ALLIANCE GOVERNMENT RESERVES INC, 497, 1995-11-08

ALLIANCE GOVERNMENT RESERVES INC
497, 1995-11-08

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<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 002-63315 and 811-02889.

<PAGE>

- --------------------------------------------------------------------------------
YIELD MESSAGES

For current recorded yield information on Alliance Government Reserves, call
on a touch-tone tele-phone toll-free (800) 251-0539 and press the following
sequence of keys: [1][#][1][#][2][5][#]. For non-touch-tone telephones, call
toll-free (800) 221-9513.
- --------------------------------------------------------------------------------

Alliance Government Reserves (the "Fund") is a series of Alliance Government
Reserves, a diversified, open-end investment company with investment
objectives of safety, liquidity and income. This prospectus sets forth the
information about the Fund that a prospective investor should know before
investing. Please retain it for future reference.

An investment in the Fund is (i) neither insured nor guaranteed by the U.S.
Government; (ii) not a deposit or obligation of, or guaranteed or endorsed
by, any bank; and (iii) not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. There can be no
assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share.

A "Statement of Additional Information," dated November 1, 1995, which
provides a further discussion of certain areas in this prospectus and other
matters which may be of interest to some investors, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
For a free copy, call (800) 221-5672 or write Alliance Fund Services, Inc. at
the address shown on page 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECU-RITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

(R)This registered service mark used under license from the owner, Alliance
Capital Management L.P.

- --------------------------------------------------------------------------------
CONTENTS
--------
<TABLE>
<S> <C>
Expense Information....................................................... 2
Financial Highlights...................................................... 2
Introduction.............................................................. 3
Investment Objectives and Policies........................................ 4
Purchase and Redemption of Shares......................................... 5
Additional Information.................................................... 6
</TABLE>
- --------------------------------------------------------------------------------

ALLIANCE

GOVERNMENT

RESERVES

- --------------------------------------------------------------------------------

[LOGO OF ALLIANCE CAPITAL APPEARS HERE]

PROSPECTUS
NOVEMBER 1, 1995

ALC25PRO5
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets, net of
expense reimbursement)

<TABLE>
<S> <C>
Management Fees........................................................ .48%
12b-1 Fees............................................................. .23
Other Expenses......................................................... .29
----
Total Fund Operating Expenses.......................................... 1.00%
</TABLE>

EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return (cumulatively through the end of
each time period): $10 $32 $55 $122
</TABLE>

The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly or indirectly. The expenses listed in the table are net of the contrac-
tual reimbursement by the Adviser described in this prospectus. The expenses
of the Fund, before such reimbursement and fee waiver would be: Management
Fees--.48%, 12b-1 Fees--.25%, Other Expenses--.29% and Total Operating Ex-
penses--1.02%. The example should not be considered a representation of past
or future expenses; actual expenses may be greater or less than those shown.

FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR (AUDITED)

The following tables have been audited by McGladrey & Pullen LLP, the Fund's
independent auditors, whose report thereon appears in the Statement of Addi-
tional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .0439 .0244 .0256 .0421 .0640 .0765 .0774 0.0612 0.0541 0.0659
Net realized gain on in-
vestments.............. -0- -0- .0001 -0- -0- .0001 -0- -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase in net
assets from operations. .0439 .0244 .0257 .0421 .0640 .0766 .0774 0.0612 0.0541 0.0659
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS: DISTRIBUTIONS
Dividends from net in-
vestment income........ (.0439) (.0244) (.0256) (.0421) (.0640) (.0765) (.0774) (0.0612) (0.0541) (0.0659)
Distributions from net
realized gains......... -0- -0- (.0001) -0- -0- (.0001) -0- -0- -0- -0-
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total dividends and dis-
tributions............. (.0439) (.0244) (.0257) (.0421) (.0640) (.0766) (.0774) (0.0612) (0.0541) (0.0659)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURNS
Total investment return
based on:
Net asset value(a)..... 4.48% 2.48% 2.60% 4.30% 6.61% 7.96% 8.04% 6.31% 5.56% 6.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(in millions).......... $2,514 $2,061 $1,783 $1,572 $1,070 $584 $522 $315 $260 $254
Ratio to average net as-
sets of:
Expenses, net of waivers
and reimbursements..... 1.00% 1.00% 1.00% .95% .89% .88% .88% .80% .95% 1.00%
Expenses, before waivers
and reimbursements..... 1.05% 1.04% 1.02% .97% .93% .98% .98% .90% 1.05% 1.10%
Net investment
income(b).............. 4.42% 2.46% 2.55% 4.17% 6.28% 7.65% 7.86% 6.13% 5.41% 6.58%
</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 waivers and reimbursement.
- -------------------------------------------------------------------------------
From time to time the Fund advertises its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
compounding, the dividends paid are assumed to be reinvested. Dividends for
the seven days ended June 30, 1995, after expense reimbursement, amounted to
an annualized yield of 4.97%, equivalent to an effective yield of 5.10%. Ab-
sent such reimbursement, the annualized yield for such period would have been
4.95%, equivalent to an effective yield of 5.08%.

2
<PAGE>

ALLIANCE GOVERNMENT RESERVES . . . . . with investment objectives of

SAFETY . LIQUIDITY . INCOME

We seek safety for the Fund by investing in a diversified list of
U.S. Government securities which are selected for their liquidity and
stability of principal. Liquidity of the investment portfolio is in-
creased even more by our emphasis on short-term issues. Specifically,
at the time of investment no security purchased can have a maturity
exceeding one year, which maturity may extend to 397 days, and the av-
erage maturity of the portfolio cannot exceed 90 days.

The short average maturity of the portfolio enhances our ability to
maintain the Fund's share price at $1.00--this, in turn, provides both
stability of value and liquidity to you and your fellow shareholders.

Our professional investment managers seek the maximum current income
for the Fund that is consistent with safety and maintenance of liquid-
ity. In addition to their knowledge and experience with money markets,
our managers obtain yield advantages for the Fund by making many secu-
rity purchases in especially large amounts such as $1 million and mul-
tiples thereof. Persons investing for themselves usually cannot ex-
ploit such money market opportunities due to the large investment
sizes required.

WHO SHOULD INVEST IN THE FUND?

The Fund is designed for individuals, brokers, institutions, advis-
ers, custodians, charities, fiduciaries, or corporations who can bene-
fit from high money market income--and who place value on an invest-
ment having the extra safety implicit in a portfolio containing U.S.
Government securities. The Fund also is suitable for persons and enti-
ties seeking an investment having liquidity, stability, simplicity,
and convenience. Investors using the Fund avoid certain mechanical
burdens that they would incur by investing in money markets directly,
such as monitoring of maturity dates, safeguarding of receipts and de-
liveries, and the maintenance of tax information and other records.

<TABLE>
<CAPTION>
MAJOR FEATURES AND SERVICES OF ALLIANCE GOVERNMENT RESERVES
<S> <C>
No sales charges Same-day funds for withdrawals
No withdrawal fees or penalties Free check-writing ($100 minimum per check)
Low-expense Distribution Plan Free institutional record-keeping services
(.25 of 1% maximum annual rate) IRA, SEP, 403 (b) (7) and employer-sponsored
Daily compounding of dividends retirement plans
First-day income for investments Low investment minimums
</TABLE>

3
<PAGE>
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INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objectives are--in the following order of priority--
safety of principal, excellent liquidity, and maximum current income to the ex-
tent consistent with the first two objectives. As a matter of fundamental poli-
cy, the Fund pursues its objectives by maintaining a portfolio of high quality
money market securities of the types described in the succeeding paragraph, all
of which at the time of investment have remaining maturities of one year or
less, which maturities may extend to 397 days. The Fund may not change this
policy or the "other fundamental investment policies" described in a separate
section below without shareholder approval. The Fund may, without such approv-
al, create additional classes of shares in order to establish portfolios which
may have different investment objectives. There can be no assurance, as is true
with all investment companies, that the Fund's objectives will be achieved.

MONEY MARKET SECURITIES

The securities in which the Fund invests are: (1) marketable obligations of,
or guaranteed by, the United States Government, its agencies or instrumentali-
ties (collectively, the "U.S. Government"), including issues of the United
States Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the authority of
an act of Congress; and (2) repurchase agreements that are collateralized in
full each day by the types of securities listed above. These agreements are en-
tered into with "primary dealers" (as designated by the Federal Reserve Bank of
New York) in U.S. Government securities or State Street Bank and Trust Company,
the Fund's Custodian, and would create a loss to the Fund if, in the event of a
dealer default, the proceeds from the sale of the collateral were less than the
repurchase price. The Fund may commit up to 15% of its net assets to the pur-
chase of when-issued U.S. Government securities, whose value may fluctuate
prior to their settlement, thereby creating an unrealized gain or loss to the
Fund.

The Fund will comply with Rule 2a-7 under the Investment Company Act of 1940
(the "Act"), as amended from time to time, including the diversity, quality and
maturity limitations imposed by the Rule. A more detailed description of Rule
2a-7 is set forth in the Fund's Statement of Additional Information under "In-
vestment Objectives and Policies."

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the Fund may
not: (1) borrow money except from banks on a temporary basis or via entering
into reverse repurchase agreements in aggregate amounts not exceeding 10% of
its assets and to be used exclusively to facilitate the orderly maturation and
sale of portfolio securities during any periods of abnormally heavy redemption
requests, if they should occur; such borrowings may not be used to purchase in-
vestments and it will not purchase any investment while any such borrowings ex-
ist; or (2) pledge, hypothecate or in any manner transfer, as security for in-
debtedness, its assets except to secure such borrowings.
4
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

OPENING ACCOUNTS

Instruct your Account Executive to open an account in the Fund in conjunc-
tion with your brokerage account.

SUBSEQUENT INVESTMENTS

A. BY CHECK THROUGH YOUR BROKERAGE FIRM

Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.

B. BY SWEEP

Your brokerage firm may offer an automatic "sweep" for the Fund in the oper-
ation of brokerage cash accounts for its customers. Contact your Account Exec-
utive to determine if a sweep is available and what the sweep parameters are.

REDEMPTIONS

A. BY CHECKWRITING

With this service, you may write checks made payable to any payee in any
amount of $100 or more. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account. You must first
fill out the Signature Card, which you can obtain from your Account Executive.
There is no additional charge for the checkwriting service. The checkwriting
service enables you to receive the daily dividends declared on the shares to
be redeemed until the day that your check is presented for payment.

B. BY SWEEP

If your brokerage firm offers an automatic sweep service, the sweep will au-
tomatically transfer from your Fund account sufficient cash to cover any debit
balance that may occur in your cash account for any reason.

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

If you wish to obtain an Application Form to open an account directly with
the Fund or if you have any questions about the Form, purchasing shares or
other Fund procedures, please telephone the Fund toll-free (800) 221-5672.

For more information on the purchase and redemption of Fund shares, as well
as shareholder services, see the Statement of Additional Information.

5
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be constant
at $1.00 per share, although this price is not guaranteed. The net asset value
of the Fund's shares is determined at 12:00 Noon and 4:00 p.m. (New York time)
each business day. The net asset value per share is calculated by taking the
sum of the value of the Fund's investments (amortized cost value is used for
this purpose) and any cash or other assets, subtracting liabilities, and divid-
ing by the total number of shares outstanding. All expenses, including the fees
payable to the Adviser, are accrued daily.

TIMING OF INVESTMENTS AND REDEMPTIONS. The Fund has two transaction times
each business day, 12:00 Noon and 4:00 p.m. (New York time). New investments
represented by Federal funds or bank wire monies received by State Street Bank
at any time during a day prior to 4:00 p.m. are entitled to the full dividend
to be paid to shareholders for that day. Shares do not earn dividends on the
day a redemption is effected regardless of whether the redemption order is re-
ceived before or after 12:00 Noon. However, if you wish to have Federal funds
wired the same day as your telephone redemption request, make sure that your
request will be received by the Fund prior to 12:00 Noon.

During periods of drastic economic or market developments, such as the market
break of October 1987, it is possible that shareholders would have difficulty
in reaching Alliance Fund Services, Inc. by telephone (although no such diffi-
culty was apparent at any time in connection with the 1987 market break). If a
shareholder were to experience such difficulty, the shareholder should issue
written instructions to Alliance Fund Services, Inc. at the address shown on
page 7 of this prospectus. The Fund reserves the right to suspend or terminate
its telephone redemption service at any time without notice. Neither the Fund
nor the Adviser, or Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund reasonably be-
lieves to be genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written confirmations
of the resulting transactions to be sent to shareholders. If the Fund did not
employ such procedures, it could be liable for losses arising from unauthorized
or fraudulent telephone instructions. Selected dealers or agents may charge a
commission for handling telephone requests for redemptions.

Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event later than seven days, unless redemptions have
been suspended or postponed due to the determination of an "emergency" by the
Securities and Exchange Commission or to certain other unusual conditions.

If your Fund shares are not maintained through a financial intermediary, pro-
ceeds from any subsequent redemption by you of Fund shares that were purchased
by check or electronic funds transfer will not be forwarded to you until the
Fund is reasonably assured that your check or electronic funds transfer has
cleared, up to fifteen days following the purchase date. If the redemption re-
quest during such period is in the form of a Fund check, the check will be
marked "insufficient funds" and be returned unpaid to the presenting bank.

MINIMUMS. The Fund has minimums of $1,000 for initial investments, $100 for
subsequent investments and a $500 minimum maintenance balance for each account.
These minimums do not apply to shareholder accounts maintained through broker-
age firms or other financial institutions, as such financial intermediaries may
maintain their own minimums. The Fund imposes a service charge upon financial
intermediaries to reflect the relatively higher costs of small accounts and
small transactions; these intermediaries may in turn pass on such charges to
affected accounts. Accounts not maintained through a financial intermediary are

6
<PAGE>

notified of low balances and required to increase their balance or be subject
to liquidation of their account. See the Statement of Additional Information
for further information.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is de-
termined each business day at 4:00 p.m. (New York time) and is paid immediately
thereafter pro rata to shareholders of record via automatic investment in addi-
tional full and fractional shares in each shareholder's account. As such addi-
tional shares are entitled to dividends on following days, a compounding growth
of income occurs.

Net income consists of all accrued interest income on Fund assets less the
Fund's expenses applicable to that dividend period. Realized gains and losses
are reflected in net asset value and are not included in net income.

For Federal income tax purposes, distributions out of interest income earned
by the Fund and net realized short-term capital gains are taxable to you as or-
dinary income, and distributions of net realized long-term capital gains, if
any, are taxable as long-term capital gains irrespective of the length of time
you may have held your shares. Distributions by the Fund may also be subject to
certain state and local taxes. Each year shortly after December 31, the Fund
will send you tax information stating the amount and type of all its distribu-
tions for the year just ended.

THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, NY 10105 under an Advisory Agreement to provide invest-
ment advice and, in general, to conduct the Fund's management and investment
program, subject to the general supervision and control of the Trustees of the
Fund. For the fiscal year ended June 30, 1995, the Fund paid the Adviser at an
annual rate of .46 of 1% of the average daily value of the Fund's net assets.

