Alliance Government Reserves
This is filed pursuant to Rule 497(e)
File Nos. 2-63315 and 811 02889
PC FINANCIAL NETWORK A SERVICE
OF THE PERSHING DIVISION OF
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
One Pershing Plaza, Jersey City, New Jersey 07399
1 (800) TALE-PCF
Member NASD, Member SIPC
PERSHING GOVERNMENT ACCOUNT
Prospectus
November 1, 1995
Pershing Government Account utilizes Alliance Government Reserves (the "Fund").
The Fund is 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.
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, write the Fund at P.O. Box 1520, Secaucus, NJ07096-1520.
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.
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)
Management Fees .48%
12b-1 Fees .23
Other Expenses .29
Total Fund Operating Expenses 1.00%
EXAMPLE
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING A 5%
ANNUAL RETURN (CUMULATIVELY THROUGH THE END OF EACH TIME PERIOD):
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$10 $32 $55 $122
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The expenses listed in the table are net of the contractual
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 Expenses-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 INFORMATION . FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR (AUDITED)
<TABLE>
<CAPTION>
ALLIANCE GOVERNMENT RESERVES 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, beginning 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 investments -0- -0- .0001 -0- -0- .0001 -0- -0- -0- -0-
Net increase in net asets from
operations. .0439 .0244 .0257 .0421 .0640 .0766 .0774 0.0612 0.0541 0.0659
LESS: DISTRIBUTIONS
Dividends from net investment
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 distributions (.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 assets 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
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.
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%. Absent
such reimbursement, the annualized yield for such period would have been 4.95%,
equivalent to an effective yield of 5.08%.
INVESTMENT OBJECTIVE 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 extent
consistent with the first two objectives. As a matter of fundamental policy,
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
approval, 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 instrumentalities
(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 entered
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
purchase 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 "1940 Act"), as amended from time to time, including the diversity,
quality and maturity limitations imposed by the Rule. The average maturity of
the Fund cannot exceed 90 days. A more detailed description of Rule 2a-7 is set
forth in the Fund's Statement of Additional Information under "Investment
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
investments and it will not purchase any investment while any such borrowings
exist; or (2) pledge, hypothecate or in any manner transfer, as security for
indebtedness, its assets except to secure such borrowings.
PURCHASES AND REDEMPTION OF SHARES
PURCHASE OF SHARES
Participants in the self-directed retirement plans (IRA's, SEP's, Keogh's,
Qualified Retirement Plans) for which Donaldson, Lufkin &Jenrette Securities
Corporation ("DLJSC") is the custodian or subcustodian are eligible to invest
in shares of the Fund. Unless participants elect otherwise, the cash portion of
their retirement account will be invested in the Fund. There is a minimum
account requirement of $100. Once the minimum account requirement is met, all
free credit balances will be invested automatically on the business day
following the date they are received in the account. Proceeds of the sales of
securities will be invested in the Fund on the day following the settlement
date of the security sale. There will be no minimum, initial or subsequent
purchase requirement for investments as long as the $100 minimum requirement is
met.
REDEMPTION OF SHARES
DLJSC, as custodian or subcustodian of the self-directed retirement plans, has
instituted an automatic redemption for participants enrolled in the Fund. DLJSC
will redeem a sufficient number of shares on settlement date to pay for any
securities purchased in the self-directed retirement plan. Shares may also be
redeemed to meet any debits in the self-directed retirement account arising
from, e.g., cash distributions or other charges. Shares will also be redeemed
to satisfy any periodic or other distribution instructions from the owner of
the self-directed retirement plan. A shareholder's investment will be fully
redeemed whenever redemption of shares will reduce the remaining account
balance to less than $100.
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 (i.e., any weekday exclusive of days on which the
New York Stock Exchange or State Street Bank is closed). 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 dividing 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
received before or after 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
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 page 3 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 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.
Redemption proceeds are normally available 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.
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
immediately 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.
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.
With respect to participants in self-directed retirement plans, dividends from
ordinary income and net realized capital gains will ordinarily not be subject
to taxation until such dividends are distributed to such participants from
their self-directed retirement plan accounts. Generally, distributions will be
taxable as ordinary income at the rate applicable to the participant at the
time of distribution. In certain cases, distributions made to a participant
from a self-directed retirement plan prior to the date on which the participant
reaches age 59 1/2 are subject to a penalty tax equivalent to 10% of the amount
so distributed, in addition to the ordinary income tax payable on such amount
for the year in which it is distributed. In addition, certain contributions to
a self-directed retirement plan in excess of amounts permitted by law may be
subject to an excise tax.
Each year shortly after December 31, you will be provided with tax information
stating the amount and type of all Fund distributions for the year just ended.
THE ADVISER. The Fund retains Alliance Capital Management L.P., 1345 Avenue of
the Americas, New York, New York 10105 under an Advisory Agreement to provide
investment 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, AGR paid the Adviser
a distribution services fee 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. Shareholders pay
no direct charges or fees for investment services.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Company,
P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus, NJ07096-1520 and Alliance Fund
Distributors, Inc., 1345 Avenue of the Americas, New York, NY10105, are the
Fund's Transfer Agent and Distributor, respectively.
FUND ORGANIZATION. The Fund and another series, not offered by this prospectus,
are series of Alliance Government Reserves which is a diversified, open-end
investment company registered under the 1940 Act. The Fund was reorganized as a
Massachusetts business trust in October 1984, having previously been a Maryland
corporation since its formation in December 1978. The Fund's activities are
supervised by its Trustees. Shareholders have one vote for each share held.
Massachusetts law does not require annual meetings of shareholders, and it is
anticipated 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
periodic summary of your account from DLJSC. You can arrange for your account
statements to be sent to other parties.
