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This is filed pursuant to Rule 497(e).
File Nos.: 2-63315 and 811-02889.
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Members Money Market Account, featuring Pershing Government Account, utilizes
Alliance Government Reserves (the "Fund"). The Fund is a diversified, open-end
investment company with investment objectives of safety, liquidity and income.
This prospectus sets forth the information about the Fund that a prospective
investor should know before investing. Please retain it for future reference.
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, write Alliance Fund Services, Inc. at the address shown in this
Prospectus.
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.
CONTENTS
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<TABLE>
<S> <C>
Expense Information....................................................... 2
Financial Highlights...................................................... 3
Investment Objectives and Policies........................................ 4
Purchase and Redemption of Shares......................................... 5
Additional Information.................................................... 5
</TABLE>
ALC PGPRO7
Money
Market
Accounts
FEATURING
Pershing Government Account
Prospectus October 31, 1997
Members Money Market Accounts
Offered Through
CUNA Brokerage Services, Inc.
5910 Mineral Point Road
Madison, WI 53701
Member NASD
Member SIPC
MEMBERS
<PAGE>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets, net of
expense reimbursement)
<TABLE>
<S> <C>
Management Fees........................................................ .47%
12b-1 Fees............................................................. .25
Other Expenses......................................................... .28
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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.
2
<PAGE>
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 year........... $ 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 .0439 .0244 .0256 .0421 .0640 .0765 .0774 .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 .0612
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
LESS: DIVIDENDS AND DIS-
TRIBUTIONS
Dividends from net in-
vestment income........ (.0443) (.0461) (.0439) (.0244) (.0256) (.0421) (.0640) (.0765) (.0774) (.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) (.0612)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Net asset value, end of
year................... $ 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% 4.42% 2.46% 2.55% 4.17% 6.28% 7.65% 7.86% 6.13%
</TABLE>
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(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.
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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 4.62%, equivalent to an effective yield of 4.73%.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are--in the following order of priority--
safety of principal, excellent liquidity, and maximum current income to the
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 sep-
arate section below without shareholder approval. The Fund may, without such
approval, create additional classes of shares in order to establish portfolios
which may have different investment objectives. There can be no assurance, as
is true with all investment companies, that the Fund's objectives will be
achieved.
MONEY MARKET SECURITIES
The securities in which the Fund invests are: (1) marketable obligations of,
or guaranteed by, the United States Government, its agencies or 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 Act. Variable rate obligations have inter-
est 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 under the Investment Company Act of 1940
(the "Act"), as amended from time to time, including the diversity, quality
and maturity limitations imposed by the Rule. The average maturity of the
Fund's portfolio cannot exceed 90 days. A more detailed description of Rule
2a-7 is set forth in the Fund's Statement of Additional Information under "In-
vestment Objectives and Policies." To the extent that the Fund's limitations
are more permissive than Rule 2a-7, the Fund will comply with the more re-
strictive 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 it will not purchase any investment while any such
borrowings exist; or (2) pledge, hypothecate or in any manner transfer, as se-
curity for indebtedness, its assets except to secure such borrowings; 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
PURCHASE OF SHARES
Participants in the self-directed retirement plans (IRA's, SEP's, Keogh's,
Qualified Retirement Plans) for which Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") is the custodian or subcustodian are eligible to invest
in shares of the Fund. Unless participants elect otherwise, the cash portion
of their retirement account will be invested in the Fund. There is a minimum
account requirement of $100. Once the minimum account requirement is met, all
free credit balances will be invested automatically on the business day fol-
lowing the date they are received in the account. Proceeds of the sales of se-
curities will be invested in the Fund on the day following the settlement date
of the security sale. There will be no minimum, initial or subsequent purchase
requirement for investments as long as the $100 minimum requirement is met.
REDEMPTION OF SHARES
DLJSC, as custodian or subcustodian of the self-directed retirement plans,
has instituted an automatic redemption for participants enrolled in the Fund.
DLJSC will redeem a sufficient number of shares on settlement date to pay for
any securities purchased in the self-directed retirement plan. Shares may also
be redeemed to meet any debits in the self-directed retirement account arising
from, e.g., cash distributions or other charges. Shares will also be redeemed
to satisfy any periodic or other distribution instructions from the owner of
the self-directed retirement plan. A shareholder's investment will be fully
redeemed whenever redemption of shares will reduce the remaining account bal-
ance to less than $100.
ADDITIONAL INFORMATION
SHARE PRICE. Shares are sold and redeemed on a continuous basis without sales
or redemption charges at their net asset value which is expected to be 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 drastic economic or market developments, shareholders might have dif-
ficulty in reaching Alliance Fund Services, Inc. by telephone in which event
the shareholder should issue written instructions to Alliance Fund Services,
Inc. at the address shown in this prospectus. The Funds reserve the right to
suspend or terminate their telephone service at any time without notice. Nei-
ther the Funds nor the Adviser, or Alliance Fund Services, Inc. will be re-
sponsible for the authenticity of telephone requests to purchase or sell
shares. Alliance Fund Services, Inc. will employ reasonable procedures in or-
der to verify that telephone requests are genuine and could be liable for
losses arising from unauthorized transactions if it failed to do so. Selected
dealers or agents may charge a commission for handling telephone requests for
redemptions.
Redemption proceeds are normally wired or mailed either the same or the next
business day, but in no event
5
<PAGE>
later than seven days, unless redemptions have been suspended or postponed due
to the determination of an "emergency" by the Securities and Exchange Commis-
sion or to certain other unusual conditions.
DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Fund is
determined each business day at 4:00 p.m. (New York time) and is paid immedi-
ately thereafter pro rata to shareholders of record via automatic investment
in additional full and fractional shares in each shareholder's account. As
such additional shares are entitled to dividends on following days, a com-
pounding 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 in-
vestment advice and, in general, to conduct the Fund's management and invest-
ment program, subject to the general supervision and control of the Trustees
of the Fund. For the fiscal year ended June 30, 1997, the Fund paid the Ad-
viser 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.
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, one of the largest life insurance companies in the United States,
which is a wholly-owned subsidiary of The Equitable Companies Incorporated, a
holding company controlled by AXA, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in each Fund's Statement of Additional Information under "Management of
the Fund."
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.
6
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent
charges a fee for its services.
FUND ORGANIZATION. The Fund is a series of Alliance Government Reserves (the
"Trust"). The Fund is one of two series of the Trust; shares of the other se-
ries, Alliance Treasury Reserves, are offered by a separate prospectus. The
Trust is a diversified, open-end investment company registered under the Act.
The Trust was reorganized as a Massachusetts business trust in October 1984,
having previously been a Maryland corporation since its formation in 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
periodic summary of your account from DLJSC.
7
