This is filed pursuant to Rule 497(e).
File Nos.: 033-34001 and 811-06068
For more information about the Portfolio, the following documents are available
upon request:
o ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Portfolio's annual and semi-annual reports to shareholders contain
additional information on the Portfolio's investments.
o STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Portfolio has an SAI, which contains more detailed information about the
Portfolio, including its operations and investment policies. The Portfolio's
SAI is incorporated by reference into (and is legally part of) this prospectus.
You may request a free copy of a current annual/semi-annual report or the SAI,
or make inquiries concerning the Portfolio, by contacting your broker or other
financial intermediary, or by contacting Alliance:
BY MAIL: C/O ALLIANCE FUND SERVICES, INC.
P.O. BOX 1520, SECAUCUS, NJ 07096
BY PHONE: For Information and Literature:
(800) 237-5822
Or you may view or obtain these documents from the SEC:
IN PERSON: at the SEC's Public Reference Room in Washington, D.C.
BY PHONE: (800) SEC-0330 (for information only)
BY MAIL: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET: www.sec.gov
You also may find more information about Alliance on the Internet at:
www.Alliancecapital.com.
TABLE OF CONTENTS
RISK/RETURN SUMMARY 2
Performance and Bar Chart Information 2
FEES AND EXPENSES OF THE PORTFOLIO 3
OTHER INFORMATION ABOUT THE PORTFOLIO'S
OBJECTIVES, STRATEGIES, AND RISKS 3
Investment Objectives and Strategies 3
Risk Considerations 4
MANAGEMENT OF THE PORTFOLIO 6
PURCHASE AND SALE OF SHARES 6
How The Portfolio Values Its Shares 6
How To Buy Shares 6
How To Sell Shares 6
Other 7
DIVIDENDS, DISTRIBUTIONS AND TAXES 7
GENERAL INFORMATION 7
FINANCIAL HIGHLIGHTS 8
File No. 811-6068
BIDWELLPRO999
- ------------------------
BIDWELL & COMPANY
CASH MANAGEMENT SERVICES
- ------------------------
PROSPECTUS
SEPTEMBER 1, 1999
ALLIANCE INSTITUTIONAL RESERVES-
TRUST PORTFOLIO
209 S.W. OAK STREET
PORTLAND, OR 97204-2791
800/547-6337
Member NASD, SIPC
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
Alliance Institutional Reserves, Inc. consists of five distinct Portfolios.
This prospectus describes the Trust Portfolio. The Portfolio's investment
adviser is Alliance Capital Management L.P., a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including more than 100 mutual funds.
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RISK/RETURN SUMMARY
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The following is a summary of certain key information about the Portfolio. You
will find additional information about the Portfolio, including a detailed
description of the risks of an investment in the Portfolio, after this summary.
OBJECTIVES: The investment objectives of the Portfolio 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.
PRINCIPAL INVESTMENT STRATEGY: The Portfolio is a "money market fund" that
seeks to maintain a stable net asset value of $1.00 per share. The Portfolio
pursues its objectives by maintaining a portfolio of high-quality, U.S.
dollar-denominated money market securities.
PRINCIPAL RISKS: The principal risks of investing in the Portfolio are:
o INTEREST RATE RISK This is the risk that changes in interest rates will
adversely affect the yield or value of the Portfolio's investments in debt
securities.
o CREDIT RISK This is the risk that the issuer or guarantor of a debt security
will be unable or unwilling to make timely interest or principal payments, or
to otherwise honor its obligations. The degree of risk for a particular
security may be reflected in its credit rating. Credit risk includes the
possibility that any of the Portfolio's investments will have its credit
ratings downgraded.
ANOTHER IMPORTANT THING FOR YOU TO NOTE:
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Portfolio seeks to preserve the value of your investment
at $1.00 per share, it is possible to lose money by investing in the Portfolio.
PERFORMANCE AND BAR CHART INFORMATION
The performance table shows the Portfolio's average annual total returns and
the bar chart shows the Portfolio's annual total returns. The table and the bar
chart provide an indication of the historical risk of an investment in the
Portfolio by showing:
o the Portfolio's average annual total returns for one and five years and the
life of the Portfolio; and
o changes in the Portfolio's performance from year to year over the life of
the Portfolio.
The Portfolio's past performance does not necessarily indicate how it will
perform in the future.
You may obtain current seven-day yield information for the Portfolio by calling
(800) 237-5822 or your financial intermediary.
