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Alliance
Treasury
Reserves
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Alliance Capital [LOGO](R)
Annual Report
June 30, 1999
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<PAGE>
STATEMENT OF NET ASSETS
June 30, 1999 Alliance Treasury Reserves
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Principal
Amount
(000) Security Yield Value
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U.S. GOVERNMENT
OBLIGATIONS -- 69.5%
U.S. TREASURY NOTES -- 45.7%
$ 20,000 5.63%, 10/31/99...................... 4.88% $ 20,036,131
20,000 5.63%, 11/30/99...................... 4.84 20,057,255
98,500 5.75%, 9/30/99....................... 4.68 98,738,989
25,000 5.88%, 7/31/99....................... 4.69 25,021,637
47,000 5.88%, 8/31/99....................... 4.59 47,088,769
10,000 6.00%, 8/15/99....................... 4.49 10,017,303
135,000 6.38%, 7/15/99....................... 4.24 135,104,386
15,000 6.88%, 7/31/99....................... 4.52 15,026,367
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371,090,837
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U.S. TREASURY BILLS -- 23.8%
20,000 7/29/99.............................. 4.45 19,931,478
10,000 8/19/99.............................. 4.49 9,939,226
10,000 9/16/99.............................. 4.56 9,904,071
15,000 9/09/99.............................. 4.62 14,867,000
15,000 9/16/99.............................. 4.67 14,851,775
25,000 9/16/99.............................. 4.69 24,751,889
25,000 9/23/99.............................. 4.73 24,727,000
40,000 9/30/99.............................. 4.74 39,526,800
10,000 10/07/99............................. 4.77 9,871,920
15,000 11/18/99............................. 4.90 14,719,416
10,000 12/02/99............................. 4.96 9,792,528
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192,883,103
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Total U.S. Government
Obligations
(amortized cost
$563,973,940)........................ 563,973,940
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REPURCHASE
AGREEMENTS -- 29.6%
ABN Amro
29,000 4.80%, dated 6/30/99,
due 7/01/99 in the amount of
$29,003,867 (cost $29,000,000;
collateralized by $29,620,000
U.S. Treasury Note,
4.50%, 9/30/00,
value $29,567,269)................... 4.80 29,000,000
Bank of America
10,000 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$10,001,292 (cost $10,000,000;
collateralized by $8,850,000
U.S. Treasury Bond,
10.00%, 5/15/10,
value $10,230,609)................... 4.65 10,000,000
Barclays de Zoete
Wedd Securities, Inc.
20,000 4.80%, dated 6/30/99,
due 7/07/99 in the amount of
$20,018,667 (cost $20,000,000;
collateralized by $20,200,000
U.S. Treasury Note,
5.875%, 11/15/99,
value $20,408,312)................... 4.80 20,000,000
Bear Stearns & Co.
20,000 4.75%, dated 6/30/99,
due 7/14/99 in the amount of
$20,036,944 (cost $20,000,000;
collateralized by $19,685,000
U.S. Treasury Note,
6.50%, 8/31/01,
value $20,401,389) (a)............... 4.75 20,000,000
Deutsche Bank
20,000 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$20,002,583 (cost $20,000,000;
collateralized by $20,710,000
U.S. Treasury Note,
4.625%, 12/31/00,
value $20,464,000)................... 4.65 20,000,000
Dresdner Bank AG
14,000 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$14,001,808 (cost $14,000,000;
collateralized by $13,738,000
U.S. Treasury Note,
6.375%, 8/15/02,
value $14,270,679)................... 4.65 14,000,000
First Chicago Corp.
20,000 4.88%, dated 6/30/99,
due 7/07/99 in the amount of
$20,018,978 (cost $20,000,000;
collateralized by $19,880,000
U.S. Treasury Note,
6.875%, 8/31/99,
value $20,407,657)................... 4.88 20,000,000
Goldman Sachs & Co.
10,000 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$10,001,292 (cost $10,000,000;
collateralized by $9,040,000
U.S. Treasury Bond,
7.25%, 8/15/22,
value $10,235,029)................... 4.65 10,000,000
1
<PAGE>
STATEMENT OF NET ASSETS (continued) Alliance Treasury Reserves
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Principal
Amount
(000) Security Yield Value
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Merrill Lynch & Co., Inc.
$ 14,000 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$14,001,808 (cost $14,000,000;
collateralized by $14,210,000
U.S. Treasury Note,
5.625%, 11/30/00,
value $14,346,567)................... 4.65% $ 14,000,000
Morgan Stanley Group, Inc.
15,000 4.75%, dated 6/30/99,
due 7/01/99 in the amount of
$15,001,979 (cost $15,000,000;
collateralized by $13,550,000
U.S. Treasury Bond,
7.25%, 8/15/22,
value $15,322,167)................... 4.75 15,000,000
Paribas Corp.
25,000 4.87%, dated 6/30/99,
due 7/14/99 in the amount of
$25,047,347 (cost $25,000,000;
collateralized by $21,912,000
U.S. Treasury Bond,
7.625%, 11/15/22,
value $25,634,882) (a)............... 4.87 25,000,000
State Street Bank &
Trust Co.
