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This is filed pursuant to Rule 497(e).
File Nos. 33-34001 and 811-06068.
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[LOGO] ALLIANCE INSTITUTIONAL RESERVES, INC.
-Prime Portfolio
-Government Portfolio
-Tax-Free Portfolio
-Treasury Portfolio
____________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
____________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1999
___________________________________________________________
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Fund's current
Prospectuses dated September 1, 1999 (the "Prospectus")
which describe the Class A, Class B and Class C shares of
the Prime, Government, Tax-Free and Treasury Portfolios 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..............................................
Investment Objectives and Policies....................
Investment Restrictions ..............................
Management............................................
Expenses of the Fund..................................
Purchase and Redemption of Shares.....................
Daily Dividends-Determination of Net Asset Value......
Taxes.................................................
General Information...................................
Financial Statements and Report of Independent
Auditors............................................
Appendix A - Commercial Paper and Bond Ratings........
Appendix B - Description of Municipal Securities......
___________________________
(R): This registered service mark used under license from
the owner, Alliance Capital Management L.P.
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THE FUND
____________________________________________________________
Alliance Institutional Reserves, Inc. (the "Fund") is an
open-end investment company. The Prime Portfolio, the
Government Portfolio, the Tax-Free Portfolio and the
Treasury Portfolio, each of which is diversified
(collectively, the "Portfolios"), are described by the
Prospectus which supplements this Statement of Additional
Information. An additional portfolio of the Fund, the Trust
Portfolio, is described in a separate prospectus and
statement of additional information. The Fund changed its
name from ACM Institutional Reserves, Inc. to Alliance
Institutional Reserves, Inc. effective June 29, 1998.
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INVESTMENT OBJECTIVES AND POLICIES
____________________________________________________________
The investment objectives of each Portfolio are - in the
following order of priority - safety of principal, excellent
liquidity, and maximum current income (which, in the case of
the Tax-Free Portfolio, is exempt from Federal income taxes)
to the extent consistent with the first two objectives. As
a matter of fundamental policy, each of the Prime Portfolio,
the Government Portfolio and the Tax-Free Portfolio pursues
its objectives by maintaining a portfolio of high-quality
money market securities, all of which, at the time of
investment, have remaining maturities of one year or less
(which maturities, pursuant to Rule 2a-7 under the
Investment Company Act of 1940 as amended (the "Act"), may
extend to 397 days, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7). The
Treasury Portfolio, as a non-fundamental policy, pursues its
objectives by investing in the following investments
diversified by maturities not exceeding 397 days: issues of
the United States Treasury, such as bills, certificates of
indebtedness, notes and bonds and repurchase agreements with
respect to those instruments. The Fund may in the future
establish additional portfolios which may have different
investment objectives. As is true with all investment
companies, there can be no assurance that any of the
Portfolio's objectives will be achieved.
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General
Each of the Portfolios will comply with Rule 2a-7 under
the Act, as amended from time to time, including the
diversification, quality and maturity conditions imposed by
the Rule. To the extent that a Portfolio's limitations are
more permissive than Rule 2a-7, the Portfolio will comply
with the more restrictive provisions of the Rule.
Currently, pursuant to Rule 2a-7, each Portfolio may
invest only in U.S. dollar-denominated "Eligible Securities"
(as that term is defined in the Rule) that have been
determined by the Adviser to present minimal credit risks
pursuant to procedures approved by the Board of Directors.
Generally, an eligible security is a security that (i) has a
remaining maturity of 397 days or less and (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 (the "requisite NRSROs"). A first tier security
is an Eligible Security that has received a short-term
rating from the requisite NRSROs in the highest short-term
rating category for debt obligations, or is an unrated
security deemed to be of comparable quality. 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 of the ratings of some
NRSROs appears in Appendix A attached hereto. Securities in
which the Portfolios invest may be subject to liquidity or
credit enhancements. These securities are generally
considered to be Eligible Securities if the enhancement or
the issuer of the enhancement has received the appropriate
rating from the requisite NRSROs.
