vice President

Matthew Witschel Assistant Vice President

Christopher J. Zingaro Assistant Vice President

Mark R. Manley Assistant Secretary

ITEM 28. Location of Accounts and Records.

The majority of the accounts, books and other
documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the
Rules thereunder are maintained as follows:
journals, ledgers, securities records and other
original records are maintained principally at the
offices of Alliance Fund Services, Inc. 500 Plaza
Drive, Secaucus, New Jersey 07094-1520 and at the
offices of State Street Bank and Trust Company, the
Registrant's Custodian, 225 Franklin Street,
Boston, Massachusetts 02110. All other records so
required to be maintained are maintained at the
offices of Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105.

ITEM 29. Management Services.

Not applicable.

ITEM 30. Undertakings.

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

The Registrant undertakes to provide assistance to
shareholders in communications concerning the
removal of any Trustee of the Fund in accordance

C-19

<PAGE>

with Section 16 of the Investment Company Act of
1940.

C-20

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities
Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, the
Registrant 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 23rd day of November, 1998.

AFD EXCHANGE RESERVES

by /s/ John D. Carifa
_________________________
John D. Carifa
Chairman and President

Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the dates indicated:

Signature Title Date

1) Principal
Executive Officer

/s/ John D. Carifa Chairman and
President November 23, 1998
______________
John D. Carifa

2) Principal Financial
and Accounting
Officer

/s/ Mark D. Gersten Treasurer and
Chief November 23, 1998
_______________ Financial Officer
Mark D. Gersten

3. All of the Trustees

David H. Dievler William H. Foulk, Jr.
Ruth Block James M. Hester
John D. Carifa Clifford L. Michel
John H. Dobkin Donald J. Robinson

C-21

<PAGE>

by /s/ Edmund P. Bergan, Jr. November 23, 1998
____________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.

C-22

<PAGE>

Index to Exhibits

(i) Opinion and Consent of Seward & Kissel

Other Exhibits - Powers of Attorney of Ruth Block, John D.
Carifa, David H. Dievler, Dr. John H. Dobkin, William H.
Foulk, Jr., James M. Hester, Clifford L. Michel and Donald J.
Robinson.

C-23
00250163.AP0

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

<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: October 8, 1998

00250050.AQ8

<PAGE>
SEWARD & KISSEL
One Battery Park Plaza
New York, N.Y. 10004

Telephone: (212) 574-1200
Facsimile: (212) 480-8421

March 15, 1994

AFD Exchange Reserves
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

We have acted as counsel for AFD Exchange Reserves,
a Massachusetts business trust with transferable shares (the
"Trust"), in connection with the organization of the Trust,
the registration of the Trust under the Investment Company
Act of 1940 and the registration under the Securities Act of
1933 of an indefinite number of shares of beneficial
interest, par value $.001 per share, of the Trust.

As counsel for the Trust, we have participated in
the preparation of the Registration Statement on Form N-1A
(the "Registration Statement") and the Prospectus contained
therein (the "Prospectus") relating to such shares and have
examined and relied upon such records of the Trust and such
other documents, including certificates as to factual
matters, as we have deemed to be necessary to render the
opinions expressed herein.

Based on such examination, we are of the opinion
that:

1. The Trust has been duly organized and is
validly existing as a trust with transferable
shares of the type commonly called a Massachusetts
business trust.

2. The Trust is authorized to issue an
unlimited number of shares. The shares to be
offered for sale by the Prospectus (the "Registered
Shares") have been duly and validly authorized by
all requisite action of the Trustees of the Trust,
and no action of the shareholders of the Trust is
required in such connection.

3. When the Registered Shares have been duly
sold, issued and paid for as contemplated by the
Prospectus, they will be validly and legally
issued, fully paid and non-assessable by the Trust.

<PAGE>
AFD Exchange Reserves 2 March 15, 1994

With respect to the opinion stated in paragraph 3
above, we wish to point out that the shareholders of a
Massachusetts business trust may, under some circumstances,
be subject to assessment at the instance of creditors to pay
the obligations of such trust in the event that its assets
are insufficient for the purpose.

As to matters of Massachusetts law contained in the
foregoing opinion we have relied on the opinion of Sullivan
& Worcester of Boston, Massachusetts, dated March 15, 1994.

We hereby consent to the filing of this opinion
with the Securities and Exchange Commission as an exhibit to
the Registration Statement and to the reference to our firm
under the caption "General Information--Counsel" in the
Statement of Additional Information included therein.

Very truly yours,

/s/ Seward & Kissel

00250163.AD7