ALLIANCE GOVERNMENT RESERVES INC, 497, 1997-12-05

ALLIANCE GOVERNMENT RESERVES INC
497, 1997-12-05

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<PAGE>

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

<PAGE>

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

YIELD MESSAGES

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.

- --------------------------------------------------------------------------------
Alliance Government Reserves (the "Fund") is a series of Alliance Government
Reserves, a diversified, open-end investment company. The Fund is a money
market fund 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 October 31, 1997, 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 8.

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.

(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>
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ALLIANCE
GOVERNMENT
RESERVES

[LOGO OF ALLAINCE CAPITAL(R) APPEARS HERE]

PROSPECTUS
OCTOBER 31, 1997

ALC25PRO7
<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)
<TABLE>
<S> <C>
Management Fees......................................................... .47%
12b-1 Fees.............................................................. .25
Other Expenses.......................................................... .28
----
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 EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.

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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,
--------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ------- ------- ------- ------- ------- ------- ------- -------
<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... .0443 .0461(b) .0439(b) .0244(b) .0256(b) .0421 .0640 .0765 .0774 0.0612
Net realized gain on in-
vestments.............. -0- -0- -0- -0- .0001 -0- -0- .0001 -0- -0-
------ ------ ------- ------- ------- ------- ------- ------- ------- -------
Net increase in net
assets from operations. .0443 .0461 .0439 .0244 .0257 .0421 .0640 .0766 .0774 0.0612
------ ------ ------- ------- ------- ------- ------- ------- ------- -------
LESS: DIVIDENDS AND DIS-
TRIBUTIONS
Dividends from net in-
vestment income........ (.0443) (.0461) (.0439) (.0244) (.0256) (.0421) (.0640) (.0765) (.0774) (0.0612)
Distributions from net
realized gains......... -0- -0- -0- -0- (.0001) -0- -0- (.0001) -0- -0-
------ ------ ------- ------- ------- ------- ------- ------- ------- -------
Total dividends and dis-
tributions............. (.0443) (.0461) (.0439) (.0244) (.0257) (.0421) (.0640) (.0766) (.0774) (0.0612)
------ ------ ------- ------- ------- ------- ------- ------- ------- -------
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)..... 4.53% 4.72% 4.48% 2.48% 2.60% 4.30% 6.61% 7.96% 8.04% 6.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(in millions).......... $3,762 $3,205 $2,514 $2,061 $1,783 $1,572 $1,070 $584 $522 $315
Ratio to average net as-
sets of:
Expenses, net of waivers
and reimbursements..... 1.00% 1.00% 1.00% 1.00% 1.00% .95% .89% .88% .88% .80%
Expenses, before waivers
and reimbursements..... 1.00% 1.01% 1.05% 1.04% 1.02% .97% .93% .98% .98% .90%
Net investment
income(b).............. 4.44% 4.60%(b) 4.42%(b) 2.46%(b) 2.55%(b) 4.17% 6.28% 7.65% 7.86% 6.13%
</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 expenses reimbursed or waived by the Adviser.
- -------------------------------------------------------------------------------

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, 1997 amounted to an annualized yield of 4.62%,
equivalent to an effective yield of 4.73%.

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 money market income--and who place value on an investment
having the extra safety implicit in a portfolio containing U.S. Gov-
ernment securities. The Fund also is suitable for persons and entities
seeking an investment having liquidity, stability, simplicity, and
convenience. Investors using the Fund avoid certain administrative
burdens that they would incur by investing in money market securities
directly, such as monitoring of maturity dates, safeguarding of re-
ceipts and deliveries, and the maintenance of tax information and
other records.

MAJOR FEATURES AND SERVICES OF ALLIANCE GOVERNMENT RESERVES
<TABLE>
<S> <C>
No withdrawal fees or penalties Checkwriting
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
Same-day funds for withdrawals
</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
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 para-
graph, 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 sepa-
rate section below without shareholder approval. The Fund may, without such
approval, create additional 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) 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
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 Com-
pany, 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 as-
sets 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 money market securities in which the Fund may invest
may have variable or floating rates of interest ("variable rate obligations")
as permitted by Rule 2a-7 under the Investment Company Act of 1940, as amended
(the "Act"). Variable rate obligations have interest rates which are adjusted
either at predesignated periodic intervals or whenever there is a change in
the market rate to which the interest rate of the variable rate obligation is
tied. Some variable rate obligations allow the holder to demand payment of
principal at any time, or at specified intervals. The Fund follows Rule 2a-7
with respect to the diversification, quality and maturity of variable rate
obligations.

The Fund will comply with Rule 2a-7, including the diversification, 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
"Investment Objectives and Policies." To the extent that the Fund's limita-
tions are more permissive than Rule 2a-7, the Fund will comply with the more
restrictive provisions of the Rule.

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 re-
demption 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; (2) pledge, hypothecate or in any manner transfer, as
security for indebtedness, its assets except to secure such borrowings; or (3)
enter into repurchase agreements if, as a result thereof, more than 10% of its
assets would be subject to repurchase agreements not terminable within seven
days.

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. Checks
cannot be written for more than the principal balance (not including any ac-
crued dividends) in your account. You must first fill out the Signature Card,
which you can obtain from your Account Executive. There is a charge for check
reorders. The checkwriting service enables you to receive the daily dividends
declared on the shares to be redeemed until the day that your check is pre-
sented 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, see the
Statement of Additional Information.

The Fund offers a variety of shareholder services. For more information
about these services, call the Fund at (800) 221-5672.

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 con-
stant 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
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 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 in
this Prospectus. The Fund reserves the right to suspend or terminate its tele-
phone redemption service at any time without notice. Neither the Fund nor the
Adviser, or Alliance Fund Services, Inc. will be responsible for the authen-
ticity 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 fee
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 ac-
count. These minimums do not apply to shareholder accounts maintained through
brokerage firms or other financial institutions, as such financial intermedi-
aries may maintain their own minimums.

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

6
<PAGE>

record via automatic investment in additional full and fractional shares in
each shareholder's account. As such additional shares are entitled to divi-
dends 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
ordinary 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 dis-
tributions 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
investment advice and, in general, to conduct the Fund's management and in-
vestment program, subject to the general supervision and control of the Trust-
ees of the Fund. For the fiscal year ended June 30, 1997, the Fund paid the
Adviser at an annual rate of .48 of 1% of the average daily value of the
Fund's net assets.

The Adviser is a leading international investment manager, supervising client
accounts with assets as of September 30, 1997 totaling more than $217 billion
(of which more than $81 billion represented the assets of investment compa-
nies). The Adviser's clients are primarily major corporate employee benefit
plans, public employee retirement plans, insurance companies, banks, founda-
tions and endowment funds. The 54 registered investment companies managed by
the Adviser comprising 116 separate investment portfolios currently have over
two million shareholders. As of September 30, 1997, the Adviser was retained
as an investment manager of employee benefit fund assets for 28 of the Fortune
100 companies.

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, 1997, the Fund paid the
Adviser at an annual rate of .25 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 account-
ing 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 deposi-
tory institutions are permissible activities under present banking laws and
regulations and will take appropriate actions (which should not adversely af-
fect the Fund or its shareholders) in the future to maintain such legal con-
formity 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.

7
<PAGE>

Alliance Fund Services, Inc. P.O. Box 1520, Secaucus, NJ 07096-1520, and Alli-
ance Fund Distributors, 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 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 Trust-
ees.

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
account statements to be sent to other parties.

<PAGE>

This is filed pursuant to Rule 497(c).
Files 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 Government
Reserves, a diversified, open-end investment company. The Fund is a money
market fund 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 October 31, 1997, which
provides a further discussion of certain areas in this prospectus and other
matters and 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.

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

- --------------------------------------------------------------------------------
CONTENTS
------

ALLIANCE
TREASURY
RESERVES

[LOGO OF ALLIANCE CAPITAL(R) APPEARS HERE]

PROSPECTUS
OCTOBER 31, 1997

ALC90PRO7
<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)
<TABLE>
<S> <C>
Management Fees......................................................... .50%
12b-1 Fees.............................................................. .25
Other Expenses.......................................................... .25
----
Total Fund Operating Expenses........................................... 1.00%
</TABLE>

- --------------------------------------------------------------------------------
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 YEAR ENDED YEAR ENDED THROUGH
JUNE 30, 1997 JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1994
------------- ------------- ------------- --------------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .0443 .0466 .0460 .0260
-------- -------- -------- -------
LESS: DIVIDENDS
Dividends from net in-
vestment income........ (.0443) (.0466) (.0460) (.0260)
-------- -------- -------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
TOTAL RETURNS
Total investment return
based on: net asset
value (b).............. 4.53% 4.77% 4.71% 3.18%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(in thousands)......... $704,084 $700,558 $493,702 $80,720
Ratio to average net as-
sets of:
Expenses, net of waiv-
ers and reimburse-
ments................. .85% .81% .69% .28%(c)
Expenses, before waiv-
ers and reimburse-
ments................. 1.00% 1.05% 1.05% 1.28%(c)
Net investment income
(d)................... 4.43% 4.64% 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 expenses reimbursed or waived by the Adviser.