Under a Distribution Services Agreement (the "Agreement"), the Fund pays the
Adviser at a maximum annual rate of .25 of 1% of the Fund's aggregate average
daily net assets. For the fiscal year ended June 30, 1995, the Fund paid the
Adviser at an annual rate of .23 of 1% of the average daily value of the Fund's
net assets. Substantially all such monies (together with significant amounts
from the Adviser's own resources) are paid by the Adviser to broker-dealers and
other financial intermediaries for their distribution assistance and to banks
and other depository institutions for administrative and accounting services
provided to the Fund, with any remaining amounts being used to partially defray
other expenses incurred by the Adviser in distributing Fund shares. The Fund
believes that the administrative services provided by depository institutions
are permissible activities under present banking laws and regulations and will
take appropriate actions (which should not adversely affect the Fund or its
shareholders) in the future to maintain such legal conformity should any
changes in, or interpretations of, such laws or regulations occur.

The Adviser will reimburse the Fund to the extent that the Fund's aggregate
operating expenses (including the Adviser's fee and expenses of the Agreement)
exceed 1% of its average daily net assets for any fiscal year.

CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc. P.O. Box 1520, Secaucus, NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent charges
a fee for its services.

FUND ORGANIZATION. The Fund is a series of Alliance Government Reserves (the
"Trust"). The Fund is one of two series of the Trust; shares of the other se-
ries, Alliance Treasury Reserves, are offered by a separate prospectus. The
Trust is a diversified, open-end investment company registered under the Act.
The Trust was reorganized as a Massachusetts business trust in October 1984,
having previously been a Maryland corporation since its formation in

7
<PAGE>

December 1978. The Trust's activities are supervised by its Trustees. Normally,
each share of each series is entitled to one vote, and vote as a single series
on matters that affect both series in substantially the same manner. Massachu-
setts law does not require annual meetings of shareholders and it is antici-
pated that shareholder meetings will be held only when required by Federal law.
Shareholders have available certain procedures for the removal of Trustees.

REPORTS. You receive semi-annual and annual reports of the Fund as well as a
monthly summary of your account. You can arrange for a copy of each of your ac-
count statements to be sent to other parties.

----------------

TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross
Charles H. P. Duell
William H. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White
John Winthrop

OFFICERS
Ronald M. Whitehill, President
John R. Bonczek, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Wayne D. Lyski, Senior Vice President
Patricia Netter, Senior Vice President
Ronald R. Valeggia, Senior Vice President
Drew Biegel, Vice President
John F. Chiodi, Jr., Vice President
Doris T. Ciliberti, Vice President
William J. Fagan, Vice President
Linda D. Neil, Vice President
Raymond J. Papera, Vice President
Pamela F. Richardson, Vice President
Mark D. Gersten, Treasurer & Chief Financial Officer
Edmund P. Bergan, Jr., Secretary

<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 002-63315 and 811-02889.

<PAGE>

- --------------------------------------------------------------------------------
YIELD MESSAGES

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.
- --------------------------------------------------------------------------------

Alliance Treasury Reserves (the
"Fund") is a series of Alliance Gov-
ernment Reserves, a diversified,
open-end investment company with in-
vestment objectives of safety, li-
quidity and income. This prospectus
sets forth the information about the
Fund that a prospective investor
should know before investing. Please
retain it for future reference.

An investment in the Fund is (i)
neither insured nor guaranteed by the
U.S. Government; (ii) not a deposit
or obligation of, or guaranteed or
endorsed by, any bank; and (iii) not
federally insured by the Federal De-
posit Insurance Corporation, the Fed-
eral Reserve Board or any other agen-
cy. There can be no assurance that
the Fund will be able to maintain a
stable net asset value of $1.00 per
share.

A "Statement of Additional Informa-
tion," dated November 1, 1995, which
provides a further discussion of cer-
tain areas in this prospectus and
other matters and which may be of in-
terest to some investors, has been
filed with the Securities and Ex-
change Commission and is incorporated
herein by reference. For a free copy,
call (800) 221-5672 or write Alliance
Fund Services, Inc. at the address
shown on page 7.

THESE SECURITIES HAVE NOT BEEN AP-
PROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADE-
QUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMI-
NAL OFFENSE.

(R)This registered service mark used
under license from the owner, Alli-
ance Capital Management L.P.

- --------------------------------------------------------------------------------
ALLIANCE
TREASURY
RESERVES

- --------------------------------------------------------------------------------

[LOGO OF ALLIANCE CAPITAL APPEARS HERE]

PROSPECTUS
NOVEMBER 1, 1995

ALC90PRO5
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------

SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets, net of expense reimbursement)

<TABLE>
<S> <C>
Management Fees.............................................. .50%
12b-1 Fees................................................... .20
Other Expenses............................................... .30
----
Total Fund Operating Expenses................................ 1.00%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return (cumulatively through the end of
each time period): $10 $32 $55 $122
</TABLE>

The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly or indirectly. The expenses listed in the table are net of the contrac-
tual reimbursement by the Adviser described in this prospectus. The expenses
of the Fund, before such reimbursement would be: Management Fees--.50%, 12b-1
Fees--.25%, Other Expenses--.30% and Total Operating Expenses--1.05%. The ex-
ample should not be considered a representation of past or future expenses;
actual expenses may be greater or less than those shown.

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS . FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (AUDITED)
- --------------------------------------------------------------------------------

The following tables have been audited by McGladrey & Pullen LLP, the Fund's
independent auditors whose report thereon appears in the Statement of Addi-
tional Information. This information should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
SEPTEMBER 1, 1993(A)
YEAR ENDED THROUGH
JUNE 30, 1995 JUNE 30, 1994
------------- --------------------
<S> <C> <C>
Net asset value, beginning of period........ $ 1.00 $ 1.00
-------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................... .0460 0.260
-------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income........ (.0460) (.0260)
-------- -------
Net asset value, end of period.............. $ 1.00 $ 1.00
======== =======
TOTAL RETURNS
Total investment return based on: net asset
value (b).................................. 4.71% 3.18%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands)...... $493,702 $80,720
Ratio to average net assets of:
Expenses, net of waivers and reimburse-
ments..................................... .69% .28%(c)
Expenses, before waivers and reimburse-
ments..................................... 1.05% 1.28%(c)
Net investment income (d).................. 4.86% 3.24%(c)
</TABLE>
- --------------
(a) Commencement of operations.
(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.
(c) Annualized.
(d) Net of waivers and reimbursements.

From time to time the Fund advertises its "yield" and "effective yield." Both
yield figures are based on historical earnings and are not intended to indi-
cate future performance. To calculate the "yield," the amount of dividends
paid on a share during a specified seven-day period is assumed to be paid each
week over a 52-week period and is shown as a percentage of the investment. To
calculate "effective yield," which will be higher than the "yield" because of
compounding, the dividends paid are assumed to be reinvested. Dividends for
the seven days ended June 30, 1995, after expense reimbursement, amounted to
an annualized yield of 4.97%, equivalent to an effective yield of 5.10%. Ab-
sent such reimbursement, the annualized yield for such period would have been
4.72%, equivalent to an effective yield of 4.85%.

2
<PAGE>

ALLIANCE TREASURY RESERVES . . . . . with investment objectives of
-------------------------

SAFETY . LIQUIDITY . INCOME

We seek safety for the Fund by investing in issues of the U.S. Trea-
sury and repurchase agreements pertaining to such issues which are se-
lected for their liquidity and stability of principal. Liquidity of
the investment portfolio is increased even more by our emphasis on
short-term issues. Specifically, at the time of investment no security
purchased can have a maturity exceeding 397 days, and the average ma-
turity of the portfolio cannot exceed 90 days.

WHO SHOULD INVEST IN THE FUND?

The Fund is designed for individuals, brokers, institutions, advis-
ers, custodians, charities, fiduciaries, or corporations who can bene-
fit from high money market income--and who place value on an invest-
ment having the extra safety implicit in a portfolio containing U.S.
Treasury securities. The Fund also is suitable for persons and enti-
ties seeking an investment having liquidity, stability, simplicity,
and convenience. Investors using the Fund avoid certain mechanical
burdens that they would incur by investing in money markets directly,
such as monitoring of maturity dates, safeguarding of receipts and de-
liveries, and the maintenance of tax information and other records.

MAJOR FEATURES AND SERVICES OF ALLIANCE TREASURY RESERVES

No sales charges Same-day funds for withdrawals
No withdrawal fees or penalties Free check-writing ($100 minimum per check)
Low-expense Distribution Plan Free institutional record-keeping services
(.25 of 1% maximum annual rate) IRA, SEP, 403 (b) (7) and employer-
Daily compounding of dividends sponsored retirement plans
First-day income for investments Low investment minimums

3
<PAGE>

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objectives are--in the following order of priority--
safety of principal, excellent liquidity, and maximum current income to the ex-
tent consistent with the first two objectives. As a matter of fundamental poli-
cy, the Fund pursues its objectives by maintaining a portfolio of high quality
money market securities of the types described in the succeeding paragraph, all
of which at the time of investment have remaining maturities of 397 days. The
Fund may not change its investment objectives or the "other fundamental invest-
ment policies" described in a separate section below without shareholder ap-
proval. The Fund may, without such approval, create additional classes of
shares in order to establish portfolios which may have different investment ob-
jectives. There can be no assurance, as is true with all investment companies,
that the Fund's objectives will be achieved.

MONEY MARKET SECURITIES

The securities in which the Fund invests are: (1) issues of the U. S. Trea-
sury, such as bills, certificates of indebtedness, notes and bonds; and (2) re-
purchase agreements that are collateralized in full each day by the types of
securities listed above. These agreements are entered into with "primary deal-
ers" (as designated by the Federal Reserve Bank of New York) in U.S. Government
securities or State Street Bank and Trust Company, the Fund's Custodian. For
each repurchase agreement, the Fund requires continual maintenance of the mar-
ket value of the underlying collateral in amounts equal to, or in excess of,
the agreement amount. In the event of a dealer default, the Fund might suffer a
loss to the extent that the proceeds from the sale of the collateral were less
than the repurchase price. The Fund may commit up to 15% of its net assets to
the purchase of when-issued U.S. Treasury securities. Delivery and payment for
when-issued securities takes place after the transaction date. The payment
amount and the interest rate that will be received on the securities are fixed
on the transaction date. The value of such securities may fluctuate prior to
their settlement, thereby creating an unrealized gain or loss to the Fund.

OTHER FUNDAMENTAL INVESTMENT POLICIES

To maintain portfolio diversification and reduce investment risk, the Fund
may not: (1) borrow money except from banks on a temporary basis or via enter-
ing into reverse repurchase agreements in aggregate amounts not exceeding 10%
of its assets and to be used exclusively to facilitate the orderly maturation
and sale of portfolio securities during any periods of abnormally heavy redemp-
tion requests, if they should occur; such borrowings may not be used to pur-
chase investments and it will not purchase any investment while any such
borrowings exist; or (2) pledge, hypothecate or in any manner transfer, as se-
curity for indebtedness, its assets except to secure such borrowings.

4
<PAGE>

- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

OPENING ACCOUNTS

Instruct your Account Executive to open an account in the Fund in conjunction
with your brokerage account.

SUBSEQUENT INVESTMENTS

A BY CHECK THROUGH YOUR BROKERAGE FIRM

Mail or deliver your check made payable to your brokerage firm to your Ac-
count Executive who will deposit it into your brokerage account. Please indi-
cate your account number on the check.

B. BY SWEEP

Your brokerage firm may offer an automatic "sweep" for the Fund in the opera-
tion of brokerage cash accounts for its customers. Contact your Account Execu-
tive to determine if a sweep is available and what the sweep parameters are.

REDEMPTIONS

A. BY CHECKWRITING

With this service, you may write checks made payable to any payee in any
amount of $100 or more. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account. You must first
fill out the Signature Card, which you can obtain from your Account Executive.
There is no additional charge for the checkwriting service. The checkwriting
service enables you to receive the daily dividends declared on the shares to be
redeemed until the day that your check is presented for payment.

B. BY SWEEP

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

For more information on the purchase and redemption of Fund shares, as well
as shareholder services, see the Statement of Additional Information.

5
<PAGE>

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

6
<PAGE>

tained through a financial intermediary are notified of low balances and re-
quired to increase their balance or be subject to liquidation of their account.
See the Statement of Additional Information for further information.

DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is
determined each business day at 4:00 p.m. (New York time) and is paid immedi-
ately thereafter pro rata to shareholders of record via automatic investment in
additional full and fractional shares in each shareholder's account. As such
additional shares are entitled to dividends on following days, a compounding
growth of income occurs.

THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue
of the Americas, New York, NY 10105 under an Advisory Agreement to provide in-
vestment advice and, in general, to conduct the Fund's management and invest-
ment program, subject to the general supervision and control of the Trustees of
the Fund. For the period ended June 30, 1995, the Fund paid the Adviser at an
annual rate of .38 of 1% of the average daily value of the Fund's net assets.

Under a Distribution Services Agreement (the "Agreement"), the Fund pays the
Adviser at a maximum annual rate of .25 of 1% of the Fund's aggregate average
daily net assets. For the period ended June 30, 1995, the Adviser waived the
distribution fee. Substantially all such monies (together with significant
amounts from the Adviser's own resources) are paid by the Adviser to broker-
dealers and other financial intermediaries for their distribution assistance
and to banks and other depository institutions for administrative services pro-
vided to the Fund, with any remaining amounts being used to partially defray
other expenses incurred by the Adviser in distributing Fund shares. The Fund
believes that the administrative services provided by depository institutions
are permissible activities under present banking laws and regulations and will
take appropriate actions (which should not adversely affect the Fund or its
shareholders) in the future to maintain such legal conformity should any
changes in, or interpretations of, such laws or regulations occur.

CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent charges
a fee for its services.

FUND ORGANIZATION. The Fund is a series of Alliance Government Reserves (the
"Trust"). The Fund is one of two series of the Trust; shares of the other se-
ries, also named Alliance Government Reserves, are offered by a separate pro-
spectus. The Trust is a diversified, open-end investment company registered un-
der the Act. The Trust was reorganized in October 1984, as a Massachusetts
business trust having previously been a Maryland corporation since its forma-
tion in December 1978. The Trust's activities are supervised by its Trustees.

7
<PAGE>

Normally, each share of each series is entitled to one vote, and vote as a sin-
gle series on matters that affect both series in substantially the same manner.
Massachusetts law does not require annual meetings of shareholders and it is
anticipated that shareholder meetings will be held only when required by Fed-
eral law. Shareholders have available certain procedures for the removal of
Trustees.

----------------

TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross
Charles H. P. Duell
William H. Foulk, Jr.
Elizabeth J. McCormack
David K. Storrs
Shelby White
John Winthrop

<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 002-63315 and 811-02889.

<PAGE>

(LOGO)(R) ALLIANCE GOVERNMENT RESERVES

P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1995

TABLE OF CONTENTS

Page
____

Investment Objectives and Policies . . . . . . . . 2

Investment Restrictions . . . . . . . . . . . . . 5

Management . . . . . . . . . . . . . . . . . . . . 6

Purchase and Redemption of Shares . . . . . . . . 15

Additional Information . . . . . . . . . . . . . . 19

Daily Dividends-Determination of Net Asset Value . 21

Taxes . . . . . . . . . . . . . . . . . . . . . . 23

General Information . . . . . . . . . . . . . . . 23

Appendix-Commercial Paper and Bond Ratings . . . . 26

Financial Statements . . . . . . . . . . . . . . . 27

Independent Auditor's Report . . . . . . . . . . . 33

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated November 1, 1995. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.

