- --------------------------------------------------------------------------------
Alliance
Government
Reserves
- --------------------------------------------------------------------------------
Alliance Capital [LOGO](R)
Semi-Annual Report
December 31, 1999
(unaudited)
- --------------------------------------------------------------------------------
<PAGE>
STATEMENT OF NET ASSESTS
December 31, 1999 (unaudited) Alliance Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
- -------------------------------------------------------------------
U.S. GOVERNMENT
AGENCIES - 98.6%
FEDERAL HOME LOAN
BANK - 38.9%
$ 36,000 4.95%, 2/17/00......... 5.07% $ 35,994,851
57,500 4.95%, 2/18/00......... 5.07 57,491,594
154,000 5.00%, 2/10/00......... 5.00 153,999,531
10,000 5.02%, 3/03/00......... 5.03 9,999,488
30,000 5.03%, 2/25/00......... 5.03 29,997,952
64,000 5.05%, 3/03/00......... 5.05 64,000,000
35,000 5.05%, 3/03/00......... 5.15 34,998,975
96,400 5.10%, 3/03/00......... 5.17 96,391,808
91,000 5.10%, 5/17/00......... 5.17 90,977,847
41,000 5.14%, 3/17/00......... 5.14 41,000,000
91,000 5.15%, 5/19/00......... 5.25 90,971,047
46,000 5.15%, 10/19/00 FRN.... 5.15 46,000,000
91,000 5.16%, 3/08/00......... 5.23 90,987,879
96,000 5.20%, 3/15/00 FRN..... 5.20 96,000,000
10,020 5.20%, 5/26/00......... 5.83 9,986,451
13,500 5.26%, 5/26/00......... 5.85 13,468,310
91,100 5.42%, 6/14/00......... 5.45 91,085,151
32,000 5.48%, 7/13/00......... 5.58 31,983,890
11,500 5.50%, 4/14/00......... 5.66 11,492,654
68,435 5.56%, 7/14/00......... 5.58 68,385,315
94,000 5.63%, 10/16/00 FRN.... 5.63 93,924,535
87,000 5.99%, 7/28/00 FRN..... 5.99 86,955,716
46,500 6.05%, 11/03/00........ 6.05 46,497,288
94,000 6.16%, 10/06/00 FRN.... 6.16 93,965,219
94,000 6.17%, 10/06/00 FRN.... 6.17 93,951,332
9,500 1/07/00................ 4.00 9,495,778
50,000 2/02/00................ 5.65 49,766,459
50,000 2/09/00................ 5.65 49,712,222
35,000 2/23/00................ 5.67 34,722,333
32,000 3/01/00................ 5.70 31,710,258
75,000 3/10/00................ 5.70 74,215,541
40,000 3/24/00................ 5.73 39,497,800
40,000 3/29/00................ 5.74 39,466,800
50,000 2/11/00................ 5.77 49,690,437
45,000 1/21/00................ 5.78 44,870,400
25,000 1/21/00................ 5.80 24,927,750
33,000 5/31/00................ 5.80 32,231,036
81,500 1/19/00................ 5.81 81,290,636
20,000 1/14/00................ 5.82 19,964,555
16,120 2/09/00................ 5.82 16,024,404
20,000 1/21/00................ 5.83 19,941,900
18,700 4/13/00................ 5.85 18,398,333
50,000 4/13/00................ 5.88 49,189,194
74,500 2/23/00................ 5.89 73,884,692
25,000 3/08/00................ 5.89 24,737,292
68,500 3/22/00................ 5.90 67,626,644
50,000 3/22/00................ 5.92 49,360,319
14,000 3/17/00................ 5.97 13,832,225
25,000 5/31/00................ 5.97 24,397,792
-------------
2,519,461,633
-------------
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION - 23.3%
223,000 4.94%, 7/17/00 FRN..... 4.94 222,940,452
90,200 5.00%, 5/05/00 MTN..... 5.80 90,164,837
63,900 5.04%, 4/06/00 MTN..... 5.10 63,887,609
10,000 5.05%, 11/22/00 MTN.... 6.24 9,897,211
44,500 5.10%, 5/19/00 MTN..... 5.72 44,396,193
31,000 5.12%, 5/12/00 MTN..... 5.80 30,918,601
50,000 5.54%, 3/10/00 MTN..... 5.70 49,484,472
29,000 5.60%, 4/10/00 MTN..... 5.76 28,557,911
25,500 5.90%, 12/01/00 MTN.... 6.15 25,443,088
45,000 5.92%, 12/07/00 MTN.... 6.11 44,921,641
10,000 6.36%, 8/16/00......... 5.76 10,035,772
7,935 1/06/00................ 4.20 7,932,223
70,500 2/07/00................ 5.67 70,114,796
50,000 2/24/00................ 5.68 49,594,833
75,000 2/24/00................ 5.69 74,391,167
45,000 3/02/00................ 5.71 44,584,788
