ALLIANCE TREASURY RESERVES
ALLIANCE CAPITAL
ANNUAL REPORT
JUNE 30, 1998
STATEMENT OF NET ASSETS
JUNE 30, 1998 ALLIANCE TREASURY RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS-71.5%
U.S. TREASURY NOTES-59.5%
$ 40,000 4.75%, 8/31/98 5.05% $ 39,967,717
20,000 5.50%, 11/15/98 5.25 20,004,491
20,000 5.63%, 11/30/98 5.46 20,008,140
20,000 5.75%, 12/31/98 5.45 20,024,781
30,000 5.88%, 8/15/98 5.11 30,015,510
90,000 6.00%, 9/30/98 5.30 90,127,672
100,000 6.13%, 8/31/98 5.20 100,122,350
120,000 6.25%, 7/31/98 5.21 120,091,832
-------------
440,362,493
U.S. TREASURY BILLS-12.0%
10,000 8/20/98 5.00 9,931,181
10,000 9/10/98 5.05 9,901,586
10,000 7/23/98 5.07 9,969,322
10,000 9/17/98 5.08 9,891,342
10,000 9/17/98 5.15 9,889,825
10,000 11/19/98 5.21 9,800,642
10,000 12/10/98 5.24 9,770,275
10,000 12/10/98 5.26 9,769,375
10,000 12/17/98 5.28 9,758,705
-------------
88,682,253
Total U.S. Government Obligations
(amortized cost $529,044,746) 529,044,746
REPURCHASE AGREEMENTS-28.0%
CHASE SECURITIES, INC.
30,000 5.55%, dated 6/30/98,
due 7/01/98 in the amount of
$30,004,625 (cost $30,000,000;
collateralized by $18,645,000
U.S. Treasury Bond,
11.25%, 2/15/15,
value $30,663,734) (a) 5.55 30,000,000
CIBC/WOOD GUNDY, INC.
30,000 5.55%, dated 6/30/98,
due 7/01/98 in the amount of
$30,004,625 (cost $30,000,000;
collateralized by $18,871,000
U.S. Treasury Bond,
13.25%, 5/15/14,
value $30,512,945) (a) 5.55 30,000,000
DRESDNER BANK
25,000 5.50%, dated 6/30/98,
due 7/01/98 in the amount of
$25,003,819 (cost $25,000,000;
collateralized by $22,494,000
U.S. Treasury Note,
7.50%, 2/15/05,
value $25,552,937) (a) 5.50 25,000,000
GOLDMAN SACHS & CO.
18,000 5.46%, dated 6/30/98,
due 7/21/98 in the amount of
$18,057,330 (cost $18,000,000;
collateralized by $13,945,000
U.S. Treasury Bond,
8.125%, 8/15/19,
value $18,446,809) (a) 5.46 18,000,000
J.P. MORGAN & CO.
25,000 5.50%, dated 6/30/98,
due 7/01/98 in the amount of
$25,003,819 (cost $25,000,000;
collateralized by $20,259,000
U.S. Treasury Bond,
10.375%, 11/15/09,
value $25,598,523) (a) 5.50 25,000,000
MORGAN STANLEY GROUP, INC.
18,000 5.46%, dated 6/30/98,
due 7/28/98 in the amount of
$18,076,440 (cost $18,000,000;
collateralized by $13,080,000
U.S. Treasury Bond,
8.750%, 8/15/20,
value $18,413,860) (a) 5.46 18,000,000
SALOMON SMITH BARNEY
18,000 5.46%, dated 6/30/98,
due 7/01/98 in the amount of
$18,002,730 (cost $18,000,000;
collateralized by $15,055,000
U.S. Treasury Bond,
7.250%, 8/15/22,
value $18,416,590) 5.46 18,000,000
1
STATEMENT OF NET ASSETS (CONTINUED) ALLIANCE TREASURY RESERVES
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -------------------------------------------------------------------------------
SBC WARBURG, INC.
$ 35,000 5.70%, dated 6/30/98,
due 7/01/98 in the amount of
$35,005,542 (cost $35,000,000;
collateralized by $26,396,000
U.S. Treasury Bond,
8.75%, 5/15/17,
value $35,834,722) (a) 5.70% $ 35,000,000
STATE STREET BANK AND TRUST CO.
8,300 5.50%, dated 6/30/98,
due 7/01/98 in the amount of
$8,301,268 (cost $8,300,000;
collateralized by $7,210,000
U.S. Treasury Bond,
7.25%, 5/15/16,
value $8,470,625) (a) 5.50 8,300,000
Total Repurchase Agreements
(amortized cost $207,300,000) 207,300,000
TOTAL INVESTMENTS-99.5%
(amortized cost $736,344,746) 736,344,746
Other assets less liabilities-0.5% 3,711,399
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
740,057,194 shares outstanding) $ 740,056,145
(a) Repurchase agreements which are terminable within 7 days.
See notes to financial statements.
