- --------------------------------------------------------------------------------
Alliance
Capital
Reserves
Alliance Capital [LOGO](R)
Annual Report
June 30, 1999
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<PAGE>
STATEMENT OF NET ASSETS
June 30, 1999 Alliance Capital Reserves
================================================================================
Principal
Amount
(000) Security(a) Yield Value
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CERTIFICATES OF DEPOSIT-30.6%
Barclays Bank Plc
$ 50,000 5.61%, 6/14/00.......... 5.66% $ 49,977,083
Bayerische Landesbank
260,000 4.89%, 3/30/00 (b)...... 4.95 259,885,346
Canadian Imperial
Bank
120,000 5.10%, 9/15/99.......... 5.10 120,000,000
Cariplo NY
55,000 4.90%, 8/18/99.......... 4.89 55,000,724
Credit Communal
De Belgique
75,000 5.02%, 9/07/99.......... 5.02 75,000,000
115,000 5.29%, 9/30/99.......... 5.29 115,000,000
Deutsche Bank
87,000 4.88%, 8/16/99 (b)...... 4.95 86,992,707
90,000 5.11%, 2/22/00.......... 5.16 89,980,384
135,000 5.44%, 6/01/00.......... 5.49 134,940,331
67,000 5.58%, 6/12/00.......... 5.63 66,981,674
Hessische Landesbank
80,000 5.22%, 2/29/00.......... 5.24 79,987,186
National Westminster
Bank
328,000 4.88%, 4/17/00 (b)...... 4.94 327,853,430
105,000 5.67%, 7/05/00.......... 5.72 104,959,227
Nordeutsche
Landesbank
85,000 5.05%, 2/14/00.......... 5.08 84,984,645
95,000 5.26%, 5/18/00.......... 5.30 94,967,749
175,000 5.66%, 7/27/99.......... 5.71 174,994,278
Rabo Bank
70,000 5.11%, 2/18/00.......... 5.16 69,987,137
85,000 5.35%, 5/24/00.......... 5.40 84,963,293
122,000 5.65%, 7/26/99.......... 5.70 121,995,997
State Street Bank &
Trust Co.
150,000 4.95%, 9/13/99.......... 4.95 150,000,000
Toronto Dominion
Bank
175,000 4.81%, 8/09/99 (b)...... 4.87 174,989,046
65,000 5.07%, 2/17/00.......... 5.10 64,986,122
120,000 5.27%, 3/02/00.......... 5.30 119,976,148
UBS Finance Delaware,
Inc.
45,000 5.16%, 2/28/00.......... 5.19 44,991,382
70,000 5.22%, 5/10/00.......... 5.26 69,976,818
75,000 5.29%, 3/07/00.......... 5.12 75,071,798
65,000 5.29%, 5/19/00.......... 5.34 64,972,342
30,000 5.34%, 5/30/00.......... 5.39 29,929,816
150,000 5.36%, 5/30/00.......... 5.61 149,934,050
----------------
Total Certificates of
Deposit
(amortized cost
$3,143,278,713)......... 3,143,278,713
----------------
COMMERCIAL PAPER-29.8%
Associates Corp. of
North America
75,000 8/23/99................. 4.88 74,461,166
50,000 8/24/99................. 5.14 49,614,500
40,000 8/25/99................. 5.14 39,685,889
BAA Plc
25,870 9/15/99................. 4.84 25,605,666
Banc One Corp.
110,000 8/16/99 (c)............. 5.03 109,293,006
Banque Caisse
D'Epargne L'Etat
72,000 8/12/99................. 4.82 71,595,120
15,000 8/24/99................. 5.18 14,883,450
26,820 8/03/99................. 5.23 26,691,420
Banque Generale Du
Luxembourg
25,000 8/06/99................. 4.82 24,879,500
Bil North America, Inc.
45,000 8/10/99................. 4.79 44,760,500
40,000 9/15/99................. 4.82 39,592,978
CBA (Finance) Delaware,
Inc.