31,000 1/18/00................ 5.75 30,926,117
40,000 3/23/00................ 5.80 39,491,556
45,000 1/26/00................ 5.83 44,833,250
8,400 2/09/00................ 5.84 8,350,013
44,500 2/10/00................ 5.85 44,227,561
159,000 3/30/00................ 5.87 156,779,035
53,000 3/16/00................ 5.90 52,374,512
44,500 3/23/00................ 5.95 43,920,017
46,500 6/15/00................ 5.95 45,275,603
50,000 6/15/00................ 5.96 48,678,889
19,207 6/08/00................ 5.98 18,719,494
13,713 6/08/00................ 6.00 13,363,745
100,000 6/22/00................ 6.04 97,216,500
-------------
1,511,421,886
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FEDERAL HOME LOAN
MORTGAGE CORP. - 22.1%
45,000 5.99%, 12/06/00 MTN.... 6.15 44,933,924
9,000 6.40%, 5/16/00......... 5.80 9,016,055
42,000 1/20/00................ 5.35 41,896,668
15,850 2/02/00................ 5.51 15,777,619
10,000 2/24/00................ 5.55 9,920,555
10,000 2/25/00................ 5.55 9,919,028
35,000 2/18/00................ 5.62 34,750,450
50,000 1/27/00................ 5.64 49,813,333
1
<PAGE>
STATEMENT OF NET ASSESTS (continued) Alliance Government Reserves
================================================================================
Principal
Amount
(000) Security Yield Value
- -------------------------------------------------------------------
$ 50,000 2/01/00................ 5.65% $ 49,774,243
100,000 2/08/00................ 5.65 99,440,000
83,000 2/17/00................ 5.66 82,419,000
43,000 3/02/00................ 5.67 42,609,584
49,500 3/21/00................ 5.69 48,899,400
50,000 3/23/00................ 5.70 49,376,667
90,000 3/07/00................ 5.71 89,099,200
110,500 3/09/00................ 5.72 109,361,830
90,000 3/21/00................ 5.73 88,902,150
50,000 1/25/00................ 5.76 49,825,222
25,000 1/31/00................ 5.79 24,888,195
15,000 2/03/00................ 5.79 14,925,729
15,000 2/01/00................ 5.81 14,930,279
45,000 2/11/00................ 5.82 44,718,713
46,500 3/02/00................ 5.82 46,061,802
40,000 1/27/00................ 5.83 39,845,333
40,000 2/15/00................ 5.83 39,723,845
23,000 2/03/00................ 5.84 22,885,128
50,000 3/30/00................ 5.84 49,304,604
44,500 2/09/00................ 5.85 44,234,731
14,000 2/18/00................ 5.85 13,896,244
46,500 3/23/00................ 5.85 45,904,800
9,800 2/15/00................ 5.87 9,731,874
50,000 3/20/00................ 5.87 49,380,791
50,000 3/28/00................ 5.88 49,316,458
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1,435,483,454
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STUDENT LOAN
MARKETING
ASSOCIATION - 12.6%
84,000 6.11%, 2/14/00 FRN..... 6.11 83,994,322
196,000 6.13%, 3/16/00 FRN..... 6.13 195,981,659
89,000 6.14%, 11/17/00 FRN.... 6.14 88,945,700
184,000 6.16%, 2/04/00 FRN..... 6.16 183,996,843
82,000 6.16%, 8/10/00 FRN..... 6.16 81,985,213
94,000 6.16%, 10/12/00 FRN.... 6.16 93,921,873
89,000 6.16%, 11/15/00 FRN.... 6.16 88,962,229
-------------
817,787,839
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FEDERAL FARM
CREDIT BANK - 1.7%
20,000 1/28/00................ 5.78 19,920,139
9,500 1/19/00................ 5.80 9,475,638
22,100 2/18/00................ 5.85 21,936,214
5,000 2/10/00................ 5.87 4,969,283
14,500 2/15/00................ 5.87 14,399,201
17,000 2/16/00................ 5.87 16,879,073
21,785 3/31/00................ 5.88 21,476,670
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109,056,218
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Total U.S. Government
Agencies
(amortized cost
$6,393,211,030)........ 6,393,211,030
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REPURCHASE
AGREEMENTS - 0.9%
Paribas Corp.