Under Rule 2a-7 the Prime, Government, Tax-Free and
Treasury Portfolios, as applicable, may not invest more than
five percent of their respective assets in the securities of
any one issuer other than the United States Government, its
agencies and instrumentalities. Government securities are
also considered to be first tier securities. In addition,
the Prime 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 Prime
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
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second tier securities (the "second tier security
restriction"). The second tier security restriction applies
to the Tax-Free Portfolio with respect to its investment in
the "conduit" securities of second tier issuers. A conduit
security for purposes of Rule 2a-7 is a security nominally
issued by a municipality, but dependent for principal and
interest payments on non-municipal issuer's revenues from a
non-municipal project.
Prime Portfolio
The Prime 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, bankers' acceptances and
interest-bearing savings deposits issued or guaranteed by
banks or savings and loan associations having total assets
of more than $1 billion and which are members of the Federal
Deposit Insurance Corporation or denominated in U.S. dollars
and issued by U.S. branches of foreign banks and foreign
branches of U.S. banks, in each case having total assets of
at least $1 billion that are believed by the Adviser to be
of quality equivalent to that of other such instruments in
which the Portfolio may invest. 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. Such certificates may
include, for example, those issued by foreign subsidiaries
of such banks which are guaranteed by them. 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
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an exporter or an importer to obtain a stated amount of
Funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally
guarantees to pay the face value of the 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 funding agreements and
variable amount master demand notes, 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, 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] and participation interests in loans extended
by banks to such companies. For a description of such
ratings see Appendix A. 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. For a further
description of variable amount master demand notes, see
below, "Additional Investment Policies".
The Portfolio may invest up to 5% of its net assets in
high quality (as determined by the requisite number of
NRSROs or, if not rated, determined to be of high quality by
the Adviser) participation interests having remaining
maturities not exceeding 397 days in loans extended by banks
to U.S. and foreign companies. In a typical corporate loan
syndication, a number of institutional lenders lend a
corporate borrower a specified sum pursuant to the term and
conditions of a loan agreement. One of the co-lenders
usually agrees to act as the agent bank with respect to the
loan. The loan agreement among the corporate borrower and
the co-lenders identifies the agent bank as well as sets
forth the rights and duties of the parties. The agreement
often (but not always) provides for the collateralization of
the corporate borrower's obligations thereunder and includes
various types of restrictive covenants which must be met by
the borrower.
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The participation interests acquired by the Portfolio
may, depending on the transaction, take the form of a direct
co-lending relationship with the corporate borrower, an
assignment of an interest in the loan by a co-lender or
another participant or a participation in the seller's share
of the loan. Typically, the Portfolio will look to the
agent bank to collect principal of and interest on a
participation interest, to monitor compliance with loan
covenants, to enforce all credit remedies, such as
foreclosures on collateral, and to notify co-lenders of any
adverse changes in the borrower's financial condition or
declarations of insolvency. The agent bank in such cases
will be qualified under the Act to serve as a custodian for
a registered investment company such as the Fund. The agent
bank is compensated for these services by the borrower
pursuant to the terms of the loan agreement.
When the Portfolio acts as a co-lender in connection
with a participation interest, or when the Portfolio
acquires a participation interest the terms of which provide
that the Portfolio will be in privity with the corporate
borrower, the Portfolio will have direct recourse against
the borrower in the event the borrower fails to pay
scheduled principal and interest. In cases where the
Portfolio lacks such direct recourse, the Portfolio will
look to the agent bank to enforce appropriate credit
remedies against the borrower.
