ALLIANCE CAPITAL RESERVES
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1998
STATEMENT OF NET ASSETS
JUNE 30, 1998 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-51.9%
AKZO NOBEL, INC.
$ 20,000 7/21/98 5.50% $ 19,938,889
20,000 7/23/98 5.50 19,932,778
ALLIANZ OF AMERICA FINANCE CORP.
14,600 9/18/98 (a) 5.51 14,423,466
31,516 8/27/98 (a) 5.52 31,240,550
ASSOCIATES CORP. OF NORTH AMERICA
90,000 9/11/98 5.51 89,008,200
46,400 8/26/98 5.56 45,998,741
100,000 8/27/98 5.56 99,119,667
BAA PLC
24,584 12/07/98 5.48 23,988,985
36,493 7/22/98 5.50 36,375,918
BANK OF AMERICA
70,000 9/23/98 5.52 69,098,400
BANKERS TRUST NEW YORK
153,700 9/15/98 5.52 151,908,883
161,000 9/23/98 5.52 158,926,320
17,000 8/12/98 5.58 16,889,330
BANQUE CAISSE D'EPARGNE
95,000 9/23/98 5.51 93,778,617
20,100 9/08/98 5.52 19,887,342
20,000 10/14/98 5.52 19,678,000
BAVARIA TRUST CORP.
80,000 9/29/98 (a) 5.54 78,892,000
BIL NORTH AMERICA, INC.
16,500 8/11/98 5.55 16,395,706
25,000 8/04/98 5.56 24,868,722
20,000 7/28/98 5.57 19,916,450
CAISSE D'AMORTISSEMENT
14,600 7/10/98 5.60 14,579,560
COMMONWEALTH BANK OF AUSTRALIA
62,000 9/28/98 5.44 61,166,169
CREGEM NORTH AMERICA, INC.
42,000 12/28/98 5.48 40,849,200
CS FIRST BOSTON
23,000 8/07/98 5.52 22,869,513
10,600 8/24/98 5.53 10,512,073
9,000 8/26/98 5.53 8,922,580
30,000 9/22/98 5.53 29,617,509
DEN NORSKE BANK
50,000 9/21/98 5.52 49,371,903
DIAGEO CAPITAL PLC
53,000 9/23/98 5.52% 52,317,360
35,000 7/01/98 6.10 35,000,000
FIRST CHICAGO FINANCIAL CORP.
33,000 9/15/98 5.51 32,616,136
22,700 8/21/98 5.52 22,522,486
14,000 9/09/98 5.54 13,849,189
GENERAL ELECTRIC CAPITAL CORP.
120,000 9/08/98 5.51 118,732,700
120,000 9/09/98 5.53 118,709,667
100,000 9/15/98 5.53 98,832,556
50,000 8/19/98 5.57 49,620,930
25,000 5.62%, 11/17/98 FRN 5.62 25,000,000
GENERAL MOTORS ACCEPTANCE CORP.
175,000 9/15/98 5.52 172,960,667
220,000 9/02/98 5.53 217,870,950
GENERAL RE CORP.
27,060 9/15/98 5.52 26,744,661
16,357 9/22/98 5.52 16,148,830
GENERALE BANK
20,000 9/04/98 5.44 19,803,555
40,000 12/04/98 5.49 39,048,400
HENKEL CORP.
16,500 9/10/98 5.53 16,320,045
IMI FUNDING CORP. (USA)
21,157 8/05/98 5.40 21,045,926
36,022 11/06/98 5.52 35,315,008
46,300 9/30/98 5.54 45,651,620
20,590 8/28/98 5.56 20,405,559
65,320 7/20/98 5.70 65,123,496
ING AMERICA INSURANCE HL
27,000 12/21/98 5.52 26,283,780
28,000 8/04/98 5.54 27,853,498
25,000 7/06/98 5.55 24,980,729
J.P. MORGAN & CO., INC.
200,000 8/28/98 5.54 198,214,889
KOCH INDUSTRIES
16,000 7/01/98 (a) 6.30 16,000,000
MORGAN STANLEY GROUP, INC.
40,000 8/26/98 5.52 39,656,533
NORWEST CORP.