PERFORMANCE TABLE
SINCE
1 YEAR 5 YEARS INCEPTION*
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5.24% 5.05% 4.70%
- -------------------------------------------------------------------------------
* INCEPTION DATE: 11/16/92.
BAR CHART
n/a n/a n/a n/a 3.13% 4.08% 5.61% 5.02% 5.29% 5.24%
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
During the period shown in the bar chart, the highest return for a quarter was
1.40% (quarter ending June 30, 1995) and the lowest return for a quarter was
.76% (quarter ending December 31, 1993).
2
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FEES AND EXPENSES OF THE PORTFOLIO
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This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
None
ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS) AND EXAMPLE
The example is to help you compare the cost of investing in the Portfolio with
the cost of investing in other funds. It assumes that you invest $10,000 in the
Portfolio for the time periods indicated and then redeem all of your shares at
the end of those periods. It also assumes that your investment has a 5% return
each year, the Portfolio's operating expenses stay the same, and all dividends
and distributions are reinvested. Your actual costs may be higher or lower.
ANNUAL PORTFOLIO OPERATING EXPENSES EXAMPLE**
----------------------------------------------- ------------------
Management Fees .45% 1 Year $ 51
Other Expenses .10% 3 Years $171
Total Operating Expenses .55% 5 Years $302
Waiver and/or Expense Reimbursement* (.05)% 10 Years $684
Net Expenses .50%
* Reflects Alliance's contractual waiver during the Portfolio's current
fiscal year of a portion of the advisory fee and/or reimbursement of a portion
of the Portfolio's operating expenses so that the Portfolio's expense ratio
does not exceed .50%.
** This example assumes that Alliance's agreement to waive management fees
and/or to bear operating expenses is not extended beyond its initial period of
one year.
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OTHER INFORMATION ABOUT THE PORTFOLIO'S OBJECTIVES, STRATEGIES, AND RISKS
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This section of the prospectus provides a more complete description of the
investment objectives and principal strategies and risks of the Portfolio.
Please note:
o Additional descriptions of the Portfolio's strategies and investments, as
well as other strategies and investments not described below, may be found in
the Portfolio's Statement of Additional Information or SAI.
o There can be no assurance that the Portfolio will achieve its investment
objectives.
INVESTMENT OBJECTIVES AND STRATEGIES
As a money market fund, the Portfolio must meet the requirements of Securities
and Exchange Commission Rule 2a-7. The Rule imposes strict requirements on the
investment quality, maturity and diversification of the Portfolio's
investments. Under that Rule, the Portfolio's investments must each have a
remaining maturity of no more than 397 days and the Portfolio must maintain an
average weighted maturity that does not exceed 90 days.
The Portfolio's investments may include:
o marketable obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;
o certificates of deposit, bankers' acceptances, and interest-bearing savings
deposits 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 total assets of more than $500
million;
o high-quality commercial paper (or, if not rated, commercial paper determined
by Alliance to be of comparable quality) issued by U.S. or foreign companies
and participation interests in loans made to companies that issue such
commercial paper;
o adjustable rate obligations;
o asset-backed securities;
o restricted securities (I.E., securities subject to legal or contractual
restrictions on resale); and
o repurchase agreements that are fully collateralized.
3
The Portfolio does not invest 25% or more of its assets in securities of
issuers whose principal business activities are in the same industry. This
limitation does not apply to investments in securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, or to bank obligations,
including certificates of deposit, bankers' acceptances and interest bearing
savings deposits, issued by U.S. banks (including their foreign branches) and
U.S. branches of foreign banks subject to the same regulation as U.S. banks.
RISK CONSIDERATIONS
The Portfolio's principal risks are interest rate risk and credit risk. Because
the Portfolio invests in short-term securities, a decline in interest rates
will affect the Portfolio's yields as these securities mature or are sold and
the Portfolio purchases new short-term securities with lower yields. Generally,
an increase in interest rates causes the value of a debt instrument to
decrease. The change in value for shorter-term securities is usually smaller
than for securities with longer maturities. Because the Portfolio invests in
securities with short maturities and seeks to maintain a stable net asset value
of $1.00 per share, it is possible, though unlikely, that an increase in
interest rates would change the value of your investment.
Credit risk is the possibility that a security's credit rating will be
downgraded or that the issuer of the security will default (fail to make
scheduled interest and principal payments). The Portfolio invests in
highly-rated securities to minimize credit risk.
The Portfolio may invest up to 10% of its net assets in illiquid securities.
