<PAGE>
<PAGE>
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SHAREHOLDER SERVICES
Shareholder representatives are available to answer your questions about the
status of your account or other Fund matters. Call toll-free (800) 237-5822 or
write the Fund, P.O. Box 1520, Secaucus, New Jersey 07096-1520.
YIELDS. For current recorded yield information on the Trust Portfolio, call on
a touch-tone telephone toll-free (800) 251-0539 and press the following
sequence of keys: [1] [*] [6] [0] [#]. For non-touch-tone telephones, call
toll-free (800) 221-9513.
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ACM Institutional Reserves, Inc. (the "Fund") is an open-end investment
company. The Trust Portfolio, which is diversified, is offered by this
Prospectus. Three additional Portfolios of the Fund, the Prime Portfolio, the
Government Portfolio and the Tax-Free Portfolio, are offered by a separate
Prospectus. The Trust Portfolio's investment objectives are--in the following
order of priority--safety of principal, excellent liquidity and maximum
current income.
The Trust Portfolio offers institutional and corporate investors a
convenient and economical way to invest in a managed money market portfolio.
The Portfolio is only available through financial intermediaries.
An investment in the Trust Portfolio is (i) neither insured nor guaranteed by
the U.S. Government; (ii) not a deposit or obligation of, or guaranteed or
endorsed by, any bank; and (iii) not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency. There can
be no assurance that the Trust Portfolio will be able to maintain a stable net
asset value of $1.00 per share.
A "Statement of Additional Information," dated September 1, 1994, as amended
February 15, 1995 which provides a further discussion of certain areas in this
prospectus and other matters and which may be of interest to some investors,
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, call or write the Trust Portfolio at the
telephone number or address shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
- --------------------------------------------------------------------------------
CONTENTS
--------
<TABLE>
<S> <C>
Expense Information............................. 2
Financial Highlights............................ 2
Introduction.................................... 3
Investment Objectives and Policies.............. 3
Purchase and Redemption of Shares............... 4
Additional Information.......................... 5
</TABLE>
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DTNAC 16PRO5
- --------------------------------------------------------------------------------
ACM
INSTITUTIONAL RESERVES- TRUST PORTFOLIO
- --------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
PROSPECTUS
SEPTEMBER 1, 1994,
AS AMENDED FEBRUARY 15, 1995
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<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
The Trust Portfolio has no sales load on purchases or reinvested dividends,
deferred sales load, redemption fee or exchange fee.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets, net of expense reimbursement or
fee waiver)
<S> <C>
Management Fees......................................................... .0%
Other Expenses.......................................................... .50%
---
Total Fund Operating Expenses........................................... .50%
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return (cumulatively through the end of
each time period): $5 $16 $28 $63
</TABLE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in the Trust Portfolio will
bear directly and indirectly. Expense information has been restated to reflect
current fees. The expenses listed in the table are net of voluntary expense re-
imbursements and voluntary fee waivers. The estimated expenses, before volun-
tary expense reimbursements or fee waiver, would be: Management Fees--.45%,
Other Expenses--.78% and Total Fund Operating Expenses--1.23%. The example
should not be considered a representation of past or future expenses; actual
expenses may be greater or less than those shown.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- --------------------------------------------------------------------------------
The following table has been audited by McGladrey & Pullen, the Fund's inde-
pendent auditors, whose report thereon appears in the Statement of Additional
Information. This information should be read in conjunction with the financial
statements and notes thereto included in the Statement of Additional Informa-
tion.
<TABLE>
<CAPTION>
NOVEMBER 16, 1992(A)
YEAR ENDED THROUGH
APRIL 30, 1994 APRIL 30, 1993
-------------- --------------------
<S> <C> <C>
Net asset value, beginning of period....... $ 1.00 $ 1.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment income...................... 0.0309 0.0144
------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income....... (0.0309) (0.0144)
------- -------
Net asset value, end of period............. $ 1.00 $ 1.00
======= =======
TOTAL RETURN
Total investment return based on net asset
value(b)(c)............................... 3.14% 3.21%
======= =======
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions).... $ 36.8 $ 5.3
Ratio of expenses to average net assets(d). 0.14%(e) -0-(f)
Ratio of net investment income to average
net assets(d)............................. 3.15%(e) 3.17%(c)(f)
</TABLE>
- -------
(a) Commencement of operations.
(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 at net asset value during the period and redemption on the last
day of the period.
(c) Annualized.
(d) Net of expense reimbursement.
(e) Net of voluntary expense reimbursement equivalent to .31% of average daily
net assets.
(f) Net of voluntary expense reimbursement equivalent to .45% of average daily
net assets.
--------------
From time to time the Trust Portfolio advertises its "yield" and "effective
yield." Both yield figures are based on historical earnings and are not in-
tended to indicate future performance. To calculate the "yield," the amount of
dividends paid on a share during a specified seven-day period is assumed to be
paid each week over a 52-week period and is shown as a percentage of the in-
vestment. To calculate "effective yield," which will be higher than the "yield"
because of compounding, the dividends paid are assumed to be reinvested. Divi-
dends for the Trust Portfolio for the seven days ended June 30, 1994 amounted
to an annualized yield of 3.95%, equivalent to an effective yield of 4.03%.
Further information about the Fund's performance is contained in the Fund's an-
nual report to shareholders which may be obtained without charge by contacting
Alliance Fund Services, Inc. at the address or the telephone number shown on
the cover of this Prospectus.
2
<PAGE>
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INTRODUCTION
- --------------------------------------------------------------------------------
The Trust Portfolio invests in a diversified portfolio of money market securi-
ties. The Trust Portfolio is designed for institutional and corporate investors
who can benefit from high money market income and who are clients of financial
intermediaries. Investors using the Trust Portfolio avoid certain mechanical
burdens that they would incur by investing in money market instruments direct-
ly, such as monitoring of maturity dates, safeguarding of receipts and deliv-
eries, and the maintenance of tax information and other records. At the time of
investment, no security purchased by the Trust Portfolio can have a maturity
exceeding 397 days, and the average maturity of the Trust Portfolio cannot ex-
ceed 90 days.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
The investment objectives of the Trust Portfolio are--in the following order
of priority--safety of principal, excellent liquidity, and maximum current in-
come to the extent consistent with the first two objectives. As a matter of
fundamental policy, the Trust Portfolio pursues its objectives by maintaining a
portfolio of high-quality U.S. dollar-denominated money market securities all
of which, at the time of investment, have remaining maturities of 397 days or
less. While neither this policy, the investment objectives, nor the "other fun-
damental investment policies" described below may be changed for the Trust
Portfolio without shareholder approval, the nonfundamental investment policies
may be changed upon notice but without such approval. The Fund may in the fu-
ture establish additional portfolios which may have different investment objec-
tives. There can be no assurance that the Portfolio's objectives will be
achieved.
The Trust Portfolio will comply with Rule 2a-7 under the Investment Company
Act of 1940 (the "Act"), as amended from time to time, including the diversity,
quality and maturity conditions imposed by the Rule. A more detailed descrip-
tion of Rule 2a-7 is set forth in the Trust Portfolio's Statement of Additional
Information under "Investment Objectives and Policies."
MONEY MARKET SECURITIES
The money market securities in which the Trust Portfolio invests include: (1)
marketable obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities (collectively, the "U.S. Government"); (2) certificates of
deposit and bankers' acceptances issued or guaranteed by, or time deposits
maintained at, banks or savings and loan associations (including foreign
branches of U.S. banks or U.S. or foreign branches of foreign banks) having to-
tal assets of more than $500 million; (3) commercial paper of prime quality
[i.e., rated A-1+ or A-1 by Standard & Poor's Corporation ("Standard & Poor's")
or Prime-1 by Moody's Investors Service, Inc. ("Moody's") or, if not rated, is-
sued by U.S. or foreign companies having outstanding debt securities rated AAA
or AA by Standard & Poor's, or Aaa or Aa by Moody's] and participation inter-
ests in loans extended by banks to such companies; and (4) repurchase agree-
ments that are collateralized in full each day by liquid securities of the
types listed above. These agreements are entered into with "primary dealers"
(as designated by the Federal Reserve Bank of New York) in U.S. Government se-
curities or State Street Bank and Trust Company, the Fund's Custodian. For each
repurchase agreement, the Trust Portfolio requires continual maintenance of the
market value of the underlying collateral in amounts equal to, or in excess of,
the agreement amount. In the event of a dealer default, the Fund might suffer a
loss to the extent the proceeds from the sale of the collateral were less than
the repurchase price. The Trust Portfolio's commercial paper investments may
include variable amount master demand notes which represent a direct borrowing
arrangement involving periodically fluctuating rates of interest under a letter
agreement between a commercial paper issuer and an institutional lender pursu-
ant to which the lender may determine to invest varying amounts.
To the extent the Trust Portfolio purchases money market instruments issued by
foreign entities, consideration will be given to the domestic marketability of
such instruments, and possible interruptions of, or restrictions on, the flow
of international currency transactions.
3
<PAGE>
The Trust Portfolio may purchase restricted securities that are determined by
the Adviser to be liquid in accordance with procedures adopted by the Board of
Directors of the Fund. Restricted securities are securities subject to con-
tractual or legal restrictions on resale, such as those arising from an is-
suer's reliance upon certain exemptions from registration under the Securities
Act of 1933. The Portfolio may purchase restricted securities eligible for re-
sale under Rule 144A under the Securities Act and commercial paper issued in
reliance upon the exemption from registration in Section 4(2) of the Securi-
ties Act and, in each case, determined by the Adviser to be liquid in accor-
dance with procedures adopted by the Board of Directors of the Fund.
The Portfolio may invest in asset-backed securities that meet its existing
diversification, quality and maturity criteria. Asset-backed securities are
securities issued by special purpose entities whose primary assets consist of
a pool of loans or accounts receivable. The securities may be in the form of a
beneficial interest in a special purpose trust, limited partnership interest,
or commercial paper or other debt securities issued by a special purpose cor-
poration. Although the securities may have some form of credit or liquidity
enhancement, payments on the securities depend predominately upon collection
of the loans and receivables held by the issuer. It is the Portfolio's current
intention to limit its investment in such securities to not more than 5% of
its net assets.
OTHER FUNDAMENTAL INVESTMENT POLICIES.
To maintain portfolio diversification and reduce investment risk, the Trust
Portfolio may not (1) invest 25% or more of its total assets in the securities
of issuers conducting their principal business activities in any one industry
although there is no such limitation with respect to U.S. Government securi-
ties or bank obligations, including certificates of deposit, bankers' accept-
ances and interest bearing savings deposits; (2) invest more than 5% of its
assets in the securities of any one issuer (except the U.S. Government) al-
though with respect to one-quarter of its total assets it may invest without
regard to such limitation; (3) invest more than 5% of its assets in the secu-
rities of any issuer (except the U.S. Government) having less than three years
of continuous operation or purchase more than 10% of any class of the out-
standing securities of any issuer (except the U.S. Government); (4) enter into
repurchase agreements if, as a result thereof, more than 10% of its assets
would be committed to repurchase agreements not terminable within seven days
and other illiquid investments; (5) borrow money except from banks on a tempo-
rary basis in aggregate amounts not exceeding 15% of its assets; the Trust
Portfolio will not purchase any investments while borrowings in excess of 5%
of total assets exist; and (6) mortgage, pledge or hypothecate its assets ex-
cept to secure such borrowings.
As a matter of operating policy, fundamental policy number (2) would give the
Trust Portfolio the ability to invest, with respect to 25% of its assets, more
than 5% of its assets in any one issuer only in the event Rule 2a-7 is amended
in the future.
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
OPENING ACCOUNTS
The Portfolio is available through financial intermediaries.
(1) Telephone the Trust Portfolio toll-free at (800) 237-5822. The Trust
Portfolio will ask for the (a) name of the account as you wish it to be
registered, (b) address of the account, and (c) taxpayer identification
number. The Trust Portfolio will then provide you with an account number.
(2) Instruct your bank to wire Federal funds exactly as follows:
ABA01100002
State Street Bank and Trust Company
Boston, MA 02101
DDA9903-279-9
Attention: Mutual Funds Division
ACM Institutional Reserves, Inc.--
Trust Portfolio
++
Your account name + as registered
Your account number + with the Trust
++ Portfolio
(3) Mail a completed Application Form to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520
4
<PAGE>
SUBSEQUENT INVESTMENTS
(1) Telephone the Trust Portfolio toll-free at (800) 237-5822 to place your
order for additional shares.
