This is Filed pursuant to Rule 497(e)
(File Nos. 33-74230 and 811-08294).





(LOGO)                                    AFD EXCHANGE RESERVES

____________________________________________________________
c/o Alliance Global Investor 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
                        January 30, 2002
____________________________________________________________

    This Statement of Additional Information ("SAI") is not a
prospectus but supplements and should be read in conjunction with
the prospectus, dated January 30, 2002, that offers Class A,
Class B and Class C shares of the Fund (the "Prospectus") and the
prospectus, dated January 30, 2002, 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(es)").  Financial statements
for the Fund for the year ended September 30, 2001 are included
in the Fund's annual report to shareholders and are incorporated
into the SAI by reference.  Copies of the Prospectuses and the
Fund's annual report may be obtained by contacting Alliance
Global Investor Services, Inc. ("AGIS") at the address or the
"For Literature" telephone number shown above.

                        TABLE OF CONTENTS

                                                             Page

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS..............
MANAGEMENT OF THE FUND.......................................
EXPENSES OF THE FUND.........................................
PURCHASE OF SHARES...........................................
REDEMPTION AND REPURCHASE OF SHARES..........................
SHAREHOLDER SERVICES.........................................
DAILY DIVIDENDS--DETERMINATION OF NET ASSET VALUE............
TAXES........................................................
BROKERAGE AND PORTFOLIO TRANSACTIONS.........................
GENERAL INFORMATION..........................................
FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANT'S
REPORT.......................................................
APPENDIX A...................................................A-1
APPENDIX B...................................................B-1

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





____________________________________________________________

         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.


                                2





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

         3.   Commercial paper, including variable amount master
demand notes and funding agreements, of 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") or F1 or F2 by Fitch, 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 Appendix
A.  Commercial paper consists of short-term (usually from 1 to
270 days) unsecured promissory notes issued by corporations in
order to finance their current operations.  A variable amount
master demand note represents a direct borrowing arrangement
involving periodically fluctuating rates of interest under a
letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine
to invest varying amounts.  For a further description of variable
amount master demand notes, see "Floating and Variable Rate
Obligations" below.

         4.   Repurchase agreements that are fully
collateralized.  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 that 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 determined to be creditworthy by the Fund's investment
adviser, Alliance Capital Management L.P. ("Alliance" or the
"Adviser").  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.  A repurchase agreement is deemed to be an
acquisition of the underlying securities provided that the


                                3





obligation of the seller to repurchase the securities from the
money market fund is collateralized fully (as defined in such
Rule).  Accordingly, the counterparty of a fully collateralized
repurchase agreement is deemed to be the issuer of the underlying
securities.

         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 under "Certain Fundamental
Investment Policies."  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.

         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.




                                4





         Asset-Backed Securities.  The Fund may invest in asset-
backed securities that meet its existing diversification, quality
and maturity criteria.  These securities must generally be rated,
as required by Rule 2a-7.  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 entity.  Although the
securities may have some form of credit or liquidity enhancement,
payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer.  Generally, as
required by Rule 2a-7, the special purpose entity is deemed to be
the issuer of the asset-backed security, however, the Portfolio
is required to treat any obligor whose obligations constitute ten
percent or more of the assets of the asset-backed security as the
issuer of the portion of the asset-backed security such
obligations represent.

         Illiquid Securities.  The Fund 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 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.




                                5





          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.

         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.

         Rule 2a-7 under the Act.  The Fund will comply with Rule
2a-7 under the Act, as amended from time to time, including the
diversification, quality and maturity limitations imposed by the
Rule.  To the extent that the Fund's limitations are more
permissive than Rule 2a-7, the Fund will comply with the more
restrictive provisions of the Rule.