Investments in illiquid securities may be subject to liquidity risk, which is
the risk that, under certain circumstances, particular investments may be
difficult to sell at an advantageous price. Illiquid restricted securities also
are subject to the risk that the Portfolio may be unable to sell the security
due to legal or contractual restrictions on resale.
The Portfolio's investments in U.S. dollar-denominated obligations (or credit
and liquidity enhancements) of foreign banks, foreign branches of U.S. banks,
U.S. branches of foreign banks, and commercial paper of foreign companies may
be subject to foreign risk. Foreign securities issuers are usually not subject
to the same degree of regulation as U.S. issuers. Reporting, accounting, and
auditing standards of foreign countries differ, in some cases, significantly
from U.S. standards. Foreign risk includes nationalization, expropriation or
confiscatory taxation, political changes or diplomatic developments that could
adversely affect the Portfolio's investments.
The Portfolio also is subject to management risk because it is an actively
managed portfolio. Alliance will apply its investment techniques and risk
analyses in making investment decisions for the Portfolio, but there is no
guarantee that its techniques will produce the intended result.
YEAR 2000: Many computer systems and applications that process transactions use
two-digit date fields for the year of a transaction, rather than the full four
digits. If these systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900," which could result in processing
inaccuracies and inoperability at or after the year 2000. The Portfolio and its
major service providers, including Alliance, utilize a number of computer
systems and applications that have been either developed internally or licensed
from third-party suppliers. In addition, the Portfolio and its major service
providers, including Alliance, are dependent on third-party suppliers for
certain systems applications and for electronic receipt of information critical
to their business. Should any of the computer systems employed by the Portfolio
or its major service providers, including Alliance, fail to process Year 2000
related information properly, that could have a significant negative impact on
the Portfolio's operations and the services that are provided to the
Portfolio's shareholders. To the extent that the operations of issuers of
securities held by the Portfolio are impaired by the Year 2000 problem, the
value of the Portfolio's shares may be materially affected. In addition, for
the Portfolio's investments in foreign markets, it is possible that foreign
companies and markets will not be as prepared for Year 2000 as domestic
companies and markets.
The Year 2000 issue is a high priority for the Portfolio and Alliance. During
1997, Alliance began a formal Year 2000 initiative which established a
structured and coordinated process to deal with the Year 2000 issue. As part of
its initiative, Alliance established a Year 2000 project office to manage the
Year 2000 initiative, focusing on both information technology and
non-information technology systems. The Year 2000 project office meets
periodically with the audit committee of the board of directors of Alliance
Capital Management Corporation, Alliance's general partner, and with Alliance's
executive manage-
4
ment to review the status of the Year 2000 efforts. Alliance has also retained
the services of a number of consulting firms which have expertise in advising
and assisting with regard to Year 2000 issues. Alliance reports that by June
30, 1998 it had completed its inventory and assessment of its domestic and
international computer systems and applications, identified mission critical
systems (those systems where loss of their function would result in immediate
stoppage or significant impairment to core business units) and nonmission
critical systems and determined which of these systems were not Year 2000
compliant. All third-party suppliers of mission critical computer systems and
nonmission critical systems applications have been contacted to verify whether
their systems and applications will be Year 2000 compliant and their responses
are being evaluated. Substantially all of those contacted have responded and
approximately 90% have informed Alliance that their systems and applications
are or will be Year 2000 compliant. All mission and nonmission critical systems
supplied by third parties have been tested with the exception of those third
parties not able to comply with Alliance's testing schedule. Alliance reports
that it expects that all testing will be completed before the end of 1999.
Alliance has remediated, replaced or retired all of its non-compliant mission
critical systems and applications that can affect the Portfolio. All nonmission
critical systems have been remediated. After each system has been remediated,
it is tested with 19XX dates to determine if it still performs its intended
business function correctly. Next, each system undergoes a simulation test
using dates occurring after December 31, 1999. Inclusive of the replacement and
retirement of some of its systems, Alliance has completed these testing phases
for 98% of mission critical systems and 100% of nonmission critical systems.
Integrated systems tests were conducted to verify that the systems would
continue to work together. Full integration testing of all mission critical and
nonmission critical systems is complete. Testing of interfaces with third-party
suppliers has begun and will continue throughout 1999. Alliance reports that it
has completed an inventory of its facilities and related technology
applications and has begun to evaluate and test these systems. Alliance reports
that it anticipates that these systems will be fully operable in the year 2000.