(2) Instruct your bank to wire Federal funds to State Street Bank and Trust
Company ("State Street Bank") as in (2) above or mail your check or nego-
tiable bank draft payable to ACM Institutional Reserves, Inc.--Trust Port-
folio to Alliance Fund Services, Inc. as in (3) above.
REDEMPTIONS
A. BY TELEPHONE
You may withdraw any amount from your account on any Fund business day (any
weekday exclusive of days on which the New York Stock Exchange or State Street
Bank is closed) as discussed below, between 9:00 a.m. and 5:00 p.m. (New York
time) via orders given to Alliance Fund Services, Inc. by telephone toll-free
(800) 237-5822. Redemption orders must include your account name as registered
with the Trust Portfolio and the account number.
Telephone redemptions may be made on any Fund business day between 9:00 a.m.
and 4:00 p.m. (New York time). If your telephone redemption order is received
by Alliance Fund Services, Inc. prior to 4:00 p.m. (New York time) on any Fund
business day, we will send the proceeds in Federal funds by wire to your desig-
nated bank account that day. Redemptions are made without any charge to you.
During periods of drastic economic or market developments, such as the market
break of October 1987, it is possible that shareholders would have difficulty
in reaching Alliance Fund Services, Inc. by telephone (although no such diffi-
culty was apparent at any time in connection with the 1987 market break). If a
shareholder were to experience such difficulty, the share-holder should issue
written instructions to Alliance Fund Services, Inc. at the address shown on
the cover of this prospectus. The Fund reserves the right to suspend or termi-
nate its telephone redemption service at any time without notice. Neither the
Fund nor the Adviser, or Alliance Fund Services, Inc. will be responsible for
the authenticity of telephone requests for redemptions that the Fund reasonably
believes to be genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine, including among
others, recording such telephone instructions and causing written confirmations
of the resulting transactions to be sent to shareholders. If the Fund did not
employ such procedures, it could be liable for losses arising from unauthorized
or fraudulent telephone instructions. Selected dealers or agents may charge a
commission for handling telephone requests for redemptions.
B. BY CHECK-WRITING
With this service, you may write checks made payable to any payee in any
amount of $500 or more. Checks cannot be written for more than the principal
balance (not including any accrued dividends) in your account. First, you must
fill out the Signature Card which is available from your financial intermedi-
ary. If you wish to establish this check-writing service subsequent to the
opening of your Fund account, contact the Fund by telephone or mail. There is
no separate charge for the check-writing service, except that State Street Bank
will impose its normal charges for checks which are returned unpaid because of
insufficient funds or for checks upon which you have placed a stop order. The
check-writing service enables you to receive the daily dividends declared on
the shares to be redeemed until the day that your check is presented to State
Street Bank for payment.
- --------------------------------------------------------------------------------
OBTAINING AN APPLICATION FORM. If you wish to obtain an Application Form, or
you have questions about the Form, purchasing shares, or other Trust
Portfolio procedures, please telephone the Trust Portfolio toll-free at (800)
237-5822.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
CHANGES IN APPLICATION FORM. If you decide to change instructions or any other
information already given on your Application Form, send a written notice to
ACM Institutional Reserves, Inc.--Trust Portfolio, P.O. Box 1520, Secaucus, New
Jersey 07096-1520, with your signature guaranteed by an institution which is an
"eligible guarantor" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended.
5
<PAGE>
INVESTMENTS MADE BY CHECK. Money transmitted by a check drawn on a member of
the Federal Reserve System is converted to Federal funds in one business day
following receipt and is then invested in the Fund. Checks drawn on banks which
are not members of the Federal Reserve System may take longer to be converted
and invested. All payments must be in United States dollars.
Proceeds from any subsequent redemption by you of Trust Portfolio shares that
were purchased by check will not be forwarded to you until the Trust Portfolio
is reasonably assured that your check has cleared, normally up to fifteen days
following the purchase date.
SHARE PRICE. Shares of the Trust Portfolio are sold and redeemed on a continu-
ous basis without sales or redemption charges at their net asset value which is
expected to be constant at $1.00 per share, although this price is not guaran-
teed. The net asset value of the Trust Portfolio's shares is determined each
Fund business day (as defined under "Purchase and Redemption of Shares--Redemp-
tions," above), at 12:00 Noon and 4:00 p.m. (New York time). The net asset
value per share of the Trust Portfolio is calculated by taking the sum of the
value of the Trust Portfolio's investments (amortized cost value is used for
this purpose) and any cash or other assets, subtracting liabilities, and divid-
ing by the total number of shares of the Trust Portfolio outstanding. All ex-
penses, including the fees payable to the Adviser, are accrued daily.
TIMING OF INVESTMENTS AND REDEMPTIONS. The Trust Portfolio has two transaction
times each business day, 12:00 Noon and 4:00 p.m. (New York time). Investments
receive the full dividend for a day if the investor's telephone order is placed
by 4:00 p.m. (New York time) and Federal funds or bank wire monies are received
by State Street Bank before 4:00 p.m. (New York time) on that day.
Redemption proceeds are normally wired the same business day if a redemption
request is received prior to 4:00 p.m. (New York time), but in no event later
than seven days, unless redemptions have been suspended or postponed due to the
determination of an "emergency" by the Securities and Exchange Commission or to
certain other unusual conditions. Shares do not earn dividends on the day a re-
demption is effected.
MINIMUMS. An initial investment of at least $1,000,000 in the Trust Portfolio
is required. There is no minimum for subsequent investments. The Trust Portfo-
lio reserves the right at anytime to vary the initial and subsequent investment
minimums.
The Trust Portfolio reserves the right to close out an account that is below
$500,000 after at least 60 days' written notice to the shareholder unless the
balance in such account is increased to at least that amount during such peri-
od.
DAILY DIVIDENDS, OTHER DISTRIBUTIONS, TAXES. All net income of the Trust Port-
folio is determined each business day at 4:00 p.m. (New York time) and is paid
immediately thereafter pro rata to shareholders of record via automatic invest-
ment in additional full and fractional shares of the Trust Portfolio in each
shareholder's account. As such additional shares are entitled to dividends on
following days, a compounding growth of income occurs.
The Trust Portfolio's net income consists of all accrued interest income on
assets less expenses applicable to that dividend period. Realized gains and
losses are reflected in net asset value and are not included in net income.
Distributions out of taxable interest income, other investment income, and
short-term capital gains are taxable as ordinary income and distributions of
long-term capital gains, if any, are taxable as long-term capital gains irre-
spective of the length of time a shareholder held its shares.
THE ADVISER. The Trust Portfolio retains Alliance Capital Management L.P.,
1345 Avenue of the Americas, New York, NY 10105 under an Advisory Agreement to
provide investment advice and, in general, to supervise its management and in-
vestment program, subject to the general control of the Directors of the Fund.
The Trust Portfolio pays the Adviser at an annual rate of .45 of 1% of the av-
erage daily value of its net assets. During the Fund's fiscal year ended April
30, 1994, the Adviser waived the advisory fee of $81,648 for the Trust Portfo-
lio. In addition, for the fiscal year ended April 30, 1994, the Adviser volun-
tarily and contractually reimbursed expenses of the Trust Portfolio in the
amount of $116,512.
6
<PAGE>
The Adviser has undertaken until, at its request, the Trust Portfolio notifies
investors to the contrary, that if, in any fiscal year, the aggregate expenses
of the Trust Portfolio, exclusive of taxes, brokerage, interest on borrowings
and extraordinary expenses, but including the management fee, exceed .50 of 1%
of the Trust Portfolio's average net assets for the fiscal year, the Trust
Portfolio may deduct from the payment to be made to the Adviser, or the Adviser
will bear, such excess expense.
The Adviser is a leading international investment manager, supervising client
accounts with assets as of June 30, 1994 totaling more than $122 billion (of
which approximately $39 billion represented the assets of investment compa-
nies). The Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations
and endowment funds. The 49 registered investment companies managed by the Ad-
viser comprising 93 separate investment portfolios currently have over one mil-
lion shareholders. As of June 30, 1994, the Adviser was retained as an invest-
ment manager of employee benefit fund assets for 28 of the Fortune 100 compa-
nies.
Alliance Capital Management Corporation, the sole general partner of, and the
owner of a 1% general partnership interest in, the Adviser, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States, one of the largest life insurance companies in the United States.
The Adviser may make payments from time to time from its own resources, which
may include the management fees paid by the Trust Portfolio to compensate bro-
ker-dealers, depository institutions, or other persons for providing distribu-
tion assistance and adminis-trative services and to otherwise promote the sale
of shares of the Trust Portfolio, including paying for the preparation, print-
ing and distribution of prospectuses and sales literature or other promotional
activities.
SHAREHOLDER SERVICING AGENT. The shareholder servicing agent is responsible
for shareholder account and administrative servicing functions. Such responsi-
bilities may include, among other things, answering shareholder inquiries re-
garding account status and history and the manner in which purchases and re-
demptions of Trust Portfolio shares may be effected; assisting shareholders in
designating and changing dividend options, account designations and addresses;
providing necessary personnel and facilities to establish and maintain certain
shareholder accounts and records as may be requested from time to time by the
Trust Portfolio; assisting in processing purchase and redemption transactions;
arranging for the wiring of funds; transmitting and receiving funds in connec-
tion with shareholder orders to purchase or redeem shares; verifying share-
holder signatures on check writing drafts in connection with redemption orders,
transfers among and changes in shareholder-designated accounts; providing peri-
odic statements showing a shareholder's account balances; furnishing (either
separately or on an integrated basis with other reports sent to a shareholder
by the shareholder servicing agent) monthly and annual statements and confirma-
tions of all purchases and redemptions of shares in a shareholder's account;
transmitting, on behalf of the Fund, proxy statements, annual reports, updated
prospectuses and other communications to shareholders of the Fund; receiving,
tabulating and transmitting to the Fund proxies executed by shareholders with
respect to meetings of shareholders of the Fund; and providing such other re-
lated services as the Trust Portfolio or a shareholder may reasonably request.
For the services provided, the shareholder servicing agent may receive a fee
for services performed.
CUSTODIAN, TRANSFER AGENT AND DISTRIBUTOR. State Street Bank and Trust Compa-
ny, P.O. Box 1912, Boston, MA 02105, is the Fund's Custodian. Alliance Fund
Services, Inc., P.O. Box 1520, Secaucus, NJ 07096-1520 and Alliance Fund Dis-
tributors, Inc., 1345 Avenue of the Americas, New York, NY 10105, are the
Fund's Transfer Agent and Distributor, respectively. The transfer agent charges
a fee for its services.
FUND ORGANIZATION. The Trust Portfolio is a series of ACM Institutional Re-
serves, Inc. ("Fund"). The Trust Portfolio is one of four series of the Fund;
shares of the other series, the Prime Portfolio, the Government Portfolio and
the Tax-Free Portfolio, are offered by a separate prospectus. The Fund was or-
ganized as a Maryland corporation on March 21, 1990. The Trust Portfolio's ac-
tivities are supervised by its Board of Di-
7
<PAGE>
rectors. Shareholders of each Portfolio are entitled to one vote per share and
vote as a single series on matters that affect all series in substantially the
same manner. As of June 30, 1994, the Adviser beneficially owned more than 25%
of the outstanding shares of the Portfolio and therefore is deemed to be a con-
trolling person of such Portfolio. For more detailed information see the Port-
folio's Statement of Additional Information.
Maryland law does not require annual meetings of shareholders and it is antic-
ipated that shareholder meetings will be held only when required by Federal or
Maryland law. Shareholders have available certain procedures for the removal of
directors.
REPORTS. Shareholders will receive a monthly summary of their account, as
well as semi-annual and annual reports. Shareholders may arrange for a copy of
each of their account statements to be sent to other parties.
BOARD OF DIRECTORS
David H. Dievler, Chairman
Ruth Block
John D. Carifa
John H. Dobkin
William H. Foulk, Jr.
James M. Hester
Clifford L. Michel
Robert C. White
OFFICERS
James P. Syrett, President
Ronald M. Whitehill, Executive Vice President
Kathleen A. Corbet, Senior Vice President
Susan G. Peabody, Senior Vice President
Drew Biegel, Vice President
Pamela F. Richardson, Vice President
Mark D. Gersten, Treasurer and Chief
Financial Officer
Edmund P. Bergan, Jr., Secretary
Joseph J. Mantineo, Controller
8
<PAGE>
ACM INSTITUTIONAL RESERVES, INC.