The Adviser believes that the principal credit risk
associated with acquiring participation interests from a
co-lender or another participant is the credit risk
associated with the underlying corporate borrower. The
Portfolio may incur additional credit risk, however, when
the Portfolio is in the position of participant rather than
a co-lender because the Portfolio must assume the risk of
insolvency of the co-lender from which the participation
interest was acquired and that of any person interpositioned
between the Portfolio and the co-lender. However, in
acquiring participation interests the Adviser will conduct
analysis and evaluation of the financial condition of each
such co-lender and participant to ensure that the
participation interest meet the Portfolio's high quality
standard and will continue to do so as long as it holds a
participation.
4. Fully Collateralized Repurchase Agreements. For a
description of repurchase agreements, see below, "Additional
Investment Policies - Repurchase Agreements."
The Portfolio may make investments in certificates of
deposit, bankers' acceptances and interest-bearing saving
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deposits issued by U.S. branches of foreign banks and
foreign branches of U.S. banks, in each case specified in
paragraph 2 above, and commercial paper issued by foreign
companies meeting the rating criteria specified in paragraph
3 above. To the extent that the Portfolio invests in such
instruments, 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,
less government supervision of issuers, difficulty in
enforcing contractual obligations and lack of uniform
accounting standards.
The Portfolio may invest in asset-backed securities that
meet its existing diversification, quality and maturity
criteria. These securities must generally be rated. 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 corporation.
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. Generally, the special purpose entity
is deemed to be the issuer of the asset-backed security.
However, the Portfolio is required to treat any person whose
obligations constitute ten percent or more of the assets of
the asset-backed security as the issuer of the portion of
the asset-backed security such obligations represent.
Floating and Variable Rate Obligations. The Portfolio may
purchase floating and variable rate demand notes and bonds,
which are obligations ordinarily having stated maturities in
excess of 397 days, but which permit the holder to demand
payment of principal and accrued interest at any time, or at
specified intervals not exceeding 397 days, in each case
upon not more than 30 days notice. The Portfolio may also
invest in master demand notes which are obligations that
permit the Prime Portfolio to invest fluctuating amounts, at
varying rates of interest, pursuant to direct arrangements
between the Prime Portfolio, as lender, and the borrower.
These obligations permit daily changes in the amounts
borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded,
and there generally is no established secondary market for
these obligations, although they are redeemable at face
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value, plus accrued interest. The Portfolio also may invest
in short-term obligations of insurance companies, sometimes
referred to as funding agreements. These arrangements are
direct obligations of insurance companies and are not
traded. Where these types of obligations are not secured by
letters of credit or other credit support arrangements, the
Prime Portfolio's right to redeem is dependent on the
ability of the borrower or insurance company to pay
principal and interest on demand.
The Portfolio's investment objectives may not be changed
without the affirmative vote of a majority of the
Portfolio's outstanding shares as defined below. Except as
otherwise provided, the 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 Portfolio will not change
its investment policies without contemporaneous written
notice to shareholders.
Government Portfolio
The Government Portfolio pursues its objectives by
maintaining a portfolio of the following investments
diversified by maturities not exceeding one year (which
maturities, pursuant to Rule 2a-7 under the Act, may extend
to 397 days, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7).
As a matter of operating policy which may be changed
without shareholder approval, the Government Portfolio
attempts to invest in securities that the Adviser believes
are legal investments for federal credit unions as set forth
in Sections 107(7) and (8) of the Federal Credit Union Act
and Part 703 of the National Credit Union Administration
regulations.
The Government Portfolio may make the following
investments:
1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the United States 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 Banks,
Federal National Mortgage Association and Tennessee Valley
Authority. Some of these securities are supported by the
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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. Repurchase agreements pertaining to the above
securities. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."
Floating and Variable Rate Obligations. The Portfolio
may also purchase floating and variable rate obligations,
including floating and variable rate demand notes and bonds.
The Portfolio may invest in variable and floating rate
obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest
rate is tied. The Portfolio may also purchase floating and
variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 397 days,
but which permit the holder to demand payment of principal
and accrued interest at any time, or at specified intervals
not exceeding 397 days, in each case upon not more than 30
days' notice.