         Currently, pursuant to Rule 2a-7, the Fund may invest
only in "Eligible Securities," as that term is defined in the
Rule.  Generally, an Eligible Security is a security that (i) is
denominated in U.S. Dollars and has a remaining maturity of 397
days or less; (ii) is rated, or is issued by an issuer with
short-term debt outstanding that is rated, in one of the two
highest rating categories by two NRSROs or, if only one NRSRO has
issued a rating, by that NRSRO; and (iii) has been determined by
Alliance to present minimal credit risks pursuant to procedures


                                6





approved by the Trustees.  A security that originally had a
maturity of greater than 397 days is an Eligible Security if its
remaining maturity at the time of purchase is 397 calendar days
or less and the issuer has outstanding short-term debt that would
be an Eligible Security.  Unrated securities may also be Eligible
Securities if Alliance determines that they are of comparable
quality to a rated Eligible Security pursuant to guidelines
approved by the Trustees.  A description of the ratings of some
NRSROs appears in the Appendix A attached hereto.

         Eligible securities are classified as either first tier
securities or second tier securities.  Generally, a first tier
security is an Eliglble Security that has received a short-term
rating from the requisite NRSROs in the highest short-term rating
category for debt obligations or is an unrated security deemed to
be of comparable quality.  Government securities are also
considered to be first tier securities.  A security that has
received the second highest rating by the requisite number of
NRSROs is a second tier security.  Under Rule 2a-7, the Fund may
not invest more than five percent of its assets in first tier
securities of any one issuer other than the U.S. Government, its
agencies and instrumentalities.  The Fund may not invest in a
second tier security if immediately after the acquisition thereof
the Fund would have invested more than (A) the greater of one
percent of its assets or one million dollars in securities issued
by that issuer which are second tier securities and (B) five
percent of its total assets in second tier securities.

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



                                7





         (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
____________________

*      As a matter of operating policy, pursuant to Rule 2a-7,
       the Fund will invest no more than 5% of its assets in the
       first tier (as defined in Rule 2a-7) securities of any one
       issuer, except that under Rule 2a-7, the Fund may invest
       up to 25% of its total assets in the first tier securities
       of a single issuer for a period of up to three business
       days.  Fundamental policy number (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.


                                8





commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase
securities on margin; (e) make short sales of securities or
maintain a short position or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Fund's assets would be invested in such
securities; (g) purchase or retain securities of any issuers if
those officers and trustees of the Fund and employees of 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.

____________________________________________________________

                     MANAGEMENT OF THE FUND
____________________________________________________________

The Adviser

         Alliance, a Delaware limited partnership with principal
offices at 1345 Avenue of the Americas, New York, New York 10105,
has been retained under an investment advisory agreement (the
"Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund under the supervision and control of the Fund's Trustees.

         Alliance is a leading global investment management firm
supervising client accounts with assets as of September 30, 2001,
totaling approximately $421 billion.  Alliance provides mangement
services for many of the largest U.S. public and private employee
benefit plans, endowments, foundations, public employee
retirement funds, banks, insurance companies and high net worth
individuals worldwide.  Alliance is also one of the largest
mutual fund sponsors, with a diverse family of globally
distributed mutual fund portfolios.  As one of the world's
leading global investment management organizations, Alliance is
able to compete for virtually any portfolio assignment in any
developed capital market in the world.

         Alliance, an investment adviser registered under the
Act, is a Delaware limited partnership, of which Alliance Capital
Management Corporation ("ACMC"), an indirect wholly-owned
subsidiary of AXA Financial, Inc. ("AXA Financial"), is the
general partner.  As of December 31, 2001, Alliance Capital
management Holding L.P. ("Alliance Holding") owned approximately
30% of the outstanding units of limited partnership interest in
Alliance ("Alliance Units").  ACMC is the general partner of


                                9





Alliance Holding, whose equity interests are traded on the
Exchange in the form of units ("Alliance Holding Units").  As of
December 31, 2001, AXA Financial, together with certain of its
wholly-owned subsidiaries, including ACMC, beneficially owned
approximately 2% of the outstanding Alliance Holding Units and
52% of the outstanding Alliance Units.  AXA Financial, a Delaware
corporation, is a wholly-owned subsidiary of AXA, a French
company.