- Trust Portfolio
- -----------------------------------------------------------------
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
- -----------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1994, as amended February 15, 1995
- -----------------------------------------------------------------
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Trust Portfolio's current
Prospectus dated September 1, 1994, as amended February 15, 1995
which describes shares of the Trust Portfolio of the Fund. A
copy of this Prospectus may be obtained by contacting Alliance
Fund Services, Inc. at the address or telephone number shown
above.
TABLE OF CONTENTS
PAGE
The Fund. . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective and Policies . . . . . . . . . . . 2
Investment Restrictions . . . . . . . . . . . . . . . . 8
Management. . . . . . . . . . . . . . . . . . . . . . . 10
Purchase and Redemption of Shares . . . . . . . . . . . 16
Daily Dividends-Determination of Net Asset Value. . . . 17
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Information . . . . . . . . . . . . . . . . . . 20
Appendix - Commercial Paper and Bond Ratings. . . . . . 23
Report of Independent Auditors and Financial Statements 25-39
- -----------------------------------------------------------------
k:wit-mit\SAItr-94.air<PAGE>
-2-
- -----------------------------------------------------------------
THE FUND
- -----------------------------------------------------------------
ACM Institutional Reserves, Inc. (the "Fund") is an open-end
investment company. The Trust Portfolio, which is diversified,
is described in the Prospectus which supplements this Statement
of Additional Information. Three additional Portfolios of the
Fund, the Prime Portfolio, the Government Portfolio and the Tax-
Free Portfolio, are described in a separate Prospectus and
Statement of Additional Information.
- -----------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- -----------------------------------------------------------------
The Trust Portfolio's investment objectives are -- in the
following order of priority -- safety of principal, excellent
liquidity, and maximum current income to the extent consistent
with the first two objectives. As a matter of fundamental
policy, the Trust Portfolio pursues its objectives by maintaining
a portfolio of high-quality U.S.-dollar denominated money market
securities, all of which, at the time of investment, have
remaining maturities of 397 days or less.
The Trust Portfolio will comply with Rule 2a-7 under the
Investment Company Act of 1940 (the "Act"), as amended from time
to time, including the diversity, quality and maturity conditions
imposed by the Rule.
Currently, pursuant to Rule 2a-7, the Trust Portfolio may
invest only in "eligible securities," as that term is defined in
the Rule. Generally, an eligible security is a security that (i)
is denominated in U.S. Dollars and has a remaining maturity of
397 days or less; (ii) is rated, or is issued by an issuer with
short-term debt outstanding that is rated, in one of the two
highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO; and (iii) has been determined
by the Adviser to present minimal credit risks pursuant to
procedures approved by the Board of Directors. A security that
originally had a maturity of greater than 397 days is an eligible
security if its remaining maturity at the time of purchase is 397
calendar days or less and the issuer has outstanding short-term
debt that would be an eligible security. Unrated securities may
also be eligible securities if the Adviser determines that they
are of comparable quality to a rated eligible security pursuant
to guidelines approved by the Board of Directors. A description<PAGE>
-3-
of the ratings of some NRSROs appears in Appendix attached
hereto.
Under Rule 2a-7 the Trust Portfolio may not invest more than
five percent of its assets in the securities of any one issuer
other than the United States Government, its agencies and
instrumentalities. In addition, the Trust Portfolio may not
invest in a security that has received, or is deemed comparable
in quality to a security that has received, the second highest
rating by the requisite number of NRSROs (a "second tier
security") if immediately after the acquisition thereof the Trust
Portfolio would have invested more than (A) the greater of one
percent of its total assets or one million dollars in securities
issued by that issuer which are second tier securities, or (B)
five percent of its total assets in second tier securities.
The Trust Portfolio may make the following investments
diversified by maturities and issuers:
1. Marketable obligations of, or guaranteed by, the United
States Government, its agencies or instrumentalities. These
include issues of the U.S. Treasury, such as bills, certificates
of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an act of
Congress. The latter issues include, but are not limited to,
obligations of the bank for cooperatives, Federal Financing Bank,
Federal Home Loan Bank, Federal Intermediate Credit Banks,
Federal Land Bank, Federal National Mortgage Association and
Tennessee Valley Authority. Some of the securities are supported
by the full faith and credit of the U.S. Treasury, others are
supported by the right of the issuer to borrow from the Treasury,
and still others are supported only by the credit of the agency
or instrumentality.
2. Certificates of deposit and bankers' acceptances issued
or guaranteed by, or time deposits maintained at, banks or
savings and loans associations (including foreign branches of
U.S. banks or U.S. or foreign branches of foreign banks) having
total assets of more than $500 million. Certificates of deposit
are receipts issued by a depository institution in exchange for
the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date
specified on the certificate. The certificate usually can be
traded in the secondary market prior to maturity. Bankers'
acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance
commercial transactions. Generally, an acceptance is a time
draft drawn on a bank by an exporter or an importer to obtain a
stated amount of funds to pay for specific merchandise. The
draft is them "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the<PAGE>
-4-
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.
3. Commercial paper, including variable amount master
demand notes, of prime quality [rated A-1+ or A-1 by Standard &
Poor's Corporation ("Standard & Poor's") or Prime-1 by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by
domestic and foreign companies which have an outstanding debt
issued rated AAA or AA by Standard & Poor's or Aaa or Aa by
Moody's]. For a description of such ratings see the Appendix.
Commercial paper consists of short-term (usually from 1 to 270
days) unsecured promissory notes issued by corporations in order
to finance their current operations. A variable amount master
demand note represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter
agreement between a commercial paper issuer and an institutional
lender pursuant to which the lender may determine to invest
varying amounts.
4. Repurchase agreements pertaining to the above
securities. A repurchase agreement arises when a buyer purchases
a security and simultaneously agrees to resell it to the vendor
at an agreed-upon future date. The resale price is greater than
the purchase price, reflecting an agreed-upon market rate which
is effective for the period of time the buyer's money is invested
in the security and which is not related to the coupon rate on
the purchased security. Repurchase agreements may be entered
into with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities or with State Street Bank and Trust
Company ("State Street Bank"), the Fund's Custodian. It is the
Trust Portfolio's current practice, which may be changed at any
time without shareholder approval, to enter into repurchase
agreements only with such primary dealers and State Street Bank.
For each repurchase agreement, the Trust Portfolio requires
continual maintenance of the market value of underlying
collateral in amounts equal to, or in excess of, the agreement
amount. While the maturities of the underlying collateral may
exceed one year, the term of the repurchase agreement is always
less than one year. In the event that a vendor defaulted on its
repurchase obligation, the Trust Portfolio might suffer a loss to
the extent that the proceeds from the sale of the collateral were
less than the repurchase price. If the vendor became bankrupt,
the Trust Portfolio might be delayed in selling the collateral.
Repurchase agreements often are for short periods such as one day
or a week, but may be longer. Repurchase agreements not
terminable within seven days will be limited to no more than 10%
of the Trust Portfolio's assets.<PAGE>
-5-
Additional Investment Policies
--------------------------------
The following investment policies supplement those set forth
above.
RESERVE REPURCHASE AGREEMENTS. While the Trust Portfolio
has no plans to do so, it may enter into reverse repurchase
agreements, which involve the sale of money market securities
held by the Trust Portfolio with an agreement to repurchase the
securities at an agreed-upon price, date and interest payment.
LIQUID RESTRICTED SECURITIES
The Trust Portfolio may purchase restricted securities that
are determined by the Adviser to be liquid in accordance with
procedures adopted by the Directors. Restricted securities are
securities subject to contractual or legal restrictions on
resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act of
1933 (the "Securities Act").
In recent years, a large institutional market has developed
for certain types of restricted securities including, among
others, private placements, repurchase agreements, commercial
paper, foreign securities and corporate bonds and notes. These
instruments are often restricted securities because they are sold
in transactions not requiring registration. For example,
commercial paper issues in which the Trust Portfolio may invest
include, among others, securities issued by major corporations
without registration under the Securities Act in reliance on the
exemption from registration afforded by Section 3(a)(3) of such
Act and commercial paper issued in reliance on the private
placement exemption from registration which is afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the
Federal securities laws in that any resale must also be made in
an exempt transaction. Section 4(2) paper is normally resold to
other institutional investors through or with the assistance of
investment dealers who make a market in Section 4(2) paper, thus
providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders.
In 1990, in part to enhance the liquidity in the<PAGE>
-6-
institutional markets for restricted securities, the SEC adopted
Rule 144A under the Securities Act to establish a safe harbor
from the Securities Act's registration requirements for resale of
certain restricted securities to qualified institutional buyers.
Section 4(2) paper that is issued by a company that files reports
under the Securities Exchange Act of 1934 is generally eligible
to be resold in reliance on the safe harbor of Rule 144A.
Pursuant to Rule 144A, the institutional restricted securities
markets may provide both readily ascertainable values for
restricted securities and the ability to liquidate an investment
in order to satisfy share redemption orders on a timely basis.
An insufficient number of qualified institutional buyers
interested in purchasing certain restricted securities held by
the Trust Portfolio, however, could affect adversely the
marketability of such portfolio securities and the Trust
Portfolio might be unable to dispose of such securities promptly
or at reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of Rule
144A and the consequent inception of the PORTAL System sponsored
by the National Association of Securities Dealers, Inc., an
automated system for the trading, clearance and settlement of
unregistered securities.
The Fund's Directors have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
The Directors have delegated the function of making day-to-day
determinations of liquidity to the Adviser, pursuant to
guidelines approved by the Directors. The Adviser takes into
account a number of factors in determining whether a restricted
security being considered for purchase is liquid, including at
least the following:
(i) the frequency of trades and quotations for
the security;
(ii) the number of dealers making quotations to
purchase or sell the security;
(iii) the number of other potential purchasers of
the security;
(iv) the number of dealers undertaking to make a
market in the security;
(v) the nature of the security (including its
unregistered nature) and the nature of the
marketplace for the security (e.g., the time
needed to dispose of the security, the method
of soliciting offers and the mechanics of
transfer); and<PAGE>
-7-
(vi) any applicable Securities and Exchange
Commission interpretation or position with
respect to such types of securities.
Following the purchase of a restricted security by the Trust
Portfolio, the Adviser monitors continuously the liquidity of
such security and reports to the Directors regarding purchases of
liquid restricted securities.
General
---------
While there are many kinds of short-term securities used by
money market investors, the Trust Portfolio, in keeping with its
primary investment objective of safety of principal, restricts
its investments to the types listed above. Of note, the Trust
Portfolio does not invest in letters of credit. The Trust
Portfolio may make investments in certificates of deposit and
banker's acceptances issued or guaranteed by, or time deposits
maintained at, foreign branches of U.S. banks and U.S. and
foreign branches of foreign banks, and commercial paper issued by
foreign companies. To the extent that the Trust Portfolio makes
such investments, consideration is given to their domestic
marketability, the lower reserve requirements generally mandated
for overseas banking operations, the possible impact of
interruptions in the flow of international currency transactions,
potential political and social instability or expropriation,
imposition of foreign taxes, the lower level of government
supervision of issuers, the difficulty in enforcing contractual
obligations and lack of uniform accounting standards. There can
be no assurance that any of the Trust Portfolio's objectives will
be achieved. The market value of the Trust Portfolio's
investments tends to decrease during periods of rising interest
rates and to increase during intervals of falling rates.
Net income to shareholders is aided both by the Trust
Portfolio's ability to make investments in large denominations
and by efficiencies of scale. Also, the Trust Portfolio may seek
to improve its income by selling certain portfolio securities
prior to maturity in order to take advantage of yield disparities
that occur in money markets.
The Trust Portfolio's investment objectives may not be
changed without the affirmative vote of a majority of the Trust
Portfolio's outstanding shares as defined below. Except as
otherwise provided, the Trust Portfolio's investment policies are
not designated "fundamental policies" within the meaning of the
Act and may, therefore, be changed by the Directors without a
shareholder vote. However, the Trust Portfolio will not change
its investment policies without contemporaneous written notice to<PAGE>
-8-
shareholders.
- -----------------------------------------------------------------
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------
Unless otherwise specified to the contrary, the following
restrictions may not be changed without the affirmative vote of
(1) 67% or more of the shares represented at a meeting at which
more than 50% of the outstanding shares are present in person or
by proxy or (2) more than 50% of the outstanding shares,
whichever is less. If a percentage restriction is adhered to at
the time of an investment, a later increase or decrease in
percentage resulting from a change in values of portfolio
securities or in the amount of the Trust Portfolio's assets will
not constitute a violation of that restriction.