______________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The Fund is a diversified, open-end investment company whose
objectives are - in the following order of priority - safety of
principal, excellent liquidity, and maximum current income to the
extent consistent with the first two objectives. The Fund
pursues its objectives by maintaining a portfolio of the
following investments diversified by maturities not exceeding one
year or less (which maturities pursuant to Rule 2a-7 under the
Investment Company Act of 1940 as amended (the "Act"), may extend
to 397 days):

1. Marketable obligations of, or guaranteed by, the United
States Government, its agencies or instrumentalities. These
include issues of the United States Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of
an act of Congress. The latter issues include, but are not
limited to, obligations of the Bank for Cooperatives, Federal
Financing Bank, Federal Home Loan Bank, Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of these
securities are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to
borrow from the Treasury, and still others are supported only by
the credit of the agency or instrumentality.

2. Repurchase agreements pertaining to the above
securities. A repurchase agreement arises when a buyer purchases
a security and simultaneously agrees to resell it to the vendor
at an agreed-upon market rate which is effective for the period
of time the buyer's money is invested in the security and which
is not related to the coupon rate on the purchased security.
Repurchase agreements may be entered into with member banks of
the Federal Reserve System or "primary dealers" (as designated by
the Federal Reserve Bank of New York) in U.S. Government
securities or with State Street Bank and Trust Company. It is
the Fund's current practice, which may be changed at any time
without shareholder approval, to enter into repurchase agreements
only with such primary dealers or State Street Bank and Trust
Company, the Fund's Custodian. For each repurchase agreement,
the Fund requires continual maintenance of the market value of
the underlying collateral in amounts equal to, or in excess of,
the agreement amount. While the maturities of the underlying
collateral may exceed one year, the term of the repurchase
agreement is always less than one year. In the event that a
vendor defaulted on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of

<PAGE>

the collateral were less than the repurchase price. If the
vendor became bankrupt, the Fund might be delayed in selling the
collateral. Repurchase agreements often are for short periods
such as one day or a week, but may be longer. Repurchase
agreements not terminable within seven days will be limited to no
more than 10% of the Fund's assets.* Pursuant to Rule 2a-7, a
repurchase agreement is deemed to be an acquisition of the
underlying securities provided that the obligation of the seller
to repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
vendor of a fully collateralized repurchase agreement is deemed
to be the issuer of the underlying securities.

Reverse Repurchase Agreements. While the Fund has no present
plans to do so, it may enter into reverse repurchase agreements,
which have the characteristics of borrowing and which involve the
sale of securities held by the Fund with an agreement to
repurchase the securities at an agreed-upon price, date and
interest payment.

When-Issued Securities. Certain new issues that the Fund is
permitted to purchase are available on a "when-issued" basis
- -that is, delivery and payment for the securities take place
after the transaction date, normally within ten days (the Fund
will not make any such commitments of more than thirty days).
The payment amount and the interest rate that will be received on
the securities are fixed on the transaction date. The Fund will
make commitments for such when-issued transactions only with the
intention of actually acquiring the securities and, to facilitate
such acquisitions, the Fund's Custodian will maintain, in a
separate account, cash, U.S. Government or other appropriate
high-grade debt obligations of the Fund having value equal to or
greater than such commitments. Similarly, a separate account
will be maintained to meet obligations in respect of reverse
repurchase agreements. On delivery dates for such transactions,
the Fund will meet its obligations from maturities or sales of
the securities held in the separate account and/or from then
available cash flow. If the Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition, it
could, as with the disposition of any other portfolio obligation,
incur a gain or loss due to market fluctuation. No when-issued
commitments will be made if, as a result, more than 15% of the
Fund's net assets would be so committed.

____________________
* As used throughout the Prospectus and Statement of Additional
Information, term "assets" shall refer to the Fund's total
assets.

<PAGE>

While there are many kinds of short-term securities used by
money market investors, the Fund, in keeping with its primary
investment objective of safety of principal, restricts its
portfolio to the types of investments listed above. Net income
to shareholders is aided both by the Fund's ability to make
investments in large denominations and by its efficiencies of
scale. Also, the Fund may seek to improve its income by selling
certain portfolio securities prior to maturity in order to take
advantage of yield disparities that occur in money markets. The
market value of the Fund's investments tends to decrease during
periods of rising interest rates and to increase during intervals
of falling rates. Except as otherwise provided, the Fund's
investment policies are not designated "fundamental policies"
within the meaning of the Act and may, therefore, be changed by
the Trustees of the Trust without a shareholder vote. However,
the Fund will not change its investment policies without
contemporaneous written notice to shareholders. There can be no
assurance, as is true with all investment companies, that the
Fund's objectives will be achieved.

Rule 2a-7 under the Act. The Fund will comply with Rule 2a-
7 under the Act, as amended from time to time, including the
diversity, quality and maturity limitations imposed by the Rule.

Currently, pursuant to Rule 2a-7, the Fund may invest only in
"eligible securities," as that term is defined in the Rule.
Generally, an eligible security is a security that (i) is
denominated in U.S. Dollars and has a remaining maturity of 397
days or less; (ii) is rated, or is issued by an issuer with
short-term debt outstanding that is rated, in one of the two
highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO; and (iii) has been determined
by the Adviser to present minimal credit risks pursuant to
procedures approved by the Trustees. A security that originally
had a maturity of greater than 397 days is an eligible security
if its remaining maturity at the time of purchase is 397 calendar
days or less and the issuer has outstanding short-term debt that
would be an eligible security. Unrated securities may also be
eligible securities if the Adviser determines that they are of
comparable quality to a rated eligible security pursuant to
guidelines approved by the Trustees. A description of the
ratings of some NRSROs appears in the Appendix attached hereto.

<PAGE>

immediately after the acquisition thereof the Fund would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities.

_________________________________________________________________

INVESTMENT RESTRICTIONS
_________________________________________________________________

The foregoing investment objectives and policies and the
following restrictions may not, except as otherwise indicated, be
changed without the approval of a majority of the Fund's
outstanding shares. As used in this prospectus, the term
"majority of the Fund's outstanding shares" means the affirmative
vote of the holders of (a) 67% or more of the shares represented
at a meeting at which more than 50% of the outstanding shares are
represented or (b) more than 50% of the outstanding shares,
whichever is less. If a percentage restriction is adhered to at
the time of an investment, a later increase or decrease in
percentage resulting from a change in value of portfolio
securities or in amount of the Fund's assets will not constitute
a violation of that restriction.

The Fund:

1. May not purchase any security which has a maturity date
more than one year* from the date of the Fund's purchase;

2. May not purchase securities other than marketable
obligations of, or guaranteed by, the United States Government,
its agencies or instrumentalities, or repurchase agreements
pertaining thereto;

3. May not enter into repurchase agreements if, as a result
thereof, more than 10% of the Fund's assets would be subject to
repurchase agreements not terminable within seven days (which may
be considered to be illiquid) or with any one seller** if, as a

___________________
* Which maturity, pursuant to Rule 2a-7, may extend to 397
days.

** Pursuant to Rule 2a-7, the seller of a fully collateralized
repurchase agreement is deemed to be the issuer of the

<PAGE>

result thereof, more than 5% of the Fund's assets would be
invested in repurchase agreements purchased from such seller; and
may not enter into any reverse repurchase agreements if, as a
result thereof, the Fund's obligations with respect to reverse
repurchase agreements would exceed 10% of the Fund's assets;

4. May not borrow money except from banks on a temporary
basis or via entering into reverse repurchase agreements in
aggregate amounts not to exceed 10% of the Fund's assets and to
be used exclusively to facilitate the orderly maturation and sale
of portfolio securities during any periods of abnormally heavy
redemption requests, if they should occur; such borrowings may
not be used to purchase investments and the Fund will not
purchase any investment while any such borrowings exist;

5. May not pledge, hypothecate or in any manner transfer,
as security for indebtedness, any securities owned or held by the
Fund except as may be necessary in connection with any borrowing
mentioned above, including reverse repurchase agreements, and in
an aggregate amount not to exceed 10% of the Fund's assets;

6. May not make loans, provided that the Fund may purchase
securities of the type referred to in paragraph 2 above and enter
into repurchase agreements with respect thereto; or

7. May not act as an underwriter of securities.

MANAGEMENT

Trustees and Officers

The Trustees and principal officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise specified, the address of each such
person is 1345 Avenue of the Americas, New York, New York 10105.
Those Trustees whose names are preceded by an asterisk are
"interested persons" of the Fund as determined under the Act.
Each Trustee and officer is also a director, trustee or officer
of other registered companies sponsored by Alliance Capital
Management L.P. (the "Adviser").

<PAGE>

Trustees

*DAVE H. WILLIAMS, 63, Chairman, is Chairman of the Board of
Directors of Alliance Capital Management Corporation ("ACMC")**,
sole general partner of the Adviser with which he has been
associated since prior to 1990.

*JOHN D. CARIFA, 50, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1990.

SAM Y. CROSS, 68, was, since prior to December 1990,
Executive Vice President of The Federal Reserve Bank of New York
and manager for foreign operations for The Federal Reserve
System. He is also a director of Fuji Bank and Trust Co. His
address is 200 East 66th Street, New York, New York 10021.

CHARLES H. P. DUELL, 57, is President of Middleton Place
Foundation with which he has been associated since prior to 1990.
He is also a Director of GRC International, Inc., a Trustee
Emeritus of the National Trust for Historic Preservation and
serves on the Board of Architectural Review, City of Charleston.
His address is Middleton Place Foundation, Ashley River Road,
Charleston, South Carolina 29414.

WILLIAM H. FOULK, JR., 63, is an independent consultant. He
was formerly Senior Manager of Barrett Associates, Inc., a
registered investment adviser, with which he had been associated
since prior to 1990. His address is 2 Hekma Road, Greenwich, CT
06831.

ELIZABETH J. McCORMACK, 73, is an Associate of Rockefeller
Family and Associates (philanthropic organization) and has been
since prior to 1990. She is a Director of Philip Morris, Inc.,
Champion International Corporation and The American Savings Bank.
She is a Trustee of Hamilton College, and a Member of the Board
of Overseers Managers of Swarthmore College and the Memorial
Sloan-Kettering Cancer Center. Her address is 30 Rockefeller
Plaza, New York, New York 10112.

______________________

** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.

<PAGE>

DAVID K. STORRS, 51, is President of The Common Fund
(investment management for educational institutions) and has been
since prior to 1990. His address is The Common Fund, 450 Post
Road East, Westport, Connecticut 06881.

SHELBY WHITE, 57, is an author and financial journalist. Her
address is One Sutton Place South, New York, New York 10022.

JOHN WINTHROP, 59, is President of John Winthrop & Co., Inc.
(investment management) and has been since prior to 1990. He is
a Director of NUI Corporation and American Farmland Trust and a
Trustee of Pioneer Funds. His address is One North Ager's Wharf,
Charleston, South Carolina, 29401.

Officers

RONALD M. WHITEHILL - President, 56, is a Senior Vice
President of ACMC and Division President and Chief Executive
Officer of Alliance Cash Management Services with which he has
been associated since 1993. Previously, he was Senior Vice
President and Managing Director of Reserve Fund since prior to
1990.

JOHN R. BONCZEK - Senior Vice President, 35, is a Vice
President of ACMC with which he has been associated since prior
to 1990.

KATHLEEN A. CORBET - Senior Vice President, 35, has been a
Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1990.

ROBERT I. KURZWEIL - Senior Vice President, 44, has been a
Vice President of ACMC since May 1994. Previously, he was Vice
President of Sales and Business Development for Automatic Data
Processing with which he had been associated since prior to 1990.

WAYNE D. LYSKI - Senior Vice President, 54, is an Executive
Vice President of ACMC with which he has been associated since
prior to 1990.

PATRICIA NETTER - Senior Vice President, 44, is a Vice
President of ACMC with which she has been associated since prior
to 1990.

RONALD R. VALEGGIA - Senior Vice President, 48, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1990.

<PAGE>

DREW BIEGEL - Vice President, 44, is a Vice President of ACMC
which he has been associated with since prior to 1990.

JOHN F. CHIODI, Jr. - Vice President, 29, is a Vice President
of ACMC with which he has been associated since prior to 1990.

DORIS T. CILIBERTI - Vice President, 31, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1990.

WILLIAM J. FAGAN - Vice President, 33, is an Assistant Vice
President of ACMC with which he has been associated since prior
to 1990.

LINDA D. NEIL - Vice President, 35, is an Assistant Vice
President of ACMC with which she has been associated since August
1993. Previously, she was an Associate Director of The Reserve
Fund since prior to 1990.

RAYMOND J. PAPERA - Vice President, 39, is a Vice President
of ACMC with which he has been associated since prior to 1990.

PAMELA F. RICHARDSON - Vice President, 42, is a Vice
President of ACMC with which she has been associated since prior
to 1990.

EDMUND P. BERGAN, Jr. - Secretary, 45, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1990.

MARK D. GERSTEN - Treasurer and Chief Financial Officer, 45,
is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1990.

JOSEPH J. MANTINEO - Controller, 36, is a Vice President of
AFS with which he has been associated since prior to 1990.

As of October 2, 1995 there were 2,754,774,654 shares of the
Fund outstanding of which the Trust's Trustees and officers as a
group owned less than 1%.

<PAGE>

of the Trustees serves as a director or trustee, are set forth
below. Neither the Fund nor any other fund in the Alliance Fund
Complex provides compensation in the form of pension or
retirement benefits to any of its directors or trustees.

Total Number
Total of Funds in the
Compensation Alliance Fund
from the Complex Including
Alliance the Fund, as to
Aggregate Fund Complex, which the Trustee
Name of Trustee Compensation Including is a Director
of the Fund from the Fund the Fund or Trustee

___________________ _____________ _____________ _________________

Dave H. Williams $-0- $-0- 6

John D. Carifa $-0- $-0- 49

Sam Y. Cross $2,249 $15,000 3

Charles H.P. Duell $2,249 $14,250 3

William H. Foulk, Jr. $3,000 $141,500 30

Elizabeth J. McCormack $1,874 $15,000 3

David K. Storrs $1,874 $15,750 3

Shelby White $2,249 $15,750 3

John Winthrop $1,874 $13,500 3

The Adviser

Alliance Capital Management L.P., a New York Stock Exchange
listed company with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") as the
Fund's Adviser (see "Management of the Fund" in the Prospectus).
ACMC, the sole general partner of, and the owner of a 1% general
partnership interest in, the Adviser, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The
Equitable Companies Incorporated ("ECI"), a holding company
controlled by AXA, a French insurance holding company. As of
June 30, 1995, ACMC, Inc. and Equitable Capital Management
Corporation, each a wholly-owned direct or indirect subsidiary of

<PAGE>

Equitable, together with Equitable, owned in the aggregate
approximately 59% of the issued and outstanding units
representing assignments of beneficial ownership of limited
partnership interests in the Adviser ("Units"), and approximately
33% and 8% of the Units were owned by the public and employees of
the Adviser and its subsidiaries, respectively, including
employees of the Adviser who serve as Directors of the Fund.