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

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, 1997, after expense reimbursement, amounted to
an annualized yield of 4.60%, equivalent to an effective yield of 4.69%.
Absent such reimbursement, the annualized yield for such period would have
been 4.45%, equivalent to an effective yield of 4.54%.

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 money market income--and who place value on an investment
having the extra safety implicit in a portfolio containing U.S. Trea-
sury securities. The Fund also is suitable for persons and entities
seeking an investment having liquidity, stability, simplicity, and
convenience. Investors using the Fund avoid certain administrative
burdens that they would incur by investing in money market securities
directly, such as monitoring of maturity dates, safeguarding of re-
ceipts and deliveries, and the maintenance of tax information and
other records.

MAJOR FEATURES AND SERVICES OF ALLIANCE TREASURY RESERVES
<TABLE>
<S> <C>
No withdrawal fees or penalties Checkwriting
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
Same-day funds for withdrawals
</TABLE>

3
<PAGE>

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 para-
graph, all of which at the time of investment have remaining maturities of 397
days or less. The Fund may not change its investment objectives 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 invest-
ment 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)
repurchase 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. Govern-
ment securities 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. 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. The money market securities in which the Fund may invest may have vari-
able or floating rates of interest ("variable rate obligations") as permitted
by Rule 2a-7 under the Investment Company Act of 1940, as amended (the "Act").
Variable rate obligations have interest rates which are adjusted either at
predesignated periodic intervals or whenever there is a change in the market
rate to which the interest rate of the variable rate obligation is tied. Some
variable rate obligations allow the holder to demand payment of principal at
any time, or at specified intervals. The Fund follows Rule 2a-7 with respect
to the diversification, quality and maturity of variable rate obligations.

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 re-
demption 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; (2) pledge, hypothecate or in any manner transfer, as
security for indebtedness, its assets except to secure such borrowings; or (3)
enter into repurchase agreements, if as a result thereof, more than 10% of its
assets would be subject to repurchase agreements not terminable within seven
days.

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

REDEMPTIONS

A. BY CHECKWRITING

B. BY SWEEP

OPENING AN ACCOUNT DIRECTLY WITH THE FUND; SHAREHOLDER SERVICES

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

The Fund offers a variety of shareholder services. For more information
about these services call the Fund at (800) 221-5672.

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 liabili-
ties, and dividing by the total number of shares outstanding. All expenses,
including the fees payable to the Adviser, are accrued daily.

During periods of drastic economic or market developments, such as the mar-
ket break of October 1987, it is possible that shareholders would have diffi-
culty 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 in 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 confirma-
tions 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 un-
authorized or fraudulent telephone instructions. Selected dealers or agents
may charge a fee for handling telephone requests for redemptions.

If your Fund shares are not maintained through a financial intermediary,
proceeds from any subsequent redemption by you of Fund shares that were pur-
chased by check or electronic funds transfer will not be forwarded to you un-
til the Fund is reasonably assured that your check or electronic funds trans-
fer has cleared, up to fifteen days following the purchase date. If the re-
demption 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.

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

6
<PAGE>

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
investment advice and, in general, to conduct the Fund's management and in-
vestment program, subject to the general supervision and control of the Trust-
ees of the Fund. For the period ended June 30, 1997, the Fund paid the Adviser
at an annual rate of .49 of 1% of the average daily value of the Fund's net
assets.

The Adviser is a leading international investment manager, supervising cli-
ent accounts with assets as of September 30, 1997 totaling more than $217 bil-
lion (of which more than $81 billion represented the assets of investment com-
panies). The Adviser's clients are primarily major corporate employee benefit
plans, public employee retirement plans, insurance companies, banks, founda-
tions and endowment funds. The 54 registered investment companies managed by
the Adviser comprising 116 separate investment portfolios currently have over
two million shareholders. As of September 30, 1997, the Adviser was retained
as an investment manager of employee benefit fund assets for 28 of the Fortune
100 companies.

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, 1997, the Fund paid the Ad-
viser at an annual rate of .11 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 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 be-
lieves 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 Com-
pany, 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-

7
<PAGE>

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
under 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.
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. 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.

<PAGE>

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

<PAGE>

(LOGO) ALLIANCE GOVERNMENT RESERVES

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

STATEMENT OF ADDITIONAL INFORMATION
October 31, 1997

TABLE OF CONTENTS

Page

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

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

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

Purchase and Redemption of Shares . . . . . . . . 14

Additional Information . . . . . . . . . . . . . . 18

Daily Dividends-Determination of Net Asset Value . 20

Taxes . . . . . . . . . . . . . . . . . . . . . . 22

General Information . . . . . . . . . . . . . . . 22

Appendix-Commercial Paper and Bond Ratings . . . . 25

Financial Statements . . . . . . . . . . . . . . . 26-30

Independent Auditor's Report . . . . . . . . . . . 31

_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Fund's
current Prospectus dated October 31, 1997. 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.

<PAGE>

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 under the Investment Company Act of 1940,
as amended (the "Act"), 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, the 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, generally 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 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.

Floating and Variable Rate Obligations. The Fund may
purchase floating and variable rate obligations, including
floating and variable rate demand notes and bonds. The Fund may
invest in variable and floating rate obligations whose interest
rates are adjusted either at predesignated periodic intervals or
whenever there is a change in the market rate to which the
security's interest rate is tied. The Fund may also purchase
floating and variable rate demand notes and bonds, which are
obligations ordinarily having stated maturities in excess of 13
months, but which permit the holder to demand payment of
principal at any time, or at specified intervals not exceeding 13
months, in each case upon not more than 30 days' notice.

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
diversification, quality and maturity limitations imposed by the
Rule. To the extent that the Fund's limitations are more
permissive than Rule 2a-7, the Fund will comply with the more
restrictive provisions of the Rule.

Currently, pursuant to Rule 2a-7, the Fund may invest
only in U.S. dollar-denominated "eligible securities" (as that
term is defined in the Rule) that have been determined by
Alliance Capital Management L.P. (the "Adviser") to present
minimal credit risks pursuant to procedures approved by the
Trustees. Generally, an eligible security is a security that
(i) has a remaining maturity of 397 days or less and (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")

<PAGE>

or, if only one NRSRO has issued a rating, by that NRSRO. 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.

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.

<PAGE>

_________________________________________________________________

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 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

__________________________

* 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
underlying securities.

<PAGE>

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 the Adviser.

Trustees

DAVE H. WILLIAMS,* 65, 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 1992.

_________________________

* An "interested person" of the Fund as defined in the Act.
** 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>

*JOHN D. CARIFA, 52, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1992.

SAM Y. CROSS, 70, was, since prior to December 1992,
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, 59, is President of Middleton Place
Foundation with which he has been associated since prior to 1992.
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., 65, 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 1992. His address is 2 Greenwich Plaza, Suite
100, Greenwich, CT 06830.

DONALD J. ROBINSON, 63, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently Senior Counsel to
that firm. He was a Trustee of the Museum of the City of New
York from 1977 to 1995. His address is 666 Fifth Avenue, 19th
Floor, New York, New York 10103.

DAVID K. STORRS, 53, is President and Chief Executive
Officer of Alternative Investment Group, LLC (a venture capital
firm). He was formerly President of The Common Fund (investment
management for educational institutions) with which he had been
since prior to 1992. His address is 65 South Gate Lane,
Southport, Connecticut 06490.

SHELBY WHITE, 59, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

Officers

RONALD M. WHITEHILL - President, 59, is a Senior Vice
President of ACMC and President 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 1992.

KATHLEEN A. CORBET - Senior Vice President, 37, is an
Executive Vice President of ACMC since July 1993. Prior thereto,
she was employed by Equitable Capital since prior to 1992.

<PAGE>

DREW BIEGEL - Senior Vice President, 46 is a Vice
President of ACMC with which he has been associated since prior
to 1992.

JOHN R. BONCZEK - Senior Vice President, 37, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

ROBERT I. KURZWEIL - Senior Vice President, 46, 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 1992.

WAYNE D. LYSKI - Senior Vice President, 56, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1992.