The Trust Portfolio may not:
1. purchase any security which has a maturity date more
than 397 days or less from the date of the Trust Portfolio's
purchase;
2. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry provided that for purposes of this
restriction (a) there is no limitation with respect to
investments in securities issued or guaranteed by the United
States Government, its agencies or instrumentalities,
certificates of deposit, bankers' acceptances and
interest-bearing savings deposits and (b) all finance companies
as a group and all utility companies as a group are each
considered to be a separate industry;
3. invest more than 5% of its assets in the securities of
any one issuer (exclusive of securities issued or guaranteed by
the United States Government, its agencies or instrumentalities),
except that up to 25% of the value of the Trust Portfolio's total
assets may be invested without regard to such 5% limitation;
4. invest in more than 10% of any one class of an issuer's
outstanding securities (exclusive of securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities);
5. borrow money except from banks on a temporary basis or
via entering into reverse repurchase agreements in aggregate
amounts not to exceed 15% of the Trust Portfolio's assets and to
be used exclusively to facilitate the orderly maturation and sale
of portfolio securities during any periods of abnormally heavy
redemption requests, if they should occur; such borrowings may<PAGE>
-9-
not be used to purchase investments and the Trust Portfolio will
not purchase any investments while borrowings in excess of 15% of
total assets exist;
6. pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by the
Trust Portfolio except as may be necessary in connection with any
borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 5% of the
Trust Portfolio's assets;
7. make loans, provided that the Trust Portfolio may
purchase money market securities and enter into repurchase
agreements;
8. enter into repurchase agreements if, as a result
thereof, more than 10% of the Trust Portfolio's assets would be
subject to repurchase agreements not terminable within seven days
and other illiquid investments; or
9. (a) make investments for the purpose of exercising
control; (b) purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition or
reorganization; (c) invest in real estate (other than money
market securities secured by real estate or interests therein or
money market securities issued by companies which invest in real
estate, or interests therein), commodities or commodity
contracts, including futures contracts, interests in oil, gas and
other mineral exploration or other development programs; (d)
purchase securities on margin; (e) make short sales of securities
or maintain a short position or write, purchase or sell puts,
call, straddles, spreads or combinations thereof; (f) invest in
securities of issuers (other than agencies and instrumentalities
of the United States Government) having a record, together with
predecessors, of less than three years of continuous operation if
more than 5% of the Trust Portfolio's assets would be invested in
such securities; (g) purchase or retain securities of any issuers
if those officers and directors of the Fund and of the Adviser
who own individually more than 1/2% of the outstanding securities
of such issuer together own more than 5% of the securities of
such issuer; or (h) act as an underwriter of securities.
In connection with the qualification or registration of the
Trust Portfolio's shares for sale under the securities laws of
certain states, the Trust Portfolio has agreed, in addition to
the foregoing investment restrictions, that it (i) will not
invest more than 5% of the value of its total assets at the time
of purchase in the commercial paper, including variable amount
master demand notes, of any one issuer, and (ii) will not pledge,
hypothecate or in any manner transfer, as security for
indebtedness, securities owned by the Trust Portfolio if such<PAGE>
-10-
pledge, hypothecation, or transfer would then result in more than
10% of the Trust Portfolio's net assets being so encumbered.
- -----------------------------------------------------------------
MANAGEMENT
- -----------------------------------------------------------------
DIRECTORS AND OFFICERS
The Directors and principal officers of the Fund and their
primary occupations during the past five years are set forth
below. Unless otherwise specified, the address of each such
person is 1345 Avenue of the Americas, New York, New York 10105.
Each Director and officer is affiliated as such with one or more
of the other registered investment companies that are advised by
the Adviser.
DIRECTORS
DAVID H. DIEVLER,* Chairman of the Board and President, is a
Senior Vice President of Alliance Capital Management Corporation
("ACMC")**, the sole general partner of the Adviser with which he
has been associated since prior to 1989.
JOHN D. CARIFA,* is the President, the Chief Operating
Officer and a Director of ACMC, with which he has been associated
since prior to 1989.
RUTH BLOCK, is a Director of Ecolab Incorporated (specialty
chemicals) and Amoco Corporation (oil and gas). Previously, she
was an Executive Vice President and Chief Insurance Officer of
The Equitable Life Assurance Society of the United States since
prior to 1989. Her address is Box 4653, Stamford, Connecticut
06903.
- --------------------
* An "interested person" of the Fund as defined in the
Act.
** For purposes of this statement of Additional
Information, ACMC refers to Alliance Capital Management
Corporation, the sole general partner of the Adviser,
and to the predecessor general partner of the Adviser
of the same name.
<PAGE>
-11-
JOHN H. DOBKIN, is the President of Historic Hudson Valley
(historic preservation) since 1990. Previously, he was Director
of the National Academy of Design. From 1987 to 1992, he was a
Director of ACMC. His address is 105 West 55th Street, New York,
New York 10019.
WILLIAM H. FOULK, JR., is a Senior Manager of Barrett
Associates, Inc., a registered investment adviser, since prior to
1989. His address is 521 Fifth Avenue, New York, New York 10175.
DR. JAMES M. HESTER, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide
Corporation. He was formerly President of New York University,
The New York Botanical Garden and Rector of The United Nations
University. His address is 525 East 72nd Street, New York, New
York 10021.
CLIFFORD L. MICHEL, is a Partner of the law firm of Cahill
Gordon & Reindel with which he has been associated since prior to
1989. He is Chief Executive Officer of Wenonah Development
Company (investments) and a Director of Placer Dome, Inc.
(mining) and Faber-Castell Corporation (writing products). His
address is St. Bernard's Road, Gladstone, New Jersey 07934.
ROBERT C. WHITE, is a Vice President and Chief Financial
Officer of the Howard Hughes Medical Institute with which he has
been associated since prior to 1989. His address is 8101
Connecticut Avenue, Apt. S501, Chevy Chase, Maryland 20815.
The Directors of the Fund who are officers or employees of
the Adviser or any of its affiliates receive no remuneration from
the Fund. Each of the other Directors is paid an annual retainer
of $2,000, a fee of $250 for each meeting attended and reimbursed
for the expense of attendance at such meetings. During the
fiscal year ended April 30, 1994, the Fund paid an aggregate of
$9,468 as director's fees to the Fund's Directors who are not
affiliated with the Adviser. As of June 30, 1994, the Directors
and officers of the Fund as a group owned less than 1% of the
outstanding shares of each Portfolio.
OFFICERS
DAVID H. DIEVLER - Chairman, see biography above.
JAMES P. SYRETT - President, is a Senior Vice President of
ACMC and Division President and Chief Executive Officer of
Alliance Cash Management Services with which he has been
associated since prior to 1989.
<PAGE>
-12-
RONALD M. WHITEHILL - Executive Vice President, is a Vice
President of ACMC and Executive Vice President of Alliance Cash
Management Services with which he has been associated since 1993.
Previously, he was Senior Vice President and Managing Director of
Reserve Fund since prior to 1989.
KATHLEEN A. CORBET - Senior Vice President, is a Senior Vice
President of ACMC since July 1993. Previously, she held various
responsibilities as head of Equitable Capital Management
Corporation's Fixed Income Management Department, Private
Placement Secondary Trading and Fund Management since prior to
1989.
SUSAN G. PEABODY - Senior Vice President, is a Senior Vice
President of ACMC with which she has been associated since prior
to 1989.
DREW A. BIEGEL - Vice President, is a Vice President of ACMC
which he has been associated with since October 1989.
Previously, he was associated with Reich & Tang, L.P.
PAMELA F. RICHARDSON - Vice President, is a Vice President
of ACMC with which she has been associated since June 1990.
Previously, she was a Vice President of Mitchell Hutchins Asset
Management with which she had been associated since prior to
1989.
EDMUND P. BERGAN, Jr. - Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
("AFD") with which he has been associated since prior to 1989.
MARK D. GERSTEN - Treasurer and Chief Financial Officer, is
a Senior Vice President of Alliance Fund Services, Inc. ("AFS")
and AFD with which he has been associated since prior to 1989.
JOSEPH J. MANTINEO, Controller, - is a Vice President of AFS
with which he has been associated since prior to 1989.
THE ADVISER
Alliance Capital Management L.P., a Delaware limited
partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") as the
Fund's Adviser (see "Management of the Fund" in the Prospectus).
ACMC, the sole general partner of, and the owner of a 1% general
partnership interest in, the Adviser, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The<PAGE>
-13-
Equitable Companies Incorporated ("ECI"), a holding company
controlled by AXA, a French insurance holding company. As of
December 31, 1993, ACMC, Inc. and Equitable Capital Management
Corporation, each a wholly-owned direct or indirect subsidiary of
Equitable, owned in the aggregate approximately 62.2% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"), and approximately 27.5% and 10.3% of the Units
were owned by the public and employees of the Adviser and its
subsidiaries, respectively, calculated including as outstanding
units subject to options exercisable by employees within 60 days
of December 31, 1993.
AXA owns 49% of the outstanding voting shares of common
stock of ECI. AXA is a member of a group of companies (the "AXA
Group") that is the second largest insurance group in France and
one of the largest insurance groups in Europe. Principally
engaged in property and casualty insurance and life insurance in
Europe and elsewhere in the world, the AXA Group is also involved
in real estate operations and certain other financial services,
including mutual fund management, lease financing services and
brokerage services. Based on information provided by AXA, as of
December 31, 1993, 42.7% of the voting shares (representing 54.8%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian Corporation, owned 34.2%). As of December 31, 1993,
62.4% of the voting shares (representing 71.5% of the voting
power) of Finaxa were owned by five French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 31.6% of the voting shares (representing
45.5% of the voting power)), and 27.1% of the voting shares
(representing 19.7% of the voting power) of Finaxa were owned by
Compagnie Financiere de Paribas, a French financial institution
engaged in banking and related activities ("PARIBAS"). Including
the shares owned by Midi Participations, as of December 31, 1993,
the Mutuelles AXA directly or indirectly owned 51.7% of the
voting shares (representing 64.2% of the voting power) of AXA.
Acting as a group, the Mutuelles AXA control AXA, Midi
Participations and Finaxa. The Mutuelles AXA have approximately
1.5 million policyholders.
The Adviser is a leading international investment manager
supervising client accounts with assets as of June 30, 1994
totaling more than $122 billion (of which more than $39 billion
represents the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,<PAGE>
-14-
foundations and endowment funds. The Adviser and its subsidiary
employ approximately 1,400 employees who operate out of domestic
offices and the overseas offices of subsidiaries in London,
England, Tokyo, Japan, Vancouver, Canada and Toronto, Canada,
Melbourne, Australia and Dusseldorf, Germany. The 49 registered
investment companies managed by the Adviser comprising 93
separate investment portfolios currently have over one million
shareholders. As of June 30, 1994, the Adviser was retained as
an investment manager of employee benefit fund assets for 28 of
the Fortune 100 companies.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
each Portfolio of the Fund and pays all compensation of Directors
of the Fund who are affiliated persons of the Adviser. The
Adviser or its affiliates also furnish the Fund without charge
with management supervision and assistance and office
facilities. Under the Advisory Agreement, the Trust Portfolio
pays the Adviser at an annual rate of .45 of 1% of the average
daily value of its net assets. The fee is accrued daily and paid
monthly. The Adviser has undertaken, until, at its request, the
Fund notifies investors to the contrary that if, in any fiscal
year, the aggregate expenses of the Trust Portfolio, exclusive of
taxes, brokerage, interest on borrowings and extraordinary
expenses, but including the management fee, exceed .50 of 1% of
the Trust Portfolio's average net assets for the fiscal year, the
Trust Portfolio may deduct from the payment to be made to the
Adviser, or the Adviser will bear, such excess expenses. The
Adviser also voluntarily reimbursed the Trust Portfolio from
October 15, 1993 to April 30, 1994 for expenses exceeding .20 of
1% of its average daily net assets. For the period ended April
30, 1994, the Adviser waived the advisory fee of $81,648 for the
Trust Portfolio. For the period November 16, 1992 (commencement
of operations) to April 30, 1993, the Adviser waived its advisory
fee of $11,718. For the year ended April 30, 1994, the Adviser
voluntarily and contractually reimbursed expenses of the Trust
Portfolio in the amount of $116,512. For the period ended April
30, 1993, reimbursement was $58,200. The Adviser may make
payments from time to time from its own resources, which may
include the management fees paid by the Trust Portfolio to
compensate broker-dealers, depository institutions, or other
persons for providing distribution assistance and administrative
services and to otherwise promote the sale of shares of the Trust
Portfolio, including paying for the preparation, printing and
distribution of prospectuses and other literature or other
promotional activities. The Trust Portfolio also pays for
printing of prospectuses and other reports to shareholders and
all expenses and fees related to registrations and filings with
the Securities and Exchange Commission and with state regulatory
authorities. The Trust Portfolio pays all other expenses
incurred in its operations, including the Adviser's management<PAGE>
-15-
fees; custody, transfer and dividend disbursing expenses; legal
and auditing costs; clerical, administrative, accounting, and
other office costs; fees and expenses of Directors who are not
affiliated with the Adviser; costs of maintenance of the Fund's
existence; and interest charges, taxes, brokerage fees, and
commissions. As to the obtaining of clerical and accounting
services not required to be provided to the Trust Portfolio by
the Adviser under the Advisory Agreement, the Fund may employ its
own personnel. For such services, it also may utilize personnel
employed by the Adviser; if so done, the services are provided to
the Fund at cost and the payments therefor must be specifically
approved in advance by the Directors.