Tax-Free Portfolio
As a matter of fundamental policy, the Tax-Free
Portfolio, except when assuming a temporary defensive
position, must maintain at least 80% of its total assets in
high-grade municipal securities having maturities of one
year or less (which maturities, pursuant to Rule 2a-7 under
the Act, may extend to 397 days, or such greater length of
time as may be permitted from time to time pursuant to Rule
2a-7), as opposed to taxable investments described below.
Normally, substantially all of its income will be tax-exempt
as described below.
To the extent consistent with its other objectives, the
Portfolio seeks maximum current income that is exempt from
Federal income taxes by investing principally in a
diversified portfolio of high-grade municipal securities.
Such income may be subject to state or local income taxes.
Municipal Securities
The term "municipal securities," as used in the
Prospectus and this Statement of Additional Information,
means obligations issued by or on behalf of states,
territories, and possessions of the United States or their
political subdivisions, agencies and instrumentalities, the
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interest from which is exempt from Federal income taxes.
The municipal securities in which the Portfolio invests
include those obligations which at the time of purchase:
1. are backed by the full faith and credit of the
United States; or
2. are municipal notes rated MIG-1/VMIG-1 or
MIG-2/VMIG-2 by Moody's or SP-1 or SP-2 by Standard
& Poor's or, if not rated, are of equivalent
investment quality as determined by the Adviser; or
3. are municipal bonds rated Aa or higher by Moody's,
AA or higher by Standard & Poor's or, if not rated,
are of equivalent investment quality as determined
by the Adviser; or
4. are other types of municipal securities, provided
that such obligations are rated Prime-1 by Moody's,
A-1 or higher by Standard & Poor's or, if not
rated, are of equivalent investment quality as
determined by the Adviser. (See Appendix B for a
description of municipal securities and Appendix A
for a description of these ratings.)
The Portfolio will not invest 25% or more of its total
assets in the securities of non-governmental issuers
conducting their principal business activities in any one
industry.
Alternative Minimum Tax
Under current Federal income tax law, (1) interest on
tax-exempt municipal securities issued after August 7, 1986
which are "specified private activity bonds" will be treated
as an item of tax preference for purposes of the alternative
minimum tax ("AMT") imposed on individuals and corporations,
though for regular Federal income tax purposes such interest
will remain fully tax-exempt, and (2) interest on all
tax-exempt obligations will be included in "adjusted current
earnings" of corporations for AMT purposes. The Portfolio
may purchase "private activity" municipal securities because
such issues may provide somewhat higher yields than other
comparable municipal securities. However, the Portfolio
will limit its investments so that no more than 20% of its
total income is derived from municipal securities that bear
interest subject to the AMT.
Investors should consider that, in most instances, no
state, municipality or other governmental unit with taxing
power will be obligated with respect to AMT-subject bonds.
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AMT-subject bonds are in most cases revenue bonds and do not
generally have the pledge of the credit or the taxing power,
if any, of the issuer of such bonds. AMT-subject bonds are
generally limited obligations of the issuer supported by
payments from private business entities and not by the full
faith and credit of a state or any governmental subdivision.
Typically the obligation of the issuer of AMT-subject bonds
is to make payments to bond holders only out of and to the
extent of, payments made by the private business entity for
whose benefit the AMT-subject bonds were issued. Payment of
the principal and interest on such revenue bonds depends
solely on the ability of the user of the facilities financed
by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide
specific detail on each of these obligations in which Fund
assets may be invested.