PATRICIA NETTER - Senior Vice President, 46, is a Vice
President of ACMC with which she has been associated since prior
to 1992.

KENNETH T. CARTY - Vice President, 37 is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOHN F. CHIODI, Jr. - Vice President, 31, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

DORIS T. CILIBERTI - Vice President, 33, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1992.

MARIA R. CONA - Vice President, 42, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1992.

WILLIAM J. FAGAN - Vice President, 35, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOSEPH R. LASPINA - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

LINDA D. NEIL - Vice President, 37, 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 1992.

<PAGE>

RAYMOND J. PAPERA - Vice President, 41, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1992.

EDMUND P. BERGAN, Jr. - Secretary, 47, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
with which he has been associated since prior to 1992.

MARK D. GERSTEN - Treasurer and Chief Financial Officer,
47, is a Senior Vice President of Alliance Fund Services, Inc.
and Alliance Fund Distributors, Inc. with which he has been
associated since prior to 1992.

VINCENT S. NOTO - Controller, 32, is an Assistant Vice
President of Alliance Fund Services, Inc., with which he has been
associated since prior to 1992.

As of October 15, 1997, the Trustees and officers as a
group owned less than 1% of the shares of the Fund.

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, 1997, the
aggregate compensation paid to each of the Trustees during
calendar year 1996 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies (and separate investment portfolios within
those companies) 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>

Total Number Total Number
of Funds in of Investment
the Alliance Portfolios Within
Fund Complex, the Funds,
Compensation Including the Including the
From the Fund, as to Fund, as to
Alliance Fund which the which the
Name of Aggregate Complex, Trustee is a Trustee is a
Trustee Compensation Including the Director or Director or
of the Fund From the Fund Fund Trustee Trustee
___________ ____________ ______________ _____________ _______________

Dave H. Williams $-0- $-0- 6 15
John D. Carifa $-0- $-0- 52 114
Sam Y. Cross $2,466 $ 12,000 3 12
Charles H.P. Duell $2,466 $ 12,000 3 12
William H. Foulk, Jr. $3,020 $144,250 34 70
Elizabeth J. McCormack $1,775 $ 9,750 3 12
Donald J. Robinson $-0- $137,250 42 102
David K. Storrs $2,466 $ 12,000 3 12
Shelby White $2,466 $ 12,000 3 12

On August 11, 1997, Elizabeth J. McCormack resigned as a
Trustee.

On September 8, 1997, Donald J. Robinson was elected as
a Trustee.

The Adviser

Alliance Capital Management L.P., a Delaware limited
partnership 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") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision and control of the Fund's Trustees.

The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1997 of more than $217 billion (of which more than
$81 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. As of September 30, 1997, the
Adviser was an investment manager of employee benefit fund assets
for 28 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,500
employees who operated out of five domestic offices and the
offices of subsidiaries in Bahrain, Bangalore, Chennai, Istanbul,
London, Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto and

<PAGE>

affiliate offices located in Vienna, Warsaw, Hong Kong, Sao Paulo
and Moscow. The 54 registered investment companies comprising
more than 116 separate investment portfolios managed by the
Adviser currently have more than two million shareholders.

Alliance Capital Management Corporation, 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"). ECI is a holding company
controlled by AXA-UAP, a French insurance holding company which
at September 30, 1997, beneficially owned approximately 59% of
the outstanding voting shares of ECI. As of June 30, 1997, ACMC,
Inc. and Equitable Capital Management Corporation, each a wholly-
owned direct or indirect subsidiary of Equitable, together with
Equitable, owned in the aggregate approximately 57% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser.

AXA-UAP is a holding company for an international group
of insurance and related financial services companies. AXA-UAP's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically with activities,
principally in Western Europe, North America and the Asia/Pacific
area. AXA-UAP is also engaged in asset management, investment
banking, securities trading, brokerage, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.

Based on information provided by AXA-UAP, as of
September 30, 1997 more than 25% of the voting power of AXA-UAP
was controlled directly and indirectly by FINAXA, a French
holding company. As of September 30, 1997 more than 25% of the
voting power of FINAXA was controlled directly and indirectly by
four French mutual insurance companies (the "Mutuelles AXA"), one
of which, AXA Assurances I.A.R.D. Mutuelle, itself controlled
directly and indirectly more than 25% of the voting power of
FINAXA. Acting as a group, the Mutuelles AXA control AXA-UAP and
Finaxa.

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

<PAGE>

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, 1995, 1996 and 1997 the Adviser
received from the Fund, advisory fees (net of reimbursement for
the fiscal year ended June 30, 1995) of $10,057,300, $14,176,991
and $17,412,020, 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 $151,500,
$163,000 and $164,000, respectively, for such services for the
fiscal years ended June 30, 1995, 1996 and 1997.

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 ratified
by the Trustees. For the fiscal years ended June 30, 1995, 1996
and 1997, the Fund reimbursed such broker-dealers a total of
$1,406,467, $1,611,378 and $2,146,522, respectively.

<PAGE>

The Advisory Agreement became effective on July 22,
1992. Continuance of the Advisory Agreement until June 30, 1998
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 16, 1997.

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>

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, 1997, the Fund made payments to
the Adviser for expenditures, under the Agreement in amounts
aggregating $9,145,567 which constituted .25 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
$10,301,287. Of the $19,446,854 paid by the Adviser and the Fund
under the Agreement, $39,000 was paid for advertising, printing,
and mailing of prospectuses to persons other than current
shareholders; and $19,407,854 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. 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 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, 1998 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 16, 1997.
The Agreement may be continued annually thereafter if approved by
a majority vote of the Trustees who neither are interested

<PAGE>

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.

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

<PAGE>

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 with the Fund
Your account number as registered 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.

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.

<PAGE>

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>

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 Checkwriting

With this service, you may write checks made payable to
any payee. 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 checkwriting
service subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate charge for
the checkwriting service, except that State Street Bank may
impose charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a
stop order. There is currently a $7.50 charge for check
reorders.

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

Additional Information

<PAGE>

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

<PAGE>

that you wish to use this procedure, or to change instructions
already given, send a written notice to Alliance Fund Services,
Inc., 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 Services,
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.

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

<PAGE>

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 New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day;
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
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.

<PAGE>

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 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
to the extent required by Rule 2a-7 under the Act 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 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.

<PAGE>

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.

<PAGE>

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 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

<PAGE>

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. During the fiscal
years ended June 30, 1995, 1996 and 1997, 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.

At October 15, 1997, there were 4,041,361,169 shares of
beneficial interest of the Fund outstanding. To the knowledge of
the Fund the following persons owned of record and no person
owned beneficially, 5% or more of the outstanding shares of the
Fund as of October 15, 1997:

No. of % of
Name and Address Shares Class

Pershing as Agent 2,456,338,037 60%
Omnibus Account for
Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002

<PAGE>

Shareholder Liability. Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Fund. However, the
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
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.

Legal Matters. The legality of the shares offered
hereby has been passed upon by Seward & Kissel, 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.

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 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

<PAGE>

The Fund's yield for the seven-day period ended June 30,
1997 was 4.62% which is the equivalent of a 4.73% compounded
effective yield. 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.

A-1

<PAGE>

ALLIANCE GOVERNMENT RESERVES

ALLIANCE CAPITAL

ANNUAL REPORT
JUNE 30, 1997

STATEMENT OF NET ASSETS
JUNE 30, 1997 ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCIES-44.3%
FEDERAL HOME LOAN BANK-14.0%
$ 50,000 5.51%, 9/24/97 FRN 5.51% $ 49,991,500
60,000 5.62%, 12/04/97 FRN 5.40 59,978,918
52,700 5.87%, 1/30/98 5.87 52,700,000
56,000 5.88%, 3/24/98 6.15 55,865,685
14,000 6.00%, 9/24/97 5.57 14,007,438
53,000 6.11%, 4/17/98 6.14 52,987,940
29,365 9/18/97 5.37 29,018,958
26,000 7/24/97 5.45 25,909,469
9,645 7/22/97 5.49 9,614,112
50,000 8/07/97 5.53 49,716,076
24,000 10/22/97 5.58 23,579,640
24,080 12/22/97 5.60 23,428,235
65,000 7/01/97 6.00 65,000,000
17,000 6/30/98 6.00 17,000,000
-------------
528,797,971

FEDERAL NATIONAL MORTGAGE
ASSOCIATION-10.4%
79,500 5.94%, 10/15/97 FRN 5.94 79,502,942
47,000 6.02%, 4/15/98 6.15 46,957,471
2,000 9/10/97 5.37 1,978,818
7,000 7/24/97 5.44 6,975,671
45,000 9/05/97 5.49 44,547,075
20,000 9/18/97 5.51 19,758,172
25,000 9/25/97 5.51 24,670,931
27,110 7/08/97 5.52 27,080,902
27,000 8/11/97 5.53 26,829,953
45,000 8/12/97 5.53 44,709,675
67,000 8/04/97 5.54 66,649,441
-------------
389,661,051