The Advisory Agreement became effective on July 22, 1992.
The Advisory Agreement replaced an earlier agreement (the "First
Advisory Agreement") that terminated because of its technical
assignment as a result of AXA's acquisition of control over
Equitable. In anticipation of the assignment of the First
Advisory Agreement, the advisory agreement was approved by the
unanimous vote, cast in person, of the Fund's Directors
(including the Directors who are not parties to the Advisory
Agreement or interested persons as defined in the Act of any such
party) at a meeting called for the purpose held on September 10,
1991. At a meeting held on December 7, 1993, a majority of the
outstanding voting securities of the Trust Portfolio approved the
Advisory Agreement.
The Advisory Agreement remains in effect with respect to the
Trust Portfolio until December 31, 1994, and thereafter for
successive twelve month periods computed from each January 1,
provided that such continuance is specifically approved at least
annually by a vote of a majority of the Trust Portfolio's
outstanding voting securities or by the Fund's Board of
Directors, including in either case approval by the majority of
the Directors who are not parties to the Advisory Agreement or
interested persons as defined in the Act. The Advisory Agreement
may be terminated with respect to the Trust Portfolio without
penalty on 60 days' written notice at the option of either party
or by vote of a majority of the outstanding voting securities of
the Trust Portfolio; it will automatically terminate in the event
of assignment. The Adviser is not liable for any action or
inaction in regard to its obligations under the Advisory
Agreement as long as it does not exhibit willful misfeasance, bad
faith, gross negligence, or reckless disregard of its
obligations.
<PAGE>
-16-
- -----------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -----------------------------------------------------------------
The Trust Portfolio may refuse any order for the purchase of
shares and reserves the right to suspend the sale of its shares
to the public in response to conditions in the securities markets
or for other reasons. The Trust Portfolio is only available
through financial intermediaries.
Shareholders maintaining accounts in the Trust Portfolio
through brokerage firms and other institutions should be aware
that such institutions necessarily set deadlines for receipt of
transaction orders from their clients that are earlier than the
transaction times of the Trust Portfolio itself so that the
institutions may properly process such orders prior to their
transmittal to State Street Bank. Should an investor place a
transaction order with such an institution after its deadline,
the institution may not effect the order with the Trust Portfolio
until the next business day. Accordingly, an investor should
familiarize himself or herself with the deadlines set by his or
her institution.
Except with respect to telephone orders, investors whose
payment in Federal funds or bank wire monies are received by
State Street Bank by 4:00 p.m. (New York time) will become
shareholders on, and will receive the dividend declared, that
day. A telephone order for the purchase of shares will become
effective, and the shares purchased will receive the dividend on
shares declared on that day, if such order is placed by 4:00 p.m.
(New York time) and Federal funds or bank wire monies are
received by State Street bank prior to 4:00 p.m. (New York time)
of such day. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve
wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately
available funds; similar immediate availability is accorded
monies received at State Street Bank by bank wire. Money
transmitted by a check drawn on a member of the Federal Reserve
System is converted to Federal funds in one business day
following receipt. Checks drawn on banks which are not members
of the Federal Reserve System may take longer. All payments
(including checks from individual investors) must be in United
States dollars.
All shares purchased are confirmed to each shareholder and
are credited to his or her account at net asset value. To avoid
unnecessary expense to the Trust Portfolio and to facilitate the<PAGE>
-17-
immediate redemption of shares, stock certificates, for which no
charge is made, are not issued except upon the written request of
the shareholder. Certificates are not issued for fractional
shares. Shares for which certificates have been issued are not
eligible for any of the optional methods of withdrawal, such as
telephone, telegraph and check-writing procedures. The Trust
Portfolio reserves the right to reject any purchase order.
The Trust Portfolio reserves the right to close out an
account that is below $500,000 after at least 60 days' written
notice to the shareholder unless the balance in such account is
increased to at least that amount during such period. For
purposes of this calculation, the sum of a shareholder's balance
in all of the Portfolios will be considered as one account.
A "business day," during which purchases and redemptions of
Trust Portfolio shares can become effective and the transmittal
of redemption proceeds can occur, is considered for Trust
Portfolio purposes as any weekday exclusive of national holidays
on which the New York Stock Exchange is closed and Good Friday;
if one of these holidays falls on a Saturday or Sunday, purchases
and redemptions will likewise not be processed on the preceding
Friday or the following Monday, respectively. On any such day
that is an official bank holiday in Massachusetts, neither
purchases nor wire redemptions can become effective because
Federal funds cannot be received or sent by State Street Bank.
On such days, therefore, the Trust Portfolio can only accept
redemption orders for which shareholders desire remittance by
check. The right of redemption may be suspended or the date of a
redemption payment postponed for any period during which the New
York Stock Exchange is closed (other than customary weekend and
holiday closings), when trading on the New York Stock Exchange is
restricted, or an emergency (as determined by the Securities and
Exchange Commission) exists, or the Securities and Exchange
Commission has ordered such a suspension for the protection of
shareholders. The value of a shareholder's investment at the
time of redemption may be more or less than his or her cost,
depending on the market value of the securities held by the Trust
Portfolio at such time and the income earned.
- -----------------------------------------------------------------
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
- -----------------------------------------------------------------
All net income of the Trust Portfolio is determined at 12:00
Noon and 4:00 p.m. (New York time) and is paid immediately
thereafter pro rata to shareholders of record of the Trust
Portfolio via automatic investment in additional full and
fractional shares in each shareholder's account at the rate of
one share for each dollar distributed. As such additional shares<PAGE>
-18-
are entitled to dividends on following days, a compounding growth
of income occurs.
The Trust Portfolio's net income consists of all accrued
interest income on assets less expenses allocable to the Trust
Portfolio (including accrued expenses and fees payable to the
Adviser) applicable to that dividend period. Realized gains and
losses of the Trust Portfolio are reflected in its net asset
value and are not included in net income. Net asset value per
share of the Trust Portfolio is expected to remain constant at
$1.00 since all net income of the Trust Portfolio is declared as
a dividend each time net income is determined and net realized
gains and losses, if any, are expected to be relatively small.
The valuation of the Trust Portfolio's securities is based
upon its amortized cost which does not take into account
unrealized securities gains or losses as measured by market
valuations. The amortized cost method involves valuing an
instrument at its cost and thereafter applying a constant
amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value
of the instrument. During periods of declining interest rates,
the daily yield on shares of the Trust Portfolio may be higher
than that of a fund with identical investments utilizing a method
of valuation based upon market prices for its portfolio
instruments; the converse would apply in a period of rising
interest rates.
The Trust Portfolio utilizes the amortized cost method of
valuation of portfolio securities in accordance with the
provisions of Rule 2a-7 under the Act. Pursuant to such rule,
the Trust Portfolio maintains a dollar-weighted average portfolio
maturity of 90 days or less and invests only in securities of
high quality. The Trust Portfolio also purchases instruments
having remaining maturities of no more than 397 days. The Trust
Portfolio maintains procedures designed to stabilize, to the
extent reasonably possible, the price per share of the Trust
Portfolio as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Trust Portfolio's
portfolio holdings by the Directors at such intervals as they
deem appropriate to determine whether and to what extent the net
asset value of the Trust Portfolio calculated by using available
market quotations or market equivalents deviates from net asset
value based on amortized cost. If such deviation as to the Trust
Portfolio exceeds 1/2 of 1%, the Directors will promptly consider
what action, if any, should be initiated. In the event the
Directors determine that such a deviation may result in material
dilution or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the Trust Portfolio prior
to maturity to realize capital gains or losses or to shorten<PAGE>
-19-
average portfolio maturity; (2) withholding dividends of net
income on shares of the Trust Portfolio; or (3) establishing a
net asset value per share of the Trust Portfolio by using
available market quotations or equivalents.
The net asset value of the shares of the Trust Portfolio is
determined each business day (and on such other days as the
Directors deem necessary) at 12:00 Noon and 4:00 p.m. (New York
time). The net asset value per share of the Trust Portfolio is
calculated by taking the sum of the value of the Trust
Portfolio's investments and any cash or other assets, subtracting
liabilities, and dividing by the total number of shares of that
Trust Portfolio outstanding. All expenses, including the fees
payable to the Adviser, are accrued daily.
- -----------------------------------------------------------------
TAXES
- -----------------------------------------------------------------
FEDERAL INCOME TAX CONSIDERATIONS
The Trust Portfolio qualified, for the period ended April
30, 1994, as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code) and, as such, will
not be liable for Federal income and excise taxes on the
investment company taxable income and net capital gains
distributed to its shareholders. Since the Trust Portfolio
distributes all of its investment company taxable income and net
capital gains, the Trust Portfolio should thereby avoid all
Federal income and excise taxes.
Distributions out of taxable interest income, other
investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since the Trust Portfolio's
investment income is derived from interest rather than dividends,
no portion of such distributions is eligible for the
dividends-received deduction available to corporations.
Long-term capital gains, if any, distributed by the Trust
Portfolio to a shareholder are taxable to the shareholder as
long-term capital gain, irrespective of the length of time he or
she may have held his or her shares. Any loss realized on shares
held for six months or less will be treated as long-term loss for
Federal income tax purposes to the extent of any long-term
capital gain distributions received on such shares.
Distributions of short and long-term capital gains, if any, are
normally made once each year shortly before the close of the
Trust Portfolio's fiscal year, although such distributions may be
made more frequently if necessary in order to maintain the Trust
Portfolio's net asset value at $1.00 per share.
<PAGE>
-20-
- -----------------------------------------------------------------
GENERAL INFORMATION
- -----------------------------------------------------------------
PORTFOLIO TRANSACTIONS. Subject to the general supervision
of the Directors of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Trust Portfolio. Because the Trust
Portfolio invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover
rate does not have an adverse effect upon the net yield and net
asset value of the Trust Portfolio's shares since the portfolio
transactions occur primarily with issuers, underwriters or major
dealers in money market instruments acting as principals. Such
transactions are normally on a net basis which do not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission paid
by the issuer to the underwriters; transactions with dealers
normally reflect the spread between bid and asked prices.
The Trust Portfolio has no obligation to enter into
transactions in portfolio securities with any dealer, issuer,
underwriter or other entity. In placing orders, it is the policy
of the Trust Portfolio to obtain the best price and execution for
its transactions. Where best price and execution may be obtained
from more than one dealer, the Adviser may, in its discretion,
purchase and sell securities through dealers who provide
research, statistical and other information to the Adviser. Such
services may be used by the Adviser for all of its investment
advisory accounts and, accordingly, not all such services may be
used by the Adviser in connection with the Trust Portfolio. The
supplemental information received from a dealer is in addition to
the services required to be performed by the Adviser under the
Advisory Agreement, and the expenses of the Adviser will not
necessarily be reduced as a result of the receipt of such
information.
CAPITALIZATION
All shares of the Trust Portfolio participate equally in
dividends and distributions from the Trust Portfolio, including
any distributions in the event of a liquidation. Each share of
the Trust Portfolio is entitled to one vote for all purposes.
Shares of all classes vote for the election of Directors and on
any other matter that affects all Portfolios of the Fund in
substantially the same manner as a single class, except as
otherwise required by law. As to matters affecting each
Portfolio differently, such as approval of the Advisory
Agreement, shares of each Portfolio vote as a separate class. <PAGE>
-21-
There are no conversion or preemptive rights in connection with
any shares of the Trust Portfolio. Since voting rights are
noncumulative, holders of more than 50% of the shares voting for
the election of Directors can elect all of the Directors.
Procedures for calling a shareholders' meeting for the removal of
Directors of the Fund, similar to those set forth in Section
16(c) of the Act and in the Fund's By-Laws, will be available to
shareholders of each Portfolio. Special meetings of stockholders
for any purpose may be called by 10% of its outstanding
shareholders. All shares of the Trust Portfolio when duly issued
will be fully paid and non-assessable. The rights of the holders
of shares of a class may not be modified except by the vote of a
majority of the outstanding shares of such class.