Taxable Securities
Although the Portfolio expects to be largely invested in
municipal securities, the Portfolio may elect to invest up
to 20% of its total assets in taxable money market
securities when such action is deemed to be in the best
interests of shareholders. Such taxable money market
securities also are limited to remaining maturities of one
year (which maturities may extend to 397 days pursuant to
Rule 2a-7, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7) or less
at the time of the Portfolio's investment, and the
Portfolio's municipal and taxable securities are maintained
at a dollar-weighted average of 90 days or less. Taxable
money market securities purchased by the Portfolio include
those described below:
1. marketable obligations of, or guaranteed by, the
United States Government, its agencies or
instrumentalities; or
2. certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having
total assets of more than $1 billion and which are
members of the Federal Deposit Insurance
Corporation; or
3. commercial paper of prime quality rated A-1 or
higher by Standard & Poor's or Prime-1 by Moody's
or, if not rated, issued by companies which have
an outstanding debt issue rated AA or higher by
Standard & Poor's, or Aa or higher by Moody's.
(See Appendix A for description of these ratings.)
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The Portfolio may also enter into repurchase agreements
pertaining to the types of securities in which it may
invest. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."
Variable Rate Obligations
The interest rate payable on certain municipal
securities in which the Portfolio may invest, called
"variable rate" obligations, is not fixed and may fluctuate
based upon changes in market rates. The interest rate
payable on a variable rate municipal security is adjusted
either at predesignated periodic intervals or whenever there
is a change in the market rate to which the security's
interest rate is tied. Other features may include the right
of the Portfolio to demand prepayment of the principal
amount and accrued interest of the obligation prior to its
stated maturity and the right of the issuer to prepay the
principal amount and accrued interest prior to maturity.
The main benefit of a variable rate municipal security is
that the interest rate adjustment minimizes changes in the
market value of the obligation. As a result, the purchase
of variable rate municipal securities enhances the ability
of the Portfolio to maintain a stable net asset value per
share and to sell an obligation prior to maturity at a price
approximating the full principal amount. The payment of
principal and interest by issuers of certain municipal
securities purchased by the Portfolio may be guaranteed by
letter of credit or other credit facilities offered by banks
or other financial institutions. Such guarantees will be
considered in determining whether a municipal security meets
the Portfolio's investment quality requirements.
Variable rate obligations purchased by the Portfolio may
include participation interests in variable rate industrial
development bonds that are backed by irrevocable letters of
credit or guarantees of banks that meet criteria for banks
described above in "Taxable Securities." Purchase of a
participation interest gives the Portfolio an undivided
interest in certain such bonds. The Portfolio can exercise
the right, on not more than 30 days' notice, to sell such an
instrument back to the bank from which it purchased the
instrument and draw on the letter of credit for all or any
part of the principal amount of the Portfolio's
participation interest in the instrument, plus accrued
interest, but will generally do so only (i) as required to
provide liquidity to the Portfolio, (ii) to maintain a high
quality investment portfolio, or (iii) upon a default under
the terms of the demand instrument. Banks retain portions
of the interest paid on such variable rate industrial
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development bonds as their fees for servicing such
instruments and the issuance of related letters of credit
and repurchase commitments. The Portfolio follows Rule 2a-7
with respect to its investments in variable rate instruments
supported by letters of credit and participation interests.
The Portfolio will not purchase participation interests
in variable rate industrial development bonds unless the
interest earned by the Portfolio from the bonds in which it
holds participation interests is considered to be exempt
from Federal income taxes. The Adviser will monitor the
pricing, quality and liquidity of variable rate demand
obligations and participation interests therein held by the
Portfolio on the basis of published financial information,
rating agency reports and other research services to which
the Adviser may subscribe.
Standby Commitments
The Portfolio may purchase municipal securities together
with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to
their maturity dates. Such a right to resell is commonly
known as a "standby commitment," and the aggregate price
which the Portfolio pays for securities with a standby
commitment may be higher than the price which otherwise
would be paid. The primary purpose of this practice is to
permit the Portfolio to be as fully invested as practicable
in municipal securities while preserving the necessary
flexibility and liquidity to meet unanticipated redemptions.
