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Alliance
Capital
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 Capital Reserves
================================================================================
Principal
Amount
(000) Security(a) Yield Value
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COMMERCIAL PAPER-41.2%
Abbey National
Treasury Services
$ 45,000 3/22/99 ................ 4.80% $ 44,520,000
8,000 2/16/99 ................ 4.95 7,949,400
Allianz of America
Finance Corp.
13,000 3/19/99 (b)............. 5.12 12,857,636
Associates Corp. of
North America
40,000 2/11/99 ................ 5.03 39,770,856
30,000 3/25/99 ................ 5.13 29,645,175
100,000 3/26/99 ................ 5.13 98,803,000
BAA Plc
25,856 3/10/99 ................ 5.07 25,608,386
25,000 2/09/99 ................ 525 24,857,812
Banco de Santander
50,000 2/12/99 ................ 5.16 49,699,000
Bank of America Corp.
75,000 6/08/99 ................ 4.88 73,393,667
120,000 5/11/99 ................ 4.93 117,863,666
Bank of America F.S.B.
125,000 5/14/99 ................ 4.92 122,727,917
100,000 5/17/99 ................ 4.92 98,141,333
Bankers Trust Alex
Brown, Inc.
100,000 2/16/99 FRN (c)......... 5.28 100,000,000
Banque Caisse
d'Epargne L'Etat
55,000 3/22/99 ................ 5.04 54,384,000
43,000 3/25/99 ................ 5.07 42,497,366
Bil North America, Inc.
25,000 3/15/99 ................ 5.05 24,743,993
Caisse des Depots et
Consignations
67,000 1/04/99 ................ 5.12 66,971,413
Cregem North
America, Inc.
80,000 3/23/99 ................ 5.05 79,091,000
67,600 3/25/99 ................ 5.06 66,811,371
Delaware Funding Corp.
17,754 2/16/99 (b)............. 5.27 17,634,447
Den Danske Corp.
43,000 3/29/99 ................ 5.11 42,469,505
120,000 2/10/99 ................ 5.17 119,310,667
Diageo Capital Plc
115,000 3/15/99 ................ 5.06 113,820,036
50,000 3/22/99 ................ 5.08 49,435,556
Equilon Enterprise LLC
25,000 3/24/99 ................ 5.09 24,710,153
60,000 3/05/99 ................ 5.12 59,462,400
Ford Motor Credit Corp.
190,000 6/09/99 ................ 4.86 185,921,650
General Electric
Capital Corp.
100,000 2/19/99 ................ 5.14 99,300,389
70,000 2/22/99 ................ 5.43 69,450,967
General Electric
Capital Services
71,000 4/30/99 ................ 5.06 69,812,446
100,000 3/05/99 ................ 5.19 99,091,750
10,000 3/05/99 ................ 5.20 9,909,000
75,000 3/04/99 ................ 5.23 74,324,458
General Electric
Financial Assurance
25,000 2/19/99 ................ 5.15 24,824,757
Government
Development Bank of
Puerto Rico
30,664 2/23/99 ................ 5.24 30,427,444
Grand Funding Corp.
51,267 3/19/99 (b)............. 5.15 50,702,280
Henkel Corp.
14,000 2/24/99 ................ 4.90 13,897,100
ING America Insurance
Holdings, Inc.
50,000 6/28/99 ................ 4.93 48,781,195
40,000 3/12/99 ................ 5.10 39,603,333
20,000 3/26/99 ................ 5.15 19,759,667
10,000 3/29/99 ................ 5.17 9,875,058
International
Securitization Corp.
34,000 3/17/99 (b)............. 5.15 33,635,208
Lloyds Bank
80,000 6/03/99 ................ 4.84 78,354,400
Marsh & McClennan, Inc.
20,000 2/26/99 ................ 5.28 19,835,733
33,000 1/19/99 ................ 5.32 32,912,220
Morgan Stanley
Group, Inc.
60,000 3/24/99 ................ 5.20 59,289,333
214,000 2/26/99 ................ 5.28 212,242,347
Norwest Corp.
