--------------------------------------------------------------------------------
Alliance
Government
Reserves
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Alliance Capital {LOGO](R)
Annual Report
June 30, 2000
<PAGE>
LETTER TO SHAREHOLDERS Alliance Government Reserves
================================================================================
August 2, 2000
Dear Shareholder:
We are pleased to provide you with an update of Alliance Government Reserves
Portfolio 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 Government Reserves
Portfolio 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 Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
--------------------------------------------------------------------------------
U.S. GOVERNMENT
AGENCIES - 58.8%
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION - 22.6%
$ 10,000 5.05%, 11/22/00 MTN............... 6.24% $ 9,954,316
25,500 5.89%, 12/22/00 MTN............... 6.35 25,444,607
25,500 5.90%, 12/01/00 MTN............... 6.15 25,473,851
45,000 5.92%, 12/07/00 MTN............... 6.11 44,963,248
10,000 6.36%, 8/16/00.................... 5.76 10,007,281
139,000 6.82%, 7/17/00 FRN................ 6.87 138,996,970
158,000 7.00%, 5/17/01.................... 6.98 158,033,522
44,000 7.28%, 5/25/01 MTN................ 7.28 44,000,000
30,000 9/21/00........................... 6.30 29,581,117
44,000 7/19/00........................... 6.44 43,858,980
94,000 8/10/00........................... 6.48 93,329,467
100,000 8/22/00........................... 6.50 99,069,778
82,500 12/28/00.......................... 6.51 79,814,625
93,500 9/07/00........................... 6.55 92,359,092
37,500 8/03/00........................... 6.57 37,277,594
93,500 9/14/00........................... 6.57 92,239,698
94,000 9/21/00........................... 6.58 92,613,631
171,000 9/28/00........................... 6.62 168,420,213
40,000 11/02/00.......................... 6.73 39,105,822
--------------
1,324,543,812
--------------
FEDERAL HOME
LOAN BANK - 18.9%
32,000 5.48%, 7/13/00.................... 5.58 31,998,993
45,000 5.56%, 7/14/00.................... 5.57 44,999,616
23,435 5.56%, 7/14/00.................... 5.85 23,432,037
46,500 6.05%, 11/03/00................... 6.06 46,498,888
87,000 6.37%, 7/28/00 FRN................ 6.46 86,994,224
94,000 6.40%, 2/09/01 MTN................ 6.42 93,986,884
85,000 6.50%, 2/15/01 MTN................ 6.59 84,952,401
94,000 6.56%, 10/06/00 FRN............... 6.63 93,982,957
94,000 6.63%, 10/16/00 FRN............... 6.77 93,971,865
90,000 6.75%, 5/04/01.................... 7.15 89,721,359
40,000 9/15/00........................... 6.30 39,482,356
135,000 7/12/00........................... 6.43 134,736,000
117,418 6.50%, 7/21/00.................... 6.50 116,995,947
100,000 6.59%, 9/20/00.................... 6.59 98,539,750
30,000 6.60%, 9/27/00.................... 6.60 29,524,067
--------------
1,109,817,344
--------------
FEDERAL HOME
LOAN MORTGAGE
CORP. - 11.3%
45,000 5.99%, 12/06/00 MTN............... 6.15% 44,969,113
38,000 7/11/00........................... 6.44 37,932,339
134,000 7/18/00........................... 6.44 133,594,389
64,000 7/27/00........................... 6.49 63,701,405
188,000 7/25/00........................... 6.50 187,189,093
90,000 8/01/00........................... 6.50 89,501,675
25,000 8/03/00........................... 6.57 24,851,729
82,500 9/28/00........................... 6.62 81,172,231
--------------
662,911,974
--------------
STUDENT LOAN
MARKETING
ASSOCIATION - 6.0%
89,000 6.52%, 11/17/00 FRN............... 6.59 88,976,340
82,000 6.54%, 8/10/00 FRN................ 6.57 81,997,311
94,000 6.54%, 10/12/00 FRN............... 6.65 93,971,565
89,000 6.54%, 11/15/00 FRN............... 6.59 88,983,676
--------------
353,928,892
--------------
Total U.S. Government
Agencies
(amortized cost
$3,451,202,022)................... 3,451,202,022
--------------
REPURCHASE
AGREEMENTS - 40.9%
Bank of America
275,000 6.53%, dated 6/29/00,
due 7/20/00 in the
amount of $276,047,521
(cost $275,000,000;
collateralized by
$309,800,000 FNMA 535063,
6.50%, 12/01/14,
value $285,996,007) (a)........... 6.53 275,000,000
2
<PAGE>
Alliance Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
--------------------------------------------------------------------------------
Chase Securities, Inc.