         The Advisory Agreement is terminable without penalty by
a vote of a majority of the Fund's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Fund's
Trustees on 60 days' written notice, or by Alliance on 60 days'
written notice, and will automatically terminate in the event of
its assignment.  The Advisory Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on
the part of Alliance, or of reckless disregard of its obligations
thereunder, Alliance shall not be liable for any action or
failure to act in accordance with its duties thereunder.

         The Advisory Agreement will continue in effect for
successive twelve-month periods (computed from each October 1),
provided, however, that such continuance is specifically approved
at least annually by a vote of a majority of the Fund's
outstanding voting securities or by the Fund's Board of Trustees,
including in either case approval by a majority of the Trustees
who are not parties to the Advisory Agreement or interested
persons of any such party as defined by the Act.  Most recently,
continuance of the Advisory Agreement was approved for an
additional annual term by the Board of Trustees, including a
majority of the Trustees who are not "interested persons" as
defined in the Act, at their meeting held on July 18, 2001.

         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
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 under the
Advisory Agreement.  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


                               10





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 years ended
September 30, 2001, 2000 and 1999, respectively, Alliance
received from the Fund advisory fees of $2,226,126, $1,815,474
and $1,245,776, 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.

         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 business and affairs of the Fund are managed under
the direction of the Board of Trustees.  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, 56, is the President, Chief Operating
Officer and a Director of ACMC, the general partner of Alliance,
with which he has been associated since prior to 1997.

         RUTH BLOCK, 71, is a Director of Ecolab Incorporated
(specialty chemicals) and BP Amoco Corporation (oil and gas).
She was formerly an Executive Vice President and the Chief
Insurance Officer of The Equitable; Chairman and Chief Executive
Officer of Evlico; a Director of Avon, Tandem Financial Group and



                               11





Donaldson, Lufkin & Jenrette Securities Corporation.  Her address
is P.O. Box 4623, Stamford, Connecticut  06903.

         DAVID H. DIEVLER, 72, is an independent consultant.
Until December 1994 he was Senior Vice President of ACMC
responsible for mutual fund administration.  Prior to joining
ACMC in 1984 he was Chief Financial Officer of Eberstadt Asset
Management since 1968.  Prior to that he was a Senior Manager at
Price Waterhouse & Co.  Member of American Institute of Certified
Public Accountants since 1953.  His address is P.O. Box 167,
Spring Lake, New Jersey  07762.

         JOHN H. DOBKIN, 59, Consultant.  Currently, President of
the Board of Save Venice, Inc. (preservation organization).
Formerly a Senior Advisor from June 1999 - June 2000 and
President from December 1989 - May 1999 of Historic Hudson Valley
(historic preservation).  Previously, he was Director of the
National Academy of Design.  During 1988-92, he was a Director
and Chairman of the Audit Committee of ACMC.  His address is P.O.
Box 12, Annandale, New York 12504.

         WILLIAM H. FOULK, JR., 69, 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 1997.  He was
formerly Deputy Comptroller of the State of New York and, prior
thereto, Chief Investment Officer of the New York Bank for
Savings.  His address is 2 Greenwich Plaza, Suite 100, Greenwich,
Connecticut 06830.

         CLIFFORD L. MICHEL, 62, is Senior Counsel to the law
firm of Cahill Gordon & Reindel, with which he has been
associated since prior to 1997.  He is President and Chief
Executive Officer of Wenonah Development Company (investments)
and a Director of Placer Dome, Inc. (mining).  His address is St.
Bernard's Road, Gladstone, New Jersey 07934.

