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Alliance
Treasury
Reserves
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AllianceCapital [LOGO](R)
Semi-Annual Report
December 31, 1998
(unaudited)
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<PAGE>
STATEMENT OF NET ASSETS
December 31, 1998 (unaudited) Alliance Treasury Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
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U.S. GOVERNMENT
OBLIGATIONS-71.4%
U.S. TREASURY NOTES-43.1%
$ 39,500 5.00%, 1/31/99 ......... 4.53% $ 39,505,111
35,000 5.00%, 2/15/99 ......... 4.51 35,011,427
65,000 5.50%, 2/28/99 ......... 4.66 65,077,872
45,000 5.88%, 1/31/99 ......... 4.64 45,037,770
25,000 5.88%, 2/28/99 ......... 4.83 25,037,516
55,000 6.25%, 3/31/99 ......... 4.48 55,221,834
3,000 6.38%, 1/15/99 ......... 4.50 3,001,875
57,400 6.38%, 4/30/99 ......... 4.86 57,669,735
24,300 6.38%, 5/15/99 ......... 4.57 24,450,305
10,000 6.75%, 5/31/99 ......... 4.59 10,083,618
8,500 8.88%, 2/15/99 ......... 4.50 8,541,932
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368,638,995
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U.S. TREASURY BILLS-28.3%
3,000 1/21/99 ................ 4.27 2,992,900
20,000 1/21/99 ................ 4.37 19,951,778
15,000 2/04/99 ................ 4.39 14,938,233
10,000 3/11/99 ................ 4.39 9,916,817
20,000 2/04/99 ................ 4.43 19,916,889
20,000 1/21/99 ................ 4.46 19,950,667
10,000 3/04/99 ................ 4.46 9,924,997
10,000 3/25/99 ................ 4.46 9,898,325
29,800 1/21/99 ................ 4.47 29,726,328
10,000 2/11/99 ................ 4.47 9,949,661
10,000 2/18/99 ................ 4.47 9,941,067
30,000 1/21/99 ................ 4.59 29,923,916
30,000 1/21/99 ................ 4.61 29,924,250
10,000 2/04/99 ................ 4.62 9,956,839
15,000 4/01/99 ................ 4.63 14,832,187
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241,744,854
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Total U.S. Government
Obligations
(amortized cost
$610,383,849)........... 610,383,849
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REPURCHASE
AGREEMENTS-27.8%
ABN Amro
15,000 4.77%, dated 12/16/98,
due 2/11/99 in the amount of
$15,113,288 (cost $15,000,000;
collateralized by $8,950,000
U.S. Treasury Bond,
11.25%, 2/15/15,
value $15,284,435) (a) .. 4.77 15,000,000
Barclays de Zoete
Wedd Securities, Inc
8,000 4.74%, dated 12/21/98,
due 3/23/99 in the amount of
$8,096,907 (cost $8,000,000;
collateralized by $7,885,000
U.S. Treasury Note,
7.875%, 11/15/99,
value $8,161,124) (a) ... 4.74 8,000,000
Barclays de Zoete
Wedd Securities, Inc.
8,000 4.78%, dated 12/21/98,
due 2/24/99 in the amount of
$8,069,044 (cost $8,000,000;
collateralized by $8,030,000
U.S. Treasury Note,
5.875%, 11/15/99,
value $8,158,470) (a) ... 4.78 8,000,000
Bear Stearns & Co.
8,000 4.65%, dated 12/18/98,
due 2/25/99 in the amount of
$8,071,300 (cost $8,000,000;
collateralized by $23,820,000
U.S. Treasury Note,
4.65%, 2/25/99,
value $8,158,207) (a) ... 4.65 8,000,000
Bear Stearns & Co.
7,000 4.75%, dated 11/17/98,
due 1/20/99 in the amount of
$7,059,111 (cost $7,000,000;
collateralized by $7,050,000
U.S. Treasury Note,
5.00%, 2/15/99,
value $7,142,244) (a) ... 4.75 7,000,000
Cibc/Wood Gundy, Inc.
15,000 4.65%, dated 12/17/98,
due 12/16/99 in the amount of
$15,118,188 (cost $15,000,000;
collateralized by $14,977,000
U.S. Treasury Note,
5.50%, 4/15/00,
value $15,295,081) (a) .. 4.65 15,000,000
First Boston Corp.