$300,000 6.55%, dated 6/28/00,
due 7/13/00 in the amount of
$300,818,750 (cost
$300,000,000; collateralized
by $237,450,000 FNMA 492273,
7.113%, 9/01/34, value
$178,111,408, $30,879,897
FNMA 452229, 6.00%, 3/01/29,
value $26,347,531,
$71,280,700 FHARM 420263,
6.328, 10/01/24, value
$24,863,323, $41,442,000
FHARM 420345, 7.40%,
10/01/37, value $24,466,197,
$46,472,000 FHARM 420273,
6.328%, 1/01/35, value
$16,334,583, $50,000,000
FHARM 390274, 6.217%,
4/01/31, value $13,353,751,
$31,743,211 FHARM 420267,
6.452%, 12/01/24, value
$12,558,787, $19,266,000
FHARM 390345, 6.252%,
12/01/34, value $7,770,814
and $5,680,000 FHARM E00543,
6.00%, 4/01/13, value
$4,268,931) (a)................... 6.55% $ 300,000,000
First Boston Corp.
300,000 6.46%, dated 6/21/00, due
7/06/00 in the amount of
$300,807,500 (cost
$300,000,000;
collateralized by
$94,771,000 GNMA 280133,
7.00%, 11/20/27,
value $59,586,144,
$105,426,952 GNMA I 28375,
7.375%, 2/20/24,
value $33,908,102,
$98,450,000 GNMA 280024,
7.125%, 12/20/26,
value $27,576,375,
$101,000,000 GNMA 280012,
7.125%, 11/20/26,
value $27,983,161,
$83,000,000 GNMA 28530,
7.125%, 10/20/24,
value $26,852,483,
$44,556,004 GNMA 780032,
6.50%, 8/15/24,
value $26,037,179,
$26,639,693 FNMA 323739,
6.50%, 5/01/04,
value $19,548,847,
$50,000,000 FNMA 313332,
8.50%, 11/01/11,
value $16,020,377,
$50,000,000 FNMA 313278,
8.50%, 8/01/11,
value $15,480,480,
$47,143,702 FNMA 238811,
7.251%, 5/01/25,
value $14,808,602,
$40,975,214 FNMA 296171,
7.854%, 6/01/24,
value $13,723,982,
$37,210,685 FHMA A01661,
9.00%, 1/01/17,
value $12,489,865 and
$48,257,061 FNMA 340183,
8.00%, 8/01/10,
value $12,372,369)................ 6.46 300,000,000
Goldman Sachs & Co.
250,000 6.55%, dated 6/27/00,
due 7/11/00 in the
amount of $250,636,806
(cost $250,000,000;
collateralized by
$302,028,000 FNMA 323541,
6.00%, 2/01/29,
value $257,330,096) (a)........... 6.55 250,000,000
Merrill Lynch & Co., Inc.
78,000 6.45%, dated 6/19/00,
due 7/10/00 in the
amount of $78,293,475
(cost $78,000,000;
collateralized by
$35,474,886 FHARM 786284,
6.036%, 4/01/28,
value $19,996,312,
$50,000,000 FNMA 299468,
7.018%, 10/01/24,
value $17,773,590,
$50,000,000 FHARM 755230,
8.261%, 8/01/34,
value $15,613,157,
3
<PAGE>
STATEMENT OF NET ASSETS (continued) Alliance Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
--------------------------------------------------------------------------------
$21,289,000 FHARM 846670,
7.81%, 9/01/30,
value $14,788,312 and
$30,722,123 FNMA 66426,
6.219%, 1/01/17,
value $12,508,762) (b)............ 6.45% $ 78,000,000
Morgan Stanley Dean Witter
$250,000 6.63%, dated 6/27/00,
due 7/05/00 in the amount of
$250,368,333 (cost
$250,000,000; collateralized
by $99,550,066 FNMA 323908,
6.00%, 9/01/29, value
$88,124,044, $90,000,000
FNMA 323573, 7.50%, 1/01/29,
value $63,546,117,
$56,759,512 FNMA 323715,
6.00%, 5/01/29, value
$49,133,704, $46,636,622
FNMA 323821, 6.00%, 7/01/29,
value $40,891,846 and
$17,430,000 FNMA 323990,
6.00%, 10/01/29, value
$15,511,894)...................... 6.63 250,000,000
PaineWebber, Inc.