AXA owns approximately 60% of the outstanding voting shares
of common stock of ECI. AXA is a member of a group of companies
(the "AXA Group") that is the second largest insurance group in
France (measured by gross premiums written worldwide) and one of
the largest insurance groups in Europe. Principally engaged in
property and casualty insurance and life insurance in Europe and
elsewhere in the world, the AXA Group is also involved in real
estate operations and certain other financial services, including
mutual fund management, lease financing services and brokerage
services. Based on information provided by AXA, as of January 1,
1995, 42.3% of the issued shares (representing 54.7% of the
voting power) of AXA were owned by Midi Participations, a French
corporation that is a holding company. The voting shares of Midi
Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian Corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 31.8% of the issued shares) (representing 39.0% of the
voting power), and 26.5% of the voting shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("Paribas"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the issued shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.

The Adviser is a leading international investment manager
supervising client accounts with assets as of September 30, 1995
totaling over $140 billion (of which approximately $47 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included, as of September 30,
1995, 29 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,

<PAGE>

Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 105 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.

Under the Advisory Agreement, the Adviser provides investment
advisory services and order placement facilities for the Fund and
pays all compensation of Trustees of the Fund who are affiliated
persons of the Adviser. The Adviser or its affiliates also
furnish the Fund without charge with management supervision and
assistance and office facilities. Under the Advisory Agreement,
the Fund pays an advisory fee at an annual rate of .50 of 1% of
up to $1.25 billion of the average daily value of the Fund's net
assets, .49 of 1% of the next $.25 billion of such assets, .48 of
1% of the next $.25 billion of such assets, .47 of 1% of the next
$.25 billion of such assets, .46 of 1% of the next $1 billion of
such assets and .45 of 1% of the average daily net assets of the
Fund in excess of $3 billion. The fee is accrued daily and paid
monthly. The Adviser will reimburse the Fund to the extent that
its net expenses (excluding taxes, brokerage, interest and
extraordinary expenses) exceed 1% of its average daily net assets
for any fiscal year. For the fiscal years ended June 30, 1993,
1994 and 1995 the Adviser received from the Fund, advisory fees
of $8,426,907, $9,200,580 and $10,057,300, respectively. In
accordance with the Distribution Services Agreement described
below, the Fund may pay a portion of advertising and promotional
expenses in connection with the sale of shares of the Fund. The
Fund also pays for printing of prospectuses and other reports to
shareholders and all expenses and fees related to registration
and filing with the Securities and Exchange Commission and with
state regulatory authorities. The Fund pays all other expenses
incurred in its operations, including the Adviser's management
fees; custody, transfer and dividend disbursing expenses; legal
and auditing costs; clerical, administrative accounting, and
other office costs; fees and expenses of Trustees who are not
affiliated with the Adviser; costs of maintenance of the Trust's
existence; and interest charges, taxes, brokerage fees, and
commissions. As to the obtaining of clerical and accounting
services not required to be provided to the Fund by the Adviser
under the Advisory Agreement, the Fund may employ its own
personnel. For such services, it also may utilize personnel
employed by the Adviser; if so done, the services are provided to
the Fund at cost and the payments therefor must be specifically
approved in advance by the Trustees. The Fund paid to the
Adviser a total of $125,946, $139,000 and $151,500, respectively,
for such services for the fiscal years ended June 30, 1993, 1994
and 1995.

The Fund has made arrangements with certain broker-dealers
whose customers are Fund shareholders pursuant to which the
broker-dealers perform shareholder servicing functions, such as

<PAGE>

opening new shareholder accounts, processing purchase and
redemption transactions, and responding to inquiries regarding
the Fund's current yield and the status of shareholder accounts.
The Fund pays for the electronic communications equipment
maintained at the broker-dealers' offices that permits access to
the Fund's computer files and, in addition, reimburses the
broker-dealers at cost for personnel expenses involved in
providing the services. All such reimbursements must be approved
in advance by the Trustees. For the fiscal years ended June 30,
1993, 1994 and 1995, the Fund reimbursed such broker-dealers a
total of $832,079, $803,149 and $1,406,467, respectively.

The Advisory Agreement became effective on July 22, 1992.
Continuance of the Advisory Agreement until June 30, 1996 was
approved by the vote, cast in person by all the Trustees of the
Trust who neither were interested persons of the Trust nor had
any direct or indirect financial interest in the Agreement or any
related agreement, at a meeting called for that purpose on June
12, 1995.

The Advisory Agreement will remain in effect thereafter from
year to year provided that such continuance is specifically
approved annually by a vote of a majority of the outstanding
shares of the Fund or by the Fund's Trustees, including in either
case approval by a majority of the Trustees who are not parties
to the Advisory Agreement or interested persons as defined in the
Act. The Advisory Agreement may be terminated without penalty on
60 days' written notice at the option of either party or by a
vote of the outstanding voting securities of the Fund; it will
automatically terminate in the event of assignment. The Adviser
is not liable for any action or inaction in regard to its
obligations under the Advisory Agreement as long as it does not
exhibit willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations.

Distribution Services Agreement

Rule 12b-1 adopted by the Securities and Exchange Commission
under the Act permits an investment company to directly or
indirectly pay expenses associated with the distribution of its
shares in accordance with a duly adopted and approved plan. The
Fund has entered into a Distribution Services Agreement (the
"Agreement") which includes a plan adopted pursuant to Rule 12b-1
(the "Plan") with Alliance Fund Distributors, Inc. (the
"Distributor") and the Adviser. Pursuant to the Plan, the Fund
pays to the Distributor a Rule 12b-1 distribution services fee
which may not exceed an annual rate of .25 of 1% of the Fund's
aggregate average daily net assets. In addition, under the
Agreement the Adviser makes payments for distribution assistance
and for administrative and accounting services from its own
resources which may include the management fee paid by the Fund.

<PAGE>

Payments under the Agreement are used in their entirety for
(i) payments to broker-dealers and other financial
intermediaries, including the Distributor, for distribution
assistance and to banks and other depository institutions for
administrative and accounting services, and (ii) otherwise
promoting the sale of shares of the Fund such as by paying for
the preparation, printing and distribution of prospectuses and
other promotional materials sent to existing and prospective
shareholders and by directly or indirectly purchasing radio,
television, newspaper and other advertising. In approving the
Agreement the Trustees determined that there was a reasonable
likelihood that the Agreement would benefit the Fund and its
shareholders. During the fiscal year ended June 30, 1995, the
Fund made payments to the Adviser for expenditures, under the
Agreement in amounts aggregating $5,022,401 which constituted .23
of 1% of the Fund's average daily net assets during the period,
and the Adviser made payments from its own resources as described
above aggregating $6,713,381. Of the $11,735,782 paid by the
Adviser and the Fund under the Agreement, $66,565 was paid for
advertising, printing, and mailing of prospectuses to persons
other than current shareholders; and $11,669,217 was paid to
broker-dealers and other financial intermediaries for
distribution assistance.

The administrative and accounting services provided by banks
and other depository institutions may include, but are not
limited to, establishing and maintaining shareholder accounts,
sub-accounting, processing of purchase and redemption orders,
sending confirmations of transactions, forwarding financial
reports and other communications to shareholders and responding
to shareholder inquiries regarding the Fund. The State of Texas
requires that shares of the Fund may be sold in that state only
by dealers or other financial institutions that are registered
there as broker-dealers. As interpreted by courts and
administrative agencies, certain laws and regulations limit the
ability of a bank or other depository institution to become an
underwriter or distributor of securities. However, in the
opinion of the Fund's management based on the advice of counsel,
these laws and regulations do not prohibit such depository
institutions from providing other services for investment
companies such as the administrative and accounting services
described above. The Trustees will consider appropriate
modifications to the Fund's operations, including discontinuance
of payments under the Agreement to banks and other depository
institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to
provide the above-mentioned services.

The Treasurer of the Fund reports the amounts expended under
the Agreement and the purposes for which such expenditures were
made to the Trustees on a quarterly basis. Also, the Agreement

<PAGE>

provides that the selection and nomination of disinterested
Trustees (as defined in the Act) are committed to the discretion
of the disinterested Trustees then in office.

The Agreement became effective on July 22, 1992. Continuance
of the Agreement until June 30, 1996 was approved by the vote,
cast in person by all the Trustees of the Fund who neither were
interested persons of the Fund nor had any direct or indirect
financial interest in the Agreement or any related agreement, at
a meeting called for that purpose on June 12, 1995. The
Agreement may be continued annually thereafter if approved by a
majority vote of the Trustees who neither are interested persons
of the Fund nor have any direct or indirect financial interest in
the Agreement or in any related agreement, cast in person at a
meeting called for that purpose.

All material amendments to the Agreement must be approved by
a vote of the Trustees, including a majority of the disinterested
Trustees, cast in person at a meeting called for that purpose,
and the Agreement may not be amended in order to increase
materially the costs which the Fund may bear pursuant to the
Agreement without the approval of a majority of the outstanding
shares of the Fund. The Agreement may also be terminated at any
time by a majority vote of the disinterested Trustees, or by a
majority of the outstanding shares of the Fund or by the
Distributor. Any agreement with a qualifying broker-dealer or
other financial intermediary may be terminated without penalty on
not more than sixty days' written notice by a vote of the
majority of non-party Trustees, by a vote of a majority of the
outstanding shares of the Fund, or by the Distributor and will
terminate automatically in the event of its assignment.

The Agreement is in compliance with rules of the National
Association of Securities Dealers, Inc. (the "NASD") which became
effective July 7, 1993 and which limit the annual asset-based
sales charges and service fees that a mutual fund may impose to
.75% and .25%, respectively, of average annual net assets.

PURCHASE AND REDEMPTION OF SHARES

Generally, shares of the Fund are sold and redeemed on a
continuous basis without sales or redemption charges at their net
asset value which is expected to be constant at $1.00 per share,
although this price is not guaranteed.

<PAGE>

Accounts Not Maintained Through Financial Intermediaries

Opening Accounts - New Investments

A. When Funds are Sent by Wire (the wire method permits
immediate credit)

1) Telephone the Fund toll-free at (800) 824-1916. The
Fund will ask for the name of the account as you
wish it to be registered, address of the account,
and taxpayer identification number social
security number for an individual. The Fund will
then provide you with an account number.

2) Instruct your bank to wire Federal funds (minimum
$1,000) exactly as follows:

ABA 0110 0002-8
State Street Bank and Trust Company
Boston, MA 02101
Alliance Government Reserves
DDA 9903-279-9

Your account name as registered
Your account number with the Fund

3) Mail a completed Application Form to:

Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520

B. When Funds are Sent by Check

1) Fill out an Application Form.

2) Mail the completed Application Form along with your
check or negotiable bank draft (minimum $1,000),
payable to "Alliance Government Reserves," to
Alliance Fund Services, Inc. as in A(3) above.

Subsequent Investments

A. Investments by Wire (to obtain immediate credit)

Instruct your bank to wire Federal funds (minimum $100)
to State Street Bank and Trust Company ("State Street Bank") as
in A(2) above.

<PAGE>

B. Investments by Check

Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Government Reserves," to Alliance Fund
Services, Inc. as in A(3) above.

Include with the check or draft the "next investment"
stub from one of your previous monthly or interim account
statements. For added identification, place your Fund account
number on the check or draft.

Investments Made by Check

Money transmitted by a check drawn on a member of the
Federal Reserve System is converted to Federal funds in one
business day following receipt and, thus, is then invested in the
Fund. Checks drawn on banks which are not members of the Federal
Reserve System may take longer to be converted and invested. All
payments must be in United States dollars.

PROCEEDS FROM ANY SUBSEQUENT REDEMPTION BY YOU OF FUND
SHARES THAT WERE PURCHASED BY CHECK OR ELECTRONIC FUNDS TRANSFER
WILL NOT BE FORWARDED TO YOU UNTIL THE FUND IS REASONABLY ASSURED
THAT YOUR CHECK OR ELECTRONIC FUNDS TRANSFER HAS CLEARED, UP TO
FIFTEEN DAYS FOLLOWING THE PURCHASE DATE. If the redemption
request during such period is in the form of a Fund check, the
check will be marked "insufficient funds" and be returned unpaid
to the presenting bank.

Redemptions

A. By Telephone

You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed)
between 9:00 a.m. and 5:00 p.m. (New York time) via orders given
to Alliance Fund Services, Inc. by telephone toll-free (800)
824-1916. Such redemption orders must include your account name
as registered with the Fund and the account number.

If your telephone redemption order is received by
Alliance Fund Services, Inc. prior to 12:00 Noon (New York time),
we will send the proceeds in Federal funds by wire to your
designated bank account that day. The minimum amount for a wire
is $1,000. If your telephone redemption order is received by
Alliance Fund Services, Inc. after 12:00 Noon and before 4:00
p.m., we will wire the proceeds the next business day. You also
may request that proceeds be sent by check to your designated
bank. Redemptions are made without any charge to you.

<PAGE>

During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this statement of additional information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, or
Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.

B. By Check-Writing

With this service, you may write checks made payable to
any payee in any amount of $100 or more. Checks cannot be
written for more than the principal balance (not including any
accrued dividends) in your account. First, you must fill out the
Signature Card which is with the Application Form. If you wish
to establish this check-writing service, except that State Street
Bank will impose its normal charges for checks which are returned
unpaid because of insufficient funds or for checks upon which you
have placed a stop order.

THE CHECK-WRITING SERVICE ENABLES YOU TO RECEIVE THE DAILY
DIVIDENDS DECLARED ON THE SHARES TO BE REDEEMED UNTIL THE DAY
THAT YOUR CHECK IS PRESENTED TO STATE STREET BANK FOR PAYMENT.

C. By Mail

You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by duly
endorsed certificates, if issued, should be mailed to Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey
07096-1520. Such orders must include the account name as
registered with the Fund and the account number. All written
orders for redemption, and accompanying certificates, if any,
must be signed by all owners of the account with the signatures
guaranteed by an institution which is an "eligible guarantor" as

<PAGE>

defined in Rule 17 Ad-15 under the Securities Exchange Act of
1934, as amended.

Additional Information

Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself or herself
with the deadlines set by his or her institution. (For example,
the Distributor accepts purchase orders from its customers up to
2:15 p.m. New York time for issuance at the 4:00 p.m. transaction
time and price.) A brokerage firm acting on behalf of a customer
in connection with transactions in Fund shares is subject to the
same legal obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.

Orders for the purchase of Fund shares become effective at
the next transaction time after Federal funds or bank wire monies
become available to State Street Bank for a shareholder's
investment. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve
wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately
available funds; similar immediate availability is accorded
monies received at State Street Bank by bank wire. Money
transmitted by a check drawn on a member of the Federal Reserve
System is converted to Federal funds in one business day
following receipt. Checks drawn on banks which are not members
of the Federal Reserve System may take longer. All payments
(including checks from individual investors) must be in United
States dollars.

All shares purchased are confirmed to each shareholder and
are credited to his or her account at the net asset value. To
avoid unnecessary expense to the Fund and to facilitate the
immediate redemption of shares, share certificates, for which no
charge is made, are not issued except upon the written request of
a shareholder. Certificates are not issued for fractional
shares. Shares for which certificates have been issued are not
eligible for any of the optional methods of withdrawal; namely,

<PAGE>

the telephone, telegraph, check-writing or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.

Arrangements for Telephone Redemptions. If you wish to use
the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Government
Reserves, P.O. Box 1520, Secaucus, New Jersey 07096-1520, with
your signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.

Automatic Investment Program. A shareholder may purchase
shares of the Fund through an automatic investment program
through a bank that is a member of the National Automated
Clearing House Association. Purchases can be made on a Fund
business day each month designated by the shareholder.
Shareholders wishing to establish an automatic investment program
should write or telephone the Fund or Alliance Fund Service, Inc.
at (800) 221-5672.