50,000 9/15/99................. 4.84 49,489,111
CS First Boston,
Guernsey
50,000 9/13/99 (c)............. 4.82 49,504,611
65,000 9/09/99 (c)............. 4.87 64,384,486
45,000 9/21/99 (c)............. 4.87 44,500,620
30,000 8/20/99 (c)............. 5.06 29,789,167
CS First Boston, Inc.
30,000 8/25/99 (c)............. 4.88 29,776,333
40,000 8/26/99 (c)............. 4.90 39,695,111
40,000 9/01/99 (c)............. 4.90 39,662,445
Dresdner Bank
200,000 8/24/99................. 5.14 198,458,000
First Chicago Financial
Corp.
35,000 8/25/99................. 4.82 34,742,264
35,000 9/10/99................. 4.85 34,665,215
175,000 7/14/99................. 4.99 174,684,660
1
<PAGE>
STATEMENT OF NET ASSETS (continued) Alliance Capital Reserves
================================================================================
Principal
Amount
(000) Security(a) Yield Value
- --------------------------------------------------------------------------------
Ford Motor Credit
Corp.
$ 445,000 7/01/99................. 5.75% $ 445,000,000
GE Capital
International Funding
65,000 8/24/99................. 5.15 64,497,875
85,000 8/25/99................. 5.22 84,322,125
General Electric Capital
Corp.
125,000 8/31/99................. 4.93 123,955,799
Goldman Sachs Group LP
33,000 9/15/99................. 5.10 32,644,700
Government
Development Bank of
Puerto Rico
60,000 7/01/99................. 5.00 60,000,000
J.P. Morgan & Co., Inc.
50,000 9/27/99................. 4.83 49,409,667
60,000 9/15/99................. 5.04 59,361,600
77,000 9/15/99................. 5.05 76,179,094
Morgan Stanley Group,
Inc.
100,000 7/01/99................. 5.75 100,000,000
National City Corp.
50,000 8/11/99................. 5.18 49,705,028
70,000 8/13/99................. 5.20 69,565,222
Park Avenue Receivables
Corp.
180,000 8/25/99 (c)............. 5.35 178,528,750
Sheffield Receivables
Corp.
36,700 7/15/99 (c)............. 5.05 36,627,925
Shell Finance
86,000 8/02/99................. 4.82 85,631,538
Societe Generale N.A.,
Inc.
110,000 8/25/99................. 4.89 109,178,208
Southern Co.
60,000 7/14/99................. 4.99 59,891,883
Thames Global Asset
Funding
8,000 9/15/99 (c)............. 5.10 7,913,867
UNI Funding, Inc.
60,000 7/15/99................. 4.82 59,887,533
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Total Commercial Paper
(amortized cost
$3,062,716,032)......... 3,062,716,032
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CORPORATE OBLIGATIONS-15.5%
American General
Annuity Insurance Co.
Funding Agreement
20,000 4.95%, 9/01/99 (d)...... 4.95 20,000,000
General American
Funding Corp.
Funding Agreement
405,000 5.12%, 7/09/99 FRN...... 5.12 405,000,000
General Electric
Capital Corp.
180,000 4.95%, 4/12/00 FRN...... 4.95 180,000,000
Hartford Life Insurance
Co. Funding Agreement
50,000 4.96%, 2/27/00 FRN (d).. 4.96 50,000,000
J.P. Morgan & Co., Inc.
200,000 4.82%, 7/07/99
FRN MTN................. 4.84 199,997,280
John Hancock Funding
Agreement
100,000 4.94%, 3/31/00 FRN (d).. 4.94 100,000,000
Merrill Lynch & Co., Inc.