85,000 2/05/99 ................ 4.95 84,590,937
Republic New York Corp.
78,000 3/15/99 ................ 5.05 77,201,258
Salomon Smith Barney
75,000 3/11/99 ................ 5.05 74,274,063
100,000 3/05/99 ................ 5.15 99,098,750
100,000 3/08/99 ................ 5.15 99,055,833
1
<PAGE>
STATEMENT OF NET ASSETS (continued) Alliance Capital Reserves
================================================================================
Principal
Amount
(000) Security(a) Yield Value
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Scotia Bank
$ 30,000 2/18/99 ................ 5.25% $ 29,790,000
Sheffield Receivables
Corp.
30,000 3/15/99 (b)............. 5.15 29,686,708
UBS Finance Delaware,
Inc.
275,000 6/10/99 ................ 4.85 269,067,333
Vattenfall Treasury, Inc.
15,000 1/08/99 ................ 5.05 14,985,271
Wells Fargo & Co.
36,000 3/26/99 ................ 5.05 35,575,800
43,000 4/15/99 ................ 5.05 42,372,678
60,000 3/12/99 ................ 5.11 59,403,833
Westpac Capital Corp.
60,000 4/22/99 ................ 4.98 59,078,700
Windmill Funding Corp.
23,000 2/25/99 (b)............. 5.23 22,816,224
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Total Commercial Paper
(amortized cost
$3,886,127,878)......... 3,886,127,878
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CERTIFICATES OF DEPOSIT-18.2%
Bank of Nova Scotia
24,500 5.71%, 3/31/99 ......... 4.92 24,536,968
Bank of Scotland
10,000 5.16%, 4/09/99 ......... 5.14 10,000,279
Canadian Imperial
Bank of Commerce
142,000 4.87%, 4/15/99 ......... 4.87 142,000,000
150,000 4.96%, 3/15/99 ......... 4.96 150,000,000
90,000 5.25%, 1/04/99 ......... 5.25 90,000,000
Chase Manhattan Bank
90,000 4.90%, 3/15/99 ......... 4.90 90,000,000
Deutsche Bank
87,000 5.41%, 8/16/99 FRN...... 5.48 86,964,011
42,000 5.67%, 2/26/99 ......... 6.02 41,998,091
40,000 5.70%, 3/05/99 ......... 5.74 39,997,099
Dresdner Bank
90,000 5.51%, 1/15/99 ......... 5.67 89,993,654
National Westminster
Bank
135,000 5.65%, 3/03/99 ......... 5.70 134,988,991
Nordeutsche
Landesbank
175,000 5.66%, 7/27/99 ......... 5.71 174,954,444
65,000 5.72%, 4/16/99 ......... 5.77 64,991,045
Rabo Bank
122,000 5.65%, 7/26/99 ......... 5.70 121,967,011
Royal Bank of Canada
15,000 5.53%, 2/04/99 ......... 5.04 15,004,092
20,000 5.53%, 2/12/99 ......... 5.70 19,993,956
25,000 5.55%, 2/11/99 ......... 5.70 24,993,138
Swiss Bank
71,000 5.66%, 3/04/99 ......... 5.71 70,995,376
Toronto Dominion Bank
175,000 4.81%, 8/09/99 FRN...... 4.87 174,938,211
25,000 5.71%, 6/23/99 ......... 5.02 25,067,139
Wachovia Bank
50,000 5.18%, 3/05/99 ......... 5.18 50,000,000
Westdeutsche
Landesbank
70,000 5.32%, 2/16/99 ......... 5.32 70,000,000
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Total Certificates of
Deposit
(amortized cost
$1,713,383,505)......... 1,713,383,505
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BANK OBLIGATIONS-13.9%
Abbey National
250,000 5.42%, 2/17/99 FRN...... 5.48 249,981,377
140,000 4.87%, 7/15/99 FRN...... 4.94 139,952,551
Bayerische Landesbank
150,000 5.49%, 2/25/99 FRN...... 5.57 149,982,693
CS First Boston, Inc.