Retirement Plans. The Fund's objectives of safety of
principal, excellent liquidity and maximum current income to the
extent consistent with the first two objectives may make it a
suitable investment vehicle for part or all of the assets held in
various tax-deferred retirement plans. The Fund has available
forms of individual retirement account (IRA), simplified employee
pension plans (SEP), 403(b)(7) plans and employer-sponsored
retirement plans (Keogh or HR10 Plan). Certain services
described in this prospectus may not be available to retirement
accounts and plans. Persons desiring information concerning
these plans should write or telephone the Fund or AFS at (800)
221-5672.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, is the custodian under these plans. The custodian
charges a nominal account establishment fee and a nominal annual
maintenance fee. A portion of such fees is remitted to AFS to
compensate that organization for services rendered to retirement
plan accounts maintained with the Fund.

<PAGE>

with payments forwarded by check or electronically via the
Automated Clearing House ("ACH") network shortly after the close
of the month. Under the Systematic Withdrawal Plan, you may
request payments by check or electronically via the ACH network
in any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, you can order, via a
signature-guaranteed letter to the Fund, such periodic payments
to be sent to another person. Shareholders wishing either of the
above plans electronically through the ACH network should write
or telephone the Fund or AFS at (800) 221-5672.

The Fund has the right to close out an account if it has a
zero balance on December 31 and no account activity for the first
six months of the subsequent year. Therefore, unless this has
occurred, a shareholder with a zero balance, when reinvesting,
should continue to use his account number. Otherwise, the
account should be re-opened pursuant to procedures described
above or through instructions given to a financial intermediary.

A "business day," during which purchases and redemptions of
Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any weekday exclusive of national holidays on which the New York
Stock Exchange is closed and Good Friday; if one of these
holidays falls on a Saturday or Sunday, purchases and redemptions
will likewise not be processed on the preceding Friday or the
following Monday, respectively. On any such day that is an
official bank holiday in Massachusetts, neither purchases nor
wired redemptions can become effective because Federal funds
cannot be received or sent by State Street Bank. On such days,
therefore, the Fund can only accept redemption orders for which
shareholders desire remittance by check. The right of redemption
may be suspended or the date of a redemption payment postponed
for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency (as
determined by the Securities and Exchange Commission) exists, or
the Commission has ordered such a suspension for the protection
of shareholders. The value of a shareholder's investment at the
time of redemption may be more or less than his or her cost,
depending on the market value of the securities held by the Fund
at such time and the income earned.

DAILY DIVIDENDS--DETERMINATION OF NET ASSET VALUE

All net income of the Fund is determined after the close of
each business day, currently 4:00 p.m. New York time (and at such
other times as the Trustees may determine) and is paid

<PAGE>

immediately thereafter pro rata to shareholders of record via
automatic investment in additional full and fractional shares in
each shareholder's account at the rate of one share for each
dollar distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

Net income consists of all accrued interest income on Fund
portfolio assets less the Fund's expenses applicable to that
dividend period. Realized gains and losses are reflected in net
asset value and are not included in net income. Net asset value
per share is expected to remain constant at $1.00 since all net
income is declared as a dividend each time net income is
determined.

The valuation of the Fund's portfolio securities is based
upon their amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of the Fund may be higher than that of
a fund with identical investments utilizing a method of valuation
based upon market prices for its portfolio instruments; the
converse would apply in a period of rising interest rates.

The Fund utilizes the amortized cost method of valuation of
portfolio securities in accordance with the provisions of Rule
2a-7 under the Act. Pursuant to such rule, the Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less and
invests only in securities of high quality. The Fund also
purchases instruments which, at the time of investment, have
remaining maturities of no more than one year which maturities
may extend to 397 days. The Fund maintains procedures designed
to stabilize, to the extent reasonably possible, the price per
share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Fund's portfolio
holdings by the Trustees at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Fund calculated by using available market quotations
or market equivalents deviates from net asset value based on
amortized cost. If such deviation exceeds 1/2 of 1%, the
Trustees will promptly consider what action, if any, should be
initiated. In the event the Trustees determine that such a
deviation may result in material dilution or other unfair results
to new investors or existing shareholders, they will consider
corrective action which might include (1) selling instruments
prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; (2) withholding dividends of

<PAGE>

net income on shares; or (3) establishing a net asset value per
share using available market quotations or equivalents. There
can be no assurance, however, that the Fund's net asset value per
share will remain constant at $1.00.

The net asset value of the shares is determined each business
day at 12:00 Noon and 4:00 p.m. (New York time). The net asset
value per share is calculated by taking the sum of the value of
the Fund's investments and any cash or other assets, subtracting
liabilities, and dividing by the total number of shares
outstanding. All expenses, including the fees payable to the
Adviser, are accrued daily.

TAXES

The Fund has qualified in each fiscal year to date and
intends to qualify in each future year to be taxed as a regulated
investment company under the Internal Revenue Code of 1986, as
amended (the "Code") and, as such, will not be liable for Federal
income and excise taxes on the net income and capital gains
distributed to its shareholders. Since the Fund distributes all
of its net income and capital gains, the Fund itself should
thereby avoid all Federal income and excise taxes.

For shareholders' Federal income tax purposes, all
distributions by the Fund out of interest income and net realized
short-term capital gains are treated as ordinary income and
distributions of long-term capital gains, if any, are treated as
long-term capital gains irrespective of the length of time the
shareholder held shares in the Fund. Since the Fund derives
nearly all of its gross income in the form of interest and the
balance in the form of short-term capital gains, it is expected
that for corporate shareholders, none of the Fund's distributions
will be eligible for the dividends-received deduction under
current law.

GENERAL INFORMATION

Portfolio Transactions. Subject to the general supervision
of the Trustees of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Fund. Because the Fund invests in
securities with short maturities, there is a relatively high
portfolio turnover rate. However, the turnover rate does not
have an adverse effect upon the net yield and net asset value of

<PAGE>

the Fund's shares since the Fund's portfolio transactions occur
primarily with issuers, underwriters or major dealers in money
market instruments acting as principals. Such transactions are
normally on a net basis which do not involve payment of brokerage
commissions. The cost of securities purchased from an
underwriter usually includes a commission paid by the issuer to
the underwriters; transactions with dealers normally reflect the
spread between bid and asked prices.

The Fund has no obligations to enter into transactions in
portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. Portfolio securities
will not be purchased from or sold to the Adviser's parent, or
any subsidiary or affiliate of the parent. During the fiscal
years ended June 30, 1993, 1994 and 1995, the Fund paid no
brokerage commissions.

Capitalization. All shares of the Fund, when issued, are
fully paid and non-assessable. The Trustees are authorized to
reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees, in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of another class would be governed by the Act and the law
of the Commonwealth of Massachusetts. If shares of another class
were issued in connection with the creation of a second
portfolio, each share of either portfolio would normally be
entitled to one vote for all purposes. Generally, shares of both
portfolios would vote as a single series for the election of
Trustees and on any other matter that affected both portfolios in
substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Advisory Agreement
and changes in investment policy, shares of each portfolio would
vote as separate classes. Certain procedures for the removal by
shareholders of trustees of investment trusts, such as the Fund,
are set forth in Section 16(c) of the Act.

<PAGE>

Legal Matters. The legality of the shares offered hereby has
been passed upon by Seward & Kissel, One Battery Park Plaza, New
York, New York, counsel for the Fund and the Adviser. Seward &
Kissel has relied upon the opinion of Sullivan & Worcester,
Boston, Massachusetts, for matters relating to Massachusetts law.

Auditors. An opinion relating to the Fund's financial
statements is given herein by McGladrey & Pullen, LLP, New York,
New York, independent auditors for the Fund.

Yield Quotations. Advertisements containing yield quotations
for the Fund may from time to time be sent to investors or placed
in newspapers, magazines or other media on behalf of the Fund.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Such yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933. Yield quotations are thus determined by (i)
computing the net change over a seven-day period, exclusive of
capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of such
period, (ii) dividing the net change in account value by the
value of the account at the beginning of such period, and (iii)
multiplying such base period return the result by (365/7)--with
the resulting yield figure carried to the nearest hundredth of
one percent. The Fund's effective annual yield represents a
compounding of the annualized yield according to the following
formula:

effective yield = [(base period return + 1)365/7] - 1

The Fund's yield for the seven-day period ended June 30,
1995, after expense reimbursement, was 4.97% which is the
equivalent of a 5.10% compounded effective yield. Absent such
reimbursement, the annualized yield for such period would have
been 4.59%, equivalent to an effective yield of 5.08%. Current
yield information for the Fund can be obtained by a recorded
message by telephoning toll-free at (800) 221-9513.

Additional Information. This Statement of Additional
Information does not contain all the information set forth in the
Registration Statement filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of
the Registration Statement may be obtained at a reasonable charge
from the Commission or may be examined, without charge, at the
Commission's offices in Washington, D.C.

<PAGE>

APPENDIX

A-1+, A-1 and Prime-1 Commercial Paper Ratings

"A-1+" is the highest, and "A-1" the second highest,
commercial paper rating assigned by Standard & Poor's Corporation
("Standard & Poor's") and "Prime-1" is the highest commercial
paper rating assigned by Moody's Investors Service, Inc.
("Moody's"). Standard & Poor's uses the numbers 1+, 1, 2 and 3
to denote relative strength within its highest classification of
"A", while Moody's uses the numbers 1, 2 and 3 to denote relative
strength within its highest classification of "Prime." Commercial
paper issuers rated "A" by Standard & Poor's have the following
characteristics: liquidity ratios are better than industry
average; long term debt rating is A or better; the issuer has
access to at least two additional channels of borrowing; basic
earnings and cash flow are in an upward trend; and typically, the
issuer is a strong company in a well-established industry and has
superior management. Commercial paper issuers rated "Prime" by
Moody's have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk; margins
of support for current indebtedness are large or stable with cash
flow and asset protection well assured; current liquidity
provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available; and
while protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.

AAA & AA and Aaa & Aa Bond Ratings

Bonds rated AAA and Aaa have the highest ratings assigned to
debt obligations by Standard & Poor's and Moody's, respectively.
Standard & Poor's AAA rating indicates an extremely strong
capacity to pay principal and interest. Bonds rated AA by
Standard & Poor's also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and the
majority of instances they differ from AAA issues only in small
degree. Moody's Aaa rating indicates the ultimate degree of
protection as to principal and interest. Moody's Aa rated bonds,
though also high-grade issues, are rated lower than Aaa bonds
because margins of protection may not be as large or fluctuations
of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear
somewhat larger.

26
00250083.AB2

<PAGE>

STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES-100.5%
FEDERAL NATIONAL MORTGAGE ASSOCIATION-41.8%
$ 15,000 4/29/96 5.49% $14,306,888
18,000 12/08/95 5.63 17,549,600
25,000 8/31/95 5.67 24,759,812
23,000 9/07/95 5.70 22,752,367
50,000 10/05/95 5.75 49,233,333
45,000 10/06/95 5.75 44,302,812
70,000 8/30/95 5.78 69,325,667
25,000 9/12/95 5.78 24,706,986
9,900 8/28/95 5.80 9,807,490
100,000 9/05/95 5.81 98,934,833
85,000 7/28/95 5.86 84,626,425
50,000 7/31/95 5.86 49,755,833
50,000 7/17/95 5.87 49,869,556
9,300 8/14/95 5.87 9,233,278
25,000 7/05/96 FRN 5.87 24,982,750
30,000 7/26/95 5.89 29,877,292
25,000 7/20/95 5.90 24,922,153
3,095 7/25/95 5.90 3,082,826
23,000 8/14/95 5.90 22,834,144
26,000 7/06/95 5.91 25,978,658
32,000 8/04/95 5.91 31,821,387
30,000 9/20/95 5.95 29,598,375
74,300 9/22/95 5.95 73,280,748
10,000 3/18/96 6.13 9,555,575
25,000 3/15/96 6.16 23,896,333
20,000 3/18/96 6.23 19,096,650
81,000 5.53%, 4/04/97 FRN 5.58 80,933,220
15,000 5.71%, 6/10/96 5.73 14,993,296
45,000 5.91%, 10/30/95 FRN 5.96 44,989,016
22,000 6.04%, 7/19/95 FRN 6.07 21,999,675
1,051,006,978

FEDERAL HOME LOAN MORTGAGE CORP.-21.8%
10,560 11/27/95 5.55 10,317,428
15,008 9/07/95 5.79 14,843,863
30,000 9/11/95 5.79 29,652,600
30,000 8/25/95 5.80 29,734,167
50,000 9/25/95 5.80 49,307,222
8,000 9/05/95 5.81 7,914,787
20,448 8/25/95 5.82 20,266,183
10,000 7/19/95 5.88 9,970,600
60,800 7/24/95 5.88 60,571,595
10,000 7/27/95 5.88 9,957,533
45,000 7/28/95 5.88 44,801,550
18,000 5/01/96 5.88 17,103,300
16,000 7/19/95 5.89 15,952,880
21,652 8/21/95 5.89 21,471,332
24,157 8/18/95 5.90 23,966,965
35,000 10/23/95 5.91 34,344,975
12,129 8/10/95 5.93 12,049,083
18,000 3/29/96 5.97 17,188,080
12,095 12/29/95 5.98 11,731,350
9,600 7/05/95 6.00 9,593,600
9,086 7/07/95 6.00 9,076,914
50,000 7/03/95 6.10 49,983,056
25,000 5.91%, 8/10/95 FRN 6.01 24,997,260
12,750 6.45%, 4/08/96 6.52 12,743,338
547,539,661

STUDENT LOAN MARKETING ASSOCIATION-18.4%
40,000 9/20/95 5.72 39,485,200
20,000 5.68%, 11/24/97 FRN 5.70 19,988,745
10,000 5.69%, 5/14/96 FRN 5.63 10,004,967
94,400 5.72%, 12/20/96 FRN 5.72 94,400,000
49,300 5.72%, 4/18/97 FRN 5.76 49,266,768
48,500 5.73%, 4/16/96 FRN 5.72 48,502,082
30,880 5.86%, 11/20/97 FRN 5.83 30,899,604
70,000 5.89%, 12/01/95 FRN 6.01 69,963,148
40,000 5.91%, 1/23/97 FRN 5.72 40,128,382
40,000 5.94%, 2/14/97 FRN 5.70 40,152,464
20,000 5.96%, 8/22/96 FRN 5.86 20,007,499
462,798,859

FEDERAL HOME LOAN BANK-11.6%
33,000 7/06/95 5.92 32,972,867
28,555 11/01/95 5.98 27,971,574
25,000 9/27/95 5.99 24,633,944
25,500 7/05/95 6.00 25,483,000
8,000 9/27/95 6.00 7,882,667
25,000 9/05/95 6.08 24,721,333
6,000 2/14/96 6.20 5,764,400
47,500 5.81%, 8/05/96 FRN 5.96 47,426,734
15,600 5.85%, 6/03/96 FRN 6.00 15,577,640
29,500 5.92%, 8/21/95 5.87 29,496,609
15,000 5.92%, 8/24/95 5.88 14,998,274
10,000 5.98%, 10/20/95 FRN 6.07 9,997,565
10,000 6.00%, 10/06/95 6.07 9,998,339
15,000 6.85%, 2/28/96 6.83 15,004,662
291,929,608

ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------

PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- -------------------------------------------------------
FEDERAL FARM CREDIT BANK-6.0%
$ 10,000 7/05/95 5.86% $ 9,993,489
3,000 8/17/95 5.86 2,977,048
5,900 7/17/95 5.92 5,884,477
40,000 6/20/96 FRN 5.94 39,980,601
15,000 3/05/96 6.19 14,360,367
14,000 5.60%, 7/01/96 5.69 13,986,392
10,000 5.70%, 9/01/95 5.87 9,996,981
44,000 6.04%, 5/24/96 FRN 6.08 43,992,070
10,000 6.76%, 2/28/96 6.70 10,001,864
151,173,289

U.S. TREASURY NOTES-0.4%
10,000 3.88%, 8/31/95 5.67 9,971,162

AGENCY FOR INTERNATIONAL
DEVELOPMENT HOUSING-0.4%
9,645 6.00%, 1/01/97 6.02 9,644,762

OVERSEAS PRIVATE INVESTMENT CORP.-0.1%
2,500 6.21%, 6/10/97 FRN 6.21 2,500,000

TOTAL INVESTMENTS-100.5%
(amortized cost
$2,526,564,319) 2,526,564,319
Other assets less
liabilities-(0.5%) (12,256,116)

NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
2,515,245,616 shares
outstanding) $2,514,308,203

+ All securities either mature or their interest rate changes in one year or
less.