30,000 4.75%, dated 12/31/99,
due 1/03/00 in the
amount of $30,011,875
(cost $30,000,000;
collateralized by
$30,280,000 FHLMC,
5.28%, 2/02/01,
value $30,571,000)..... 4.75 30,000,000
State Street Bank
and Trust Co.
28,900 3.00%, dated 12/31/99,
due 1/03/00 in the
amount of $28,907,225
(cost $28,900,000;
collateralized by
$27,615,000 U.S. Treasury
Note, 7.875%, 11/15/04,
value $29,479,013)..... 3.00 28,900,000
-------------
Total Repurchase
Agreements
(amortized cost
$58,900,000)........... 58,900,000
-------------
TOTAL INVESTMENTS - 99.5%
(amortized cost
$6,452,111,030)........ 6,452,111,030
Other assets less
liabilities - 0.5%..... 34,826,728
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2
<PAGE>
Alliance Government Reserves
================================================================================
Value
- -------------------------------------------------------------------
NET ASSETS - 100%
(offering and redemption
price of $1.00 per share;
6,487,766,805 shares
outstanding)........... $6,486,937,758
==============
- --------------------------------------------------------------------------------
Glossary of Terms:
FHLMC - Federal Home Loan Mortgage Corp.
FRN - Floating Rate Note
MTN - Medium Term Note
See notes to financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1999 (unaudited) Alliance Government Reserves
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ...................................................... $ 163,296,172
EXPENSES
Advisory fee (Note B) ......................................... $ 14,156,832
Distribution assistance and administrative service (Note C) ... 13,171,205
Transfer agency (Note B) ...................................... 2,516,766
Registration fees ............................................. 387,190
Printing ...................................................... 361,721
Custodian fees ................................................ 224,099
Audit and legal fees .......................................... 43,376
Trustees' fees ................................................ 3,999
Miscellaneous ................................................. 47,864
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Total expenses ................................................ 30,913,052
Less: expense reimbursement ................................... (526,285)
-------------
Net expenses .................................................. 30,386,767
-------------
Net investment income ......................................... 132,909,405
REALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions .................. 5,873
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ....................... $ 132,915,278
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(unaudited) June 30, 1999
================= ===============
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income ............................ $ 132,909,405 $ 239,224,535
Net realized gain on investment transactions ..... 5,873 33,882
--------------- ---------------
Net increase in net assets from operations ....... 132,915,278 239,258,417
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ............................ (132,909,405) (239,224,535)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (Note E) ............................ 903,866,188 674,320,941
--------------- ---------------
Total increase ................................... 903,872,061 674,354,823
NET ASSETS
Beginning of year ................................ 5,583,065,697 4,908,710,874
--------------- ---------------
End of period .................................... $ 6,486,937,758 $ 5,583,065,697
=============== ===============
</TABLE>
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See notes to financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 (unaudited) 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 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. 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
six months ended December 31, 1999, the reimbursement amounted to $526,285.
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 $939,346 for the six months ended December 31,
1999.
For the six months ended December 31, 1999, the Fund's expenses were reduced by
$9,078 under an expense offset arrangement with Alliance Fund Services, Inc.