The Board of Directors is authorized to reclassify and issue
any unissued shares to any number of additional series without
shareholder approval. Accordingly, the Directors in the future,
for reasons such as the desire to establish one or more
additional portfolios with different investment objectives,
policies or restrictions, may create additional series of
shares. Any issuance of shares of another class would be
governed by the Act and Maryland law.
As of the close of business on June 30, 1994, there were
5,000,102.240 shares of the Trust Portfolio outstanding. Set
forth and discussed below is certain information as to all
persons who owned of record or beneficially 5% or more of the
outstanding shares of the Trust Portfolio at June 30, 1994.
No. of % of
Name and Address Shares Class
- ----------------- ------- ------
TRUST PORTFOLIO
Alliance Capital 5,000,000 99%
Management L..P INV
Attn: Robert Joseph
1345 Ave of the Americas
New York, NY 10105-0302
LEGAL MATTERS. The legality of the shares offered hereby
has been passed upon by Seward & Kissel, New York, New York,
counsel for the Trust Portfolio and the Adviser. Seward & Kissel
has relied upon the opinion of Venable, Baetjer and Howard, 1800
Mercantile Bank & Trust Building, 2 Hopkins Plaza, Baltimore,
Maryland 21201, for matters relating to Maryland law.
ACCOUNTANTS. McGladrey & Pullen, New York, New York, are
the independent auditors for the Trust Portfolio.<PAGE>
-22-
YIELD QUOTATIONS. Advertisements containing yield
quotations for the Trust Portfolio may from time to time be sent
to investors or placed in newspapers, magazines or other media on
behalf of the Fund. Such yield quotations are calculated in
accordance with the standardized method referred to in Rule 482
under the Securities Act of 1933.
Yield quotations for the Trust Portfolio are thus determined
by (i) computing the net change over a seven-day period,
exclusive of the capital changes, in the value of a hypothetical
pre-existing account having a balance of one share of the Trust
Portfolio at the beginning of such period, (ii) dividing the net
change in account value by the value of the account at the
beginning of the base period to obtain the base period return,
and (iii) multiplying the base period return by (365/7) with the
resulting yield figure carried to the nearest hundredth of one
percent. The Trust Portfolio's effective annual yield represents
a compounding of the annualized yield according to the formula:
effective yield + [(base period return + 1) 365/7] - 1.
<PAGE>
- -----------------------------------------------------------------
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
- -----------------------------------------------------------------
MUNICIPAL AND CORPORATE BONDS
The two higher ratings of Moody's Investors Service, Inc.
("Moody"s) for municipal and corporate bonds are Aaa an Aa.
Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally
known as high-grade bonds. Moody's states that Aa bonds are
rated lower than the best bonds because margins of protection or
other elements make long-term risks appear somewhat larger than
Aaa securities. The generic rating Aa may be modified by the
addition of the numerals 1, 2 or 3. The modifier 1 indicates
that the security ranks in the higher end of the Aa rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of
such rating category.
The two highest ratings of Standard & Poor's for municipal
and corporate bonds AAA and AA. Bonds rated AAA have the highest
rating assigned by Standard & Poor's to debt obligation.
Capacity to pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in a small degree. The AA rating may be modified by
the addition of a plus (+) or Minus (-) sign to show relative
standing within rating
category.
SHORT-TERM MUNICIPAL SECURITIES
Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1. Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-1/VMIG-1 group.
Standard & Poor's highest rating for short-term municipal
loans is SP-1. Standard & Poor's stated that short-term
municipal securities bearing the SP-1 designation have very
strong or strong capacity to pay principal and interest. Those
issues rated SP-1 which are determined to possess overwhelming
safety characteristics will be given a plus (+) designation.
Issues rate SP-2 have satisfactory capacity to pay principal and
interest.<PAGE>
A-2
OTHER MUNICIPAL SECURITIES AND COMMERCIAL PAPER
"Prime-1" is the highest rating assigned by Moody's for
other short-term municipal securities and commercial paper, and
"A-1+" and "A-1" are the two highest ratings for commercial paper
assigned by Standard & Poor's (Standard & Poor's does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2,
and 3 to denote relative strength within its highest
classification of "Prime", while Standard & Poor's uses the
number 1+, 1, 2 and 3 to denote relative strength within its
highest classification of "A". Issuers rated "Prime" by Moody's
have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins
of support for current indebtedness are large or stable with cash
flow an asset protection well assured, current liquidity provides
ample coverage of near-term liabilities and unused alternative
financing arrangements are generally available. While protective
elements may change over the intermediate or longer term, such
changes are most unlikely to impair the fundamentally strong
position of short-term obligations. Commercial paper issuers
rates "A" by Standard & Poor's have the following
characteristics: liquidity ratios are better than industry
average, long-term debt rating is A or better, the issuer has
access to at least two additional channels of borrowing, and
basic earnings and cash flow are in an upward trend. Typically,
the issuer is a strong company in a well-established industry and
has superior management.
wit-mit\SAItr-94.air
<PAGE>
ACM INSTITUTIONAL RESERVES, INC.
ANNUAL REPORT
APRIL 30, 1994
STATEMENT OF NET ASSETS
April 30, 1994 ACM INSTITUTIONAL RESERVES - PRIME PORTFOLIO
Principal
Amount
(000) Security Yield Value
COMMERCIAL PAPER 59.6%
Banco Nacional De Mexico
$2,000 5/03/94 3.70% $1,999,589
Beta Finance Inc.
1,000 9/12/94 4.00 985,111
Bowater Plc Inc.
4,000 5/18/94 3.82 3,992,784
Crosby Head Funding Corp.
3,500 5/04/94 3.75 3,498,906
Great Lakes Credit Corp.
3,780 6/01/94 3.87 3,767,403
Health Insurance Plan of
Greater New York City
4,000 5/23/94 3.85 3,990,589
IMI Funding Corp. (USA)
1,100 8/01/94 4.00 1,088,756
Isetan of America, Inc.
2,000 10/24/94 4.25 1,958,444
Mitsubishi Motors Credit Of America
3,500 5/11/94 3.80 3,496,306
Nafin Funding Corp.
3,500 5/05/94 3.75 3,498,542
October Corp.
1,770 5/02/94 3.75 1,769,816
Premium Funding, Inc. (Series A)
1,742 6/01/94 3.85 1,736,225
Progress Funding Corp.
1,000 9/22/94 4.35 982,600
Rohm & Haas Co.
17,000 5/02/94 3.80 16,998,206
75 State Street Capital Corp.
4,000 5/31/94 3.95 3,986,833
SFC (USA)
1,000 5/06/94 3.73 999,482
Sharp Electronics
2,500 5/20/94 3.75 2,495,052
Working Capital Management Co., L.P.
4,000 5/18/94 3.80 3,992,822
Younkers Funding Corp.
3,205 5/17/94 3.75 3,199,658
----------
Total Commercial Paper
(amortized cost $64,437,124) 64,437,124
-----------
CORPORATE OBLIGATIONS 31.1%
Abbey National Corp.
3,000 4.05%, 5/17/94 4.05 2,999,866
American Express Centurion FRN
1,000 4.11%, 4/18/95 4.11 1,000,000
American Express Co.
1,400 8.63%, 7/15/94 3.45 1,414,814
American Telephone & Telegraph Co.
$1,000 8.88%, 11/01/94 3.71% $1,025,194
Bankers Trust Corp.
1,500 5.25%, 1/16/95 4.77 1,504,068
1,000 5.25%, 1/16/95 3.62 1,011,091
Bear Stearns Cos., Inc.
3,000 4.30%, 10/21/94 4.30 3,000,000
Commercial Credit Co.
1,300 6.25%, 1/15/95 3.75 1,322,144
Commercial Credit Group Inc.
400 6.25%, 1/15/95 3.75 406,830
Deere John Capital Corp.
450 6.00%, 2/01/95 4.60 454,362
General Electric Capital Corp.
1,000 8.60%, 11/15/94 3.70 1,025,693
General Electric Co.
500 5.88%, 12/01/94 3.79 506,007
500 5.88%, 12/01/94 3.75 505,913
Household Finance Corp.
250 7.50%, 8/01/94 4.20 251,954
International Lease Finance Corp.
1,600 6.00%, 1/15/95 3.65 1,625,627
Merrill Lynch & Co., Inc.
3,000 8.38%, 5/01/94 4.01 3,000,000
Nordic Investment Bank
120 9.50%, 12/15/94 3.67 124,266
Nordstrom Inc.
2,000 9.00%, 7/05/94 3.61 2,018,760
1,000 9.00%, 7/15/94 3.66 1,010,729
Northern Telecom Ltd.
1,500 9.25%, 6/02/94 3.98 1,506,700
Ontario Hydro
350 9.25%, 5/01/95 5.21 363,611
Phillip Morris Cos., Inc.
1,000 9.45%, 3/27/95 5.01 1,038,826
PNC Funding Corp.
500 6.00%, 12/15/94 4.97 503,722
500 6.00%, 12/15/94 4.70 502,865
Republic of Finland
2,000 9.50%, 11/01/94 3.86 2,054,846
Shell Oil Co.
1,500 7.13%, 8/15/94 3.60 1,514,979
Sony Capital Corp.
1,000 6.40%, 2/15/95 4.60 1,013,316
Transamerica Corp.
800 9.63%, 1/01/95 3.75 830,593
Xerox Corp.
100 9.13%, 6/15/94 3.77 100,645
---------
Total Corporate Obligations
(amortized cost $33,637,421) 33,637,421
-----------
STATEMENT OF NET ASSETS (continued) ACM INSTITUTIONAL RESERVES - PRIME
PORTFOLIO
Principal
Amount
(000) Security Yield Value
U.S. GOVERNMENT & AGENCY OBLIGATIONS 7.4%
Federal Home Loan Bank FRN 0.9%
$1,000 2.00%, 11/16/94 2.00% $1,000,000
Federal National Mortgage Assn. FRN 3.7%
4,000 3.65%, 12/20/95 3.70 3,996,816
Tennessee Valley Authority 1.9%
2,000 3.41%, 10/28/94 3.45 1,999,517
U.S. Treasury Note 0.9%
1,000 4.25%, 7/31/94 4.25 1,001,612
----------
Total U.S. Government & Agency Obligations
(amortized cost $7,997,945) 7,997,945
----------
CERTIFICATE OF DEPOSIT 1.4%
Security Pacific Corp.
$1,500 8.33%, 12/27/94 4.05
(amortized cost $1,541,095) $1,541,095
----------
TOTAL INVESTMENTS 99.5%
(amortized cost $107,613,585) 107,613,585
Other assets less liabilities 0.5% 496,196
-----------
NET ASSETS 100% (offering and
redemption price of $1.00 per share;
108,150,515 shares outstanding) $108,109,781
------------
GLOSSARY OF TERMS:
FRN Floating Rate Note
See notes to financial statements.