Glossary of terms:
FRN - Floating Rate Note
See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------

INVESTMENT INCOME
Interest $118,368,624
EXPENSES
Advisory fee (Note B) $10,694,803
Distribution assistance and administrative
service (Note C) 7,017,099
Transfer agency 3,996,332
Registration fees 454,221
Custodian fees 323,650
Printing 300,704
Audit and legal fees 66,386
Trustees' fees 17,620
Miscellaneous 39,947
Total expenses 22,910,762
Less: expense reimbursement and fee waiver (1,074,234)
21,836,528
Net investment income 96,532,096

REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (551,975)

NET INCREASE IN NET ASSETS FROM OPERATIONS $95,980,121

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------

YEAR ENDED YEAR ENDED
JUNE 30,1995 JUNE 30,1994
------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $96,532,096 $48,029,539
Net realized loss on investments (551,975) (236,674)
Net increase in net assets from operations 95,980,121 47,792,865

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (96,532,096) (48,029,539)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 453,818,535 278,696,374
Total increase 453,266,560 278,459,700

NET ASSETS
Beginning of year 2,061,041,643 1,782,581,943
End of year $2,514,308,203 $2,061,041,643

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 ALLIANCE GOVERNMENT 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 (the
'Portfolio') and Alliance Treasury Reserves. Each portfolio is considered to be
a separate entity for financial reporting and tax purposes. 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.

2. TAXES
It is the Portfolio's policy to comply with 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 applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.

3. DIVIDENDS
The Portfolio declares dividends daily 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. GENERAL
Interest income is accrued as earned. Security transactions are recorded on a
trade date basis. Security gains and losses are determined on the identified
cost basis. 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.

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 of 1% on the first $1.25 billion of average daily
net assets; .49 of 1% on the next $.25 billion; .48 of 1% on the next $.25
billion; .47 of 1% on the next $.25 billion; .46 of 1% on the next $1 billion;
and .45% in excess of $3 billion. The Adviser has agreed to reimburse the
Portfolio to the extent that its 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 year ended June 30,
1995, the reimbursement amounted to $637,503. The Portfolio compensates
Alliance Fund Services, Inc. (a wholly-owned subsidiary of the Adviser) for
providing personnel and facilities to perform transfer agency services for the
Portfolio. Such compensation amounted to $2,640,512 for the year ended June 30,
1995.

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 1% 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, 1995, the distribution fee amounted to $5,459,132 of which
$436,731 was waived. In addition, the Portfolio reimbursed certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services, accounting and bookkeeping, and legal and compliance
support. For the year ended June 30, 1995, such payments by the Portfolio
amounted to $1,557,967 of which $151,500 was paid to the Adviser.

ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995, the cost of portfolio securities for federal income tax
purposes was the same as the cost for financial reporting purposes. At June 30,
1995 the Portfolio had a capital loss carryforward of $937,413, of which
$148,764 expires in 2001, $236,674 expires in 2002 and $551,975 expires in 2003.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1995, capital paid-in aggregated $2,515,245,616. Transactions, all at $1.00
per share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
--------------- ---------------
Shares sold 9,487,236,684 7,696,239,666
Shares issued on reinvestments of dividends 96,532,096 47,809,968
Shares redeemed (9,129,950,245) (7,465,353,260)
Net increase 453,818,535 278,696,374

NOTE F: FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .0439 .0244 .0256 .0421 .0640
Net realized gain on investments -0- -0- .0001 -0- -0-
Net increase in net assets from operations .0439 .0244 .0257 .0421 .0640

LESS: DISTRIBUTIONS
Dividends from net investment income (.0439) (.0244) (.0256) (.0421) (.0640)
Distributions from net realized gains -0- -0- (.0001) -0- -0-
Total dividends and distributions (.0439) (.0244) (.0257) (.0421) (.0640)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURNS
Total investment return based on:
net asset value (a) 4.48% 2.48% 2.60% 4.30% 6.61%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $2,514 $2,061 $1,783 $1,572 $1,070
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.00% 1.00% 1.00% .95% .89%
Expenses, before waivers and reimbursements 1.05% 1.04% 1.02% .97% .93%
Net investment income 4.42% 2.46% 2.55% 4.17% 6.28%
</TABLE>

(a) Total investment return in 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 in the last day of the period.

ALLIANCE GOVERNMENT RESERVES
- -------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE GOVERNMENT RESERVES
We have audited the accompanying statement of net assets of Alliance Government
Reserves as of June 30, 1995 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 Fund'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, 1995 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 Government Reserves as of June 30, 1995, 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.

New York, New York
August 8, 1995

<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 002-63315 and 811-02889.

<PAGE>

ALLIANCE CAPITAL LOGO (R)
ALLIANCE TREASURY RESERVES
_________________________________________________________________

P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1995

TABLE OF CONTENTS
Page
____

Investment Objectives and Policies . . . . . . . . 2

Investment Restrictions . . . . . . . . . . . . . 4

Management . . . . . . . . . . . . . . . . . . . . 6

Purchase and Redemption of Shares . . . . . . . . 16

Additional Information . . . . . . . . . . . . . . 19

Daily Dividends-Determination of Net Asset Value . 22

Taxes . . . . . . . . . . . . . . . . . . . . . . 23

General Information . . . . . . . . . . . . . . . 24

Appendix-Commercial Paper and Bond Ratings . . . . 27

Financial Statements . . . . . . . . . . . . . . . 28

Independent Auditor's Report . . . . . . . . . . . 34

_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated November 1, 1995. A copy of the
Prospectus may be obtained by contacting the Fund at the address
or telephone number shown above.

___________________
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

_________________________________________________________________

INVESTMENT OBJECTIVES AND POLICIES
_________________________________________________________________

1. Issues of the United States Treasury, such as bills,
certificates of indebtedness, notes and bonds. Such issues are
supported by the full faith and credit of the U.S. Treasury.

2. Repurchase agreements pertaining to the above securities.
A repurchase agreement arises when a buyer purchases a security
and simultaneously agrees to resell it to the vendor at an
agreed-upon market rate which is effective for the period of time
the buyer's money is invested in the security and which is not
related to the coupon rate on the purchased security. Repurchase
agreements may be entered into with member banks of the Federal
Reserve System or "primary dealers" (as designated by the Federal
Reserve Bank of New York) in U.S. Government securities or with
State Street Bank and Trust Company. It is the Fund's current
practice, which may be changed at any time without shareholder
approval, to enter into repurchase agreements only with such
primary dealers or State Street Bank and Trust Company, the
Fund's Custodian. For each repurchase agreement, the Fund
requires continual maintenance of the market value of the
underlying collateral in amounts equal to, or in excess of, the
agreement amount. While the maturities of the underlying
collateral may exceed 397 days, the term of the repurchase
agreement is always less than 397 days. In the event that a
vendor defaulted on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of
the collateral were less than the repurchase price. If the
vendor became bankrupt, the Fund might be delayed in selling the
collateral. Repurchase agreements often are for short periods
such as one day or a week, but may be longer. Repurchase
agreements not terminable within seven days will be limited to no
more than 10% of the Fund's assets.* Pursuant to Rule 2a-7, a
repurchase agreement is deemed to be an acquisition of the
underlying securities provided that the obligation of the seller

___________________
* As used throughout the Prospectus and Statement of Additional
Information, term "assets" shall refer to the Fund's total
assets.

<PAGE>

to repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
vendor of a fully collateralized repurchase agreement is deemed
to be the issuer of the underlying securities.

While there are many kinds of short-term securities used by
money market investors, the Fund, in keeping with its primary
investment objective of safety of principal, restricts its
portfolio to the types of investments listed above. Net income
to shareholders is aided both by the Fund's ability to make
investments in large denominations and by its efficiencies of
scale. Also, the Fund may seek to improve its income by selling
certain portfolio securities prior to maturity in order to take
advantage of yield disparities that occur in money markets. The
market value of the Fund's investments tends to decrease during
periods of rising interest rates and to increase during intervals
of falling rates. Except as otherwise provided, the Fund's
investment policies are not designated "fundamental policies"
within the meaning of the Investment Company Act of 1940, as
amended, (the "Act") and may, therefore, be changed by the

<PAGE>

Trustees of the Trust without a shareholder vote. However, the
Fund will not change its investment policies without
contemporaneous written notice to shareholders. There can be no
assurance, as is true with all investment companies, that the
Fund's objectives will be achieved.

Rule 2a-7 under the Act. The Fund will comply with Rule 2a-
7 under the Act, as amended from time to time, including the
diversity, quality and maturity limitations imposed by the Rule.

Under Rule 2a-7 the Fund may not invest more than five
percent of its assets in the securities of any one issuer other
than the United States Government, its agencies and
instrumentalities. In addition, the Fund may not invest in a
security that has received, or is deemed comparable in quality to
a security that has received, the second highest rating by the
requisite number of NRSROs (a "second tier security") if
immediately after the acquisition thereof the Fund would have
invested more than (A) the greater of one percent of its total
assets or one million dollars in securities issued by that issuer
which are second tier securities, or (B) five percent of its
total assets in second tier securities.

INVESTMENT RESTRICTIONS

The foregoing investment objectives and policies and the
following restrictions may not, except as otherwise indicated, be
changed without the approval of a majority of the Fund's

<PAGE>

outstanding shares. As used in this prospectus, the
term"majority of the Fund's outstanding shares" means the
affirmative vote of the holders of (a) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (b) more than 50% of the
outstanding shares, whichever is less.

The Fund:

1. May not purchase any security which has a remaining
maturity of more than 397 days from the date of the Fund's
purchase;

2. May not purchase securities other than marketable
obligations of the United States Treasury, or repurchase
agreements pertaining thereto;

3. May not enter into repurchase agreements if, as a result
thereof, more than 10% of the Fund's net assets would be subject
to repurchase agreements not terminable within seven days (which
may be considered to be illiquid) or with any one seller* if, as
a result thereof, more than 5% of the Fund's assets would be
invested in repurchase agreements purchased from such seller; and
may not enter into any reverse repurchase agreements if, as a
result thereof, the Fund's obligations with respect to reverse
repurchase agreements would exceed 10% of the Fund's assets;

5. May not pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by the
Fund except as may be necessary in connection with any borrowing
mentioned above, including reverse repurchase agreements, and in
an aggregate amount not to exceed 10% of the Fund's assets;

6. May not make loans, provided that the Fund may purchase
securities of the type referred to in paragraph 2 above and enter
into repurchase agreements with respect thereto; or

___________________
* Pursuant to Rule 2a-7, the seller of a fully collateralized
repurchase agreement is deemed to be the issuer of the underlying
securities.

<PAGE>

7. May not (a) make investments for the purpose of
exercising control; (b) purchase securities of other investment
companies, except in connection with a merger, consolidation,
acquisition or reorganization; (c) invest in real estate (other
than money market securities secured by real estate or interests
therein or money market securities issued by companies which
invest in real estate, or interests therein), commodities or
commodity contracts, interests in oil, gas and other mineral
exploration or other development programs; (d) purchase any
restricted securities or securities on margin; (e) make short
sales of securities or maintain a short position or write,
purchase or sell puts, calls, straddles, spreads or combinations
thereof; (f) invest in securities of issuers (other than agencies
and instrumentalities of the United States Government) having a
record, together with predecessors, of less than three years of
continuous operation if more than 5% of the Fund's assets would
be invested in such securities; (g) purchase or retain securities
of any issuers if those officers and trustees of the Fund and
employees of the Adviser who own individually more than 1/2 of 1%
of the outstanding securities of such issuer together own more
than 5% of the securities of such issuer; or (h) act as an
underwriter of securities.
_________________________________________________________________

MANAGEMENT
_________________________________________________________________

Trustees and Officers

The Trustees and principal officers of the Trust and their
primary occupations during the past five years are set forth
below. Unless otherwise specified, the address of each such
person is 1345 Avenue of the Americas, New York, New York 10105.
Those Trustees whose names are preceded by an asterisk are
"interested persons" of the Trust as determined under the Act.
Each Trustee and officer is affiliated as such with one or more
of the other registered investment companies that are advised by
Alliance Capital Management L.P. (the "Adviser").

<PAGE>

Trustees

*DAVE H. WILLIAMS, 63, Chairman, is Chairman of the Board of
Directors of Alliance Capital Management Corporation ("ACMC"),**
sole general partner of the Adviser with which he has been
associated since prior to 1990.

*JOHN D. CARIFA, 50, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1990.

<PAGE>

SHELBY WHITE, 57, is an author and financial journalist. Her
address is One Sutton Place South, New York, New York 10022.

Officers

JOHN R. BONCZEK - Senior Vice President, 35, is a Vice
President of ACMC with which he has been associated since prior
to 1990.

WAYNE D. LYSKI - Senior Vice President, 54, is an Executive
Vice President of ACMC with which he has been associated since
prior to 1990.

PATRICIA NETTER - Senior Vice President, 44, is a Vice
President of ACMC with which she has been associated since prior
to 1990.

RONALD R. VALEGGIA - Senior Vice President, 48, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1990.

DREW BIEGEL - Vice President, 44, is a Vice President of ACMC
which he has been associated with since prior to 1990.

JOHN F. CHIODI, Jr. - Vice President, 29, is a Vice President
of ACMC with which he has been associated since prior to 1990.

<PAGE>

DORIS T. CILIBERTI - Vice President, 31, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1990.

WILLIAM J. FAGAN - Vice President, 33, is an Assistant Vice
President of ACMC with which he has been associated since prior
to 1990.

RAYMOND J. PAPERA - Vice President, 39, is a Vice President
of ACMC with which he has been associated since prior to 1990.

PAMELA F. RICHARDSON - Vice President, 42, is a Vice
President of ACMC with which she has been associated since prior
to 1990.

EDMUND P. BERGAN, Jr. - Secretary, 45, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1990.

MARK D. GERSTEN - Treasurer and Chief Financial Officer, 45,
is a Senior Vice President of Alliance Fund Services, Inc.
("AFS") and AFD with which he has been associated since prior to
1990.

