ALLIANCE GOVERNMENT RESERVES
ALLIANCECAPITAL
SEMI-ANNUAL REPORT
DECEMBER 31, 1995
(UNAUDITED)
STATEMENT OF NET ASSETS
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES-86.4%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION-39.4%
$ 25,000 5/13/96 5.35% $ 24,505,868
51,735 5/24/96 5.35 50,627,871
20,000 1/22/96 5.44 19,936,533
20,000 3/19/96 5.47 19,762,967
45,000 2/07/96 5.47 44,747,013
3,000 1/30/96 5.48 2,986,769
5,000 1/25/96 5.48 4,981,750
15,000 4/29/96 5.49 14,727,788
10,000 3/04/96 5.50 9,903,750
11,000 3/13/96 5.50 10,879,000
50,000 3/01/96 5.52 49,540,000
4,850 2/29/96 5.54 4,805,965
15,000 2/27/96 5.54 14,868,425
25,000 2/28/96 5.54 24,776,861
25,000 2/21/96 5.55 24,803,438
25,000 1/29/96 5.55 24,892,083
38,400 2/21/96 5.55 38,098,352
50,000 2/29/96 5.55 49,545,208
40,000 2/08/96 5.57 39,764,822
10,000 1/25/96 5.58 9,962,800
50,000 2/22/96 5.58 49,597,000
31,700 1/30/96 5.59 31,557,253
13,500 1/05/96 5.62 13,491,570
40,000 1/19/96 5.67 39,886,600
25,000 7/05/96 FRN 5.75 24,991,234
10,000 3/18/96 6.13 9,868,886
25,000 3/15/96 6.16 24,683,444
20,000 3/18/96 6.23 19,733,494
81,000 5.21%, 4/04/97 FRN 5.26 80,952,329
25,000 5.30%, 12/26/96 5.36 24,983,279
75,000 5.53%, 9/03/96 FRN 5.57 74,980,547
90,000 5.53%, 10/15/96 FRN 5.60 89,950,696
20,000 5.64%, 10/02/96 5.85 19,969,044
15,000 5.71%, 6/10/96 5.73 14,996,871
10,000 5.76%, 9/27/96 5.76 10,000,000
50,000 5.81%, 10/01/96 FRN 5.86 49,981,733
15,000 5.81%, 10/04/96 5.81 14,994,115
50,000 6.67%, 3/15/96 5.75 50,082,589
--------------
1,128,817,947
FEDERAL HOME LOAN BANK-17.3%
15,000 5/13/96 5.33 14,704,629
17,745 4/12/96 5.37 17,475,010
27,000 4/12/96 5.40 26,586,900
5,300 7/19/96 5.46 5,139,233
20,000 3/04/96 5.49 19,807,850
25,000 4/02/96 5.50 24,648,611
50,000 2/16/96 5.51 49,647,972
25,000 2/02/96 5.54 24,876,889
60,000 1/02/96 5.75 59,990,417
50,000 1/02/96 6.10 49,991,528
6,000 2/14/96 6.20 5,954,533
30,000 5.53%, 11/13/96 FRN 5.60 29,982,360
47,500 5.57%, 8/05/96 FRN 5.72 47,460,352
15,600 5.66%, 6/03/96 FRN 5.81 15,589,813
45,000 5.74%, 10/16/96 FRN 5.87 44,956,747
25,000 5.79%, 11/14/96 5.79 25,000,000
20,000 5.97%, 7/18/96 5.97 20,000,000
15,000 6.85%, 2/28/96 6.83 15,001,117
--------------
496,813,961
STUDENT LOAN MARKETING ASSOCIATION-14.4%
20,000 5.22%, 11/24/97 FRN 5.24 19,991,106
10,000 5.23%, 5/14/96 FRN 5.17 10,002,093
94,400 5.26%, 12/20/96 FRN 5.26 94,400,000
48,500 5.27%, 4/16/96 FRN 5.26 48,500,761
100,000 5.30%, 8/04/97 FRN 5.30 100,000,000
49,300 5.31%, 4/18/97 FRN 5.35 49,276,075
32,000 5.35%, 2/17/98 FRN 5.73 31,947,556
30,880 5.40%, 11/20/97 FRN 5.37 30,895,472
8,300 5.40%, 1/21/98 FRN 5.43 8,295,095
20,000 5.50%, 8/22/96 FRN 5.40 20,004,198
--------------
413,312,356
FEDERAL HOME LOAN MORTGAGE CORP.-8.5%
32,675 1/22/96 5.50 32,570,168