77,000 8/31/98 5.54 76,277,184
81,000 7/01/98 6.20 81,000,000
1
STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
PRUDENTIAL FUNDING CORP.
$175,000 9/14/98 5.53% $ 172,983,854
173,000 7/01/98 6.45 173,000,000
SALOMON SMITH BARNEY
55,000 9/09/98 5.51 54,410,736
45,000 9/14/98 5.51 44,483,438
55,000 8/26/98 5.52 54,527,733
110,000 9/01/98 5.52 108,954,267
100,000 9/02/98 5.52 99,034,000
30,000 9/08/98 5.52 29,682,600
SCOTIA BANC, INC.
35,000 8/24/98 5.55 34,708,625
SIGMA FINANCE, INC.
50,000 10/21/98 (a) 5.54 49,138,222
SPECIAL PURPOSE ACCOUNTS
RECEIVABLE COOPERATIVE CORP.
33,100 8/26/98 (a) 5.58 32,812,692
6,000 9/02/98 (a) 5.60 5,941,200
SVENSKA HANDELSBANKEN
50,000 8/28/98 5.52 49,555,333
THAMES ASSET GLOBAL SECURITIZATION
91,148 9/11/98 (a) 5.54 90,138,080
UBS FINANCE DELAWARE, INC.
10,000 8/10/98 5.53 9,938,555
UNI FUNDING, INC.
80,000 9/11/98 5.51 79,118,400
VATTENFALL TREASURY, INC.
26,000 8/24/98 5.52 25,784,720
Total Commercial Paper
(amortized cost $4,156,274,280) 4,156,274,280
CERTIFICATES OF DEPOSIT-20.3%
BAYERISCHE VEREINSBANK
155,000 5.64%, 2/25/99 5.64 155,000,000
BAYERISCHE LANDESBANK
150,000 5.53%, 2/25/99 FRN 5.61 149,924,795
CANADIAN IMPERIAL
BANK OF COMMERCE
180,000 5.58%, 9/23/98 5.58 180,000,000
CREDIT AGRICOLE
15,000 5.87%, 8/10/98 5.90 14,998,136
DEUTSCHE BANK
42,000 5.67%, 2/26/99 6.02 41,991,820
40,000 5.70%, 3/05/99 5.75 39,988,625
75,000 5.95%, 10/21/98 6.33 74,989,003
DRESDNER BANK
90,000 5.51%, 1/15/99 5.67 89,910,254
GENERALE BANK
30,000 5.94%, 8/28/98 5.96 29,998,686
HESSISCHE LANDESBANK
160,000 5.60%, 9/30/98 5.60 160,000,000
NATIONAL WESTMINSTER BANK
135,000 5.65%, 3/03/99 5.70 134,955,785
NORDEUTSCHE LANDESBANK
65,000 5.72%, 4/16/99 5.77 64,975,352
ROYAL BANK OF CANADA
20,000 5.53%, 2/12/99 5.70 19,967,478
25,000 5.55%, 2/11/99 5.70 24,962,341
SWISS BANK
71,000 5.66%, 3/04/99 5.71 70,981,653
TORONTO DOMINION BANK
200,000 5.58%, 9/23/98 5.58 200,000,000
175,000 5.59%, 9/30/98 5.59 175,000,000
Total Certificates of Deposit
(amortized cost $1,627,643,928) 1,627,643,928
BANK OBLIGATIONS-11.2%
ABBEY NATIONAL
250,000 5.54%, 2/17/99 FRN 5.60 249,908,470
BANK OF MONTREAL
75,000 5.64%, 10/01/98 FRN 5.64 75,000,000
BAYERISCHE LANDESBANK
160,000 5.63%, 10/02/98 FRN 5.63 160,000,000
DEUTSCHE BANK
160,000 5.52%, 7/01/98 FRN 5.52 160,000,000
LASALLE NATIONAL BANK
30,000 5.60%, 12/10/98 5.60 30,000,000
25,000 5.62%, 12/21/98 5.62 25,000,000
60,000 5.70%, 3/10/99 5.70 60,000,000
SMM TRUST
50,000 5.66%, 12/14/98 FRN (a) 5.66 50,000,000
40,000 5.66%, 5/28/99 FRN (a) 5.66 40,000,000
50,000 5.69%, 12/16/98 FRN (a) 5.69 50,000,000
Total Bank Obligations
(amortized cost $899,908,470) 899,908,470
3
ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CORPORATE OBLIGATIONS-7.6%
GENERAL AMERICAN FUNDING CORP.