2
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998 ALLIANCE TREASURY RESERVES
_______________________________________________________________________________
INVESTMENT INCOME
Interest $39,826,498
EXPENSES
Advisory fee (Note B) $3,636,521
Distribution assistance and administrative
service (Note C) 2,497,474
Transfer agency (Note B) 650,416
Custodian fees 170,719
Registration fees 138,401
Printing 77,389
Audit and legal fees 39,498
Trustees' fees 11,397
Amortization of organization expense 9,125
Miscellaneous 26,018
Total expenses 7,256,958
Less: expense reimbursement and fee waiver (376,850)
Net expenses 6,880,108
Net investment income 32,946,390
REALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (1,049)
NET INCREASE IN NET ASSETS FROM OPERATIONS $32,945,341
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $32,946,390 $30,395,733
Net realized gain (loss) on investment
transactions (1,049) 17,487
Net increase in net assets from operations 32,945,341 30,413,220
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (32,946,390) (30,395,733)
Net realized gain on investments (16,592) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) 35,989,359 3,509,283
Total increase 35,971,718 3,526,770
NET ASSETS
Beginning of year 704,084,427 700,557,657
End of year $740,056,145 $704,084,427
See notes to financial statements.
3
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 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 of which is considered to be a
separate entity for financial reporting and tax purposes. The Portfolio pursues
its objectives by maintaining a portfolio of high-quality money market
securities all of which, at the time of investment, have remaining maturities
of 397 days or less. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Portfolio.
1. VALUATION OF SECURITIES
Securities in which the Portfolio invests are traded primarily in the
over-the-counter market and are valued at amortized cost, under which method a
portfolio instrument is valued at cost and any premium or discount is amortized
on a constant basis to maturity.
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 meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. DIVIDENDS
The Portfolio declares dividends daily from net investment income and
automatically reinvests such dividends in additional shares at net asset value.
Net realized capital gains on investments, if any, are expected to be
distributed near year end.
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 Portfolio's policy to take possession of securities as collateral
under repurchase agreements and to determine on a daily basis that the value of
such securities are sufficient to cover the value of the repurchase agreements.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER
The Portfolio pays its Adviser, Alliance Capital Management L.P., an advisory
fee at the annual rate of .50% on the first $1.25 billion of average daily net
assets; .49% on the next $.25 billion; .48% on the next $.25 billion; .47% on
the next $.25 billion; .46% on the next $1 billion; and .45% in excess of $3
billion. The Adviser has agreed, pursuant to the advisory agreement, to
reimburse the Portfolio to the extent that its annual aggregate expenses
(excluding taxes, brokerage, interest and, where permitted, extraordinary
expenses) exceed 1% of its average daily net assets for any fiscal year. The
Adviser also voluntarily agreed to reimburse the Portfolio from July 1, 1997 to
October 26, 1997 for expenses exceeding .85% of its average daily net assets
and from October 27, 1997 to November 19, 1997 for expenses exceeding .90% of
its average daily net assets. For the year ended June 30, 1998, the
reimbursement amounted to $39,480.
The Portfolio compensates Alliance Fund Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for the Portfolio.
Such compensation amounted to $350,012 for the year ended June 30, 1998.
4
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 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, 1998, the distribution fee amounted to $1,818,261, of which
$337,370 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,
1998, such payments by the Portfolio amounted to $679,213, of which $131,500
was paid to the Adviser.
NOTE D: INVESTMENT TRANSACTIONS
At June 30, 1998, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 1998 the
Portfolio had a loss carryforward of $1,049 which expires in the year 2006.
NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1998, capital paid-in aggregated $740,057,194. Transactions, all at $1.00 per
share, were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1998 1997
------------- -------------
Shares sold 3,120,550,717 3,406,513,740
Shares issued on reinvestments of dividends 32,946,390 30,395,733
Shares redeemed (3,117,507,748) (3,433,400,190)
Net increase 35,989,359 3,509,283
5
FINANCIAL HIGHLIGHTS ALLIANCE TREASURY RESERVES
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
SEPTEMBER 1,
1993(A)
YEAR ENDED JUNE 30, THROUGH
-------------------------------------------------- JUNE 30,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .0453 .0443 .0466 .0460 .0260
LESS: DIVIDENDS
Dividends from net investment income (.0453) (.0443) (.0466) (.0460) (.0260)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on net
asset value (c) 4.63% 4.53% 4.77% 4.71% 3.18%(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $740,056 $704,084 $700,558 $493,702 $80,720
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95% .85% .81% .69% .28%(d)
Expenses, before waivers and
reimbursements 1.01% 1.00% 1.05% 1.05% 1.28%(d)
Net investment income (b) 4.53% 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.
6
INDEPENDENT AUDITOR'S REPORT ALLIANCE TREASURY RESERVES
_______________________________________________________________________________
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
ALLIANCE TREASURY RESERVES PORTFOLIO
We have audited the accompanying statement of net assets of Alliance Treasury
Reserves Portfolio as of June 30, 1998 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.
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, 1998, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Treasury Reserves Portfolio as of June 30, 1998, 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 24, 1998
7
ALLIANCE TREASURY RESERVES
1345 Avenue of the Americas, New York, NY 10105
Toll free 1 (800) 221-5672
YIELDS. 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 CAPITAL
DISTRIBUTION OF THIS REPORT OTHER THAN TO SHAREHOLDERS MUST
BE PRECEDED OR ACCOMPANIED BY THE FUND'S CURRENT PROSPECTUS,
WHICH CONTAINS FURTHER INFORMATION ABOUT THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM
THE OWNER, ALLIANCE CAPITAL MANAGEMENT L.P.
TRSAR