50,000 2/20/96 5.54 49,615,278
25,000 2/26/96 5.54 24,784,555
35,057 2/20/96 5.55 34,786,769
30,000 1/22/96 5.65 29,901,125
25,000 1/22/96 5.67 24,917,312
18,000 5/01/96 5.88 17,644,260
18,000 3/29/96 5.97 17,737,320
12,750 6.45%, 4/08/96 6.52 12,747,685
--------------
244,704,472
FEDERAL FARM CREDIT BANK-6.4%
9,000 2/23/96 5.54 8,926,595
15,000 3/05/96 6.19 14,834,933
40,000 5.51%, 6/20/96 FRN 5.56 39,990,656
14,000 5.60%, 7/01/96 5.69 13,993,233
53,000 5.68%, 9/03/96 FRN 5.68 53,000,000
44,000 5.75%, 5/24/96 FRN 5.79 43,996,519
10,000 6.76%, 2/28/96 6.70 10,000,447
184,742,383
1
STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY+ YIELD VALUE
- ---------------------------------------------------------------------------
AGENCY FOR INTERNATIONAL
DEVELOPMENT HOUSING-0.3%
$ 7,365 5.74%, 1/02/96 5.76% $ 7,364,288
OVERSEAS PRIVATE INVESTMENT CORP.-0.1%
1,875 5.75%, 6/10/97 FRN 5.75 1,875,000
Total U.S. Government and Agencies
(amortized cost $2,477,630,407) 2,477,630,407
REPURCHASE AGREEMENTS-13.9%
FIRST BOSTON CORP.
100,000 5.73%, dated 12/08/95, due 1/19/96
in the amount of $100,668,500
(cost $100,000,000; collateralized by
$24,812,689 FHLMC, 7.47%, 11/01/23,
value $18,482,119, $54,460,000 FHLMC,
6.37%, 6/01/30, value $20,416,790,
$48,570,000 FHLMC, 7.21%, 5/01/24,
value $37,583,769, $9,310,000 FHLMC,
6.36%, 11/01/17, value $1,633,086
and $25,496,151 FNMA, 6.46%, 6/01/24,
value $23,842,296) 5.73 100,000,000
GOLDMAN SACHS & CO.
100,000 5.73%, dated 12/01/95, due 1/31/96
in the amount of $100,970,917
(cost $100,000,000; collateralized by
$122,685,000 FNMA, 6.38%, 3/01/33,
value $101,679,423 and $646,000 FNMA,
7.31%, 1/01/35, value $631,796) 5.73 100,000,000
MORGAN STANLEY GROUP, INC.
100,000 5.77%, dated 12/08/95, due 1/19/96
in the amount of $100,673,167
(cost $100,000,000; collateralized by
$109,550,000 FNMA, 6.36%, 4/01/34,
value $102,282,680) 5.77 100,000,000
PRUDENTIAL-BACHE SECURITIES, INC.
100,000 5.75%, dated 11/30/95, due 1/25/96
in the amount of $100,894,444
(cost $100,000,000; collateralized by
$15,876,000 FHLMC, 7.86%, 4/01/24,
value $11,302,093, $50,000,000 FHLMC,
7.58%, 9/01/23, value $37,053,775,
$26,865,676 FHLMC, 7.49%, 10/01/23,
value $21,535,872, $2,423,000 FNMA,
6.38%, 3/01/33, value $2,002,568 and
$31,235,000 FNMA, 6.38%, 11/01/22,
value $30,060,050) 5.75 100,000,000
Total Repurchase Agreements
(amortized cost $400,000,000) 400,000,000
TOTAL INVESTMENTS-100.3%
(amortized cost $2,877,630,407) 2,877,630,407
Other assets less liabilities-(0.3%) (8,326,315)
NET ASSETS-100%
(offering and redemption price of $1.00
per share; 2,870,242,154 shares outstanding) $2,869,304,092
+ All securities either mature or their interest rate changes in one year or
less.
Glossary:
FRN - Floating Rate Note
See notes to financial statements.