170,000 6.47%, dated 6/16/00,
due 7/07/00 in the
amount of $170,641,608
(cost $170,000,000;
collateralized by
$84,701,727 GNMA 781038,
6.50%, 5/15/29,
value $76,633,804,
$43,063,222 GNMA 781029,
6.50%, 5/15/29,
value $38,627,619,
$38,265,944 FNMA 323812,
6.00%, 7/01/29,
value $33,573,794,
$19,875,155 FNMA 456450,
6.50%, 1/01/29,
value $17,144,576 and
$8,921,000 FNMA 323748,
6.50%, 4/01/14,
value $7,695,064)................. 6.47 170,000,000
Paribas Corp.
250,000 6.85%, dated 6/30/00,
due 7/03/00 in the
amount of $250,142,708
(cost $250,000,000;
collateralized by
$100,000,000 FNMA 31359,
value $95,381,000,
$50,000,000 FNMA 313588,
value $48,884,000,
$50,000,000 FNMA 313588,
value $49,239,000 and
$62,345,000 FMDN 313396,
value $61,817,000)................ 6.85% 250,000,000
Prudential Securities, Inc.
175,000 6.46%, dated 6/19/00,
due 7/10/00 in the
amount of $175,659,458
(cost $175,000,000;
collateralized by
$49,785,000 FHLB C11509,
6.50%, 6/01/28,
value $39,115,980,
$39,058,000 FNMA 535340,
7.641%, 12/01/26,
value $39,727,627,
$50,000,000 FHLB G01033,
8.50%, 12/01/28,
value $34,688,705,
$37,161,537 FHLB C22214,
6.50%, 2/01/29,
value $31,263,032,
$36,333,430 FHLB G00748,
7.00%, 8/01/27,
value $20,607,679 and
$25,095,000 FNMA 313713,
6.50%, 9/01/12,
value $14,854,619) (a)............ 6.46 175,000,000
Prudential Securities, Inc.
120,000 6.55%, dated 6/28/00,
due 7/14/00 in the
amount of $120,349,333
(cost $120,000,000;
collateralized by
$50,000,000 FHLB G01014,
6.50%, 12/01/28,
value $43,369,979,
$50,000,000 FHLB C00560,
7.00%, 9/01/28,
value $39,635,738,
$30,000,000 FHLB C36430,
7.50%, 2/01/30,
value $29,371,892 and
$14,022,000 FGLMC C19397,
4
<PAGE>
Alliance Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
--------------------------------------------------------------------------------
6.50%, 12/01/28,
value $11,365,368) (a)............ 6.55% $ 120,000,000
SBC Warburg
$200,000 6.70%, dated 6/30/00,
due 7/05/00 in the amount of
$200,186,111 (cost
$200,000,000; collateralized
by $125,000,000 FNMA,
11/30/00, value $125,923,750
and $80,990,000 FHLMC, 6.75%,
9/15/29, value $79,066,488)....... 6.70 200,000,000
State Street Bank and
Trust Co.
30,500 6.50%, dated 6/30/00,
due 7/03/00 in the
amount of $30, 516,521
(cost $30,500,000;
collateralized by
$30,655,000 FHLB,
6.315%, 8/24/01,
value $31,114,825................. 6.50 30,500,000
--------------
Total Repurchase
Agreements
(amortized cost
$2,398,500,000)................... 2,398,500,000
--------------
TOTAL INVESTMENTS - 99.7%
(amortized cost
$5,849,702,022)................... $5,849,702,022
Other assets less
liabilities - 0.3%.......... 17,148,802
--------------
NET ASSETS - 100%
(offering and redemption
price of $1.00 per share;
5,867,635,356 shares
outstanding)...................... $5,866,850,824
==============
--------------------------------------------------------------------------------
(a) Repurchase agreements which are terminable within 7 days.
(b) Funding Agreements which are illiquid securities and subject to
restrictions as to resale. This security amounted to $78,000,000,
representing 1.3% of net assets (see Note A).
Glossary of Terms:
FGLMC - Federal Home Loan Mortgage Corp. - Gold
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corp.
FHARM - Federal Home Adjustable Rate Mortgage
FMDN - Federal Mortgage Discount Note
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
GNMA - Government National Mortgage Association
MTN - Medium Term Note
See notes to financial statements.