         DONALD J. ROBINSON, 67, is Senior Counsel to the law
firm of Orrick, Herrington & Sutcliffe LLP since prior to 1997.
He was formerly a senior partner and a member of the Executive
Committee of that firm.  He was also a member of the Municipal
Securities Rulemaking Board and Trustee of the Museum of the City
of New York.  His address is 98 Hell's Peak Road, Weston, Vermont
05161.

Officers

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




                               12





         ANDREW M. ARAN - Senior Vice President, 44, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1997.

         KATHLEEN A. CORBET - Senior Vice President, 41, is an
Executive Vice President of ACMC, with which she has been
associated since prior to 1997.

         WAYNE D. LYSKI - Senior Vice President, 60, is an
Executive Vice President of ACMC, with which he has been
associated since prior to 1997.

         RAYMOND J. PAPERA - Senior Vice President, 45, is a
Senior Vice President of ACMC, with which he has been associated
since prior to 1997.

         KENNETH T. CARTY - Vice President, 41, is a Vice
President of ACMC, with which he has been associated since prior
to 1997.

         JOHN F. CHIODI, Jr. - Vice President, 35, is a Vice
President of ACMC, with which he has been associated since prior
to 1997.

         MARIA R. CONA - Vice President, 47, is a Vice President
of ACMC, with which she has been associated since prior to 1997.

         JOSEPH DONA - Vice President, 40, is a Vice President of
ACMC with which he has been associated since prior to 1997.

         PATRICIA POST - Vice President, 33, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1997.

         MARK D. GERSTEN - Treasurer and Chief Financial Officer,
51, is a Senior Vice President of Alliance Global Investor
Services, Inc. ("AGIS") and a Vice President of Alliance Fund
Distributors, Inc. ("AFD"), with which he has been associated
since prior to 1997.

         EDMUND P. BERGAN, Jr., - Secretary, 51, is a Senior Vice
President and the General Counsel of AFD and AGIS, with which he
has been associated since prior to 1997.

         ANDREW L. GANGOLF - Assistant Secretary, 47, is a Senior
Vice President and Assistant General Counsel of AFD, with which
he has been associated since prior to 1997.

         DOMENICK PUGLIESE - Assistant Secretary, 40, is a Senior
Vice President and Assistant General Counsel of AFD, with which
he has been associated since prior to 1997.


                               13





         VINCENT S. NOTO - Controller, 37, is a Vice President of
AGIS, with which he has been associated since prior to 1997.

         The aggregate compensation paid by the Fund to each of
the Trustees during its fiscal year ended September 30, 2001, the
aggregate compensation paid to each of the Trustees during
calendar year 2001 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.

                                                                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               49            113
Ruth Block             $3,462        $186,050         38             88
David H. Dievler       $3,462        $244,350         44             94
John H. Dobkin         $3,462        $210,900         41             91
William H. Foulk, Jr.  $3,462        $249,400         45            110
Clifford L. Michel     $3,462        $199,087.50      39             91
Donald J. Robinson     $3,462        $186,050         41            103


         As of January 4, 2002, the Trustees and officers of the
Fund as a group owned less than 1% of the shares of the Fund.











                               14





____________________________________________________________

                      EXPENSES OF THE FUND
____________________________________________________________

Distribution Services Agreement

         The Fund has entered into a Distribution Services
Agreement (the "Agreement") with AFD 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").

         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, 2001,
the Fund paid distribution services fees for expenditures under
the Agreement to the Principal Underwriter with respect to
Class A shares, in amounts aggregating $2,626,255, 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 $1,265,255.  Of
the $3,891,510 paid by the Fund and the Adviser under the
Agreement, $100,764 was spent on advertising, $17,438 on the
printing and mailing of prospectuses for persons other than
current shareholders, $0 for compensation to broker-dealers,
$1,812,826 for compensation to sales personnel and $1,960,482 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, 2001,
the Fund paid distribution services fees for expenditures under
the Agreement to the Principal Underwriter with respect to
Class B shares, in amounts aggregating $2,447,123, 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 $0.  Of the $2,447,123 paid by
the Fund and the Adviser under the Agreement in the case of the
Class B shares, $12,692 was spent on advertising, $7,539 on the
printing and mailing of prospectuses for persons other than
current shareholders, $1,452,457 for compensation to broker-
dealers, $211,203 for compensation paid to sales personnel,


                               15





$552,963 for interest on Class B shares financing, $92,667 was
spent on the printing of sales literature, due diligence, travel,
entertainment, occupancy, communications, taxes, depreciation and
other promotional expenses and $117,602 was used to offset the
distribution services fees paid in prior years.

