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Alliance
Treasury
Reserves
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Alliance Capital [LOGO](R)
Annual Report
June 30, 2000
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<PAGE>
LETTER TO SHAREHOLDERS Alliance Treasury Reserves
===============================================================================
August 2, 2000
Dear Shareholder:
We are pleased to provide you with an update of Alliance Treasury Reserves for
the annual reporting period ended June 30, 2000.
U.S. financial markets were anticipating some signs of a slowdown for the first
half of 2000--some sign that past Fed rate hikes were having an effect and
that little, if any, further tightening would be necessary. The U.S. economy,
however, has continued to grow. The U.S. Commerce Department recently reported
that the U.S. economy grew at an impressive, seasonally-adjusted annual rate of
+5.2% during the spring quarter. Inflation, as measured by the broad and
reliable gross domestic purchases and personal consumption price indices, held
stable at 2.5% on a year-earlier basis. The second-quarter growth number, well
above the 3.5% to 4.0%, consensus and actually faster than a downward-revised
quarter-one growth rate of +4.8%, created immediate anxiety. As a result,
interest rates headed higher and stock prices headed lower.
The U.S. economy's gross domestic product report does, however, give evidence
to some signs of cooling off. For example, a key measure of aggregate demand
(real final sales) slowed sharply to +4.2% from +6.7% in the first quarter.
Monthly evidence that consumers had taken a break from their long-running
shopping spree was confirmed. Household spending dipped to just +3.0% in the
second quarter versus +7.6% in the first quarter. Unwanted inventories added a
full percentage point to second-quarter growth. We also believe that a more
meaningful comparison can be made between growth during the second half of 1999
(+7.0%) and growth during the first half of this year (+5.0%).
In his late-July Congressional testimony, Fed Chairman Alan Greenspan laid out
an upbeat forecast for the U.S. economy and rendered a somewhat self-
congratulatory assessment of the role the Federal Reserve has played in
securing that future. To be sure, we welcome his endorsement of both the "New
Economy" paradigm and our own bullishness about accelerating productivity. The
subsequent report on employment costs, showing a quarter-to-quarter gain of
only 1.0% in the spring versus a 1.4% rise in the first quarter, and the soon-
to-be-released report on second-quarter productivity, should help to validate
the Chairman's optimism. Mr. Greenspan is repositioning the Fed to play a more
reactive role going forward. He understands that financial markets should and
must take the lead role in terms of steering the New Economy. As a consequence,
although we still believe the Fed will tighten further, we look for that
tightening to come late in the year and only after the bond market has laid the
groundwork.
As for U.S. financial markets, the road to higher prices will be a bit bumpier
than we expected. Inaction by the Fed toward the end of August could open the
window to the upside, but for now we see more volatility than opportunity. With
an election in front of us, the next several months could be a difficult time
for investors. Therefore investors may want to use periods of asset market
strength to establish more defensive positions.
We appreciate your investment in the portfolios of Alliance Treasury Reserves
and look forward to reporting further investment progress in the coming period.