18,600 4.65%, dated 6/30/99,
due 7/01/99 in the amount of
$18,602,403 (cost $18,600,000;
collateralized by $18,855,000
U.S. Treasury Note,
5.00%, 2/28/01,
value $18,973,108)................... 4.65 18,600,000
Warburg Securities
25,000 4.94%, dated 6/30/99,
due 7/14/99 in the amount of
$25,048,028 (cost $25,000,000;
collateralized by $16,749,000
U.S. Treasury Bond,
13.25%, 5/15/14,
value $25,440,160) (a)............... 4.94 25,000,000
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Total Repurchase
Agreements
(amortized cost
$240,600,000)........................ 240,600,000
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TOTAL INVESTMENTS -- 99.1%
(amortized cost
$804,573,940)........................ 804,573,940
Other assets less
liabilities -- 0.9%.................. 7,177,986
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NET ASSETS -- 100%
(offering and redemption
price of $1.00 per share;
811,743,106 shares
outstanding)......................... $ 811,751,926
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(a) Repurchase agreements which are terminable within 7 days.
See notes to financial statements.
2
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STATEMENT OF OPERATIONS
Year Ended June 30, 1999 Alliance Treasury Reserves
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ........................................................ $ 37,974,367
EXPENSES
Advisory fee (Note B) ........................................... $ 3,888,081
Distribution assistance and administrative service (Note C) ..... 3,118,452
Transfer agency (Note B) ........................................ 430,780
Custodian fees .................................................. 178,100
Registration fees ............................................... 129,678
Printing ........................................................ 80,194
Audit and legal fees ............................................ 44,636
Trustees' fees .................................................. 8,643
Amortization of organization expense ............................ 1,550
Miscellaneous ................................................... 27,581
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Total expenses .................................................. 7,907,695
Less: expense reimbursement ..................................... (131,532)
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Net expenses .................................................... 7,776,163
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Net investment income ........................................... 30,198,204
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions .................... 10,597
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NET INCREASE IN NET ASSETS FROM OPERATIONS ......................... $ 30,208,801
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1999 June 30, 1998
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................. $ 30,198,204 $ 32,946,390
Net realized gain (loss) on investment transactions ... 10,597 (1,049)
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Net increase in net assets from operations ............ 30,208,801 32,945,341
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................. (30,198,204) (32,946,390)
Net realized gain on investments ...................... (728) (16,592)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) ................................. 71,685,912 35,989,359
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Total increase ........................................ 71,695,781 35,971,718
NET ASSETS
Beginning of year ..................................... 740,056,145 704,084,427
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End of year ........................................... $ 811,751,926 $ 740,056,145
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</TABLE>
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See notes to financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 Alliance Treasury Reserves
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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. Certain illiquid securities containing
unconditional puts at par value are also valued at amortized cost.
2. Organization Expenses
The organization expenses of the Portfolio were 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.
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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, extra ordinary
expenses) exceed 1% of its average daily net assets for any fiscal year. For the
year ended June 30, 1999, the reimbursement amounted to $131,532.
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 $201,514 for the year ended June 30, 1999.
For the year ended June 30, 1999, the Fund's expenses were reduced by $2,552
under an expense offset arrangement with Alliance Fund Services.
4
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Alliance Treasury Reserves
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NOTE C: Distribution Assistance and Administrative Services Plan
Under this Plan, the Portfolio pays Alliance Fund Distributors, Inc. (the
"Distributor"), a wholly-owned subsidiary of the Adviser, a distribution fee at
the annual rate of .25% of the average daily value of the Portfolio's net
assets. The Plan provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. For the year
ended June 30, 1999, the distribution fee amounted to $1,944,041. In addition,
the Portfolio may reimburse certain broker-dealers for administrative costs
incurred in connection with providing share holder services, and may reimburse
the Adviser for accounting and bookkeeping, and legal and compliance support.
For the year ended June 30, 1999, such payments by the Port folio amounted to
$1,174,411, of which $131,000 was paid to the Adviser.
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NOTE D: Investment Transactions
At June 30, 1999, the cost of investments for federal in come tax purposes was
the same as the cost for financial reporting purposes.
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NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At June 30,
1999, capital paid-in aggregated $811,743,106. Transactions, all at $1.00 per
share, were as follows:
Year Ended Year Ended
June 30, June 30,
1999 1998
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Shares sold ................................ 2,440,073,136 3,120,550,717
Shares issued on reinvestments of dividends 30,198,204 32,946,390
Shares redeemed ............................ (2,398,585,428) (3,117,507,748)
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Net increase ............................... 71,685,912 35,989,359
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5
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Treasury Reserves
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Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Year
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------
1999 1998 1997 1996 1995
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<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 (a) .............................. .0389 .0453 .0443 .0466 .0460
-------- -------- -------- -------- --------
Less: Dividends
Dividends from net investment income ................... (.0389) (.0453) (.0443) (.0466) (.0460)
-------- -------- -------- -------- --------
Net asset value, end of year ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return
Total investment return based on net asset value (b) ... 3.96% 4.63% 4.53% 4.77% 4.71%
Ratios/Supplemental Data
Net assets, end of year (in thousands) ................. $811,752 $740,056 $704,084 $700,558 $493,702
Ratios to average net assets of:
Expenses, net of waivers and reimbursements ......... 1.00% .95% .85% .81% .69%
Expenses, before waivers and reimbursements ......... 1.02% 1.01% 1.00% 1.05% 1.05%
Net investment income (a) ........................... 3.88% 4.53% 4.43% 4.64% 4.86%
</TABLE>
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(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.
6
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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, 1999 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, 1999, 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, 1999, 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.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
New York, New York
July 23, 1999
7
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Alliance Treasury Reserves -----------------
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Alliance Capital [LOGO](R)
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.