2
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $81,237,965
EXPENSES
Advisory fee (Note B) $ 6,734,504
Distribution assistance and administrative
service (Note C) 4,250,925
Transfer agency 2,448,488
Registration fees 275,765
Custodian fees 226,608
Printing 210,531
Audit and legal fees 31,527
Trustees' fees 7,974
Miscellaneous 22,118
Total expenses 14,208,440
Less: fee waiver (278,597)
13,929,843
Net investment income 67,308,122
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (649)
NET INCREASE IN NET ASSETS FROM OPERATIONS $67,307,473
STATEMENTS OF CHANGES IN NET ASSETS
_______________________________________________________________________________
SIX MONTHS ENDED
DECEMBER 31,1995 YEAR ENDED
(UNAUDITED) JUNE 30, 1995
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income $ 67,308,122 $ 96,532,096
Net realized loss on investments (649) (551,975)
Net increase in net assets from operations 67,307,473 95,980,121
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (67,308,122) (96,532,096)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase 354,996,538 453,818,535
Total increase 354,995,889 453,266,560
NET ASSETS
Beginning of period 2,514,308,203 2,061,041,643
End of period $2,869,304,092 $2,514,308,203
See notes to financial statements.
3
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 (UNAUDITED) 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. No reimbursement was required
for the six months ended December 31, 1995. 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 $1,398,973 for the six months ended December 31,
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 six
months ended December 31, 1995, the distribution fee amounted to $3,482,461 of
which $278,597 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 six months ended December 31, 1995, such payments by the
Portfolio amounted to $768,464 of which $80,000 was paid to the Adviser.
4
ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
At December 31, 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 December 31,
1995, capital paid-in aggregated $2,870,242,154. Transactions, all at $1.00 per
share, were as follows:
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995
----------------- ---------------
Shares sold 6,265,281,047 9,487,236,684
Shares issued on reinvestments of dividends 67,308,122 96,532,096
Shares redeemed (5,977,592,631) (9,129,950,245)
Net increase 354,996,538 453,818,535
5
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
NOTE F: FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1995 -----------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .0243 .0439 .0244 .0256 .0421 .0640
Net realized gain on investments -0- -0- -0- .0001 -0- -0-
Net increase in net assets from
operations .0243 .0439 .0244 .0257 .0421 .0640
LESS: DISTRIBUTIONS
Dividends from net investment income (.0243) (.0439) (.0244) (.0256) (.0421) (.0640)
Distributions from net realized gains -0- -0- -0- (.0001) -0- -0-
Total dividends and distributions (.0243) (.0439) (.0244) (.0257) (.0421) (.0640)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURNS
Total investment return based on:
net asset value (a) 4.89%(b) 4.48% 2.48% 2.60% 4.30% 6.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2,869 $2,514 $2,061 $1,783 $1,572 $1,070
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.00%(b) 1.00% 1.00% 1.00% .95% .89%
Expenses, before waivers and
reimbursements 1.02%(b) 1.05% 1.04% 1.02% .97% .93%
Net investment income (c) 4.83%(b) 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.
(b) Annualized.
(c) Net of expenses reimbursed or waived by the Adviser.
6
ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________
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
JOSEPH R. LASPINA, VICE PRESIDENT
LINDA D. NEIL, VICE PRESIDENT
RAYMOND J. PAPERA, VICE PRESIDENT
PAMELA F. RICHARDSON, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JOSEPH J. MANTINEO, CONTROLLER
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
AUDITORS
MCGLADREY & PULLEN, LLP
555 Fifth Avenue
New York, NY 10017
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
7
ALLIANCE GOVERNMENT RESERVES
1345 Avenue of the Americas, New York, NY 10105
Toll free 1 (800) 221-5672
YIELDS. For current recorded yield information on Alliance
Government Reserves, call on a touch-tone telephone 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
ALLIANCECAPITAL
DISTRIBUTION OF THIS REPORT OTHER THAN TO SHAREHOLDERS MUST
BE PRECEDED OR ACCOMPANIED BY THE FUND'S CURRENT PROSPECTUS,
WHICH CONTAINS FURTHER INFORMATION ABOUT THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM
THE OWNER, ALLIANCE CAPITAL MANAGEMENT L.P.
ALC601032
GOVSR