Sincerely,
/s/ Ronald M. Whitehill
Ronald M. Whitehill
President
1
<PAGE>
STATEMENT OF NET ASSETS
June 30, 2000 Alliance Treasury Reserves
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Principal
Amount
(000) Security Yield Value
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U.S. GOVERNMENT
OBLIGATIONS - 64.8%
U.S. TREASURY
NOTES - 47.0%
$ 11,000 4.00% 10/31/00........... 6.05% $ 10,922,870
7,000 4.50% 9/30/00............ 5.99 6,972,873
5,000 4.63% 11/30/00........... 6.24 4,966,790
144,000 5.13% 8/31/00............ 6.03 143,741,348
10,000 5.38% 7/31/00............ 5.80 9,995,136
72,000 6.00% 8/15/00............ 5.73 72,006,378
62,000 6.13% 7/31/00............ 5.71 62,010,803
59,000 6.25% 8/31/00............ 5.80 59,021,413
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369,637,611
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U.S. TREASURY
BILLS - 17.8%
$ 12,000 8/03/00................... 5.64 11,939,363
15,000 8/03/00................... 5.67 14,923,688
15,000 9/07/00................... 5.77 14,840,483
20,000 9/07/00................... 5.79 19,786,744
20,000 9/07/00................... 5.81 19,786,083
10,000 8/03/00................... 5.85 9,947,750
15,000 8/17/00................... 5.85 14,888,571
10,000 8/31/00................... 5.90 9,902,908
8,000 8/31/00................... 5.90 7,922,259
10,000 8/17/00................... 5.91 9,924,931
6,000 8/10/00................... 6.04 5,961,570
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139,824,350
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Total U.S. Government
Obligations
(amortized cost
$509,461,961).............. 509,461,961
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REPURCHASE
AGREEMENTS - 34.3%
ABN AMRO
30,000 6.42%, dated 6/28/00,
due 7/13/00 in the
amount of $30,080,250
(cost $30,000,000;
collateralized by
$23,333,000 U.S. Treasury
Bond, 8.875%, 2/15/19,
value $30,751,848) (a)..... 6.42 30,000,000
Bear Stearns & Co.
16,000 6.38%, dated 6/28/00,
due 7/12/00 in the
amount of $16,039,667
(cost $16,000,000;
collateralized by
$17,555,000 U.S. Treasury
Bond, 5.50%, 8/15/28,
value $16,455,308) (a)..... 6.38 16,000,000
Deutsche Morgan Grenfell
7,100 6.37%, dated 6/30/00,
due 7/05/00 in the
amount of $7,106,282
(cost $7,100,000;
collateralized by
$7,063,761 U.S. Treasury
Bond, 8.50%, 2/20/15,
value $7,242,623).......... 6.37 7,100,000
First Boston Corp.
30,000 6.42%, dated 6/29/00,
due 7/31/00 in the
amount of $30,171,200
(cost $30,000.000;
collateralized by
$25,031,000 U.S. Treasury
Bond, 8.125%, 5/15/21,
value $30,745,108) (a)..... 6.42 30,000,000
First Chicago Corp.
30,000 6.35%, dated 6/29/00,
due 7/20/00 in the
amount of $30,111,125
(cost $30,000,000;
collateralized by
$18,496,000 U.S. Treasury
Note, 6.50%, 10/15/06,
value $18,969,709 and
$10,145,000 U.S. Treasury
Bond, 10.375%, 11/15/09,
value $11,753,934) (a)..... 6.35 30,000,000
Goldman Sachs & Co.
18,000 6.00%, dated 6/30/00,
due 7/03/00 in the
amount of $18,009,000
(cost $18,000,000;
collateralized by
$18,360,000 U.S. Treasury
Bond, 6.00%, 2/15/26,
value $18,395,000)......... 6.00 18,000,000
2
<PAGE>
Alliance Treasury Reserves
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Principal
Amount
(000) Security Yield Value
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Morgan (J.P.) & Co.
$ 14,000 6.37%, dated 6/28/00,
due 7/19/00 in the
amount of $14,052,022
(cost $14,000,000;
collateralized by
$13,966,000 U.S. Treasury
Bond, 6.25%, 8/15/23,
value $14,377,234) (a)..... 6.37 $ 14,000,000
Morgan Stanley
Dean Witter
25,000 6.38%, dated 6/28/00,
due 7/20/00 in the
amount of $25,097,472
(cost $25,000,000;
collateralized by
$18,750,000 U.S. Treasury
Bond, 9.875%, 11/15/15,
value $25,617,188) (a)..... 6.38 25,000,000
Paribas Corp.
30,000 6.40%, dated 6/29/00,
due 7/13/00 in the
amount of due $30,074,667
(cost $30,000,000;
collateralized by
$30,201,000 U.S. Treasury
Note, 5.375%, 2/15/01,
value $30,612,160) (a)..... 6.40 30,000,000
Salomon Smith
Barney, Inc.