FEDERAL HOME LOAN MORTGAGE CORP.-8.5%
69,000 5.72%, 3/17/98 5.87 68,929,495
46,000 5.84%, 4/08/98 6.04 45,935,193
4,400 7/14/97 5.43 4,391,372
21,000 7/30/97 5.46 20,907,635
28,000 8/04/97 5.46 27,855,614
22,000 8/13/97 5.46 21,856,523
3,845 7/01/97 5.50 3,845,000
19,000 9/03/97 5.50 18,814,222
37,005 7/18/97 5.51 36,908,715
23,000 8/15/97 5.57 22,839,863
46,500 7/01/97 6.00 46,500,000
318,783,632

FEDERAL FARM CREDIT BANK-7.7%
72,000 5.36%, 10/01/97 FRN 5.36% 71,979,737
80,000 5.39%, 6/01/98 FRN 5.39 79,986,379
75,000 5.43%, 5/01/98 FRN 5.43 75,000,000
30,000 5.60%, 11/03/97 5.60 29,992,122
2,520 9/10/97 5.37 2,493,311
8,000 9/15/97 5.37 7,909,307
24,000 11/19/97 5.60 23,473,600
-------------
290,834,456

STUDENT LOAN MARKETING
ASSOCIATION-3.7%
20,000 5.18%, 11/24/97 FRN 5.18 19,998,126
32,500 5.20%, 9/03/97 FRN 5.20 32,496,699
32,000 5.31%, 2/17/98 FRN 5.31 31,984,429
8,300 5.36%, 1/21/98 FRN 5.36 8,298,667
48,000 5.44%, 12/19/97 5.94 47,888,378
-------------
140,666,299

Total U.S. Government and Agencies
(amortized cost $1,668,743,409) 1,668,743,409

REPURCHASE AGREEMENTS-55.3%
CHASE SECURITIES, INC.
50,000 5.53%, dated 6/11/97,
due 7/14/97 in the amount of
$50,253,458 (cost $50,000,000;
collateralized by $40,000,000
FN 317618, value $30,234,010,
$12,305,000 FN 303814,
value $11,145,491 and
$11,560,000 FN 313040,
value $10,752,908)(a) 5.53 50,000,000

CHASE SECURITIES, INC.
37,000 5.55%, dated 6/18/97,
due 8/18/97 in the amount of
$37,347,954 (cost $37,000,000;
collateralized by $14,648,945
FN 250911, value $14,408,970,
$19,999,000 FN 30372,
value $18,167,979 and
$6,000,000 FN 379176,
value $5,913,833)(a) 5.55 37,000,000

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
CHASE SECURITIES, INC.
$ 52,000 5.58%, dated 6/24/97,
due 9/22/97 in the amount of
$52,725,400 (cost $52,000,000;
collateralized by $20,147,603
FN 377532, value $19,821,895,
$17,977,606 FN 377535,
value $17,599,818 and
$17,840,000 FN 313285,
value $17,339,662)(a) 5.58% $52,000,000

FIRST BOSTON CORP.
50,000 5.52%, dated 6/25/97,
due 7/29/97 in the amount of
$50,260,667 (cost $50,000,000;
collateralized by $34,122,984
FN 303983, value $30,822,960
and $27,758,000 FH 00590,
value $26,834,315)(a) 5.52 50,000,000

FIRST BOSTON CORP.
45,000 5.53%, dated 6/17/97,
due 7/18/97 in the amount of
$45,214,228 (cost $45,000,000;
collateralized by $25,639,370
FH 00605, value $24,520,616
and $23,749,000 FN 303983,
value $45,973,476)(a) 5.53 45,000,000

FIRST BOSTON CORP.
50,000 5.53%, dated 6/13/97,
due 7/21/97 in the amount of
$50,291,861 (cost $50,000,000;
collateralized by $26,527,676
FH 00612, value $25,554,119,
$23,735,204 FN 313472,
value 23,142,245 and
$2,630,000 FH 00546,
value $2,474,838)(a) 5.53 50,000,000

FUJI BANK
100,000 5.51%, dated 6/16/97,
due 7/16/97 in the amount of
$100,459,167 (cost $100,000,000;
collateralized by $100,000,000
FNMA 12/22/05, value
$97,791,674, $1,210,000
VA 10/15/01, value $1,254,299
and $2,850,000 FHLMC
6/23/05, value $2,831,967)(a) 5.51 100,000,000

GOLDMAN SACHS & CO.
37,000 5.51%, dated 6/18/97,
due 7/23/97 in the amount of
$37,198,207 (cost $37,000,000;
collateralized by $38,969,000
FM 00672, value $37,875,735)(a) 5.51 37,000,000

GOLDMAN SACHS & CO.
50,000 5.53%, dated 6/04/97,
due 7/08/97 in the amount of
$50,261,139 (cost $50,000,000;
collateralized by $53,833,000
FM 00517, value $51,494,837)(a) 5.53 50,000,000

GOLDMAN SACHS & CO.
50,000 5.53%, dated 6/04/97,
due 7/09/97 in the amount of
$50,268,819 (cost $50,000,000;
collateralized by $30,703,000
FM 00517, value $29,371,093
and $26,426,000 FN 303074,
value $22,013,443)(a) 5.53 50,000,000

GOLDMAN SACHS & CO.
50,000 5.53%, dated 6/04/97,
due 7/10/97 in the amount of
$50,276,500 (cost $50,000,000;
collateralized by $53,830,000
FM 00536, value $51,543,354)(a) 5.53 50,000,000

LEHMAN BROTHERS
40,000 5.50%, dated 6/20/97,
due 7/21/97 in the amount of
$40,189,444 (cost $40,000,000;
collateralized by $20,000,000
FN 303187, value $14,243,380,
$26,713,415 FN 050643,
value $10,644,559 and
$16,765,000 FN 337174,
value $15,962,946)(a) 5.50 40,000,000

ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
LEHMAN BROTHERS
$ 87,000 5.50%, dated 6/19/97,
due 7/23/97 in the amount of
$87,451,917 (cost $87,000,000;
collateralized by $10,000,000
GN 002122, value $8,057,247,
$24,750,000 FN 250937,
value $24,861,261, $37,017,733
FN 050579, value $10,095,395,
$35,967,747 FN 303187,
value $25,614,584 and
$82,000,000 FN 124852,
value $199,628,789)(a) 5.50% $87,000,000

LEHMAN BROTHERS
40,000 5.50%, dated 6/20/97,
due 7/24/97 in the amount of
$40,207,778 (cost $40,000,000;
collateralized by $29,368,023
FN 303187, value $20,914,972,
$27,839,578 FN 124463,
value $8,064,631 and
$21,184,921 FN 124677,
value $11,947,272)(a) 5.50 40,000,000

LEHMAN BROTHERS
22,000 6.10%, dated 6/30/97,
due 7/01/97 in the amount of
$22,003,728 (cost $22,000,000;
collateralized by $23,526,361
GNMA 780560 6.50%, 5/15/24,
value $22,459,775) 6.10 22,000,000

MORGAN STANLEY GROUP, INC.
60,000 5.49%, dated 6/19/97,
due 7/15/97 in the amount of
$60,237,900 (cost $60,000,000;
collateralized by $17,969,000
FN 250327, value $14,481,919,
$14,500,000 FN 303707,
value $12,260,650, $23,000,000
FG 00236, value $14,286,915
and $21,564,000 FN 313017,
value $20,485,312)(a) 5.49 60,000,000

MORGAN STANLEY GROUP, INC.
79,000 5.51%, dated 6/26/97,
due 7/10/97 in the amount of
$79,169,279 (cost $79,000,000;
collateralized by $10,812,000
FN 250055, value $7,915,300,
$21,000,000 FN 66772,
value $18,140,254 and
$55,535,000 FN 77433,
value $54,982,733)(a) 5.51 79,000,000

MORGAN STANLEY GROUP, INC.
50,000 5.55%, dated 5/02/97,
due 7/01/97 in the amount of
$50,462,500 (cost $50,000,000;
collateralized by $52,292,000
GN 780410, value
$51,433,317)(a) 5.55 50,000,000

NIKKO SECURITIES CO.
40,000 5.52%, dated 6/10/97,
due 7/09/97 in the amount of
$40,177,867 (cost $40,000,000;
collateralized by $41,700,000
FH 00522, value $41,136,284)(a) 5.52 40,000,000