5
<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 six
months ended December 31, 1999, the distribution fee amounted to $7,596,692. 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 six months ended December 31, 1999, such payments by the
Portfolio amounted to $5,574,513 of which $85,000 was paid to the Adviser.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
At December 31, 1999, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. At June 30, 1999 the
Portfolio had a capital loss carryforward of $834,920, of which $46,271 expires
in 2001, $236,674 expires in 2002 and $551,975 expires in the year 2003.
- --------------------------------------------------------------------------------
NOTE E: Transactions in Shares of Beneficial Interest
An unlimited number of shares ($.001 par value) are authorized. At December 31,
1999, capital paid-in aggregated $6,487,766,805. Transactions, all at $1.00 per
share, were as follows:
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(unaudited) June 30, 1999
================= ===============
<S> <C> <C>
Shares sold ......................................... 2,955,863,821 5,844,469,091
Shares issued on reinvestments of dividends ...... 132,909,405 239,224,535
Shares redeemed ..................................... (2,184,907,038) (5,409,372,685)
--------------- ---------------
Net increase ........................................ 903,866,188 674,320,941
=============== ===============
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Government Reserves
================================================================================
Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each
Period
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30,
1999 ======================================================================
(unaudited) 1999 1998 1997 1996 1995
============= ============= ============ ============= ============= ============
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- --------
Income from Investment Operations
Net investment income .................... .0219(a) .0419(a) .0463(a) .0443 .0461(a) .0439(a)
------- ------- ------- ------- ------- --------
Less: Dividends
Dividends from net investment income ..... (.0219) (.0419) (.0463) (.0443) (.0461) (.0439)
------- ------- ------- ------- ------- --------
Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ========
Total Return
Total investment return based on net
asset value (b) ........................ 2.21% 4.27% 4.74% 4.53% 4.72% 4.48%
Ratios/Supplemental Data
Net assets, end of period (in millions) .. $ 6,487 $ 5,583 $ 4,909 $ 3,762 $ 3,205 $ 2,514
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements ....................... 1.00%(c) 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements ....................... 1.02%(c) 1.02% 1.01% 1.00% 1.01% 1.05%
Net investment income .................. 4.43%(a)(c) 4.18%(a) 4.63%(a) 4.44% 4.60%(a) 4.42%(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.
(c) Annualized.
7
<PAGE>
CHANGE IN INDEPENDENT ACCOUNTANT Alliance Government Reserves
================================================================================
McGladrey & Pullen, LLP ("McGladrey") resigned as independent auditors of the
Fund pursuant to an agreement by PricewaterhouseCoopers LLP ("PwC") to acquire
McGladrey's investment company practice. The McGladrey partners and
professionals serving the Fund at the time of the acquisition joined PwC.
The reports of McGladrey on the financial statements of the Fund during the past
two fiscal years contained no adverse opinion or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audits for the two most recent fiscal years and through
August 27, 1999, there were no disagreements with McGladrey on any matter of
accounting principle or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
McGladrey would have caused it to make reference to the subject matter of
disagreement in connection with its report.
On September 25, 1999, the Fund, with the approval of its Trustees and its Audit
Committee, engaged PwC as its independent auditors.
8
<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
Ronald M. Whitehill, President
Kathleen A. Corbet, Senior Vice President
Drew A. Biegel, Senior Vice President
John R. Bonczek, Senior Vice President
Patricia Ittner, Senior Vice President
Robert I. Kurzweil, Senior Vice President
Wayne D. Lyski, Senior Vice President
Raymond J. Papera, Senior Vice President
Kenneth T. Carty, Vice President
John F. Chiodi, Jr., Vice President
Doris T. Ciliberti, Vice President
Maria R. Cona, 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 & 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.
9
<PAGE>
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<PAGE>
(This page left intentionally blank.)
<PAGE>
---------------
Alliance Governement 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
Permit No. 7131
---------------
Yields. For current recorded yield information on Alliance Government Reserves,
call on a touch-tone telephone toll-free (800) 251-0539 and press the following
sequence of keys:
|1| |#| |1| |#| |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.
AGRSR1299