35,000 5.09%, 2/07/00 MTN...... 5.09 35,000,000
57,000 5.33%, 9/30/99 FRN...... 5.33 57,000,000
Prudential of America
Insurance Co. Funding
Agreement
69,000 4.94%, 11/30/00 FRN..... 4.94 69,000,000
Security Benefit Life
Insurance Co. Funding
Agreement
30,000 5.06%, 10/14/99 FRN (d). 5.06 30,000,000
Security Life of Denver
Funding Agreement
50,000 5.24%, 10/25/99 FRN (d). 5.24 50,000,000
Sigma Finance
150,000 5.00%, 9/15/99 FRN (c).. 5.00 150,000,000
137,000 5.20%, 6/30/00 FRN (c).. 5.20 137,000,000
Travelers Life
Funding Agreement
50,000 4.98%, 11/03/99 FRN (d). 4.98 50,000,000
50,000 4.98%, 2/11/00 FRN (d).. 4.98 50,000,000
10,000 5.05%, 10/21/99 FRN (d). 5.05 10,000,000
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Total Corporate Obligations
(amortized cost
$1,592,997,280)......... 1,592,997,280
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2
<PAGE>
Alliance Capital Reserves
================================================================================
Principal
Amount
(000) Security(a) Yield Value
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BANK OBLIGATIONS-8.1%
Abbey National Treasury
Services
$ 140,000 4.80%, 7/15/99 FRN...... 4.87% $ 139,996,593
Barclays Bank Plc
175,000 4.91%, 6/14/00 FRN...... 4.96 174,919,084
CS First Boston,
Guernsey
85,000 5.00%, 9/23/99 MTN (c).. 5.00 85,000,000
European American Bank
75,000 4.95%, 8/26/99.......... 4.95 75,000,000
First National Bank
75,000 5.60%, 6/14/00.......... 5.65 74,965,621
Lasalle National Bank
75,000 4.05%, 8/19/99.......... 4.98 74,999,114
Royal Bank of Canada
195,000 5.44%, 8/25/99 FRN...... 5.52 194,977,022
Wachovia Bank
20,000 4.97%, 11/22/99......... 5.15 19,980,281
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Total Bank Obligations
(amortized cost
$839,837,715)........... 839,837,715
----------------
TIME DEPOSITS-6.8%
Dresdner Bank
247,400 5.00%, 7/01/99.......... 5.00 247,400,000
Republic National Bank
140,000 5.88%, 7/01/99.......... 5.88 140,000,000
Societe Generale Bank
70,000 6.00%, 7/01/99.......... 6.00 70,000,000
Westdeutsche
Landesbank
239,100 5.81%, 7/01/99.......... 5.81 239,100,000
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Total Time Deposits
(amortized cost
$696,500,000)........... 696,500,000
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U.S. GOVERNMENT
AGENCY OBLIGATIONS-5.1%
Aid Housing Guaranty
Project Portugal
10,938 5.59%, 12/01/16 FRN..... 5.59 10,937,500
Federal Home Loan Bank
85,000 5.00%, 2/10/00.......... 5.00 85,000,000
Student Loan
Marketing Assn.
72,000 5.56%, 11/24/99 FRN..... 5.59 71,991,360
200,000 5.59%, 2/04/00 FRN...... 5.61 199,976,624
159,000 5.61%, 11/09/99 FRN..... 5.70 158,966,331
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Total U.S. Government
Agency Obligations
(amortized cost
$526,871,815)........... 526,871,815
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PROMISSORY NOTES-4.6%
Goldman Sachs Group LP
120,000 4.98%, 8/02/99 (c)...... 4.98 120,000,000
180,000 4.98%, 10/12/99 (c)..... 4.98 180,000,000
170,000 5.03%, 11/19/99 (c)..... 5.03 170,000,000
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Total Promissory Notes
(amortized cost
$470,000,000)........... 470,000,000
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TOTAL INVESTMENTS-100.5%
(amortized cost
$10,332,201,555)........ 10,332,201,555
Other assets less
liabilities-(0.5%)...... (54,531,142)
----------------
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
10,278,391,211 shares
outstanding)............ $ 10,277,670,413
================
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(a) All securities either mature or their interest rate changes in 397 days or
less.
(b) Variable Rate Security. Stated interest rate in effect at June 30, 1999.
(c) 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, 1999, these securities amounted to $1,471,676,321,
representing 14.3% of net assets.
(d) Funding Agreements which are illiquid securities and subject to
restrictions as to resale. These securities amounted to $360,000,000,
representing 3.5% of net assets (see Note A).
