Matroska (*.mkv) can contain all common types of video, audio and subtitles, including AC-3. It was created as an uncommercial format for "backup" purposes because of AVI limitations. And unlike MPEG-2 Program or MP4 it is an universal container. Most recent VDM version warns about incomplete MKV support and it is indeed true. VirtualDubMod might not be able to open and save all MKV files, but it is not a limitation of the format itself (use mkvtoolnix).
http://www.matroska.org/technical/sp...cid/index.html
Get MkvToolNix here:
http://www.bunkus.org/videotools/mkv...s.html#windows