JOSEPH J. MANTINEO - Controller, 36, is a Vice President of
AFS with which he has been associated since prior to 1990.

As of October 2, 1995 there were 477,247,098 shares of the
Fund outstanding of which the Trust's Trustees and officers as a
group owned less than 1%.

The Fund does not pay any fees to, or reimburse expenses of,
its Trustees who are considered "interested persons" of the Fund.
The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal year ended June 30, 1995, the
aggregate compensation paid to each of the Trustees during
calendar year 1994 by all of the registered investment companies
to which the Adviser provides investment advisory services
(collectively, the "Alliance Fund Complex") and the total number
of funds in the Alliance Fund Complex with respect to which each
of the Trustees serves as a director or trustee, are set forth
below. Neither the Fund nor any other fund in the Alliance Fund
Complex provides compensation in the form of pension or
retirement benefits to any of its directors or trustees.

<PAGE>

___________________ _____________ _____________ _________________
Dave H. Williams $-0- $-0- 6

John D. Carifa $-0- $-0- 49

Sam Y. Cross $1,603 $15,000 3

Charles H.P. Duell $1,603 $14,250 3

William H. Foulk, Jr. $3,000 $141,500 30

Elizabeth J. McCormack $1,228 $15,000 3

David K. Storrs $1,228 $15,750 3

Shelby White $1,603 $15,750 3

John Winthrop $1,228 $13,500 3

The Adviser

<PAGE>

the Adviser and its subsidiaries, respectively, including
employees of the Adviser who serve as Directors of the Fund.

AXA owns approximately 60% of the outstanding voting shares
of common stock of ECI. AXA is a member of a group of companies
(the "AXA Group") that is the second largest insurance group in
France (measured by gross premiums written worldwide) and one of
the largest insurance groups in Europe. Principally engaged in
property and casualty insurance and life insurance in Europe and
elsewhere in the world, the AXA Group is also involved in real
estate operations and certain other financial services, including
mutual fund management, lease financing services and brokerage
services. Based on information provided by AXA, as of January 1,
1995, 42.3% of the issued shares (representing 54.7% of the
voting power) of AXA were owned by Midi Participations, a French
corporation that is a holding company. The voting shares of Midi
Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian Corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 31.8% of the issued shares) (representing 39.0% of the
voting power), and 26.5% of the issued shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("Paribas"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the issued shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.

<PAGE>

Under the Advisory Agreement, the Adviser provides investment
advisory services and order placement facilities for the Fund and
pays all compensation of Trustees of the Trust who are affiliated
persons of the Adviser. The Adviser or its affiliates also
furnish the Fund without charge with management supervision and
assistance and office facilities. Under the Advisory Agreement,
the Fund pays an advisory fee at an annual rate of .50 of 1% of
up to $1.25 billion of the average daily value of the Fund's net
assets, .49 of 1% of the next $.25 billion of such assets, .48 of
1% of the next $.25 billion of such assets, .47 of 1% of the next
$.25 billion of such assets, .46 of 1% of the next $1 billion of
such assets and .45 of 1% of the average daily net assets of the
Fund in excess of $3 billion. The fee is accrued daily and paid
monthly. The Adviser has agreed to reimburse the Fund to the
extent that its net expenses (excluding taxes, brokerage,
interest and extraordinary expenses) exceed 1% of its average
daily net assets for any fiscal year. The Adviser also
voluntarily agreed to reimburse the Portfolio from September 1,
1993 (commencement of operations) through February 14, 1994 for
all expenses, and from February 15, 1994 through April 14, 1994
for expenses exceeding .20 of 1% of its average daily net assets,
from April 18, 1994 to July 14, 1994 for expenses exceeding .40
of 1% of its average daily net assets, from July 15, 1994 to
March 8, 1995 for expenses exceeding .60 of 1% of its average
daily net assets, from March 9, 1995 to March 26, 1995 for
expenses exceeding .70 of 1% of its average daily net assets and
from March 27, 1995 to June 30, 1995 for expenses exceeding .80
of 1% of its average daily net assets. For the fiscal years
ended June 30, 1994 and 1995 the Adviser received from the Fund
advisory fees of $0 and $1,044,322, respectively. In accordance
with the Distribution Services Agreement described below, the
Fund may pay a portion of advertising and promotional expenses in
connection with the sale of shares of the Fund. The Fund also
pays for printing of prospectuses and other reports to
shareholders and all expenses and fees related to registration
and filing with the Securities and Exchange Commission and with
state regulatory authorities. The Fund pays all other expenses
incurred in its operations, including the Adviser's management
fees; custody, transfer and dividend disbursing expenses; legal
and auditing costs; clerical, administrative accounting, and
other office costs; fees and expenses of Trustees who are not
affiliated with the Adviser; costs of maintenance of the Trust's
existence; and interest charges, taxes, brokerage fees, and
commissions. As to the obtaining of clerical and accounting
services not required to be provided to the Fund by the Adviser
under the Advisory Agreement, the Fund may employ its own
personnel. For such services, it also may utilize personnel
employed by the Adviser; if so done, the services are provided to
the Fund at cost and the payments therefor must be specifically
approved in advance by the Trustees. The Fund paid to the
Adviser a total of $119,000 for such services for the fiscal year

<PAGE>

ended June 30, 1995. For the period September 1, 1993
(commencement of operations) through June 30, 1994, no payments
were made by the Portfolio for such services.

The Fund has made arrangements with certain broker-dealers
whose customers are Fund shareholders pursuant to which the
broker-dealers perform shareholder servicing functions, such as
opening new shareholder accounts, processing purchase and
redemption transactions, and responding to inquiries regarding
the Fund's current yield and the status of shareholder accounts.
The Fund pays for the electronic communications equipment
maintained at the broker-dealers' offices that permits access to
the Fund's computer files and, in addition, reimburses the
broker-dealers at cost for personnel expenses involved in
providing the services. All such reimbursements must be approved
in advance by the Trustees. For the year ended June 30, 1995,
the Fund reimbursed such broker-dealers a total of $52,438. For
the period September 1, 1993 (commencement of operations) through
June 30, 1994, the Fund made no such reimbursements.

Distribution Services Agreement

Rule 12b-1 adopted by the Securities and Exchange Commission
under the Act permits an investment company to directly or
indirectly pay expenses associated with the distribution of its
shares. Pursuant to such rule the Fund has adopted a
Distribution Services Agreement (the "Agreement") with Alliance
Fund Distributors, Inc. (the "Distributor") and the Adviser under

<PAGE>

which the Fund makes payments each month to the Adviser in an
amount that will not exceed, on an annualized basis, of .25 of 1%
of the Fund's aggregate average daily net assets. In addition,
under the Agreement the Adviser makes payments for distribution
assistance and for administrative, accounting and other services
from its own resources which may include the management fee paid
by the Fund.

Payments under the Agreement are used in their entirety for
(i) payments to broker-dealers and other financial
intermediaries, including the Distributor, for distribution
assistance and to banks and other depository institutions for
administrative and accounting services, and (ii) otherwise
promoting the sale of shares of the Fund such as by paying for
the preparation, printing and distribution of prospectuses and
other promotional materials sent to existing and prospective
shareholders and by directly or indirectly purchasing radio,
television, newspaper and other advertising. In approving the
Agreement the Trustees determined that there was a reasonable
likelihood that the Agreement would benefit the Fund and its
shareholders. For the year ended June 30, 1995, the Adviser
waived all payments under the Plan. During the fiscal year ended
June 30, 1995, the Fund made no payments to the Adviser for
expenditures under the Agreement and the Adviser made payments
from its own resources as described above aggregating $1,212,232.
Of the $1,212,232 paid by the Adviser and the Fund under the
Agreement, $36,642 was paid for advertising, printing, and
mailing of prospectuses to persons other than current
shareholders; and $1,175,590 was paid to broker-dealers and other
financial intermediaries for distribution assistance.

The administrative, accounting and other services provided by
broker-dealers, depository institutions and other financial
intermediaries may include, but are not limited to, establishing
and maintaining shareholder accounts, sub-accounting, processing
of purchase and redemption orders, sending confirmations of
transactions, forwarding financial reports and other
communications to shareholders and responding to shareholder
inquiries regarding the Fund. The State of Texas requires that
shares of the Fund may be sold in that state only by dealers or
other financial institutions that are registered there as broker-
dealers. As interpreted by courts and administrative agencies,
certain laws and regulations limit the ability of a bank or other
depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Fund's management
based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other
services for investment companies such as the administrative,
accounting and other services described above. The Trustees will
consider appropriate modifications to the Fund's operations,
including discontinuance of payments under the Agreement to banks

<PAGE>

and other depository institutions, in the event of any future
change in such laws or regulations which may affect the ability
of such institutions to provide the above-mentioned services.

The Treasurer of the Trust reports the amounts expended under
the Agreement and the purposes for which such expenditures were
made to the Trustees on a quarterly basis. Also, the Agreement
provides that the selection and nomination of disinterested
Trustees (as defined in the Act) are committed to the discretion
of the disinterested Trustees then in office. The Agreement was
initially approved for the Fund by the Trustees at a meeting held
on June 14, 1993. Continuance of the Agreement until June 30,
1996 was approved by the vote, cast in person by all the Trustees
of the Fund who neither were interested persons of the Fund nor
had any direct or indirect financial interest in the Agreement or
any related agreement, at a meeting called for that purpose on
June 12, 1995. The Agreement may be continued annually
thereafter if approved by a majority vote of the Trustees who
neither are interested persons of the Trust nor have any direct
or indirect financial interest in the Agreement or in any related
agreement, cast in person at a meeting called for that purpose.

All material amendments to the Agreement must be approved by
a vote of the Trustees, including a majority of the disinterested
Trustees, cast in person at a meeting called for that purpose,
and the Agreement may not be amended in order to increase
materially the costs which the Fund may bear pursuant to the
Agreement without the approval of a majority of the outstanding
shares of the Fund. The Agreement may also be terminated at any
time by a majority vote of the disinterested Trustees, or by a
majority of the outstanding shares of the Fund or by the Adviser.
Any agreement with a qualifying broker-dealer or other financial
intermediary may be terminated without penalty on not more than
sixty days' written notice by a vote of the majority of non-party
Trustees, by a vote of a majority of the outstanding shares of
the Fund, or by the Adviser and will terminate automatically in
the event of its assignment.

<PAGE>

PURCHASE AND REDEMPTION OF SHARES

Accounts Not Maintained Through Financial Intermediaries

Opening Accounts -- New Investments

A. When Funds are Sent by Wire (the wire method permits
immediate credit)

2) Instruct your bank to wire Federal funds (minimum
$1,000) exactly as follows:

ABA 0110 0002-8
State Street Bank and Trust Company
DDA 9903-279-9
Attention: Mutual Funds Division
Alliance Treasury Reserves

Your account name as registered
Your account number with the Fund

3) Mail a completed Application Form to:

Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520

B. When Funds are Sent by Check

1) Fill out an Application Form.

2) Mail the completed Application Form along with your
check or negotiable bank draft (minimum $1,000),
payable to "Alliance Treasury Reserves," to
Alliance Fund Services, Inc. as in A(3) above.

<PAGE>

Subsequent Investments

A. Investments by Wire (to obtain immediate credit)

Instruct your bank to wire Federal funds (minimum $100)
to State Street Bank and Trust Company ("State Street Bank") as
in A(2) above.

B. Investments by Check

Mail your check or negotiable bank draft (minimum $100),
payable to "Alliance Treasury Reserves," to Alliance Fund
Services, Inc. as in A(3) above.

Investments Made by Check

Redemptions

A. By Telephone

You may withdraw any amount from your account on any
Fund business day (i.e., any weekday exclusive of days on which
the New York Stock Exchange or State Street Bank is closed)
between 9:00 a.m. and 5:00 p.m. (New York time) via orders given
to Alliance Fund Services, Inc. by telephone toll-free (800) 824-
1916. Such redemption orders must include your account name as
registered with the Fund and the account number.

If your telephone redemption order is received by
Alliance Fund Services, Inc. prior to 12:00 Noon (New York time),

<PAGE>

we will send the proceeds in Federal funds by wire to your
designated bank account that day. The minimum amount for a wire
is $1,000. If your telephone redemption order is received by
Alliance Fund Services, Inc. after 12:00 Noon and before 4:00
p.m., we will wire the proceeds the next business day. You also
may request that proceeds be sent by check to your designated
bank. Redemptions are made without any charge to you.

During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this statement of additional information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, or
Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.

B. By Check-Writing

With this service, you may write checks made payable to
any payee in any amount of $100 or more. Checks cannot be
written for more than the principal balance (not including any
accrued dividends) in your account. First, you must fill out the
Signature Card which is with the Application Form. If you wish
to establish this check-writing service, except that State Street
Bank will impose its normal charges for checks which are returned
unpaid because of insufficient funds or for checks upon which you
have placed a stop order.

THE CHECK-WRITING SERVICE ENABLES YOU TO RECEIVE THE DAILY
DIVIDENDS DECLARED ON THE SHARES TO BE REDEEMED UNTIL THE DAY
THAT YOUR CHECK IS PRESENTED TO STATE STREET BANK FOR PAYMENT.

<PAGE>

C. By Mail

You may withdraw any amount from your account at any
time by mail. Written orders for withdrawal, accompanied by duly
endorsed certificates, if issued, should be mailed to Alliance
Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-
1520. Such orders must include the account name as registered
with the Fund and the account number. All written orders for
redemption, and accompanying certificates, if any, must be signed
by all owners of the account with the signatures guaranteed by an
institution which is an "eligible guarantor" as defined in Rule
17 Ad-15 under the Securities Exchange Act of 1934, as amended.

Additional Information

Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such
institutions necessarily set deadlines for receipt of transaction
orders from their clients that are earlier than the transaction
times of the Fund itself so that the institutions may properly
process such orders prior to their transmittal to State Street
Bank. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect
the order with the Fund until the next business day.
Accordingly, an investor should familiarize himself with the
deadlines set by his institution. (For example, the Distributor
accepts purchase orders from its customers up to 2:15 p.m. New
York time for issuance at the 4:00 p.m. transaction time and
price.) A brokerage firm acting on behalf of a customer in
connection with transactions in Fund shares is subject to the
same legal obligations imposed on it generally in connection with
transactions in securities for a customer, including the
obligation to act promptly and accurately.

<PAGE>

(including checks from individual investors) must be in United
States dollars.

All shares purchased are confirmed to each shareholder and
are credited to his account at the net asset value. To avoid
unnecessary expense to the Fund and to facilitate the immediate
redemption of shares, share certificates, for which no charge is
made, are not issued except upon the written request of a
shareholder. Certificates are not issued for fractional shares.
Shares for which certificates have been issued are not eligible
for any of the optional methods of withdrawal; namely, the
telephone, telegraph, check-writing or periodic redemption
procedures. The Fund reserves the right to reject any purchase
order.

Arrangements for Telephone Redemptions. If you wish to use
the telephone redemption procedure, indicate this on your
Application Form and designate a bank and account number to
receive the proceeds of your withdrawals. If you decide later
that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Treasury
Reserves, P.O. Box 1520, Secaucus, New Jersey 07096-1520, with
your signature guaranteed by an institution which is an eligible
guarantor. For joint accounts, all owners must sign and have
their signatures guaranteed.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, is the custodian under these plans. The custodian

<PAGE>

charges a nominal account establishment fee and a nominal annual
maintenance fee. A portion of such fees is remitted to AFS to
compensate that organization for services rendered to retirement
plan accounts maintained with the Fund.