Glossary of Terms:
FRN Floating Rate Note
MTN Medium Term Note
See notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1999 Alliance Capital Reserves
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest .................................................. $ 495,160,412
EXPENSES
Advisory fee (Note B) ..................................... $ 43,181,153
Distribution assistance and administrative service (Note C) 38,066,187
Transfer agency (Note B) .................................. 8,823,715
Registration fees ......................................... 1,009,571
Printing .................................................. 768,071
Custodian fees ............................................ 738,960
Audit and legal fees ...................................... 149,720
Trustees' fees ............................................ 16,824
Miscellaneous ............................................. 118,163
---------------
Total expenses ............................................ 92,872,364
--------------
Net investment income ..................................... 402,288,048
REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions .............. (2,661)
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................... $ 402,285,387
==============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1999 June 30, 1998
--------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ..................................... $ 402,288,048 $ 316,730,840
Net realized loss on investment transactions .............. (2,661) (10,016)
--------------- --------------
Net increase in net assets from operations ................ 402,285,387 316,720,824
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ..................................... (402,288,048) (316,730,840)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) ..................................... 2,263,106,082 2,281,771,645
--------------- --------------
Total increase ............................................ 2,263,103,421 2,281,761,629
NET ASSETS
Beginning of year ......................................... 8,014,566,992 5,732,805,363
--------------- --------------
End of year ............................................... $10,277,670,413 $8,014,566,992
=============== ==============
</TABLE>
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See notes to financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 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 puts at par value 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.
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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. No
reimbursement was required for the year ended June 30, 1999.
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 $4,186,890 for the year ended June 30, 1999.
For the year ended June 30, 1999, the Fund's expenses were reduced by $50,720
under an expense offset arrangement with Alliance Fund Services.
- --------------------------------------------------------------------------------
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 year
ended June 30, 1999, the distribution fee amounted to $23,461,752. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Capital Reserves
================================================================================
with providing shareholder services, and may reimburse the Adviser for
accounting and bookkeeping, and legal and compliance support. For the year ended
June 30, 1999, such payments by the Portfolio amounted to $14,604,435, of which
$178,000 was paid to the Adviser.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
At June 30, 1999, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1999, the
Portfolio had a capital loss carryforward of $719,581, 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, $2,275 expires in 2006 and $9,185 expires in the
year 2007.
- --------------------------------------------------------------------------------
NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1999, capital paid-in aggregated $10,278,391,211. Transactions, all at $1.00 per
share, were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, June 30,
1999 1998
--------------- ---------------
<S> <C> <C>
Shares sold ................................. 14,536,904,651 24,542,949,413
Shares issued on reinvestments of dividends.. 402,288,048 316,730,840
Shares redeemed ............................. (12,676,086,617) (22,577,908,608)
--------------- ---------------
Net increase ................................ 2,263,106,082 2,281,771,645
=============== ===============
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Capital Reserves
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Year
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<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................................. .0430 .0471 .0452 .0471 .0447(a)
------- ------- ------- ------- -------
Less: Dividends
Dividends from net investment income.................. (.0430) (.0471) (.0452) (.0471) (.0447)
------- ------- ------- ------- -------
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 (b).. 4.40% 4.83% 4.63% 4.82% 4.57%
Ratios/Supplemental Data
Net assets, end of year (in millions)................. $10,278 $ 8,015 $ 5,733 $ 4,804 $ 3,024
Ratios to average net assets of:
Expenses, net of waivers and reimbursements........ .99% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and reimbursements........ .99% 1.00% 1.00% 1.00% 1.03%
Net investment income.............................. 4.29% 4.71% 4.53% 4.69% 4.51%(a)
</TABLE>
- --------------------------------------------------------------------------------
(a) Net of expenses reimbursed or waived by the Adviser.
(b) 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.
7
<PAGE>
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 June 30, 1999 and the related statements of operations,
changes in net assets, and financial highlights for the periods 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 that we 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, 1999, by correspondence with the custodian and brokers.
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, 1999, 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.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
New York, New York
July 23, 1999
8
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----------------
BULK RATE
U.S. POSTAGE
PAID
New York, NY
Permit No. 7131
----------------
Alliance Capital Reserves
1345 Avenue of the Americas, New York, NY 10105
Toll free 1 (800) 221-5672
Yields. For current recorded yield information on Alliance
Capital 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 [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.