65,000 5.28%, 3/24/99 (b)...... 5.28 65,000,000
First Union Bank of
North Carolina
20,000 5.63%, 2/10/99 ......... 4.98 20,012,523
200,000 5.19%, 3/29/99 ......... 5.19 200,000,000
Lasalle National Bank
60,000 5.70%, 3/10/99 ......... 5.70 60,000,000
50,000 5.19%, 3/15/99 ......... 5.19 50,000,000
43,000 5.65%, 3/24/99 ......... 5.65 43,000,000
45,000 4.90%, 3/17/99 ......... 4.90 45,000,000
15,000 5.19%, 3/15/99 ......... 5.19 15,000,000
40,000 5.11%, 3/15/99 ......... 5.11 40,000,000
Royal Bank of Canada
195,000 5.19%, 8/25/99 FRN...... 5.27 194,901,404
SMM Trust
40,000 5.62%, 5/28/99 FRN (b).. 5.62 40,000,000
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Total Bank Obligations
(amortized cost
$1,312,830,548)......... 1,312,830,548
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CORPORATE OBLIGATIONS-13.4%
American General
Annuity Insurance Co.
Funding Agreement
20,000 5.57%, 9/01/99 (c)...... 5.57 20,000,000
2
<PAGE>
Alliance Capital Reserves
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Principal
Amount
(000) Security(a) Yield Value
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General American
Funding Corp.
$ 405,000 5.24%, 7/09/99 FRN....... 5.24% $ 405,000,000
Merrill Lynch & Co., Inc.
135,000 4.87%, 1/20/99 FRN....... 4.87 135,000,000
65,000 5.49%, 2/16/99 FRN....... 5.49 65,000,000
100,000 5.50%, 6/01/99 FRN....... 5.50 100,000,000
57,000 5.28%, 9/30/99 .......... 5.28 57,000,000
Prudential of America
Insurance Co. Funding
Agreement
69,000 5.57%, 11/30/00 FRN...... 5.57 69,000,000
Security Benefit Life
Insurance Co. Funding
Agreement
30,000 5.41%, 10/14/99 FRN (c).. 5.41 30,000,000
Security Life of Denver
Funding Agreement
50,000 5.24%, 10/25/99 FRN (c).. 5.24 50,000,000
Sigma Finance
150,000 5.22%, 9/15/99 FRN (b)... 5.22 150,000,000
128,000 5.57%, 9/15/99 FRN (b)... 5.57 128,000,000
Travelers Life
Funding Agreement
10,000 5.59%, 10/21/99 FRN (c).. 5.59 10,000,000
50,000 5.64%, 11/03/99 FRN (c).. 5.64 50,000,000
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Total Corporate Obligations
(amortized cost
$1,269,000,000).......... 1,269,000,000
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U.S. GOVERNMENT &
AGENCY OBLIGATIONS-7.4%
Aid Housing Guaranty
Project Portugal
11,250 5.34%, 12/01/16 FRN...... 5.34 11,250,000
Federal Home Loan Bank
118,000 5.00%, 10/27/99 ......... 5.00 118,000,000
Federal National
Mortgage Assn.
135,000 4.98%, 5/21/99 FRN....... 5.06 134,959,818
Student Loan
Marketing Assn.
159,000 5.39%, 11/09/99 ......... 5.45 158,919,812
72,000 5.31%, 11/24/99 ......... 5.34 71,980,649
200,000 5.34%, 2/04/00 .......... 5.36 199,957,214
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Total U.S. Government &
Agency Obligations
(amortized cost
$695,067,493)............ 695,067,493
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PROMISSORY NOTES-4.2%
Goldman Sachs Group LP
170,000 5.23%, 5/24/99 (b)....... 5.23 170,000,000
170,000 5.31%, 4/12/99 (b)....... 5.31 170,000,000
60,000 5.36%, 2/03/99 (b)....... 5.36 60,000,000
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Total Promissory Notes
(amortized cost
$400,000,000)............ 400,000,000
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TIME DEPOSIT-1.1%
Westdeutsche
Landesbank
108,000 4.75%, 1/04/99 .......... 4.75 108,000,000
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TOTAL INVESTMENTS-99.4%
(amortized cost
$9,384,409,424).......... 9,384,409,424
Other assets less
liabilities-0.6%......... 54,932,485
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NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
9,440,061,912 shares
outstanding)............. $9,439,341,909
==============
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(a) All securities either mature or their interest rate changes in 397 days or
less.