8,000 4.70%, dated 11/19/98,
due 2/17/99 in the amount of
$8,094,000 (cost $8,000,000;
collateralized by $6,709,000
U.S. Treasury Bond,
6.875%, 8/15/25,
value $8,151,203) (a) ... 4.70 8,000,000
1
<PAGE>
STATEMENT OF NET ASSETS (continued) Alliance Treasury Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
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First Boston Corp.
$ 8,000 4.70%, dated 12/22/98,
due 2/24/99 in the amount of
$8,066,844 (cost $8,000,000;
collateralized by $6,006,000
U.S. Treasury Bond,
8.125%, 8/15/19,
value $8,165,609) (a) ... 4.70% $ 8,000,000
Goldman Sachs & Co.
5,000 4.71%, dated 12/09/98,
due 3/09/99 in the amount of
$5,058,875 (cost $5,000,000;
collateralized by $4,430,000
U.S. Treasury Bond,
6.25%, 8/15/23,
value $5,111,172) (a) ... 4.71 5,000,000
Goldman Sachs & Co.
5,000 4.71%, dated 12/16/98,
due 3/24/99 in the amount of
$5,064,108 (cost $5,000,000;
collateralized by $4,115,000
U.S. Treasury Bond,
6.875%, 8/15/25,
value $5,092,354) (a) ... 4.71 5,000,000
Goldman Sachs & Co.
8,000 4.75%, dated 12/02/98,
due 2/10/99 in the amount of
$8,073,889 (cost $8,000,000;
collateralized by $6,470,000
U.S. Treasury Note,
7.50%, 11/15/16,
value $8,177,009) (a) ... 4.75 8,000,000
Greenwich Funding Corp.
25,000 4.75%, dated 12/31/98,
due 1/04/99 in the amount of
$25,013,194 (cost 25,000,000;
collateralized by $24,275,000
U.S. Treasury Note,
5.75%, 4/30/03,
value $25,488,792) (a) .. 4.75 25,000,000
Merrill Lynch & Co., Inc.
7,000 4.65%, dated 12/15/98,
due 2/22/99 in the amount of
$7,062,388 (cost $7,000,000;
collateralized by $4,250,000
U.S. Treasury Bond,
4.65%, 5/15/14,
value $7,144,167) (b) ... 4.65 7,000,000
Merrill Lynch & Co., Inc.
8,000 4.65%, dated 12/15/98,
due 3/22/99 in the amount of
$8,100,233 (cost $8,000,000;
collateralized by $5,920,000
U.S. Treasury Bond,
4.65%, 8/15/05,
value $8,164,130) (b) ... 4.65 8,000,000
Morgan (J.P.) & Co.
10,000 4.67%, dated 12/09/98,
due 2/10/99 in the amount of
$10,081,725 (cost $10,000,000;
collateralized by $9,750,000
U.S. Treasury Note,
5.50%, 3/31/03,
value $10,138,008) (a) .. 4.67 10,000,000
Morgan Stanley Group, Inc.
7,000 4.66%, dated 12/15/98,
due 3/22/99 in the amount of
$7,087,893 (cost $7,000,000;
collateralized by $5,060,000
U.S. Treasury Bond,
8.75%, 5/15/17,
value $7,142,829) (a) ... 4.66 7,000,000
Morgan Stanley Group, Inc.
10,000 4.69%, dated 12/15/98,
due 2/22/99 in th amount of
$10,089,892 (cost $10,000,000;
collateralized by $7,230,000
U.S. Treasury Bond,
8.75%, 5/15/17,
value $10,206,058) (a) .. 4.69 10,000,000
Nationsbank Corp.
10,000 4.75%, dated 12/14/98,
due 3/22/99 in the amount of
$10,129,306 (cost $10,000,000;
collateralized by $9,760,000
U.S. Treasury Note,
5.50%, 3/31/03,
value $10,247,279) (a) .. 4.75 10,000,000
Nationsbank Corp.
8,000 4.77%, dated 12/03/98,
due 2/24/99 in the amount of
$8,087,980 (cost $8,000,000;
collateralized by $7,610,000
U.S. Treasury Note,
6.625%, 4/30/02,
value $8,161,311) (a) ... 4.77 8,000,000
2
<PAGE>
Alliance Treasury Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
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Paribas Corp.