         During the Fund's fiscal year ended September 30, 2001,
the Fund paid distribution services fees for expenditures under
the Agreement to the Principal Underwriter with respect to
Class C shares, in amounts aggregating $724,967, which
constituted .75 of 1% of the average daily net assets
attributable to Class C during such fiscal year, and the Adviser
made payments from its own resources aggregating $0.  Of the
$724,967 paid by the Fund and the Adviser under the Agreement in
the case of the Class C shares, $4,122 was spent on advertising,
$2,576 on the printing and mailing of prospectuses for persons
other than current shareholders, $320,368 for compensation to
broker-dealers, $70,827 for compensation to sales personnel, $0
for interest on Class C shares financing, $31,779 was spent on
the printing of sales literature, due diligence, travel,
entertainment, occupancy, communications, taxes, depreciation and
other promotional expenses and $295,295 was used to offset the
distribution services fees paid in prior years.

         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.

         The Rule 12b-1 Plan is in compliance with rules of the
National Association of Securities Dealers, Inc. which
effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to
 .75% and .25%, respectively, of the average annual net assets
attributable to that class.  The rules also limit the aggregate
of all front-end, deferred and asset-based sales charges imposed
with respect to a class of shares by a mutual fund that also


                               16





charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per
annum.

         The Advisory Agreement will continue in effect for
successive twelve-month periods (computed from each October 1)
with respect to each class of the Fund, provided, however, that
such continuance is specifically approved at least annually by
the Trustees of the Fund or by vote of the holders of a majority
of the outstanding voting securities (as defined in the Act) of
that class, and in either case, by a majority of the Trustees of
the Fund who are not parties to this agreement or interested
persons, as defined in the Act, of any such party (other than as
trustees of the Fund) and who have no direct or indirect
financial interest in the operation of the Rule 12b-1 Plan or any
agreement related thereto.  Most recently, the continuance of the
Agreement for an additional annual term was approved by a vote,
cast in person, of Trustees, including a majority of the Trustees
who are not "interested persons" as defined in the Act, at their
meeting held on July 18, 2001.

         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

         AGIS, 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, 2001, the Fund paid AGIS $911,550 pursuant to
the Transfer Agency Agreement.








                               17





____________________________________________________________

                       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
SAI.  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
Rule 12b-1 Plan that would materially increase the amount to be


                               18





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 AGIS 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
terrorist attacks of September 11, 2001, it is possible that
shareholders would have difficulty in reaching AGIS by telephone
(although no such difficulty was apparent at any time in
connection with the attacks).  If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to AGIS at the address shown on the cover of this
SAI.

         Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless AGIS
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



                               19





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 "qualified
State tuition programs" (within the meaning of Section 529 of the
Internal Revenue Code of 1986, as amended (the "Code")) approved
by AFD, (iv) by investment management clients of Alliance (other
than Alliance's Bernstein unit) or its affiliates, (v) 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 and
former employees (for subsequent investment in accounts
established during the course of their employment) of Alliance,
the Principal Underwriter, AGIS and their affiliates; officers
and directors of ACMC, the Principal Underwriter, AGIS 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


                               20





be resold except to the Fund), (vi) by Alliance, the Principal
Underwriter, AGIS and their affiliates; certain employee benefit
plans for employees of Alliance, the Principal Underwriter, AGIS
and their affiliates, (vii) registered investment advisers or
other financial intermediaries who charge a management,
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; (viii) 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; (ix) by employer-sponsored qualified
pension or profit-sharing plans (including Section 401(k) plans),
employer-sponsored nonqualified deferred compensation 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 through
selected dealers, agents or financial representatives.  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.