$157,000 5.85%, 7/10/98 FRN 5.85% $ 157,000,000
MERRILL LYNCH & CO., INC.
57,000 5.61%, 1/29/99 FRN 5.61 57,000,000
65,000 5.61%, 2/16/99 FRN 5.61 65,000,000
100,000 5.61%, 6/01/99 FRN 5.61 100,000,000
135,000 5.62%, 1/20/99 FRN 5.62 135,000,000
35,000 5.875%, 8/26/98 5.875 35,000,000
TRAVELERS LIFE FUNDING AGREEMENT
10,000 5.67%, 10/21/98 FRN (b) 5.67 10,000,000
50,000 5.67%, 11/03/98 FRN (b) 5.67 50,000,000
Total Corporate Obligations
(amortized cost $609,000,000) 609,000,000
PROMISSORY NOTES-4.8%
GOLDMAN SACHS GROUP LP
160,000 5.63%, 10/13/98 (a) 5.63 160,000,000
170,000 5.66%, 11/24/98 (a) 5.66 170,000,000
50,000 5.69%, 8/07/98 (a) 5.69 50,000,000
Total Promissory Notes
(amortized cost $380,000,000) 380,000,000
U.S. GOVERNMENT & AGENCY OBLIGATIONS-3.6%
AID HOUSING GUARANTY PROJECT PORTUGAL
11,563 5.83%, 12/01/16 FRN 5.83 11,562,500
FEDERAL FARM CREDIT BANK
66,000 5.41%, 8/03/98 FRN 5.43 65,997,200
FEDERAL NATIONAL MORTGAGE ASSN.
135,000 5.54%, 5/21/99 FRN 5.62 134,907,007
78,000 5.65%, 11/04/98 5.74 77,977,859
Total U.S. Government &
Agency Obligations
(amortized cost $290,444,566) 290,444,566
TIME DEPOSIT-0.3%
SOCIETE GENERALE BANK
25,000 7/01/98
(amortized cost $25,000,000)5.75 25,000,000
TOTAL INVESTMENTS-99.7%
(amortized cost $7,988,271,244) 7,988,271,244
Other assets less liabilities-0.3 26,295,748
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
8,015,285,129 shares outstanding) $8,014,566,992
# All securities either mature or their interest rate changes in one year or
less.
(a) Securities issued in reliance on section 4(2) or Rule 144A of the
Securities and Exchange Act of 1933. Rule 144A securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At June 30, 1998, these securities amounted to $838,586,210,
representing 10.5% of net assets.
(b) Funding agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $60,000,000, representing .75% of net
assets.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
3
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $383,932,689
EXPENSES
Advisory fee (Note B) $ 31,190,832
Distribution assistance and administrative service (Note C) 23,957,235
Transfer agency (Note B) 9,681,735
Registration fees 1,018,800
Printing 637,413
Custodian fees 595,434
Audit and legal fees 71,773
Trustees' fees 16,742
Miscellaneous 31,885
Total expenses 67,201,849
Net investment income 316,730,840
REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (10,016)
NET INCREASE IN NET ASSETS FROM OPERATIONS $316,720,824
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $316,730,840 $251,419,428
Net realized loss on investment transactions (10,016) (887)
Net increase in net assets from operations 316,720,824 251,418,541
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (316,730,840) (251,419,428)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 2,281,771,645 928,726,972
Total increase 2,281,761,629 928,726,085
NET ASSETS
Beginning of year 5,732,805,363 4,804,079,278
End of year $8,014,566,992 $5,732,805,363
See notes to financial statements.