$ 10,000 4.75%, dated 12/15/98,
due 3/23/99 in the amount of
$10,129,306 (cost $10,000,000;
collateralized by $9,679,000
U.S. Treasury Note,
6.25%, 10/31/01,
value $10,195,804) (a) .. 4.75% $ 10,000,000
Paribas Corp.
10,000 4.80%, dated 12/02/98,
due 2/26/99 in the amount of
$10,114,667 (cost $10,000,000;
collateralized by $5,946,000
U.S. Treasury Bond,
11.25%, 2/15/15,
value $10,233,865) (a) .. 4.80 10,000,000
Salomon Smith Barney, Inc.
10,000 4.70%, dated 12/15/98,
due 2/23/99, in the amount of
$10,091,389 (cost $10,000,000;
collateralized by $7,040,000
U.S. Treasury Note,
8.875%, 5/15/17,
value $10,189,634) (a) .. 4.70 10,000,000
Salomon Smith Barney, Inc.
7,000 4.78%, dated 11/18/98,
due 1/25/99 in the amount of
$7,063,202 (cost $7,000,000;
collateralized by $5,745,000
U.S. Treasury Note,
4.70%, 11/15/16,
value $7,147,166) (a) ... 4.78 7,000,000
State Street Bank and Trust Co.
5,800 4.50%, dated 12/31/98,
due 1/04/99 in the amount of
$5,802,900 (cost $5,800,000;
collateralized by $5,530,000
U.S. Treasury Note,
6.25%, 1/31/02,
value $5,917,100) (a) ... 4.50 5,800,000
Warburg Securities
4,000 4.68%, dated 12/16/98,
due 3/24/99 in the amount of
$4,050,960 (cost $4,000,000;
collateralized by $3,338,000
U.S. Treasury Note,
7.25%, 5/15/16,
value $4,085,782) (a) ... 4.68 4,000,000
Warburg Securities
4,000 4.76%, dated 12/16/98,
due 2/24/99 in the amount of
$4,037,022 (cost $4,000,000;
collateralized by $3,338,000
U.S. Treasury Note,
7.25%, 5/15/16,
value $4,085,782) (a) ... 4.76 4,000,000
Warburg Securities
7,000 4.78%, dated 11/17/98,
due 2/16/99 in the amount of
$7,084,579 (cost $7,000,000;
collateralized by $5,369,000
U.S. Treasury Note,
8.00%, 11/15/21,
value $7,118,814) (a) ... 4.78 7,000,000
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Total Repurchase
Agreements
(amortized cost
$237,800,000)............ 237,800,000
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TOTAL INVESTMENTS-99.2%
(amortized cost
$848,183,849)............ 848,183,849
Other assets less
liabilities-0.8%......... 6,524,440
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NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
854,702,776 shares
outstanding)............. $ 854,708,289
===============
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(a) Repurchase agreements which are terminable within 7 days.
(b) Funding agreements which are illiquid securities and subject to restrictions
as to resale. The securities amounted to $15,000,000, representing 1.75% of
net assets (see Note A).
See notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1998 (unaudited) Alliance Treasury Reserves
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest...................................................... $ 20,008,311
EXPENSES
Advisory fee (Note B)......................................... $ 1,963,634
Distribution assistance and administrative service (Note C)... 1,578,065
Transfer agency (Note B)...................................... 212,174
Custodian fees................................................ 88,065
Registration fees............................................. 71,248
Printing...................................................... 38,048
Audit and legal fees.......................................... 15,716
Trustees' fees................................................ 4,695
Amortization of organization expense.......................... 1,550
Miscellaneous................................................. 13,674
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Total expenses................................................ 3,986,869
Less: expense reimbursement................................... (59,602)
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Net expenses.................................................. 3,927,267
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Net investment income......................................... 16,081,044
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions.................. 7,290
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NET INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 16,088,334
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1998 Year Ended
(unaudited) June 30, 1998
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income.................................... $ 16,081,044 $ 32,946,390
Net realized gain (loss) on investment transactions...... 7,290 (1,049)
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Net increase in net assets from operations............... 16,088,334 32,945,341
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................... (16,081,044) (32,946,390)
Net realized gain on investments......................... (728) (16,592)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E).................................... 114,645,582 35,989,359
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Total increase........................................... 114,652,144 35,971,718
NET ASSETS
Beginning of year........................................ 740,056,145 704,084,427
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End of period............................................ $ 854,708,289 $ 740,056,145
============= =============
</TABLE>
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See notes to financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 (unaudited) Alliance Treasury Reserves
================================================================================
NOTE A: Significant Accounting Policies
Alliance Government 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 Government Reserves and Alliance Treasury Reserves
(the "Portfolio"), 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. Organization Expenses
The organization expenses of the Portfolio were being amortized against income
on a straight-line basis through September, 1998.