                               21





         The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value, which is expected to be constant at a $1.00 per
share, although this is not guaranteed, next determined as
described below.  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 SAI.  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").  Telephone purchase requests must be received before
3:00 p.m., Eastern time, on a Fund business day to receive that
day's public offering price.  Telephone purchase requests
received after 3:00 p.m., Eastern time, are 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.

         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


                               22





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 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, such cash or other
incentives 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 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,


                               23





Class C and Advisor Class shares.  On an ongoing basis, the
Trustees of the Fund, pursuant to their fiduciary duties under
the 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.

         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


                               24





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
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


                               25





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 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
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
  -Corporate Bond Portfolio
  -Quality Bond Portfolio
  -U.S. Government Portfolio
Alliance Global Dollar Government 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 Health Care Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Mid-Cap Growth 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





                               26





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 Select Investor Series, Inc.
  -Biotechnology Portfolio
  -Premier Portfolio
  -Small Cap Growth Portfolio
  -Technology Portfolio
Alliance Technology Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
AllianceBernstein Disciplined Value Fund, Inc.
AllianceBernstein Real Estate Investment Fund, Inc.
AllianceBernstein Utility Income Fund, Inc.
The Alliance Portfolios
  -Alliance Conservative Investors Fund
  -Alliance Growth Fund
  -Alliance Growth Investors Fund
The AllianceBernstein Trust
  -AllianceBernstein Global Value Fund
  -AllianceBernstein International Value Fund
  -AllianceBernstein Small Cap Value Fund
  -AllianceBernstein Value Fund
The Korean Investment Fund, Inc.
Sanford C. Bernstein Fund, Inc.
  -Bernstein Government Short Duration Portfolio
  -Bernstein Short Duration Plus Portfolio
  -Bernstein Intermediate Duration Portfolio
  -Bernstein Short Duration New York Municipal Portfolio
  -Bernstein Short Duration California Municipal Portfolio
  -Bernstein Short Duration Diversified Municipal Portfolio
  -Bernstein New York Municipal Portfolio
  -Bernstein California Municipal Portfolio
  -Bernstein Diversified Municipal Portfolio
  -Bernstein Tax-Managed International Value Portfolio
  -Bernstein International Value II Portfolio
  -Bernstein Emerging Markets Value Portfolio

         Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting AGIS at the address or the



                               27





"For Literature" telephone number shown on the front cover of
this SAI.

         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
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


                               28





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
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 AGIS at the address or
telephone numbers shown on the cover of that Alliance Mutual
Fund's SAI.

         Certain Retirement Plans.  Multiple participant payroll
deduction retirement plans may also purchase shares of any
Alliance Mutual Fund, including through the exchanges of their


                               29





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 SAI 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) 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


                               30





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.

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 are waived on
redemptions of shares (i) following the death or disability, as
defined in 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


                               31





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
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


                               32





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
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.

         The contingent deferred sales charges are waived on
redemptions of shares (i) following the death or disability, as
defined in the Code, of a shareholder, or (ii) to the extent that


                               33





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 of Advisor Class Shares to Class A Shares

         Advisor Class shares may be held solely through the fee-
based program accounts, employee benefit plans, qualified State
tuition programs 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 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 SAI (each, a "Conversion
Event"), then all Advisor Class shares held by the shareholder
will convert automatically 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 Fund
will provide the shareholder with at least 30 days' notice of the
conversion.  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 have a higher
expense ratio and 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



                               34





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.

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


                               35





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.  No interest will accrue on uncashed
redemption checks.

         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, may result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.