(b) 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 December 31, 1998, these securities amounted to $950,332,503,
representing 10.07% of net assets.
(c) Funding Agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $260,000,000, representing 2.8% of
net assets (see Note A).
Glossary:
FRN Floating Rate Note
See notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1998 (unaudited) Alliance Capital Reserves
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
Interest .................................................. $ 242,385,763
EXPENSES
Advisory fee (Note B) ..................................... $ 20,360,009
Distribution assistance and administrative service
(Note C) ................................................ 17,654,210
Transfer agency (Note B) .................................. 4,768,105
Printing .................................................. 355,226
Custodian fees ............................................ 341,234
Registration fees ......................................... 301,482
Audit and legal fees ...................................... 53,955
Trustees' fees ............................................ 8,648
Miscellaneous ............................................. 21,523
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Total expenses ............................................ 43,864,392
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Net investment income ..................................... 198,521,371
REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions .............. (1,866)
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................... $ 198,519,505
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1998 Year Ended
(unaudited) June 30, 1998
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ..................................... $ 198,521,371 $ 316,730,840
Net realized loss on investment transactions .............. (1,866) (10,016)
--------------- ---------------
Net increase in net assets from operations ................ 198,519,505 316,720,824
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ..................................... (198,521,371) (316,730,840)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) ..................................... 1,424,776,783 2,281,771,645
--------------- ---------------
Total increase ............................................ 1,424,774,917 2,281,761,629
NET ASSETS
Beginning of year ......................................... 8,014,566,992 5,732,805,363
--------------- ---------------
End of period ............................................. $ 9,439,341,909 $ 8,014,566,992
=============== ===============
</TABLE>
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See notes to financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 (unaudited) 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.
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NOTE B: Advisory Fee and Transactions with an Affiliate of the Adviser
The Portfolio pays its Adviser, Alliance Capital Management LP., 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 six months ended December 31, 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 $2,008,775 for the six months ended December 31,
1998.
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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 $11,045,058. 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,
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Capital Reserves
================================================================================
and legal and compliance support. For the six months ended December 31, 1998,
such payments by the Portfolio amounted to $6,609,152, of which $89,000 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 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 $10,016 expires in the year 2006.
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NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At December 31,
1998, capital paid-in aggregated $9,440,061,912. 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 ........................................................... 6,666,230,755 24,542,949,413
Shares issued on reinvestments of dividends ........................... 198,521,371 316,730,840
Shares redeemed ....................................................... (5,439,975,343) (22,577,908,608)
--------------- ---------------
Net increase .......................................................... 1,424,776,783 2,281,771,645
=============== ===============
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Capital Reserves
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30,
1998 -------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income ............ .0227 .0471 .0452 .0471 .0447(b) .0255(b)
------ ------ ------ ------ ------ ------
Less: Dividends
Dividends from net investment income .. (.0227) (.0471) (.0452) (.0471) (.0447) (.0255)
------ ------ ------ ------ ------ ------
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 (a) .................... 4.55%(c) 4.83% 4.63% 4.82% 4.57 % 2.58%
Ratios/Supplemental Data
Net assets, end of period
(in millions) ...................... $9,439 $8,015 $5,733 $4,804 $3,024 $2,417
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements ................... .99%(c) 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements ................... .99%(c) 1.00% 1.00% 1.00% 1.03% 1.03%
Net investment income .............. 4.49%(c) 4.71% 4.53% 4.69% 4.51%(b) 2.57%(b)
</TABLE>
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(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.
(c) Annualized.
7
<PAGE>
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BULK RATE
Alliance Capital 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 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
- ------------------------------------------------------------
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.
CAPSR