15,000 6.37%, dated 6/28/00,
due 7/19/00 in the
amount of $15,055,738
(cost $15,000,000;
collateralized by
$11,030,000 U.S. Treasury
Bond, 12.00%, 8/15/13,
value $15,388,274) (a)..... 6.37 15,000,000
SBC Warburg
25,000 6.50%, dated 6/27/00,
due 7/05/00 in the
amount of $25,036,111
(cost $25,000,000;
collateralized by
$25,856,000 U.S. Treasury
Note, 5.625%, 2/15/06,
value $25,625,896)......... 6.50 25,000,000
State Street Bank and
Trust Co.
29,300 6.40%, dated 6/30/00,
due 7/03/00 in the
amount of $29,315,627
(cost $29,300,000;
collateralized by
$29,740,000 U.S. Treasury
Note, 6.50%, 5/31/01,
value $29,888,700)......... 6.40 29,300,000
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Total Repurchase
Agreements
(amortized cost
$269,400,000).............. 269,400,000
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TOTAL INVESTMENTS - 99.1%
(amortized cost
$778,861,961).............. 778,861,961
Other assets less
liabilities - 0.9%......... 6,927,545
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NET ASSETS - 100%
(offering and redemption
price of $1.00 per share;
785,745,500 shares
outstanding)............... $ 785,789,506
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(a) Repurchase agreements which are terminable within 7 days.
See notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
June 30, 2000 Alliance Treasury Reserves
===============================================================================
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest......................................................$ 44,848,562
EXPENSES
Advisory fee (Note B..........................................$ 4,170,967
Distribution assistance and administrative service (Note C).... 3,278,674
Transfer agency (Note B)....................................... 414,831
Custodian fees................................................. 186,133
Registration fees.............................................. 139,777
Printing....................................................... 106,021
Audit and legal fees........................................... 30,732
Trustees' fees................................................. 10,466
Miscellaneous.................................................. 4,332
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Total expenses................................................. 8,341,933
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Net investment income............................................................ 36,506,629
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions................... 35,186
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NET INCREASE IN NET ASSETS FROM OPERATIONS............................................... $ 36,541,815
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 2000 June 30, 1999
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<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income .........................$ 36,506,629 $ 30,198,204
Net realized gain on investment transactions .. 35,186 10,597
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Net increase in net assets from operations .... 36,541,815 30,208,801
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ......................... (36,506,629) (30,198,204)
Net realized gain on investments .............. -0- (728)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease) (Note E) .............. (25,997,606) 71,685,912
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Total increase (decrease) ..................... (25,962,420) 71,695,781
NET ASSETS
Beginning of period ........................... 811,751,926 740,056,145
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End of period..................................$ 785,789,506 $ 811,751,926
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</TABLE>
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See notes to financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 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 accounting
principles generally accepted in the United States, 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. 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.
3. 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.
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 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, extraordinary
expenses) exceed 1% of its average daily net assets for any fiscal year. No
reimbursement was required for the year ended June 30, 2000.
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 $208,067 for the year ended June 30, 2000.
For the year ended June 30, 2000, the Fund's expenses were reduced by $3,496
under an expense offset arrangement with Alliance Fund Services, Inc.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Treasury Reserves
===============================================================================
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, 2000, the distribution fee amounted to $2,085,483. 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, 2000, such payments by the Portfolio amounted to
$1,193,191, a substantial portion of which was paid to the Adviser and its
affiliates.
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NOTE D: Investment Transactions
At June 30, 2000, the cost of investments for federal in come tax purposes was
the same as the cost for financial reporting purposes. At June 30, 2000, the
Portfolio had accumulated undistributed net realized gains of $44,006.