         To redeem shares 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 AGIS.  A telephone


                               36





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 AGIS, or by checking the appropriate box on the
shareholder or options form.

         Telephone Redemption - General.  During periods of
drastic economic or market developments, such as the terrorist
attacks of September 11, 2001, it is possible that shareholders
would have difficulty in reaching AGIS by telephone (although no
such difficulty was apparent at any time in connection with the
attacks).  If a shareholder were to experience such difficulty,
the shareholder should issue written instructions to AGIS at the
address shown on the cover of this SAI.  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
AGIS 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


                               37





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
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.









                               38





____________________________________________________________

                      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
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 AGIS at the address or telephone numbers shown on the
cover of this SAI 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,  AGIS 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 AGIS by
4:00 p.m. Eastern time on a Fund business day in order to receive
that day's net asset value.


                               39





         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 AGIS 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.

         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 AGIS,
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 AGIS with their account number and other details
of the exchange, at (800) 221-5672 before 4:00 p.m., Eastern


                               40





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 terrorist attacks of September 11,
2001, it is possible that shareholders would have difficulty in
reaching AGIS by telephone (although no such difficulty was
apparent at any time in connection with the attacks).  If a
shareholder were to experience such difficulty, the shareholder
should issue written instructions to AGIS at the address shown on
the cover of this SAI.

         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.

         None of the Alliance Funds, Alliance, the Principal
Underwriter or AGIS 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 AGIS at the "For
Literature" telephone number on the cover of this SAI, or write
to:



                               41





                   Alliance Global Investor 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.

         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


                               42





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 AGIS.

Dividend Reinvestment Program

         Shareholders may elect to have all income and capital
gains distributions from their account be paid to them in the
form of additional shares of the same class of the Fund pursuant
to the Fund's Dividend Reinvestment Program.  Shares issued under
this program will have an aggregate net asset value as of the
close of business on the declaration date of the dividend or
distribution equal to the cash amount of the distribution.
Investors wishing to participate in the Dividend Reinvestment
Program should complete the appropriate section of the
Subscription Application.  Current shareholders should contact
AGIS to participate in the Dividend Reinvestment Program.

         In certain circumstances where a shareholder has elected
to receive dividends and/or capital gain distributions in cash
but the account has been determined to be lost due to mail being
returned to us by the Postal Service as undeliverable, such
shareholder's distributions option will automatically be placed
within the Dividend Reinvestment Program for future
distributions.  No interest will accrue on amounts represented by
uncashed distribution checks.

Dividend Direction Plan

         A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account(s) with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).
Further information can be obtained by contacting AGIS at the
address or the "For Literature" telephone number shown on the
cover of this SAI.  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
AGIS 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


                               43





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
Fund shareholders desiring to do so can obtain an application
form by contacting AGIS at the address or the "For Literature"
telephone number shown on the cover of this SAI.

         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


                               44





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, Pricewaterhouse-
Coopers LLP, as well as a confirmation of each purchase and
redemption.  By contacting his or her broker or AGIS, 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
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


                               45





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
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


                               46





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
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.






                               47





____________________________________________________________

              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, 1999, 2000 and 2001, the Fund incurred
no brokerage commissions.

____________________________________________________________

                       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


                               48





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. Shareholder
meetings will be held only when required by federal or state law.

         As of the close of business on January 4, 2002, there
were 998,669,197 shares of beneficial interest of the Fund
outstanding.  Of this amount, 389,883,376 shares were Class A
shares, 354,646,697 shares were Class B shares, 85,977,702 shares
were Class C shares and 168,161,422 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 January 4, 2002:
























                               49





                                  No. of              % of
Name and Address                  Shares              Class

Class A Shares

Salomon Smith Barney
House Account
Attn Cindy Tempesta
333 W 34th St Fl 3
New York, NY  10001-2483          19,988,586           5.13%

Class B Shares

Salomon Smith Barney
House Account
Attn Cindy Tempesta
333 W 34th St Fl 3
New York, NY  10001-2483          28,873,469           8.14%