Periodic Distribution Plans. Without affecting your right to
use any of the methods of redemption described above, by checking
the appropriate boxes on the Application Form, you may elect to
participate additionally in the following plans without any
separate charge. Under the Income Distribution Plan you receive
monthly payments of all the income earned in your Fund account,
with payments forwarded by check or electronically via the
Automated Clearing House ("ACH") network shortly after the close
of the month. Under the Systematic Withdrawal Plan, you may
request payments by check or electronically via the ACH network
in any specified amount of $50 or more each month or in any
intermittent pattern of months. If desired, you can order, via a
signature-guaranteed letter to the Fund, such periodic payments
to be sent to another person. Shareholders wishing either of the
above plans electronically through the ACH network should write
or telephone the Fund or AFS at (800) 221-5672.

A "business day," during which purchases and redemptions of
Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund purposes as
any day the New York Stock Exchange is open for trading; however,
on any such day that is an official bank holiday in
Massachusetts, neither purchases nor wired redemptions can become
effective because Federal funds cannot be received or sent by
State Street Bank. On such days, therefore, the Fund can only
accept redemption orders for which shareholders desire remittance
by check. The right of redemption may be suspended or the date
of a redemption payment postponed for any period during which the
New York Stock Exchange is closed (other than customary weekend
and holiday closings), when trading on the New York Stock
Exchange is restricted, or an emergency (as determined by the
Securities and Exchange Commission) exists, or the Commission has
ordered such a suspension for the protection of shareholders.
The value of a shareholder's investment at the time of redemption
may be more or less than his cost, depending on the market value
of the securities held by the Fund at such time and the income
earned.

<PAGE>

DAILY DIVIDENDS--DETERMINATION OF NET ASSET VALUE

All net income of the Fund is determined after the close of
each business day, currently 4:00 p.m. New York time (and at such
other times as the Trustees may determine) and is paid
immediately thereafter pro rata to shareholders of record via
automatic investment in additional full and fractional shares in
each shareholder's account at the rate of one share for each
dollar distributed. As such additional shares are entitled to
dividends on following days, a compounding growth of income
occurs.

The Fund utilizes the amortized cost method of valuation of
portfolio securities in accordance with the provisions of Rule
2a-7 under the Act. Pursuant to such rule, the Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less,
purchases instruments which, at the time of investment, have
remaining maturities of no more than 397 days and invests only in
eligible securities. The Fund maintains procedures designed to
stabilize, to the extent reasonably possible, the price per share
as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Fund's portfolio holdings
by the Trustees at such intervals as they deem appropriate to
determine whether and to what extent the net asset value of the
Fund calculated by using available market quotations or market
equivalents deviates from net asset value based on amortized
cost. If such deviation exceeds 1/2 of 1%, the Trustees will

<PAGE>

promptly consider what action, if any, should be initiated. In
the event the Trustees determine that such a deviation may result
in material dilution or other unfair results to new investors or
existing shareholders, they will consider corrective action which
might include (1) selling instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; (2) withholding dividends of net income on shares; or
(3) establishing a net asset value per share using available
market quotations or equivalents. There can be no assurance,
however, that the Fund's net asset value per share will remain
constant at $1.00.

TAXES

The Fund has qualified in each fiscal year to date and
intends to qualify in each future year to be taxed as a regulated
investment company under the Internal Revenue Code of 1986, as
amended (the "Code") and, as such, will not be liable for Federal
income and excise taxes on the net income and capital gains
distributed to its shareholders. Since the Fund intends to
distribute all of its net income and capital gains, the Fund
itself should thereby avoid all Federal income and excise taxes.

<PAGE>

GENERAL INFORMATION

Portfolio Transactions. Subject to the general supervision
of the Trustees of the Trust, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Fund. Because the Fund invests in
securities with short maturities, there may be a relatively high
portfolio turnover rate. However, the turnover rate does not
have an adverse effect upon the net yield and net asset value of
the Fund's shares since the Fund's portfolio transactions occur
primarily with issuers, underwriters or major dealers in money
market instruments acting as principals. Such transactions are
normally on a net basis which do not involve payment of brokerage
commissions. The cost of securities purchased from an
underwriter usually includes a commission paid by the issuer to
the underwriters; transactions with dealers normally reflect the
spread between bid and asked prices.

The Fund has no obligations to enter into transactions in
portfolio securities with any dealer, issuer, underwriter or
other entity. In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser. Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund. The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information. Portfolio securities
will not be purchased from or sold to the Adviser's parent, or
any subsidiary or affiliate of the parent. During the period
September 1, 1993 (commencement of operations) through June 30,
1994 and for the fiscal year ended June 30, 1995, the Fund paid
no brokerage commissions.

Capitalization. All shares of the Trust, when issued, are
fully paid and non-assessable. The Trustees are authorized to
reclassify and issue any unissued shares to any number of
additional classes or series without shareholder approval.
Accordingly, the Trustees, in the future, for reasons such as the
desire to establish one or more additional portfolios with
different investment objectives, policies or restrictions, may
create additional classes or series of shares. Any issuance of
shares of another class would be governed by the Act and the law

<PAGE>

of the Commonwealth of Massachusetts. Shares of each portfolio
are normally entitled to one vote for all purposes. Generally,
shares of all portfolios vote as a single series for the election
of Trustees and on any other matter that affected all portfolios
in substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Advisory Agreement
and changes in investment policy, shares of each portfolio vote
as separate series. Certain procedures for the removal by
shareholders of trustees of investment trusts, such as the Trust,
are set forth in Section 16(c) of the Act.

Shareholder Liability. Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for
the obligations of the Fund. However, the Agreement and
Declaration of Trust disclaims shareholder liability for acts or
obligations of the Fund and requires that the Trustees use their
best efforts to ensure that notice of such disclaimer be given in
each note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or officers of the Trust. The
Agreement and Declaration of Trust provides for indemnification
out of the property of the Fund for all loss and expense of any
shareholder of the Fund held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to
meet its obligations. In the view of the Adviser, such risk is
not material.

Accountants. An opinion relating to the Fund's financial
statements is given herein by McGladrey & Pullen, LLP, New York,
New York, independent auditors for the Trust.

<PAGE>

capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of such
period, (ii) dividing the net change in account value by the
value of the account at the beginning of such period, and (iii)
multiplying such base period return the result by (365/7)--with
the resulting yield figure carried to the nearest hundredth of
one percent. The Fund's effective annual yield represents a
compounding of the annualized yield according to the following
formula:

effective yield = [(base period return + 1)365] - 1
7

The Fund's yield for the seven-day period ended June 30,
1995, after expense reimbursement, was 4.97% which is the
equivalent of a 5.10% compounded effective yield. Absent such
reimbursement, the annualized yield for such period would have
been 4.72%, equivalent to an effective yield of 4.85%. Current
yield information for the Fund can be obtained by a recorded
message by telephoning toll-free at (800) 221-9513.

<PAGE>

APPENDIX

A-1+, A-1 and Prime-1 Commercial Paper Ratings

AAA & AA and Aaa & Aa Bond Ratings

27
00250083.AB2

<PAGE>

STATEMENT OF NET ASSETS
JUNE 30, 1995 ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ----------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS-72.6%
U.S. TREASURY NOTES-47.1%
$ 35,000 3.88%, 8/31/95 5.59% $ 34,892,255
83,000 4.25%, 7/31/95 5.48 82,908,562
30,000 4.25%, 11/30/95 6.09 29,767,518
12,000 4.63%, 8/15/95 5.87 11,980,498
13,000 5.50%, 4/30/96 6.09 12,938,345
60,000 8.50%, 8/15/95 5.53 60,205,688
------------
232,692,866

U.S. TREASURY BILLS-25.5%
26,000 7/27/95 5.45 25,897,661
30,000 9/21/95 5.48 29,625,533
12,000 8/24/95 5.50 11,901,000
20,000 9/14/95 5.55 19,768,750
4,000 8/24/95 5.67 3,965,980
10,000 11/16/95 5.67 9,782,650
10,000 8/17/95 5.69 9,925,779
15,000 8/24/95 5.72 14,871,413
------------
125,738,766

Total U.S. Government Obligations
(amortized cost $358,431,632) 358,431,632

REPURCHASE AGREEMENTS-25.9%
BANKERS TRUST REPO
22,000 5.90%, dated 6/29/95, due 7/06/95
in the amount of $22,025,239
(cost $22,000,000; collateralized
by U.S. Treasury Note, 6.125%,
7/31/96, value $22,637,391) 5.90 22,000,000
GOLDMAN SACHS GROUP
21,000 5.97%, dated 6/23/95, due 7/07/95
in the amount of $21,048,755
(cost $21,000,000; collateralized
by $16,670,000 U.S. Treasury Bond,
10.00%, 5/15/10, value $21,204,761
and $260,000 U.S. Treasury Bond,
7.25%, 5/15/16, value $278,241) 5.97 21,000,000
MERRILL LYNCH GOVERNMENT
21,000 SECURITIES, INC.
5.90, dated 6/28/95, due 7/05/95
in the amount of $21,024,092
(cost $21,000,000; collateralized
by $21,235,000 U.S. Treasury Note,
5.75%, 10/31/97, value $21,377,673) 5.90 21,000,000
MORGAN J.P. REPO
22,000 5.90%, dated 6/29/95, due 7/06/95
in the amount of $22,025,239
(cost $22,000,000; collateralized
by $21,947,000 U.S. Treasury Note,
6.75%, 5/31/97, value $22,411,350) 5.90 22,000,000
MORGAN STANLEY GROUP, INC.
21,000 5.92%, dated 6/21/95, due
7/12/95 in the amount of
$21,072,500 (cost $21,000,000;
collateralized by $19,410,000
U.S. Treasury Bond, 7.50%,
11/15/16, value $21,332,803
and $110,000 U.S. Treasury Bond,
8.75%, 11/15/08, value $127,806) 5.92 21,000,000
STATE STREET REPO
21,000 5.80%, dated 6/28/95, due 7/05/95
in the amount of $21,023,683
(cost $21,000,000; collateralized
by $20,635,000 U.S. Treasury Note,
6.50%, 8/15/97, value $21,399,585) 5.80 21,000,000

TOTALREPURCHASE AGREEMENTS
(amortized cost $128,000,000) 128,000,000

TOTAL INVESTMENTS-98.5%
(amortized cost $486,431,632) 486,431,632
Other assets less liabilities-1.5% 7,270,251

NET ASSETS-100%
(offering and redemption price of $1.00
per share; 493,706,430 shares outstanding) $493,701,883

+ All securities either mature or their interest rate changes in one year or
less.
See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------

INVESTMENT INCOME
Interest $15,131,559
EXPENSES
Advisory fee (Note B) $1,363,949
Distribution assistance and administrative
service (Note C) 853,413
Transfer agency 275,207
Registration expense 216,640
Custodian fees 57,371
Printing 57,369
Audit and legal fees 22,073
Trustees' fees 11,777
Amortization of organization expense 9,119
Miscellaneous 5,347
Total expenses 2,872,265
Less: expense reimbursement and fee waiver (1,001,602)
1,870,663
Net investment income 13,260,896

REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (1,959)

NET INCREASE IN NET ASSETS FROM OPERATIONS $13,258,937

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------

SEP. 1,1993*
YEAR ENDED TO
JUNE 30,1995 JUNE 30,1994
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 13,260,896 $ 824,423
Net realized loss on investments (1,959) (2,588)
Net increase in net assets from operations 13,258,937 821,835

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (13,260,896) (824,423)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 412,984,016 80,722,414
Total increase 412,982,057 80,719,826

NET ASSETS
Beginning of year 80,719,826 -0-
End of year $493,701,883 $80,719,826

* Commencement of operations.
See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 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 portfolio is considered to be a
separate entity for financial reporting and tax purposes. The following is a
summary of significant accounting policies followed by the Fund.

2. ORGANIZATION EXPENSES
The organization expenses of the Portfolio are being amortized against income
on a straight-line basis through September, 1998.

3. TAXES
It is the Portfolio's policy to comply with the require-ments 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 applicable,
to its shareholders. Therefore, no provisions for federal income or excise
taxes are required.

4. DIVIDENDS
The Portfolio declares dividends daily 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. GENERAL
Interest income is accrued as earned. Security transactions are recorded on a
trade date basis. Security gains and losses are determined on the identified
cost basis. 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.

The Adviser has agreed to reimburse the Portfolio to the extent that its
aggregate expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed 1% of its averagedaily net assets for any fiscal
year. The Adviser also voluntarily agreed to reimburse the Portfolio from July
1, 1994 to July 14, 1994 for expenses exceeding .40 of 1% of its average daily
net assets, from July 15, 1994 to March 8, 1995 for expenses exceeding .60 of
1% of its average daily net assets, from March 9, 1995 to March 26, 1995 for
expenses exceeding .70 of 1% of its average daily net assets and from March 27,
1995 to June 30, 1995 for expenses exceeding .80 of 1% of its average daily net
assets. For the year ended June 30, 1995, the reimbursement amounted to
$319,627. The Portfolio compensates Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) for providing personnel and facilities
to perform transfer agency services for the Portfolio. Such compensation
amounted to $207,449 for the year ended June 30, 1995.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------

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 1% 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, 1995, the Adviser waived all payments under the Plan. In
addition, the Portfolio may reimburse certain broker-dealers for administrative
costs incurred in connection with providing shareholder services, accounting
and bookkeeping, and legal and compliance support. For the year ended June 30,
1995, such payments by the Portfolio amounted to $171,438 of which $119,000 was
paid to the Adviser.

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1995,the cost of securities for federal income tax purposes was the
same as the cost for financial reporting purposes. At June 30, 1995, the
Portfolio had a capital loss carryforward of $4,547 of which $2,588 expires in
2002 and $1,959 expires in 2003.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1995, capital paid-in aggregated $493,706,430. Transactions, all at $1.00 per
share, were as follows:

SEP. 1,1993(A)
YEAR ENDED THROUGH
JUNE 30,1995 JUNE 30,1994
--------------- --------------
Shares sold 2,037,450,750 232,199,197
Shares issued on reinvestments of dividends 13,260,896 820,489
Shares redeemed (1,637,727,630) (152,297,272)
Net increase 412,984,016 80,722,414

ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------

NOTE F: FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period.

SEPTEMBER 1,
1993(A)
YEAR ENDED THROUGH
JUNE 30,1995 JUNE 30,1994
------------ ------------
Net asset value, beginning of year $ 1.00 $ 1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .0460 .0260

LESS: DISTRIBUTIONS
Dividends from net investment income (.0460) (.0260)
Net asset value, end of year $ 1.00 $ 1.00

TOTAL RETURNS
Total investment return based on: net asset value (b) 4.71% 3.18%(c)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in thousands) $493,702 $80,720
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .69% .28%(c)
Expenses, before waivers and reimbursements 1.05% 1.28%(c)
Net investment income 4.86% 3.24%(c)

(a) Commencement of operations.

(b) Total investment return in 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 in the last day of the period.

INDEPENDENT AUDITOR'S REPORT ALLIANCE TREASURY RESERVES
- -------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE TREASURY RESERVES

We have audited the accompanying statement of net assets of Alliance Treasury
Reserves as of June 30, 1995 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 Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Treasury Reserves as of June 30, 1995, 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 York
August 8, 1995