NIKKO SECURITIES CO.
37,000 5.52%, dated 6/17/97,
due 7/17/97 in the amount of
$37,170,200 (cost $37,000,000;
collateralized by $14,912,058
FH 80177, value $14,710,370,
$14,934,224 FH 80685,
value $14,742,866 and
$8,715,000 FH 79859,
value $8,597,358)(a) 5.52 37,000,000

NIKKO SECURITIES CO.
12,000 5.52%, dated 6/24/97,
due 7/24/97 in the amount of
$12,055,200 (cost $12,000,000;
collateralized by $13,066,000
FG 41068, value $12,275,321)(a) 5.52 12,000,000

NIKKO SECURITIES CO.
50,000 5.52%, dated 6/19/97,
due 7/25/97 in the amount of
$50,276,000 (cost $50,000,000;
collateralized by $30,000,000
FH 79503, value $29,560,751,
$10,000,000 FH 78691,
value $9,766,832 and
$12,285,000 FH 79186,
value $12,090,172)(a) 5.52 50,000,000

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
NIKKO SECURITIES CO.
$ 50,000 5.53%, dated 6/13/97,
due 7/11/97 in the amount of
$50,215,056 (cost $50,000,000;
collateralized by $25,323,911
FH 00512, value $24,946,963,
$19,251,102 FH 00497,
value $18,900,733 and
$7,700,000 FH 00504,
value $7,571,504)(a) 5.53% $50,000,000

PAINE WEBBER GROUP, INC.
42,000 5.52%, dated 6/06/97,
due 7/15/97 in the amount of
$42,251,160 (cost $42,000,000;
collateralized by $45,065,000
FG 00595, value $43,430,457)(a) 5.52 42,000,000

PAINE WEBBER GROUP, INC.
38,000 5.55%, dated 6/03/97,
due 7/03/97 in the amount of
$38,175,750 (cost $38,000,000;
collateralized by $50,000,000
FN 190830, value $36,167,606
and $3,715,000 FN 303116,
value $2,728,153)(a) 5.55 38,000,000

PAINE WEBBER GROUP, INC.
30,000 5.56%, dated 6/25/97,
due 7/02/97 in the amount of
$30,032,433 (cost $30,000,000;
collateralized by $31,897,000
FG 00585, value $30,730,343) 5.56 30,000,000

PAINE WEBBER GROUP, INC.
49,000 5.56%, dated 6/24/97,
due 7/03/97 in the amount of
$49,068,110 (cost $49,000,000;
collateralized by $50,000,000
FN 190831, value $35,978,677
and $14,650,000 FG 00584,
value $14,138,024)(a) 5.56 49,000,000

PAINE WEBBER GROUP, INC.
30,000 6.05%, dated 6/30/97,
due 7/01/97 in the amount of
$30,005,042 (cost $30,000,000;
collateralized by $42,815,000
FN 190831 6.50%, 4/01/09,
value $30,808,541) 6.05 30,000,000

PRUDENTIAL SECURITIES, INC.
52,000 5.50%, dated 6/19/97,
due 7/17/97 in the amount of
$52,222,444 (cost $52,000,000;
collateralized by $24,266,680
FN 303714, value $18,938,228,
$19,600,000 FN 231651,
value $12,668,987 and
$26,690,000 FG 00279,
value $21,579,019)(a) 5.50 52,000,000

PRUDENTIAL SECURITIES, INC.
42,000 5.50%, dated 6/24/97,
due 7/28/97 in the amount of
$42,218,167 (cost $42,000,000;
collateralized by $20,620,000
FG 00272, value $17,027,430,
$20,427,808 FH 00678,
value $16,736,215 and
$11,967,000 FH 00377,
value $9,228,899)(a) 5.50 42,000,000

PRUDENTIAL SECURITIES, INC.
45,000 5.53%, dated 6/17/97,
due 7/02/97 in the amount of
$45,103,688 (cost $45,000,000;
collateralized by $14,333,000
FG 51185, value $11,605,511,
$5,122,846 FG 00188,
value $10,202,080 and
$25,669,923 FH 555317,
value $24,475,501)(a) 5.53 45,000,000

PRUDENTIAL SECURITIES, INC.
10,000 5.55%, dated 6/26/97,
due 7/03/97 in the amount of
$10,010,792 (cost $10,000,000;
collateralized by $13,053,000
FN 303675, value $10,253,190) 5.55 10,000,000

PRUDENTIAL SECURITIES, INC.
40,000 6.00%, dated 6/30/97,
due 7/01/97 in the amount of
$40,006,667 (cost $40,000,000;
collateralized by $42,920,000
FG G00629, 7.00%, 12/01/25,
value $40,957,702) 6.00 40,000,000

ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
SBC WARBURG
$ 65,000 5.50%, dated 6/06/97,
due 7/07/97 in the amount of
$65,307,847 (cost $65,000,000;
collateralized by $24,439,000
FN 367910, value $23,530,032,
$21,038,000 FN 341537,
value $16,162,180 and
$30,760,000 FN 304033,
value $26,966,137)(a) 5.50% $65,000,000

SBC WARBURG
25,000 5.50%, dated 6/05/97,
due 7/07/97 in the amount of
$25,122,222 (cost $25,000,000;
collateralized by $15,957,000
FN 368920, value $15,177,348
and $16,146,000 FN 190044,
value $10,461,399)(a) 5.50 25,000,000

SBC WARBURG
26,000 5.50%, dated 6/10/97,
due 7/10/97 in the amount of
$26,119,167 (cost $26,000,000;
collateralized by $21,143,000
FH 00678, value $20,154,286
and $6,872,000 FH 00378,
value $6,550,644)(a) 5.50 26,000,000

SBC WARBURG
71,000 5.50%, dated 6/19/97,
due 7/25/97 in the amount of
$71,390,500 (cost $71,000,000;
collateralized by $36,140,000
FN 050993, value $29,306,266,
$35,882,000 FH 00678,
value $34,204,044 and
$10,380,049 FH 00377,
value $8,981,673)(a) 5.50 71,000,000

SMITH BARNEY
50,000 5.54%, dated 6/03/97,
due 7/07/97 in the amount of
$50,261,611 (cost $50,000,000;
collateralized by $19,800,000
FN 250373, value $20,080,558,
$25,300,765 FH 00517,
value $24,203,434 and
$8,850,000 FN 250029,
value $7,273,940)(a) 5.54 50,000,000

SMITH BARNEY
87,000 5.54%, dated 6/17/97,
due 7/22/97 in the amount of
$87,468,592 (cost $87,000,000;
collateralized by $92,500,000
FH 00612, value $89,075,595)(a) 5.54 87,000,000

SMITH BARNEY
50,000 6.15%, dated 6/30/97,
due 7/01/97 in the amount of
$50,008,542 (cost $50,000,000;
collateralized by $14,604,175
FG C00525 8.00%, 6/01/27
value $15,040,396, $10,978,657
FG D80372 8,00%, 6/01/27
value 11,306,044, $16,181,883
FG G10353 8.00%, 4/01/10
value $9,194,079, $8,419,059
FG D80442 8.00%, 6/01/27
value $8,670,577, $14,100,000
FG L80008 6.50%, 1/01/00
value $7,266,676 and $5,980,000
FN 313568 8.00%, 12/01/17
value $6,077,595) 6.15 50,000,000

UBS FINANCE, INC.
49,000 5.50%, dated 6/24/97,
due 7/14/97 in the amount of
$49,149,722 (cost $49,000,000;
collateralized by $52,111,000
FH 00647, value $46,996,575)(a) 5.50 49,000,000

UBS FINANCE, INC.
65,000 5.50%, dated 6/18/97,
due 7/18/97 in the amount of
$65,297,917 (cost $65,000,000;
collateralized by $50,000,000
FN 250550, value $45,864,009
and $22,123,000 FN 339326,
value $20,581,937)(a) 5.50 65,000,000

UBS FINANCE, INC.
50,000 5.62%, dated 4/29/97,
due 7/30/97 in the amount of
$50,718,111 (cost $50,000,000;
collateralized by $53,885,000
FGG 00647, value $51,665,491)(a) 5.62 50,000,000

STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY# YIELD VALUE
- -------------------------------------------------------------------------
UBS FINANCE, INC.
$ 25,000 5.65%, dated 4/17/97,
due 7/16/97 in the amount of
$25,353,125 (cost $25,000,000;
collateralized by $26,899,000
FHG 00647, value $25,799,201)(a) 5.65% $ 25,000,000

Total Repurchase Agreements
(amortized cost $2,079,000,000) 2,079,000,000

TOTAL INVESTMENTS-99.6%
(amortized cost $3,747,743,409) $3,747,743,409
Other assets less liabilities-0.4% 14,741,784

NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
3,763,356,075 shares outstanding) $3,762,485,193

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

(a) Repurchase agreements which are terminable within 7 days.