Dean Witter Reynolds
Attn Mutual Fund Operations
2 Harborside Plaza 2nd FL
Jersey City, NJ  07311            20,621,500           5.81%

Class C Shares

Salomon Smith Barney
House Account
Attn Cindy Tempesta
333 W 34th St Fl 3
New York, NY  10001-2483          11,626,995          13.52%

Advisor Class Shares

Collegebound Fund
CBF-Balanced Portfolio
529 Plan
500 Plaza Dr
Secaucus NJ  07094-3619           21,532,952          12.80%

Collegebound Fund
Aggressive Growth Emphasis
Age Based Portfolio 1987-1989
500 Plaza Dr
Secaucus NJ  07094-3619           12,533,286           7.45%

Collegebound Fund
Agressive Growth Emphasis





                               50





Age Based Portfolio 1990-1992
500 Plaza Dr
Secaucus NJ  07094-3619           12,161,736           7.23%

Collegebound Fund
Growth Emphasis
Age Based Portfolio 1984-1986
500 Plaza Dr
Secaucus NJ  07094-3619           25,376,650          15.09%

Collegebound Fund
Growth Emphasis
Age Based Portfolio 1987-1989
500 Plaza Dr
Secaucus NJ  07094-3619           35,324,451          21.01%

Collegebound Fund
Growth Emphasis
Age Based Portfolio 1990-1992
500 Plaza Dr
Secaucus NJ  07094-3619           22,089,409          13.14%

Collegebound Fund
Growth Emphasis
Age Based Portfolio 1993-1995
500 Plaza Dr
Secaucus NJ  07094-3619           14,756,707          8.78%

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

         AGIS, 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


                               51





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

         AFD, 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.

Independent Accountants

         The Fund's independent accountants are
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New
York, New York, 10036.

Counsel

         Legal matters in connection with the issuance of the
shares offered hereby have been passed upon by Seward & Kissel
LLP, One Battery Park Plaza, New York, New York, counsel for the
Fund and the Adviser.

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,


                               52





(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, 2001
for Class A amounted to an annualized yield of 2.26% equivalent
to an effective yield of 2.29%, for Class B an annualized yield
of 1.76% equivalent to an effective yield of 1.77%, for Class C
an annualized yield of 2.01% equivalent to an effective yield of
2.03% and for Advisor Class an annualized yield of 2.76%
equivalent to an effective yield of 2.79%.  Current yield
information can be obtained by a recorded message by telephoning
toll-free at (800) 221-9513 or in New York State at
(212) 785-9106.

Additional Information

         Any shareholder inquiries may be directed to the
shareholder's broker or AGIS at the address or telephone numbers
shown on the front cover of this SAI.  This SAI 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.























                               53






_______________________________________________________________

    FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANT'S REPORT
_______________________________________________________________

         The financial statements and the report of
PricewaterhouseCoopers LLP of AFD Exchange Reserves are
incorporated herein by reference to its annual report filing made
with the SEC pursuant to Section 30(b) of the Act and Rule 30b2-1
thereunder.  The annual report, dated September 30, 2001, was
filed on November 21, 2001.  The annual report is available
without charge upon request by calling AGIS at (800) 227-4618.








































                               54





____________________________________________________________

                           APPENDIX A
____________________________________________________________

Prime-1, Prime-2, A-1, A-2, F1, F2

         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 Service, 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
Rating Services ("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 "F1" by Fitch, Inc. is considered
to be the highest grade paper and is regarded as having the
strongest degree of assurance for timely payment, with "F1+"
denoting an exceptionally strong assurance.  "F2" is considered
very good grade paper and reflects an assurance of timely payment
only slightly less in degree than the strongest issue.

         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


                               A-1





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





________________________________________________________________

                           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 SAI, 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.




                               B-1





              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
              (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
00250163.AT9