4
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Capital Reserves (the "Trust") is an open-end diversified investment
company registered under the Investment Company Act of 1940. The Trust consists
of two portfolios: Alliance Capital Reserves (the "Portfolio") and Alliance
Money Reserves, each of which is considered to be a separate entity for
financial reporting and tax purposes. The Portfolio pursues its objectives by
maintaining a portfolio of high-quality money market securities all of which,
at the time of investment, have remaining maturities of 397 days or less. The
financial statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity. Certain illiquid securities containing
unconditional par puts are also valued at amortized cost.
2. TAXES
It is the Portfolio's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment transactions is recorded
on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50% on the first $1.25 billion of average daily net
assets; .49% on the next $.25 billion; .48% on the next $.25 billion; .47% on
the next $.25 billion; .46% on the next $1 billion; and .45% in excess of $3
billion. The Adviser has agreed, pursuant to the advisory agreement, to
reimburse the Portfolio to the extent that its annual aggregate expenses
(excluding taxes, brokerage, interest and, where permitted, extraordinary
expenses) exceed 1% of its average daily net assets for any fiscal year. No
reimbursement was required for the year ended June 30, 1998.
The Portfolio compensates Alliance Fund Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $5,255,330 for the year ended June 30, 1998.
NOTE C: DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SERVICES PLAN
Under this Plan, the Portfolio pays the Adviser a distribution fee at the
annual rate of up to .25% of the average daily value of the Portfolio's net
assets. The Plan provides that the Adviser will use such payments in their
entirety for distribution assistance and promotional activities. For the year
ended June 30, 1998, the distribution fee amounted to $16,800,462. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection with providing shareholder services, and may reimburse
the Adviser for accounting and bookkeeping, and legal and compliance support.
For the year ended June 30, 1998, such payments by the Portfolio amounted to
$7,156,773, of which $176,500 was paid to the Adviser.
5
ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1998, the
Portfolio had a capital loss carryforward of $718,137, of which $85,995 expires
in 2001, $49,939 expires in 2002, $464,313 expires in 2003, $106,987 expires in
2004, $887 expires in 2005 and $10,016 expires in the year 2006.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1998, capital paid-in aggregated $8,015,285,129. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1998 1997
Shares sold 24,542,949,413 26,431,373,115
Shares issued on reinvestments of dividends 316,730,840 251,419,428
Shares redeemed (22,577,908,608)(25,754,065,571)
Net increase 2,281,771,645 928,726,972
6
FINANCIAL HIGHLIGHTS ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0471 .0452 .0471 .0447 .0255
LESS: DIVIDENDS
Dividends from net investment income (.0471) (.0452) (.0471) (.0447) (.0255)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on net asset
value (a) 4.83% 4.63% 4.82% 4.57% 2.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $8,015 $5,733 $4,804 $3,024 $2,417
Ratios to average net assets of:
Expenses, net of waivers and reimbursements 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and reimbursements 1.00% 1.00% 1.00% 1.03% 1.03%
Net investment income 4.71% 4.53% 4.69% 4.51%(b) 2.57%(b)
</TABLE>
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
(b) Net of expenses reimbursed or waived by the Advisor.
7
INDEPENDENT AUDITOR'S REPORT ALLIANCE CAPITAL RESERVES
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE CAPITAL RESERVES PORTFOLIO
We have audited the accompanying statement of net assets of Alliance Capital
Reserves Portfolio as of Juneb30, 1998 and the related statements of
operations, changes in net assets, and financial highlights for thebperiods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require thatbwe plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Capital Reserves Portfolio as of June 30, 1998, and the results of its
operations, changes in its net assets, and its financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New YorkJuly 24, 1998
8
ALLIANCE CAPITAL RESERVES
1345 Avenue of the Americas, New York, NYb10105
Toll free 1 (800) 221-5672
YIELDS. For current recorded yield information on AllianceCapital Reserves,
call on a touch-tone telephone toll-free(800) 251-0539 and press the following
sequence of keys:
1 # 1 # 3 9 #
For non-touch-tone telephones, call toll-free (800) 221-9513
ALLIANCE CAPITAL
DISTRIBUTION OF THIS REPORT OTHER THAN TO SHAREHOLDERS MUSTBE PRECEDED OR
ACCOMPANIED BY THE FUND'S CURRENT PROSPECTUS, WHICH CONTAINS FURTHER
INFORMATION ABOUT THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
CAPAR