5
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 2000 Alliance Government Reserves
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ....................................... $ 363,619,655
EXPENSES
Advisory fee (Note B) .......................... $ 29,460,152
Distribution assistance and administrative
service (Note C) ............................. 27,854,606
Transfer agency (Note B) ....................... 5,348,198
Printing ....................................... 989,661
Registration fees .............................. 661,955
Custodian fees ................................. 585,746
Audit and legal fees ........................... 78,218
Trustees' fees ................................. 14,597
Miscellaneous .................................. 37,808
---------------
Total expenses ................................. 65,030,941
Less: expense reimbursement .................... (1,675,047)
---------------
Net expenses ................................... 63,355,894
---------------
Net investment income .......................... 300,263,761
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions ... 50,388
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ......... $ 300,314,149
===============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 2000 June 30, 1999
=============== ===============
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income .......................... $ 300,263,761 $ 239,224,535
Net realized gain on investment transactions ... 50,388 33,882
--------------- ---------------
Net increase in net assets from operations ..... 300,314,149 239,258,417
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income .......................... (300,263,761) (239,224,535)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) .......................... 283,734,739 674,320,941
--------------- ---------------
Total increase ................................. 283,785,127 674,354,823
NET ASSETS
Beginning of period ............................ 5,583,065,697 4,908,710,874
--------------- ---------------
End of period .................................. $ 5,866,850,824 $ 5,583,065,697
=============== ===============
</TABLE>
--------------------------------------------------------------------------------
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 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 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.
--------------------------------------------------------------------------------
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. For the
year ended June 30, 2000, the reimbursement amounted to $1,675,047.
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 $2,064,697 for the year ended June 30, 2000.
For the year ended June 30, 2000, the Fund's expenses were reduced by $10,936
under an expense offset arrangement with Alliance Fund Services, Inc.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Government 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 $15,838,974. 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, 2000, such payments by the Portfolio amounted to
$12,015,632, a substantial portion of which was paid to the Adviser and its
affiliates.
--------------------------------------------------------------------------------
NOTE D: Investment Transactions
At June 30, 2000, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. At June 30, 2000 the
Portfolio had a capital loss carryforward of $784,532, of which $232,557 expires
in 2002 and $551,975 expires in the year 2003. To the extent that any net
capital loss carryforward is used to offset future capital gains, it is probable
that these gains will not be distributed to shareholders. The Portfolio utilized
$50,388 of capital loss carryforward in the current year.
--------------------------------------------------------------------------------
NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At June 30,
2000, capital paid-in aggregated $5,867,635,356. Transactions, all at $1.00 per
share, were as follows:
Year Ended Year Ended
June 30, June 30,
2000 1999
============== ==============
Shares sold ................................ 6,421,005,501 5,844,469,091
Shares issued on reinvestments of dividends 300,263,761 239,224,535
Shares redeemed ............................ (6,437,534,523) (5,409,372,685)
-------------- --------------
Net increase ............................... 283,734,739 674,320,941
============== ==============
8
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Government 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 .............................. 047(a) .042(a) .046(a) .044 .046(a)
------ ------ ------ ------ ------
Less: Dividends
Dividends from net investment income ............... (.047) (.042) (.046) (.044) (.046)
------ ------ ------ ------ ------
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) 4.82% 4.27% 4.74% 4.53% 4.72%
Ratios/Supplemental Data
Net assets, end of period (in millions) ............ $5,867 $5,583 $4,909 $3,762 $3,205
Ratios 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 .... 1.03% 1.02% 1.01% 1.00% 1.01%
Net investment income .......................... 4.74%(a) 4.18%(a) 4.63%(a) 4.44% 4.60%(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. Total investment return
calculated for a period of less than one year is not annualized.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS Alliance Government Reserves
================================================================================
To the Board of Trustees and Shareholders of
Alliance Government 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 Government 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
10
<PAGE>
Alliance Government Reserves
================================================================================
Alliance Government 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. Williams, 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
Joseph 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
--------------------------------------------------------------------------------
(1) Members of the Audit Committee.
11
<PAGE>
Alliance Government Reserves ---------------
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
Government Reserves, call on a touch-tone telephone toll-free ---------------
(800) 251-0539 and press the following sequence of keys:
- - - - - - -
* * 1 2 2 5 #
- - - - - - -
For non-touch-tone telephones, call toll-free (800) 221-9513
------------------------------------------------------------
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.
AGRAR600