Glossary:
FRN - Floating rate note

See notes to financial statements.

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $198,976,472

EXPENSES
Advisory fee (Note B) $17,412,020
Distribution assistance and administrative
service (Note C) 11,456,089
Transfer agency (Note B) 5,917,904
Registration fees 815,160
Printing 424,268
Custodian fees 420,291
Audit and legal fees 58,410
Trustees' fees 14,637
Miscellaneous 63,489
Total expenses 36,582,268
Net investment income 162,394,204

REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 46,468

NET INCREASE IN NET ASSETS FROM OPERATIONS $162,440,672

See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
JUNE 30,1997 JUNE 30,1996
--------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 162,394,204 $ 135,336,143
Net realized gain on investment transactions 46,468 20,063
Net increase in net assets from operations 162,440,672 135,356,206

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (162,394,204) (135,336,143)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 557,419,600 690,690,859
Total increase 557,466,068 690,710,922

NET ASSETS
Beginning of year 3,205,019,125 2,514,308,203
End of year $3,762,485,193 $3,205,019,125

See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 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. As a matter of
fundamental policy, the Portfolio pursues its objectives by maintaining a
portfolio of high-quality money market securities all of which, at the time of
investment, have remaining maturities of 397 days or less. The 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. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment transactions is recorded
on the identified cost basis.

5. REPURCHASE AGREEMENTS
It is the Fund'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 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 year ended June 30, 1997. 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 $3,969,178 for the year ended June 30, 1997.

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, 1997, the distribution fee amounted to $9,145,567. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection with providing shareholder services, and may reimburse
the Adviser for accounting and bookkeeping, and legal and compliance support.
For the year ended June 30, 1997, such payments by the Portfolio amounted to
$2,310,522 of which $164,000 was paid to the Adviser.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of portfolio securities for federal income tax
purposes was the same as the cost for financial reporting purposes. At June 30,
1997 the Portfolio had a capital loss carryforward of $870,882, of which
$82,233 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,
1997, capital paid-in aggregated $3,763,356,075. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
---------------- ----------------
Shares sold 16,812,712,717 13,672,251,535
Shares issued on reinvestments of dividends 162,394,204 135,336,143
Shares redeemed (16,417,687,321) (13,116,896,819)
Net increase 557,419,600 690,690,859

FINANCIAL HIGHLIGHTS ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .0443 .0461(a) .0439(a) .0244(a) .0256(a)
Net realized gain on investments -0- -0- -0- -0- .0001
Net increase in net assets from operations .0443 .0461 .0439 .0244 .0257

LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.0443) (.0461) (.0439) (.0244) (.0256)
Distributions from net realized gains -0- -0- -0- -0- (.0001)
Total dividends and distributions (.0443) (.0461) (.0439) (.0244) (.0257)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00

TOTAL RETURNS
Total investment return based on net
asset value (b) 4.53% 4.72% 4.48% 2.48% 2.60%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $3,762 $3,205 $2,514 $2,061 $1,783
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and reimbursements 1.00% 1.01% 1.05% 1.04% 1.02%
Net investment income 4.44% 4.60%(a) 4.42%(a) 2.46%(a) 2.55%(a)
</TABLE>

(a) Net of expenses reimbursed or waived by the Adviser.

(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.

INDEPENDENT AUDITOR'S REPORT ALLIANCE GOVERNMENT RESERVES
_______________________________________________________________________________

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS ALLIANCE GOVERNMENT RESERVES
PORTFOLIO

We have audited the accompanying statement of net assets of Alliance Government
Reserves Portfolio as of June 30, 1997 and the related statements of
operations, changes in net assets, and financial highlights for the periods
indicated in the accompanying financial statements. These financial statements
and financial highlights are the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and brokers.

An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Government Reserves Portfolio as of June 30, 1997, 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
July 29, 1997

<PAGE>

(LOGO)
ALLIANCE TREASURY RESERVES
_______________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
_______________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
October 31, 1997

_______________________________________________________________

TABLE OF CONTENTS

Page

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

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

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.................. 28

Financial Statements........................................29-33

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 October 31, 1997. 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 under
the Investment Company Act of 1940, as amended (the "Act"), 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

<PAGE>

vendor of a fully collateralized repurchase agreement is deemed
to be the issuer of the underlying securities.

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.

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, generally 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

<PAGE>

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.

Currently, pursuant to Rule 2a-7, the Fund may invest
only in U.S. dollar-denominated "eligible securities" (as that
term is defined in the Rule) that have been determined by the
Alliance Capital Management L.P. (the "Adviser") to present
minimal credit risks pursuant to procedures approved by the
Trustees. Generally, an eligible security is a security that
(i) has a remaining maturity of 397 days or less and (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. 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>

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 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;

____________________

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

<PAGE>

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;

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 (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.

<PAGE>

_______________________________________________________________

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
the Adviser.

Trustees

*DAVE H. WILLIAMS, 65, 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 1992.

*JOHN D. CARIFA, 52, is the President, Chief Operating
Officer, and a Director of ACMC with which he has been associated
since prior to 1992.

_______________________

* An "interested person" of the Fund as defined in the Act.

** 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, 53, is President and Chief Executive
Officer of Alternative Investment Group, LLC (a venture capital
firm). He was formerly President of The Common Fund (investment
management for educational institutions) with which he had been
associated since prior to 1992. His address is 65 South Gate
Lane, Southport, Connecticut 06490.

SHELBY WHITE, 59, is an author and financial journalist.
Her address is One Sutton Place South, New York, New York 10022.

Officers

KATHLEEN A. CORBET - Senior Vice President, 37, is an
Executive Vice President. Prior thereto, she was employed by
Equitable Capital since prior to 1992.

DREW BIEGEL - Senior Vice President, 45, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

JOHN R. BONCZEK - Senior Vice President, 37, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

WAYNE D. LYSKI - Senior Vice President, 56, is an
Executive Vice President of ACMC with which he has been
associated since prior to 1992.

<PAGE>

PATRICIA NETTER - Senior Vice President, 46, is a Vice
President of ACMC with which she has been associated since prior
to 1992.

KENNETH T. CARTY - Vice President, 36 is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOHN F. CHIODI, Jr. - Vice President, 31, is a Vice
President of ACMC with which he has been associated since prior
to 1992.

DORIS T. CILIBERTI - Vice President, 33, is an Assistant
Vice President of ACMC with which she has been associated since
prior to 1992.

MARIA R. CONA - Vice President, 42, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1992.

WILLIAM J. FAGAN - Vice President, 35, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

JOSEPH R. LASPINA - Vice President, 37, is an Assistant
Vice President of ACMC with which he has been associated since
prior to 1992.

RAYMOND J. PAPERA - Vice President, 41, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1992.

EDMUND P. BERGAN, Jr. - Secretary, 47, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1992.

VINCENT S. NOTO - Controller, 32, is an Assistant Vice
President of Alliance Fund Services, Inc., with which he has been
associated since prior to 1992.

<PAGE>

As of October 15, 1997, the Trustees and officers as a
group owned less than 1% of the shares of the Fund.

Total Number
Total Number of Investment
of Funds in Portfolios
the Alliance Within the
Fund Complex, Funds,
Compensation Including the Including
From the Fund, as to the Fund, as
Alliance Fund which the to which the
Aggregate Complex, Trustee is a Director is
Name of Trustee Compensation Including the Trustee or a Trustee or
of the Fund From the Fund Fund Director Director
________________ _____________ _____________ ______________ _____________

Dave H. Williams $-0- $-0- 6 15
John D. Carifa $-0- $-0- 52 114
Sam Y. Cross $1,781 $ 12,000 3 12
Charles H.P. Duell $1,781 $ 12,000 3 12
William H. Foulk, Jr. $3,020 $144,250 34 70
Elizabeth J. McCormack $1,406 $ 9,750 3 12
Donald J. Robinson $-0- $137,250 42 102
David K. Storrs $1,781 $ 12,000 3 12
Shelby White $1,781 $ 12,000 3 12

On August 11, 1997, Elizabeth J. McCormack resigned as a
Trustee.

On September 8, 1997, Donald J. Robinson was elected as
a Trustee.