Alliance has deferred certain other planned information technology projects
until after the Year 2000 initiative is completed. Such delay is not expected
to have a material adverse effect on Alliance's financial condition or results
of operations. Alliance, with the assistance of a consulting firm, is
developing Year 2000 specific contingency plans with emphasis on mission
critical functions. These plans seek to provide alternative methods of
processing in the event of a failure that is outside Alliance's control.
The estimated current cost to Alliance of the Year 2000 initiative ranges from
approximately $40 million to $45 million. These costs consist principally of
modification and testing and costs to develop formal Year 2000 specific
contingency plans. These costs, which will generally be expensed as incurred,
will be funded from Alliance's operations and the issuance of debt. Through
June 30, 1999, Alliance had incurred approximately $36.0 million of costs
related to the Year 2000 initiative. At this time, management of Alliance
believes that the costs associated with resolving the Year 2000 issue will not
have a material adverse effect on Alliance's results of operations, liquidity
or capital resources.
There are many risks associated with Year 2000 issues, including the risks that
the computer systems and applications used by the Portfolio and its major
service providers will not operate as intended and that the systems and
applications of third-party suppliers to the Portfolio and its service
providers will not be Year 2000 compliant. Likewise there can be no assurance
the compliance schedules outlined above will be met or that the actual cost
incurred will not exceed current cost estimates. Should the significant
computer systems and applications used by the Portfolio or its major service
providers, or the systems of their important third-party suppliers, be unable
to process date-sensitive information accurately after 1999, the Portfolio and
its service providers may be unable to conduct their normal business operations
and to provide shareholders with required services. In addition, the Portfolio
and its service providers may incur unanticipated expenses, regulatory actions
and legal liabilities. The Portfolio and Alliance cannot determine which risks,
if any, are most reasonably likely to occur or the effects of any particular
failure to be Year 2000 compliant. Certain statements provided by Alliance in
this section entitled "Year 2000", as such statements relate to Alliance, are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. To the fullest extent permitted by law, the
foregoing Year 2000 discussion is a "Year 2000 Readiness Disclosure" within the
meaning of the Year 2000 Information and Readiness Disclosure Act, 15 U.S.C.
Sec. 1 (1998).
5
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MANAGEMENT OF THE PORTFOLIO
- -------------------------------------------------------------------------------
The Portfolio's investment adviser is Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105. Alliance is a leading
international investment adviser managing client accounts with assets as of
June 30, 1999 totaling more than $321 billion (of which more than $140 billion
represented assets of investment companies). As of June 30, 1999, Alliance
managed retirement assets for many of the largest public and private employee
benefit plans (including 29 of the nation's FORTUNE 100 companies), for public
employee retirement funds in 32 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide. The 54
registered investment companies managed by Alliance, comprising 120 separate
investment portfolios, currently have more than 4.5 million shareholder
accounts.
Alliance provides investment advisory services and order placement facilities
for the Portfolio. For the fiscal year ended April 30, 1999, the Portfolio paid
Alliance .40% as a percentage of average daily net assets, net of any waivers.
(See "Annual Portfolio Operating Expenses" above for more information about fee
waivers.)
Alliance may make payments from time to time from its own resources, which may
include the management fees paid by the Portfolio, to compensate
broker-dealers, depository institutions, or other persons for providing
distribution assistance and administrative services and to otherwise promote
the sale of Portfolio shares, including paying for the preparation, printing,
and distribution of prospectuses and sales literature or other promotional
activities.
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PURCHASE AND SALE OF SHARES
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HOW THE PORTFOLIO VALUES ITS SHARES
The Portfolio's net asset value or NAV is expected to be constant at $1.00 per
share, although this price is not guaranteed. The NAV is calculated at 12:00
Noon and 4:00 p.m., Eastern time, on each Portfolio business day (I.E., each
weekday exclusive of days the New York Stock Exchange or the banks in
Massachusetts are closed).
To calculate NAV, the Portfolio's assets are valued and totaled, liabilities
subtracted and the balance, called net assets, is divided by the number of
shares outstanding. The Portfolio values its securities at their amortized
cost. This 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 investment.
HOW TO BUY SHARES
o INITIAL INVESTMENT
Instruct Bidwell & Company to use Alliance Institutional Reserves - Trust
Portfolio in conjunction with your brokerage account. Contact Bidwell & Company
for the current minimum balance requirement.
o SUBSEQUENT INVESTMENTS
By check through Bidwell & Company. Mail or deliver your check made payable to
Bidwell &Company, who will deposit it into the Portfolio. Please write your
account number on the check.