3. 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.
4. 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.
5. 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.
6. Repurchase Agreements
It is the Portfolio's policy to take possession of securities as collateral
under repurchase agreements and to determine on a daily basis that the value of
such securities are sufficient to cover the value of the repurchase agreements.
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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. For the
six months ended December 31, 1998, the reimbursement amounted to $59,602.
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 $101,168 for the six months ended December 31,
1998.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Treasury Reserves
================================================================================
NOTE C: Distribution Assistance and Administrative Services Plan
Under this Plan, the Portfolio pays Alliance Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of the Adviser, a distribution fee at
the annual rate of .25% of the average daily value of the Portfolio's net
assets. The Plan provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. For the six
months ended December 31, 1998, the distribution fee amounted to $981,817. 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 six months ended December 31, 1998, such payments by the
Portfolio amounted to $596,248, of which $65,500 was paid to the Adviser.
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NOTE D: Investment Transactions
At December 31, 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 loss carryforward of $1,049 which expires in the year 2006.
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NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At December 31,
1998, capital paid-in aggregated $854,702,776. Transactions, all at $1.00 per
share, were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1998 June 30,
(unaudited) 1998
----------------- ---------------
<S> <C> <C>
Shares sold............................................................. 1,145,732,957 3,120,550,717
Shares issued on reinvestments of dividends............................. 16,081,044 32,946,390
Shares redeemed......................................................... (1,047,168,419) (3,117,507,748)
-------------- --------------
Net increase............................................................ 114,645,582 35,989,359
============== ==============
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Treasury Reserves
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Six Months September 1,
Ended 1993(a)
December 31, Year Ended June 30, through
1998 ------------------------------------------- June 30,
(unaudited) 1998 1997 1996 1995 1994
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from Investment Operations
Net investment income (b) ................ .0207 .0453 .0443 .0466 .0460 .0260
------- ------- ------- ------- ------- -------
Less: Dividends
Dividends from net investment income ..... (.0207) (.0453) (.0443) (.0466) (.0460) (.0260)
------- ------- ------- ------- ------- -------
Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on net
asset value (c) ....................... 4.15%(d) 4.63% 4.53% 4.77% 4.71% 3.18%(d)
Ratios/Supplemental Data
Net assets, end of period (in thousands).. $854,708 $740,056 $704,084 $700,558 $493,702 $80,720
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements ...................... 1.00%(d) .95% .85% .81% .69% .28%(d)
Expenses, before waivers and
reimbursements ...................... 1.02%(d) 1.01% 1.00% 1.05% 1.05% 1.28%(d)
Net investment income (b) ............. 4.09%(d) 4.53% 4.43% 4.64% 4.86% 3.24%(d)
</TABLE>
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(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the Adviser.
(c) 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.
(d) Annualized.
7
<PAGE>
-----------------
BULK RATE
Alliance Treasury Reserves U.S. POSTAGE
1345 Avenue of the Americas, New York, NY 10105 PAID
Toll free 1 (800) 221-5672 New York, NY
Permit No. 7131
-----------------
Yields. For current recorded yield information on Alliance Treasury Reserves,
call on a touch-tone telephone toll-free (800) 251-0539 and press the following
sequence of keys:
|1| |#| |1| |#| |9| |0| |#|
For non-touch-tone telephones, call toll-free (800) 221-9513
- ------------------------------------------------------------
AllianceCapital [LOGO](R)
Distribution of this report other than to shareholders must be 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.
TRSSR