<PAGE>

The Adviser

The Adviser is a leading international investment
manager supervising client accounts with assets as of
September 30, 1997 of more than $217 billion (of which more than
$81 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. As of September 30, 1997, the
Adviser was an investment manager of employee benefit fund assets
for 28 of the FORTUNE 100 companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,500
employees who operated out of five domestic offices and the
offices of subsidiaries in Bahrain, Bangalore, Chennai, Istanbul,
London, Madrid, Mumbai, Paris, Singapore, Tokyo and Toronto and
affiliate offices located in Vienna, Warsaw, Hong Kong, Sao Paulo
and Moscow. The 54 registered investment companies comprising
more than 116 separate investment portfolios managed by the
Adviser currently have more than two million shareholders.

AXA-UAP, a French company, is the holding company for an
international group of insurance and related financial services
companies. AXA-UAP's insurance operations include activities in
life insurance, property and casualty insurance and reinsurance.
The insurance operations are diverse geographically with
activities, principally in Western Europe, North America and the
Asia/Pacific area. AXA-UAP is also engaged in asset management,

<PAGE>

investment banking, securities trading, brokerage, real estate
and other financial services activities principally in the United
States, as well as in Western Europe and the Asia/Pacific area.

Based on information provided by AXA-UAP, as of
September 30, 1997 more than 25% of the voting power of AXA-UAP
was controlled directly and indirectly by FINAXA, a French
holding company. As of September 30, 1997 more than 25% of the
voting power of FINAXA was owned by four French mutual insurance
companies (the "Mutuelles AXA"), one of which, AXA Assurances
I.A.R.D. Mutuelle, itself controlled directly and indirectly more
than 25% of the voting power of FINAXA. Acting as a group, the
Mutuelles AXA control AXA-UAP and FINAXA.

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 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, from
March 27, 1995 to April 25, 1996 for expenses exceeding .80 of 1%
of its average daily net assets and from April 26, 1996 to
June 30, 1997 for expenses exceeding .85 of 1% of its average
daily net assets. Accordingly, for the fiscal periods ended
June 30, 1995, 1996 and 1997, the Adviser received from the Fund
advisory fees of $1,044,322, $2,681,355 and $3,339,651,
respectively (net of reimbursements). 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

<PAGE>

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,
$127,000 and $131,000 for such services for the fiscal years
ended June 30, 1995, 1996 and 1997, respectively.

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 ratified
by the Trustees. For the years ended June 30, 1995, 1996 and
1997, the Fund reimbursed such broker-dealers a total of $52,438,
$111,603 and $132,648, respectively.

<PAGE>

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. 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 which the Fund makes payments each month to the
Adviser in an amount that will not exceed, on an annualized
basis, .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 and Donaldson, Lufkin &
Jenrette Securities Corporation and its Pershing Division,
affiliates of the Adviser, 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, 1997, the Fund made payments to the Adviser
for expenditures under the Agreement in amounts aggregating
$787,937 which constituted .11% at an annual rate of the Fund's
average daily net assets during the period, and the Adviser made
payments from its own resources as described above aggregating
$2,484,891. Of the $3,272,828 paid by the Adviser and the Fund
under the Agreement, $28,000 was paid for advertising, printing,
and mailing of prospectuses to persons other than current
shareholders; and $3,244,828 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

<PAGE>

shareholder inquiries regarding the Fund. 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 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, 1998 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 16, 1997. 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)

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
DDA 9903-279-9
Attention: Mutual Funds Division
Alliance Treasury Reserves

Your account name as registered with the Fund
Your account number as registered with the
Fund

<PAGE>

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.

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

<PAGE>

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.

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.

<PAGE>

B. By Checkwriting

With this service, you may write checks made
payable to any payee. 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 checkwriting service
subsequent to the opening of your Fund account, contact
the Fund by telephone or mail. There is no separate
charge for the checkwriting service, except that State
Street Bank may impose charges for checks which are
returned unpaid because of insufficient funds or for
checks upon which you have placed a stop order. There
is currently a $7.50 charge for check reorders.

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

_______________________________________________________________

ADDITIONAL INFORMATION
_______________________________________________________________

<PAGE>

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.

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, checkwriting 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 Fund Services,
Inc., 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

<PAGE>

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.

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.

<PAGE>

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 New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day and Christmas Day;
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 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
_______________________________________________________________

<PAGE>

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 to the extent required by Rule 2a-7 under the Act
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 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.

<PAGE>

_______________________________________________________________

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.

_______________________________________________________________

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.

<PAGE>

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. For the fiscal years
ended June 30, 1995, 1996 and 1997, 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
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.

At October 15, 1997, there were 701,254,436 shares of
beneficial interest of the Fund outstanding. To the knowledge of
the Fund there were no persons who owned of record or
beneficially 5% or more of the outstanding shares of the Fund as
of October 15, 1997.

<PAGE>

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.

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

The Fund's yield for the seven-day period ended June 30,
1997, after expense reimbursement, was 4.60% which is the
equivalent of a 4.69% compounded effective yield. Absent such
reimbursement, the annualized yield for such period would have
been 4.45%, equivalent to an effective yield of 4.54%. 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

<PAGE>

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

AAA & AA and Aaa & Aa Bond Ratings

1
00250083.AF1

<PAGE>

ALLIANCE TREASURY RESERVES

ALLIANCE CAPITAL

ANNUAL REPORT
JUNE 30, 1997

PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS-50.2%
U.S. TREASURY NOTES-48.1%
$ 30,000 5.25%, 12/31/97 5.80% $ 29,911,558
10,000 5.50%, 7/31/97 5.15 10,001,674
30,000 5.63%, 10/31/97 5.43 30,014,520
20,000 5.75%, 10/31/97 5.36 20,008,309
55,000 5.75%, 9/30/97 5.41 55,026,269
50,000 5.88%, 7/31/97 5.28 50,020,369
10,000 6.00%, 12/31/97 5.77 10,007,525
10,000 6.13%, 3/31/98 6.01 10,008,387
33,000 6.50%, 8/15/97 5.20 33,047,782
75,000 8.50%, 7/15/97 5.12 75,093,708
15,000 8.63%, 8/15/97 5.41 15,057,387
-------------
338,197,488

U.S. TREASURY BILL-2.1%
15,000 7/24/97 5.25 14,950,981
Total U.S. Government Obligations
(amortized cost $353,148,469) 353,148,469

REPURCHASE AGREEMENTS-48.2%
BZW SECURITIES
34,000 5.90%, dated 6/30/97, due 7/01/97
in the amount of $34,005,572
(cost $34,000,000; collateralized
by $29,605,000 U.S. Treasury Bond,
8.125%, 8/15/19, value $34,591,234) 5.90 34,000,000

CHASE SECURITIES, INC.
10,000 5.70%, dated 6/30/97,
due 7/01/97 in the amount of
$10,001,583 (cost $10,000,000;
collateralized by $10,000,000
U.S. Treasury Note, 5.875%,
1/31/99, value $10,215,314) 5.70 10,000,000

DEUTSCHE BANK
34,000 5.85%, dated 6/30/97,
due 7/01/97 in the amount of
$34,005,525 (cost $34,000,000;
collateralized by $23,101,000
U.S. Treasury Bond, 11.25%,
2/15/15, value $34,429,544) 5.85 34,000,000

FIRST BOSTON CORP.
15,000 5.40%, dated 6/18/97,
due 7/09/97 in the amount of
$15,047,250 (cost $15,000,000;
collateralized by $10,502,000
U.S. Treasury Bond, 12.00%,
8/15/13, value $15,241,698)(a) 5.40 15,000,000

FIRST BOSTON CORP.
18,000 5.42%, dated 6/04/97,
due 7/03/97 in the amount of
$18,078,590 (cost $18,000,000;
collateralized by $17,739,000
U.S. Treasury Bond, 7.25%,
5/15/16, value $18,659,210)(a) 5.42 18,000,000

GOLDMAN SACHS & CO.
18,000 5.40%, dated 6/11/97,
due 7/01/97 in the amount of
$18,054,000 (cost $18,000,000;
collateralized by $14,115,000
U.S. Treasury Note, 11.625%,
11/15/04, value $18,492,855)(a) 5.40 18,000,000

GOLDMAN SACHS & CO.
15,000 5.44%, dated 6/18/97,
due 7/02/97 in the amount of
$15,031,733 (cost $15,000,000;
collateralized by $12,525,000
U.S. Treasury Bond, 8.50%,
2/15/20, value $15,235,239)(a) 5.44 15,000,000

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------
J.P. MORGAN & CO.
$ 17,000 5.41%, dated 6/26/97,
due 7/17/97 in the amount of
$17,053,649 (cost $17,000,000;
collateralized by $12,869,000
U.S. Treasury Note, 12.75%,
5/15/05, value $17,320,869)(a) 5.41% $17,000,000