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NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At June 30,
2000, capital paid-in aggregated $785,745,500. Transactions, all at $1.00 per
share, were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, June 30,
2000 1999
-------------- --------------
<S> <C> <C>
Shares sold ........................... 2,971,684,193 2,440,073,136
Shares issued on reinvestments
of dividends ........................ 36,506,629 30,198,204
Shares redeemed ....................... (3,034,188,428) (2,398,585,428)
-------------- --------------
Net increase (decrease) ............... (25,997,606) 71,685,912
============== ==============
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Treasury Reserves
===============================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- ------- ------- -------- -------
<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 ........ .044 .039(a) .045(a) .044(a) .047(a)
----- ----- ----- ----- -----
Less: Dividends
Dividends from net
investment income .. (.044) (.039) (.045) (.044) (.047)
----- ----- ----- ----- -----
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 (b) 4.47% 3.96% 4.63% 4.53% 4.77%
Ratios/Supplemental Data
Net assets, end of
period
(in thousands) . $785,790 $811,752 $740,056 $704,084 $700,558
Ratios to average
net assets of:
Expenses, net of
waivers and
reimbursements ... 1.00% 1.00% .95% .85% .81%
Expenses, before
waivers and
reimbursements ... 1.00% 1.02% 1.01% 1.00% 1.05%
Net investment
income ........... 4.38% 3.88%(a) 4.53%(a) 4.43%(a) 4.64%(a)
</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. Total investment return
calculated for a period of less than one year is not annualized.
7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS Alliance Treasury Reserves
===============================================================================
To the Board of Trustees and Shareholders of
Alliance Treasury Reserves Portfolio
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Alliance Treasury Reserves Portfolio (the "Fund") at June 30, 2000, and the
results of its operations, the changes in its net assets and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at June 30, 2000, by correspondence with the custodian and brokers,
provides a reasonable basis for the opinion expressed above. The financial
statements for the year ended June 30, 1999, including the financial highlights
for each of the four years in the period then ended, were audited by other
independent accountants whose report dated July 23, 1999, expressed an
unqualified opinion on those financial statements.
PricewaterhouseCoopers LLP
New York, New York
July 28, 2000
8
<PAGE>
Alliance Treasury Reserves
===============================================================================
Alliance Treasury Reserves
1345 Avenue of the Americas
New York, NY 10105
Toll-free 1(800)221-5672
TRUSTEES
Dave H. Williams, Chairman
John D. Carifa
Sam Y. Cross (1)
Charles H.P. Duell (1)
William H. Foulk, Jr. (1)
David K. Storrs (1)
Shelby White (1)
OFFICERS
Dave H. Willliams, Chairman
Ronald M. Whitehill, President
Kathleen A. Corbet, Senior Vice President
Andrew M. Aran, Senior Vice President
Drew A. Biegel, Senior Vice President
John R. Bonczek, Senior Vice President
Doris T. Ciliberti, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Wayne D. Lyski, Senior Vice President
Patricia Ittner, Senior Vice President
Raymond J. Papera, Senior Vice President
Kenneth T. Carty, Vice President
John F. Chiodi, Jr., Vice President
Maria R. Cona, Vice President
John Dona, Vice President
William J. Fagan, Vice President
Linda D. Kelley, Vice President
Joseph R. LaSpina, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer and
Chief Financial Officer
Vincent S. Noto, Controller
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
DISTRIBUTOR
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
TRANSFER AGENT
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
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(1) Members of the Audit Committee.
9
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<PAGE>
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Alliance Treasury Reserves BULK RATE
1345 Avenue of the Americas, New York, NY 10105 U.S. POSTAGE
Toll free 1 (800) 221-5672 PAID
New York, NY
Yields. For current recorded yield information on Alliance Permit No. 7131
Treasury Reserves, call on a touch-tone telephone toll-free -----------------
(800) 251-0539 and press the following sequence of keys:
- - - - - - -
* * 1 2 9 0 #
- - - - - - -
For non-touch-tone telephones, call toll-free (800) 221-9513
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Alliance Capital [LOGO](R)
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
ATRAR600