STATEMENT OF NET ASSETS
April 30, 1994 ACM INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
Principal
Amount
(000) Security Yield Value
U.S. GOVERNMENT AND AGENCIES 98.6%
Federal Home Loan Mortgage Corp. 28.1%
$14,000 5/31/94 3.70% $13,956,833
5,000 4.00%, 1/06/95 3.98 5,000,772
1,500 7.13%, 8/01/94 3.50 1,513,305
1,000 9.00%, 6/21/94 3.74 1,007,071
-----------
21,477,981
-----------
Student Loan Marketing
Association 20.7%
1,715 4.09%, 7/19/96 4.06 1,716,012
5,000 4.24%, 12/30/94 4.13 5,003,716
500 4.24%, 6/02/95 4.10 500,779
4,000 4.34%, 1/23/97 4.12 4,024,007
2,000 4.37%, 2/14/97 4.10 2,014,688
1,000 4.52%, 4/24/95 4.10 1,004,177
550 4.54%, 3/20/95 4.19 551,718
1,000 4.54%, 3/23/95 4.08 1,004,075
----------
15,819,172
----------
Federal National Mortgage
Association 18.6%
1,000 5/17/94 3.19 998,582
1,100 7/25/94 3.19 1,091,715
1,000 7/15/94 3.24 993,250
1,200 6/13/94 3.64 1,194,783
1,000 5/23/94 3.66 997,763
2,000 3.45%, 8/25/94 3.51 1,999,480
2,500 3.59%, 7/08/94 3.67 2,498,038
4,500 3.65%, 12/20/95 3.70 4,496,417
----------
14,270,028
----------
U.S. Treasury Notes 18.3%
$ 1,000 3.88%, 2/28/95 3.7$ 1,000,730
2,000 3.88%, 4/30/95 4.99 1,978,254
1,000 4.00%, 9/30/94 4.00 1,002,188
5,000 4.25%, 7/31/94 4.25 5,008,025
1,000 4.25%, 1/31/95 3.60 1,004,661
500 4.63%, 11/30/94 3.62 502,809
2,000 5.13%, 5/31/94 5.13 2,002,733
1,500 8.00%, 7/15/94 3.57 1,513,634
----------
14,013,034
----------
Federal Farm Credit Bank 7.2%
1,000 4.24%, 8/25/95 4.10 1,001,881
2,000 4.25%, 9/26/94 4.35 1,999,199
2,500 4.60%, 3/13/95 4.35 2,505,252
----------
5,506,332
----------
Federal Home Loan Bank 4.3%
1,000 11/16/94 2.00 1,000,000
1,000 3.46%, 2/03/95 3.66 998,393
325 3.53%, 5/02/94 3.53 324,968
1,000 3.58%, 11/18/94 3.63 999,449
---------
3,322,810
---------
Tennessee Valley Authority 1.4%
1,000 8.75%, 10/01/94 3.95 1,063,175
---------
TOTAL INVESTMENTS 98.6%
(amortized cost $75,472,532) 75,472,532
Other assets less liabilities 1.4% 1,081,719
----------
NET ASSETS 100% (offering and
redemption price of $1.00 per share;
76,615,856 shares outstanding) $76,554,251
-----------
See notes to financial statements.
STATEMENT OF NET ASSETS
April 30, 1994 ACM INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
Principal
Amount
(000) Security Yield Value
ALABAMA 1.6%
HFA Series '89A MFHR
(Northbrook Project) VRDN*
$ 570 4/01/14 3.55% $ 570,000
----------
ARIZONA 9.3%
Apache County PCR
(Tucson Electric Power - Springerville Project)
1,000 12/15/18 3.40 1,000,000
Apache County PCR
(Tucson Electric Power) VRDN*
1,300 6/15/20 3.45 1,300,000
Maricopa County PCR PPB*
(Public Service Co.)
1,000 8/01/94 3.10 1,000,000
----------
3,300,000
----------
ARKANSAS 1.7%
Clark County Solid Waste
(Reynolds Metals Co. Project)AMT VRDN*
600 8/01/22 3.20 600,000
---------
CALIFORNIA 17.7%
ABAG Hospital Revenue
(Lucile Salter Packard Project)VRDN*
1,600 8/01/23 3.05 1,600,000
Alameda IDR
(KQED, Inc. Project) VRDN*
600 5/01/05 3.60 600,000
California HFA Series '93 VRDN*
500 8/01/17 3.45 500,000
Eastern Municipal Water Series '93B
(Riverside County Water and Sewer Revenue) VRDN*
1,200 7/01/20 3.00 1,200,000
Sacramento County GO TRAN
1,400 7/29/94 3.00 1,400,453
San Bernadino County GO TRAN
1,000 7/29/94 3.25 1,001,064
---------
6,301,517
---------
GEORGIA 6.2%
Burke County PCR Series '93A
(Oglethorpe Power Corporation)
1,000 1/01/16 3.45 1,000,000
Macon-Bibb County Hospital Rev.
(Medical Macon Project)
1,200 3/01/05 3.59 1,200,000
---------
2,200,000
---------
ILLINOIS 5.6%
Elmhurst Jt. Comm. Series '88
Hosp. Rev. Health Organization VRDN*
$ 500 7/01/18 3.35% $500,000
Illinois Health Fac Auth Series B '85
(Methodist Medical Center) VRDN*
1,500 10/01/14 3.10 1,500,000
---------
2,000,000
---------
KENTUCKY 2.8%
Housing Corp. Series E PPB*
1,000 10/27/94 2.80 1,000,000
---------
MAINE 3.1%
Educational Loan Series A'89
(Marketing Corporation)AMT VRDN*
1,100 12/01/09 3.60 1,100,000
---------
MICHIGAN 0.3%
Higher Education Series XII-F AMT VRDN*
100 10/01/20 3.55 100,000
---------
MINNESOTA 4.2%
Saint Paul Housing And Redevelopment
Series '85A
(Multi City Joint Housing) VRDN*
1,500 5/01/97 3.30 1,500,000
---------
MISSOURI 2.8%
St. Louis County IDR
(Schnuck Co.) VRDN*
1,000 12/01/15 3.70 1,000,000
---------
NEVADA 2.8%
Clark County
(McCarran ARPT) VRDN *
1,000 7/01/12 3.45 1,000,000
---------
NEW HAMPSHIRE 3.4%
Business Finance Auth. PCR
(Public Service Co) VRDN*
1,200 5/01/21 3.35 1,200,000
---------
NEW YORK 7.0%
Dormitory Authority Revenues
Series '93A VRDN*
1,500 7/01/04 3.25 1,500,000
STATEMENT OF NET ASSETS (continued) ACM INSTITUTIONAL RESERVES - TAX-FREE
PORTFOLIO
Principal
Amount
(000) Security Yield Value
New York State ERDA
(Long Island Lighting Co.) Series B AMT PPB
1,000 11/01/94 2.8 $ 999,818
---------
2,499,818
---------
NORTH CAROLINA 6.7%
Charlotte Airport Revenue Series '93A VRDN*
1,400 7/01/16 3.45 1,400,000
Medical Care Commission Hospital
Revenue Series '85
(Aces Pooled Equipment Financing Project) VRDN*
1,000 12/01/25 3.15 1,000,000
---------
2,400,000
---------
OHIO 2.0%
Stark County IDR
(Crane CR/PL, Inc.) VRDN*
700 9/01/01 3.50 700,000
---------
OKLAHOMA 0.6%
Bartlesville Health Fac. Auth.
(Heritage Villa Nursing Center) Series '85 VRDN*
200 1/01/09 3.70 200,000
---------
SOUTH DAKOTA 2.8%
Housing Finance Auth. MFHR Series 1993B PPB*
1,000 5/01/17 2.75 1,000,000
---------
TEXAS 8.4%
Dallas County IDR
(Crane CR/PL, Inc.) Series '85 VRDN*
700 5/01/10 3.60 700,000
Greater East Higher Education Authority
(Student Loan Revenue) AMT PPB*
$ 1,000 7/01/94 2.90% $1,000,000
McAllen Health Facility
(Office Building) VRDN*
1,300 12/01/24 3.50 1,300,000
---------
3,000,000
---------
UTAH 0.8%
Provo City Housing Auth. MFHR Series B
(Branbury) AMT VRDN*
300 12/15/10 3.40 300,000
---------
WASHINGTON 3.9%
Pilchuck IDR
(Crystal Creek Association) Series III '89 VRDN*
464 8/01/10 3.60 464,000
Pilchuck IDR
(Trinity at Canyon Park) Series III VRDN*
940 8/01/10 3.60 940,000
---------
1,404,000
---------
WISCONSIN 5.6%
Wisconsin GO VRDN*
2,000 11/01/09 3.25 2,000,000
---------
TOTAL INVESTMENTS 99.3%
(amortized cost $35,375,187) 35,375,335
Other assets less liabilities 0.7% 266,387
----------
NET ASSETS 100% (offering and
redemption price of $1.00 per share;
35,647,852 shares outstanding) $35,641,722
-----------
All securities either mature or their interest rate changes in one year or
less.
* Variable Rate Demand Notes (VRDN) are instruments whose interest rates
change on a specified date (such as a coupon date or interest payment date)
or whose interest rates vary with changes in a designated base rate (such as
the prime interest rate). These instruments are payable on demand and are
secured by letters of credit or other credit support agreements from major
banks. Periodic Put Bonds (PPB) are payable on demand quarterly,
semi-annually or annually and their interest rates change less frequently
than rates on Variable Rate Demand Notes.
GLOSSARY OF TERMS:
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
GO General Obligation
HFA Housing Finance Agency/Authority
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
PCR Pollution Control Revenue
PPB Periodic Put Bond
TRAN Tax & Revenue Anticipation Note
VRDN Variable Rate Demand Note
See notes to financial statements.
STATEMENT OF NET ASSETS
April 30, 1994 ACM INSTITUTIONAL RESERVES - TRUST PORTFOLIO
Principal
Amount
(000) Security Yield Value
U.S. GOVERNMENT AND AGENCIES 103.0%
Federal National Mortgage
Association 101.1%
$ 350 7/25/94 3.19% $ 347,364
22,000 5/23/94 3.66 21,950,793
15,000 6/20/94 3.84 14,920,000
-----------
37,218,157
-----------
U.S. Treasury Notes 1.4%
500 8.00%, 7/15/94 3.57 504,545
----------
Federal Farm Credit Bank 0.5%
200 5/09/94 3.64 199,838
----------
TOTAL INVESTMENTS 103.0%
(amortized cost $37,922,540) $37,922,540
Other assets less liabilities (3.0%) (1,115,562)
-----------
NET ASSETS 100% (offering and redemption
price of $1.00 per share;
36,810,325 shares outstanding) $36,806,978
-----------
See notes to financial statements.
Statement Of Operations
Year Ended April 30, 1994 ACM Institutional Reserves - Prime Portfolio
INVESTMENT INCOME
Interest $3,203,436
EXPENSES
Advisory fee (Note B) $ 185,655
Registration fees 110,610
Custodian fees 49,342
Transfer agency 23,659
Audit and legal fees 10,109
Amortization of organization expenses 7,300
Directors' fees 2,528
Printing 1,910
Miscellaneous 1,360
---------
Total expenses 392,473
Less: expense reimbursement (206,818) 185,655
--------- ----------
Net investment income 3,017,781
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (29,045)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,988,736
-----------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1994 April 30, 1993
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $3,017,781 $1,988,205
Net realized loss on investments (29,045) (6,777)
---------- ----------
Net increase in net assets from operations 2,988,736 1,981,428
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,017,781) (1,988,205)
CAPITAL STOCK TRANSACTIONS
Net increase 43,836,689 39,346,977
----------- -----------
Total increase 43,807,644 39,340,200
NET ASSETS
Beginning of year 64,302,137 24,961,937
------------ -----------
End of year $108,109,781 $64,302,137
------------ -----------
See notes to financial statements.
STATEMENT OF OPERATIONS
Year Ended April 30, 1994 ACM INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
INVESTMENT INCOME
Interest $2,678,528
EXPENSES
Advisory fee (Note B) $160,011
Custodian fees 47,122
Registration fees 37,745
Transfer agency 21,876
Amortization of organization expenses 7,300
Audit and legal fees 6,435
Directors' fees 2,200
Printing 455
Miscellaneous 1,275
--------
Total expenses 284,419
Less: expense reimbursement (124,408) 160,011
--------- ----------
Net investment income 2,518,517
----------
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (51,091)
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,467,426
-----------
Statements Of Changes In Net Assets
Year Ended Year Ended
April 30, 1994 April 30, 1993
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $2,518,517 $1,746,674
Net realized loss on investments (51,091) (9,174)
---------- ----------
Net increase in net assets from operations 2,467,426 1,737,500
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (2,518,517) (1,746,674)
CAPITAL STOCK TRANSACTIONS
Net increase 3,356,435 48,550,197
---------- -----------
Total increase 3,305,344 48,541,023
NET ASSETS
Beginning of year 73,248,907 24,707,884
----------- -----------
End of year $76,554,251 $73,248,907
----------- -----------
See notes to financial statements.
STATEMENT OF OPERATIONS
Year Ended April 30, 1994 ACM INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
INVESTMENT INCOME
Interest $ 817,889
EXPENSES
Advisory fee (Note B) $ 62,871
Registration fees 63,344
Custodian fees 47,934
Transfer agency 20,595
Audit and legal fees 10,024
Amortization of organization expenses 7,300
Directors' fees 3,280
Printing 172
Miscellaneous 1,285
--------
Total expenses 216,805
Less: expense reimbursement (153,934) 62,871
-------- --------
Net investment income 755,018
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (6,191)
Net change in unrealized appreciation of investments 148
--------
Net loss on investments (6,043)
--------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 748,975
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1994 April 30, 1993
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 755,018 $ 613,452
Net realized gain (loss) on investments (6,191) 509
Net change in unrealized appreciation of investments 148 (482)
--------- ---------
Net increase in net assets from operations 748,975 613,479
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (755,018) (613,452)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (5,210,690) 32,359,808
----------- -----------
Total increase (decrease) (5,216,733) 32,359,835
NET ASSETS
Beginning of year 40,858,455 8,498,620
------------ ------------
End of year $ 35,641,722 $ 40,858,455
------------ ------------
See notes to financial statements.