J.P. MORGAN & CO.
17,000 5.95%, dated 6/30/97,
due 7/01/97 in the amount of
$17,002,810 (cost $17,000,000;
collateralized by $11,418,000
U.S. Treasury Bond, 12.50%,
8/15/14, value $17,298,881) 5.95 17,000,000

MORGAN STANLEY GROUP, INC.
16,000 5.39%, dated 6/24/97,
due 7/10/97 in the amount of
$16,038,329 (cost $16,000,000;
collateralized by $11,580,000
U.S. Treasury Bond, 12.75%,
11/15/10, value $16,244,568)(a) 5.39 16,000,000

SANWA BANK
17,000 5.40%, dated 6/26/97,
due 7/11/97 in the amount of
$17,038,250 (cost $17,000,000;
collateralized by $17,027,000
U.S. Treasury Note, 6.375%,
3/31/01, value $17,307,526)(a) 5.40 17,000,000

SANWA BANK
17,000 5.40%, dated 6/26/97,
due 7/16/97 in the amount of
$17,051,000 (cost $17,000,000;
collateralized by $17,017,000
U.S. Treasury Note, 6.50%,
6/31/01, value $17,458,147)(a) 5.40 17,000,000

SBC WARBURG
20,000 5.39%, dated 6/06/97,
due 7/02/97 in the amount of
$20,077,856 (cost $20,000,000;
collateralized by $14,677,000
U.S. Treasury Bond, 12.75%,
11/15/10, value $20,589,079) (a) 5.39 20,000,000

SBC WARBURG
14,000 5.85%, dated 6/30/97,
due 7/01/97 in the amount of
$14,002,275 (cost $14,000,000;
collateralized by $11,345,000
U.S. Treasury Bond, 9.125%,
5/15/18, value $14,268,110) 5.85 14,000,000

SMITH BARNEY
18,000 5.41%, dated 6/19/97,
due 7/02/97 in the amount of
$18,035,165 (cost $18,000,000;
collateralized by $13,216,000
U.S. Treasury Note, 9.00%,
5/15/98, value $13,723,990
and $4,710,000
U.S. Treasury Note 5.75%,
8/15/03 value $4,646,148)(a) 5.41 18,000,000

SMITH BARNEY
15,000 5.44%, dated 6/03/97,
due 7/07/97 in the amount of
$15,077,067 (cost $15,000,000;
collateralized by $12,495,000
U.S. Treasury Bond, 8.75%,
8/15/20, value $15,581,343)(a) 5.44 15,000,000

STATE STREET BANK AND TRUST CO.
10,700 5.60%, dated 6/30/97,
due 7/01/97 in the amount of
$10,701,664 (cost $10,700,000;
collateralized by $10,985,000
U.S. Treasury Note, 5.25%,
12/31/97, value $10,967,835) 5.60 10,700,000

UBS FINANCE, INC.
20,000 5.57%, dated 4/09/97,
due 7/08/97 in the amount of
$20,278,500 (cost $20,000,000;
collateralized by $18,999,000
U.S. Treasury Note, 7.25%,
8/15/04, value $20,308,264)(a) 5.57 20,000,000

ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------
UBS FINANCE, INC.
$ 14,000 5.90%, dated 6/30/97,
due 7/01/97 in the amount of
$14,002,294 (cost $14,000,000;
collateralized by $12,206,000
U.S. Treasury Bond, 8.125%,
8/15/21, value $14,311,388) 5.90% $ 14,000,000

Total Repurchase Agreements
(amortized cost $339,700,000) 339,700,000

TOTAL INVESTMENTS-98.4%
(amortized cost $692,848,469) $692,848,469
Other assets less liabilities-1.6% 11,235,958

NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
704,067,835 shares outstanding) $704,084,427

(a) Repurchase agreements which are terminable within 7 days.

See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

ASSETS
Investments in securities, at value (cost $692,848,469) $692,848,469
Receivable for investments sold 46,041,178
Interest receivable 7,810,768
Receivable for capital stock sold 450,107
Deferred organization expense 10,614
Total assets 747,161,136

LIABILITIES
Due to custodian 350,690
Payable for investments purchased 41,619,074
Payable for capital stock redeemed 545,260
Investment advisory fee payable 242,536
Distribution fee payable 67,291
Accrued expenses 251,858
Total liabilities 43,076,709

NET ASSETS $704,084,427

COMPOSITION OF NET ASSETS
Paid-in-capital $704,067,835
Accumulated net realized gain on investment transactions 16,592
$704,084,427

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997 ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

INVESTMENT INCOME
Interest $36,226,981

EXPENSES
Advisory fee (Note B) $ 3,430,146
Distribution assistance and administrative
service (Note C) 1,978,721
Transfer agency (Note B) 924,875
Registration expense 193,296
Custodian fees 158,554
Printing 82,231
Audit and legal fees 42,671
Trustees' fees 11,255
Amortization of organization expense 9,125
Miscellaneous 18,005
Total expenses 6,848,879
Less: expense reimbursement and fee waiver (1,017,631)
Net expenses 5,831,248
Net investment income 30,395,733

REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 17,487

NET INCREASE IN NET ASSETS FROM OPERATIONS $30,413,220

STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________

YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 30,395,733 $ 24,908,350
Net realized gain on investment transactions 17,487 3,652
Net increase in net assets from operations 30,413,220 24,912,002

DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (30,395,733) (24,908,350)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 3,509,283 206,852,122
Total increase 3,526,770 206,855,774

NET ASSETS
Beginning of year 700,557,657 493,701,883
End of year $704,084,427 $700,557,657

See notes to financial statements

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 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. As a matter of
fundamental policy, the Portfolio pursues its objectives by maintaining a
portfolio of high-quality money market securities all of which, at the time of
investment, have remaining maturities of 397 days or less. The following is a
summary of significant accounting policies followed by the Portfolio.

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. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued as earned. Investment transactions are recorded on a
trade date basis. Realized gain (loss) from investment transactions is recorded
on the identified cost basis.

6. REPURCHASE AGREEMENTS
It is the Fund'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, pursuant to the advisory agreement, 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. The Adviser also voluntarily
agreed to reimburse the Portfolio for the year ended June 30, 1997 for expenses
exceeding .85 of 1% of its average daily net assets. For the year ended June
30, 1997 the reimbursement amounted to $90,495. 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 $508,795 for the year ended June 30,
1997.

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, 1997, the distribution fee amounted to $1,715,073 of which
$927,136 was waived. In addition, the Portfolio may reimburse certain
broker-dealers for administrative costs incurred in connection with providing
shareholder services and may reimburse the Adviser for accounting and
bookkeeping, and legal and compliance support. For the year ended June 30,
1997, such payments by the Portfolio amounted to $263,648 of which $131,000 was
paid to the Adviser.

NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1997, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes.

NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1997, capital paid-in aggregated $704,067,835. Transactions, all at $1.00 per
share, were as follows:

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1997 1996
--------------- ---------------
Shares sold 3,406,513,740 3,173,100,216
Shares issued on reinvestments of dividends 30,395,733 24,908,350
Shares redeemed (3,433,400,190) (2,991,156,444)
Net increase 3,509,283 206,852,122

FINANCIAL HIGHLIGHTS ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD.

<TABLE>
<CAPTION>
SEPTEMBER 1,
YEAR ENDED JUNE 30, 1993(A)
---------------------------------- THROUGH
1997 1996 1995 JUNE 30, 1994
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .0443 .0466 .0460 .0260

LESS: DIVIDENDS
Dividends from net investment income (.0443) (.0466) (.0460) (.0260)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURNS
Total investment return based on:
net asset value (c) 4.53% 4.77% 4.71% 3.18%(d)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $704,084 $700,558 $493,702 $80,720
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .85% .81% .69% .28%(d)
Expenses, before waivers and reimbursements 1.00% 1.05% 1.05% 1.28%(d)
Net investment income (b) 4.43% 4.64% 4.86% 3.24%(d)
</TABLE>

(a) Commencement of operations.

(b) Net of expenses reimbursed or waived by the Adviser.

(c) 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.

(d) Annualized.

INDEPENDENT AUDITOR'S REPORT ALLIANCE TREASURY RESERVES
_______________________________________________________________________________

TO THE BOARD OF TRUSTEES AND SHAREHOLDER ALLIANCE TREASURY RESERVES PORTFOLIO

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Alliance Treasury Reserves Portfolio as of
June 30, 1997 and the related statement of operations, changes in net assets,
and financial highlights for the periods indicated in the accompanying
financial statements. These financial statements and financial highlights are
the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.

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 Portfolio as of June 30, 1997, 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
July 29, 1997