If you invest by a check drawn on a member of the Federal Reserve System, the
check will be converted to Federal funds in one business day following receipt
and then invested in the Portfolio. If you invest by a check drawn on a bank
that is not a member of the Federal Reserve System, the check may take longer
to be converted and invested. All payments must be in U.S. dollars.
HOW TO SELL SHARES
o BY CONTACTING BIDWELL & COMPANY
Instruct Bidwell &Company to make a withdrawal from your Fund account to
purchase securities or to make payment to you by check.
o BY CHECK WRITING
With this service, you may write checks made payable to any payee. You can
write as many checks as you need against your cash balances with no minimum
check amount. You may access available funds, as well as borrow against
available equity in your margin account, at any time. An approved margin
agreement is required to borrow against the equity in your account. 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.
6
o BY SWEEP
Bidwell & Company offers automatic daily sweep of funds between your brokerage
account and money fund account, subject to the minimum balance requirement.
OTHER
The Trust Portfolio has two transaction times each Portfolio business day,
12:00 Noon and 4:00 p.m., Eastern time. Investments receive the full dividend
for a day if the investor's telephone order is received by AFS by 4:00 p.m.,
Eastern time, and Federal funds or bank wire monies are received by State
Street Bank before 4:00 p.m., Eastern time, on that day.
Redemption proceeds are normally wired the same business day if a redemption
request is received by AFSprior to 4:00 p.m., Eastern 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 redemption is effected.
A transaction, service, administrative or other similar fee may be charged by
your financial broker-dealer, agent, financial representative or other
financial intermediary with respect to the purchase, sale or exchange of shares
made through these financial intermediaries. These financial intermediaries may
also impose requirements with respect to the purchase, sale or exchange of
shares that are different from, or in addition to, those imposed by the
Portfolio.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
The Portfolio's net income is calculated and paid daily as dividends to
shareholders. The dividends are automatically invested in additional shares in
your account. These additional shares are entitled to dividends on following
days resulting in compounding growth of income. The Portfolio expects that its
distributions will primarily consist of net income, or, if any, short-term
capital gains as opposed to long-term capital gains. For Federal income tax
purposes, the Portfolio's dividend distributions of net income (or short-term
capital gains) will be taxable to you as ordinary income. Any capital gains
distributions may be taxable to you as capital gains. The Portfolio's
distributions also may be subject to certain state and local taxes.
Each year shortly after December 31, the Portfolio will send you tax
information stating the amount and type of all of its distributions for the
year.
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GENERAL INFORMATION
- -------------------------------------------------------------------------------
The Portfolio reserves the right to close an account that through redemption is
less than $500,000. The Portfolio will send shareholders 60 days' written
notice to increase the account value before the Portfolio closes the account.
During drastic economic or market developments, you might have difficulty in
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephone requests to
purchase or sell shares. AFS will employ reasonable procedures to verify that
telephone requests are genuine and could be liable for losses resulting from
unauthorized transactions if it failed to do so. Dealers and agents may charge
a commission for handling telephone requests. The telephone service may be
suspended or terminated at any time without notice.
7
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FINANCIAL HIGHLIGHTS
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The financial highlights table is intended to help you understand the
Portfolio's financial performance for the past five years. Certain information
reflects financial information for a single Portfolio share. The total return
in the table represents the rate that an investor would have earned (or lost)
on an investment in the Portfolio (assuming investment of all dividends and
distributions). The information has been audited by McGladrey & Pullen, LLP,
the Portfolio's independent auditors, whose report, along with the Portfolio's
financial statements, appears in the SAI, which is available upon request.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0489 .0523 .0492 .0527 .0479
Net gains or losses on securities .0000 .0000 .0000 .0000 .0000
Total from investment operations .0489 .0523 .0492 .0527 .0479
LESS: DISTRIBUTIONS
Dividends (.0489) (.0523) (.0492) (.0527) (.0479)
Distributions .0000 .0000 .0000 .0000 .0000
Total distributions (.0489) (.0523) (.0492) (.0527) (.0479)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on
net asset value (b) 5.01% 5.37% 5.04% 5.41% 4.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $795 $391 $176 $170 $109
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements .50% .49% .50% .50% .49%
Expenses, before waivers and
reimbursements .55% .54% .57% .60% .75%
Net investment income (a) 4.85% 5.23% 4.93% 5.28% 5.31%
</TABLE>
(a) Net of expenses reimbursed or waived by Alliance.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of period.
8