STATEMENT OF OPERATIONS
Year Ended April 30, 1994 ACM INSTITUTIONAL RESERVES - TRUST PORTFOLIO
INVESTMENT INCOME
Interest $596,182
EXPENSES
Advisory fee (Note B) $ 81,648
Registration fees 72,358
Custodian fees 31,081
Transfer agency 27,610
Audit and legal fees 6,663
Directors' fees 1,460
Printing 1,032
Miscellaneous 1,519
---------
Total expenses 223,371
Less: expense reimbursement (198,160) 25,211
--------- ---------
Net investment income 570,971
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments (3,347)
---------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 567,624
---------
SRATEMENTS OF CHANGES IN NET ASSETS
November 16, 1992 (a)
Year Ended to
April 30, 1994 April 30, 1993
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 570,971 $ 82,488
Net realized gain (loss) on investments (3,347) 24
---------- ----------
Net increase in net assets from operations 567,624 82,512
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (570,971) (82,488)
Net realized gain on investments (24) 0
CAPITAL STOCK TRANSACTIONS
Net increase 31,473,164 5,337,161
----------- ----------
Total increase 31,469,793 5,337,185
NET ASSETS
Beginning of year 5,337,185 0
------------ ------------
End of year $ 36,806,978 $ 5,337,185
(a) Commencement of operations.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 1994 ACM INSTITUTIONAL RESERVES, INC.
NOTE A: SIGNIFICANT ACCOUNTING POLICIES.
ACM Institutional Reserves, Inc. (the "Fund") is an open-end investment company
registered under the Investment Company Act of 1940. The Fund operates as a
series company currently issuing four classes of capital stock: Prime
Portfolio, Government Portfolio, Tax-Free Portfolio and Trust Portfolio. Each
series is considered to be a separate entity for financial reporting and tax
purposes. The following is a summary of significant accounting policies
followed by the Fund.
1. VALUATION OF SECURITIES.
Securities in which the Fund 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. Amortization of premium is charged
to income. Accretion of market discount is credited to unrealized gain.
2. ORGANIZATION EXPENSES.
The organization expenses of the Fund are being amortized against income on a
straight-line basis through August 1995 on Prime Portfolio and through July
1996 on Government and Tax-Free Portfolios, respectively.
3. FEDERAL INCOME TAXES.
It is the Fund's policy to comply with 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 applicable, to
its shareholders. Therefore, no provisions for federal income or excise taxes
are required.
4. DIVIDENDS.
The Fund 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
calendar year end. Dividends paid by Tax-Free Portfolio from net investment
income for the year ended April 30, 1994 are exempt from federal income taxes.
However, certain shareholders may be subject to the alternative minimum tax
(AMT).
5. GENERAL.
Interest income is accrued daily. Security transactions are recorded on the
date securities are purchased or sold. Realized gain (loss) from security
transactions is recorded on the identified cost basis.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE ADVISER.
The Fund pays its Adviser, Alliance Capital Management L.P., an advisory fee
at the annual rate of .20 of 1% of average daily net assets for the Prime,
Government and Tax-Free Portfolios and .45 of 1% of average daily net assets
for the Trust Portfolio. The Adviser has agreed to reimburse the Prime,
Government and Tax-Free Portfolios to the extent that their annual aggregate
operating expenses (excluding taxes, brokerage, interest and, where permitted,
extraordinary expenses) exceed .20 of 1% of their average daily net assets
for any fiscal year, and in regard to the Trust Portfolio exceed .45 of 1% of
its average daily net assets. The Adviser also voluntarily agreed to reimburse
the Trust Portfolio from October 15 to April 30, 1994 for expenses exceeding
.20 of 1% of its
average daily net assets. For the year ended April 30, 1994, reimbursement was
$206,818, $124,408, $153,934 and $198,160 for the Prime, Government, Tax-Free
and Trust Portfolios, respectively. The Prime, Government, Tax-Free and Trust
Portfolios compensate Alliance Fund Services, Inc. (a wholly-owned subsidiary
of the Adviser) for providing personnel and facilities to perform transfer
agency services. Such compensation for the Prime, Government and Tax-Free
Portfolios, for the year ended April 30, 1994, amounted to $18,000 per
portfolio. For the period May 1, 1993 to October 14, 1993, Alliance Fund
Services, Inc. waived its transfer agent fee of $8,177 for the Trust Portfolio.
The Trust Portfolio compensated Alliance Fund Services, Inc. for $9,823 for the
period October 15, 1993 to April 30, 1994.
NOTES TO FINANCIAL STATEMENTS (continued) ACM INSTITUTIONAL RESERVES, INC.
NOTE C: INVESTMENT TRANSACTION.
At April 30, 1994, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes for all portfolios. For
federal income tax purposes, the Prime Portfolio had a capital loss
carryforward at April 30, 1994 of $40,734, of which $1,377 expires in 1999,
$3,535 in 2000, $6,777 in 2001 and $29,045 in the year 2002;
the Government Portfolio had a capital loss carryforward of $61,605, of which
$1,340 expires in 2000, $9,174 in 2001 and $51,091 in the year 2002; the Tax-
Free Portfolio had a capital loss carryforward of $6,278, of which $87 expires
in 2000 and $6,191 in the year 2002; and the Trust Portfolio had a capital loss
carryforward of $3,347 which expires in the year 2002.
NOTE D: CAPITAL STOCK.
There are 1,000,000,000 shares of $.01 par value capital stock authorized. At
April 30, 1994, capital paid-in aggregated $108,150,515 on Prime Portfolio,
$76,615,856 on Government Portfolio, $35,647,852 on Tax-Free Portfolio, and
$36,810,325 on Trust Portfolio. Transactions, all at $1.00 per share, were as
follows:
Year Ended Year Ended
PRIME PORTFOLIO April 30, 1994 April 30, 1993
- --------------- --------------- --------------
Shares sold 624,694,567 402,498,407
Shares issued on reinvestments of dividends 3,003,812 1,985,437
Shares redeemed (583,861,690) (365,136,867)
----------- -----------
Net increase 43,836,689 39,346,977
----------- -----------
Year Ended Year Ended
GOVERNMENT PORTFOLIO April 30, 1994 April 30, 1993
- -------------------- -------------- --------------
Shares sold 353,347,971 367,128,831
Shares issued on reinvestments of dividends 2,507,438 1,744,418
Shares redeemed (352,498,974) (320,323,052)
------------ ------------
Net increase 3,356,435 48,550,197
------------ ------------
Year Ended Year Ended
TAX-FREE PORTFOLIO April 30, 1994 April 30, 1993
- ------------------ -------------- --------------
Shares sold 581,733,361 323,450,555
Shares issued on reinvestments of dividends 751,896 612,438
Shares redeemed (587,695,947) (291,703,185)
------------ ------------
Net decrease (5,210,690) 32,359,808
------------ ------------
November 16, 1992(a)
Year Ended through
TRUST PORTFOLIO April 30, 1994 April 30, 1993
- --------------- -------------- --------------
Shares sold 176,630,000 17,504,869
Shares issued on reinvestments of dividends 563,938 82,061
Shares redeemed (145,720,774) (12,249,769)
------------ -----------
Net increase 31,473,164 5,337,161
------------ -----------
(a) Commencement of operations.
NOTES TO FINACIAL STATEMENTS (continued) ACM INSTITUTIONAL RESERVES, INC.
NOTE F: FINANCIAL HIGHLIGHTS
Per share operating performance for a share outstanding throughout each period.
August 20, 1990(a)
Year Ended Through
---------------------------------- ---------
PRIME PORTFOLIO Apr.30,1994 Apr.30,1993 Apr.30,1992 Apr.30,1991
- --------------- ----------- ----------- ----------- -----------
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.00325 0.0353 0.0535 0.0506
------- ------ ------ ------
LESS: DISTRIBUTIONS
Dividends from net investment
income (0.0325) (0.0353) (0.0535) (0.0506)
------ ------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
TOTAL RETURNS
Total investment return based on net
asset value (b) 3.30% 3.59% 5.50% 7.54%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(in millions) $108.1 $64.3 $25.0 $27.2
Ratio of expenses to average net assets(d) 0.20% 0.18%(e) 0.02%(f) -0-(g)
Ratio of net investment income to average
net assets (d) 3.25% 3.42%(e) 5.30%(f) 6.84%
(c)(g)
July 22, 1991(a)
Year Ended Through
-------------------------- ------------
GOVERNMENT PORTFOLIO April 30,1994 April 30,1993 April 30,1992
- -------------------- ------------- ------------- -------------
Net asset value, beginning of perid $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.0315 0.0339 0.0377
------ ------ ------
LESS: DISTRIBUTIONS
Dividends from net investment income (0.0315) (0.0339) (0.0377)
------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
------- ------- -------
TOTAL RETURNS
Total investment return based on net
asset value (b) 3.20% 3.45% 4.98%(c)
------ ------ -----
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) 76.6 $73.2 $24.7
Ratio of expenses to average net assets (d) 0.20% 0.18%(e) 0.10%
(c)(h)
Ratio of net investment income to average
net assets (d) 3.15% 3.30%(e) 4.86%
(c)(h)
(a) Commencement of operations.
(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 at net asset value during the period and redemption on the last
day of the period.
(c) Annualized.
(d) Net of expense reimbursement.
(e) Net of voluntary expense reimbursement equivalent to .02% of average daily
net assets.
(f) Net of voluntary expense reimbursement equivalent to .18% of average daily
net assets.
(g) Net of voluntary expense reimbursement equivalent to .20% of average daily
net assets.
(h) Net of voluntary expense reimbursement equivalent to .10% of average daily
net assets.
NOTES TO FINANCIAL STATEMENTS (continued) ACM INSTITUTIONAL RESERVES, INC.
July 22, 1991(a)
Year Ended Through
-------------------------- ------------
TAX-FREE PORTFOLIO April 30,1994 April 30,1993 April 30,1992
- ------------------ -------------- ------------- -------------
Net asset value, beginning of perid $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.0240 0.0287 0.0334
------- ------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income (0.0240) (0.0287) (0.0334)
------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
------- ------- -------
TOTAL RETURNS
Total investment return based on net
asset value (b) 2.43% 2.92% 4.40%(c)
------ ------ ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $35.6 $40.9 $8.5
Ratio of expenses to average net assets(d) 0.20% 0.18%(e) 0.10%
(c)(f)
Ratio of net investment income to average
net assets (d) 2.40% 2.73%(e) 4.01%
(c)(f)
November 16, 1992(a)
Year Ended Through
-------------- --------------
TRUST PORTFOLIO April 30, 1994 April 30, 1993
- --------------- -------------- --------------
Net asset value, beginning of period $ 1.00 $ 1.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.0309 0.0144
------- -------
LESS: DISTRIBUTIONS
Dividends from net investment income (0.0309) (0.0144)
------- -------
Net asset value, end of period $ 1.00 $ 1.00
------- -------
TOTAL RETURNS
Total investment return based on net
asset value (b) 3.14% 3.21%(c)
------ -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $36.8 $5.3
Ratio of expenses to average net assets (d) 0.14%(g) -0-(h)
Ratio of net investment income to average
net assets (d) 3.15%(g) 3.17%(c)(h)
(a) Commencement of operations.
(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 at net asset value during the period and redemption on the last
day of the period.
(c) Annualized.
(d) Net of expense reimbursement.
(e) Net of voluntary expense reimbursement equivalent to .02% of average daily
net assets.
(f) Net of voluntary expense reimbursement equivalent to .10% of average daily
net assets.
(g) Net of voluntary expense reimbursement equivalent to .31% of average daily
net assets.
(h) Net of voluntary expense reimbursement equivalent to .45% of average daily
net assets.
INDEPENDENT AUDITOR'S REPORT ACM INSTITUTIONAL RESERVES, INC.
To the Board of Trustees and Shareholders
ACM Institutional Reserves, Inc.
We have audited the accompanying statements of net assets of ACM Institutional
Reserves, Inc. - Prime, Government, Tax-Free and Trust Portfolios as of April
30, 1994 and the related statements 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 Portfolios' 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
April 30, 1994 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 ACM
Institutional Reserves, Inc. - Prime, Government, Tax- Free and Trust
Portfolios as of April 30, 1994, and the results of its operations, changes in
its net assets, and financial highlights for the periods indicated, in
conformity with generally accepted accounting principles.
McGladrey & Pullen
New York, New York
June 2, 1994
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