In this regard, the Portfolio acquires standby commitments
solely to facilitate portfolio liquidity and does not
exercise its rights thereunder for trading purposes. Since
the value of a standby commitment is dependent on the
ability of the standby commitment writer to meet its
obligation to repurchase, the Portfolio's policy is to enter
into standby commitment transactions only with municipal
securities dealers which are determined to present minimal
credit risks.
The acquisition of a standby commitment does not affect
the valuation or maturity of underlying municipal securities
which continue to be valued in accordance with the amortized
cost method. Standby commitments acquired by the Portfolio
are valued at zero in determining net asset value. Where
the Portfolio pays directly or indirectly for a standby
commitment, its cost is reflected as unrealized depreciation
for the period during which the commitment is held. Standby
commitments do not affect the average weighted maturity of
the Portfolio's portfolio of securities. The Portfolio does
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not currently intend to invest more than 5% of its net
assets in standby commitments in the coming year.
General
Yields on municipal securities are dependent on a
variety of factors, including the general condition of the
money market and of the municipal bond and municipal note
market, the size of a particular offering, the maturity of
the obligation and the rating of the issue. Municipal
securities with longer maturities tend to produce higher
yields and are generally subject to greater price movements
than obligations with shorter maturities. The achievement
of the Portfolio's investment objectives is dependent in
part on the continuing ability of the issuers of municipal
securities in which the Portfolio invests to meet their
obligations for the payment of principal and interest when
due. Municipal securities historically have not been
subject to registration with the Commission, although there
have been proposals which would require registration in the
future.
After purchase by the Portfolio, a security may cease to
be rated or its rating may be reduced below the minimum
required for purchase by the Portfolio. Neither event
requires sales of such security by the Portfolio, but the
Adviser will consider such event in its determination of
whether the Portfolio should continue to hold the security,
pursuant to Rule 2a-7. To the extent that the ratings given
by Moody's or Standard & Poor's may change as a result of
changes in such organizations or their rating systems, the
Adviser will attempt to substitute comparable ratings.
Obligations of issuers of municipal securities are
subject to the provisions of bankruptcy, insolvency, and
other laws affecting the rights and remedies of creditors,
such as the Bankruptcy Code. In addition, the obligations
of such issuers may become subject to laws enacted in the
future by Congress, state legislatures, or referenda
extending the time for payment of principal and/or interest,
or imposing other constraints upon enforcement of such
obligations or upon ability of municipalities to levy taxes.
There is also the possibility that, as a result of
litigation or other conditions, the ability of any issuer to
pay, when due, the principal or the interest on its
municipal securities may be materially affected.
Except as otherwise provided above, the Portfolio's
investment objectives and policies are not designated
"fundamental policies" within the meaning of the Act and
may, therefore, be changed without a shareholder vote.
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However, the Portfolio will not change its investment
policies without contemporaneous written notice to
shareholders.
Treasury Portfolio
The Portfolio pursues its objectives by maintaining a
portfolio of the following investments diversified by
maturities not exceeding 397 days:
1. Issues of the United States Treasury, such as
bills, certificates of indebtedness, notes and bonds. Such
issues are supported by the full faith and credit of the
U.S. Treasury.
2. Repurchase agreements pertaining to the above
securities. For a description of repurchase agreements, see
below, "Additional Investment Policies - Repurchase
Agreements."
Reverse Repurchase Agreements. While the Portfolio has
no present plans to do so, it may enter into reverse
repurchase agreements, which have the characteristics of
borrowing and which involve the sale of securities held by
the Fund with an agreement to repurchase the securities at
an agreed-upon price, date and interest payment.
When-Issued Securities. For a description of when-
issued securities, see below, "Additional Investment
Policies - When-Issued Securities".
Floating and Variable Rate Obligations. The Portfolio
may purchase floating and variable rate obligations,
including floating and variable rate demand notes and bonds.
The Portfolio may invest in variable and floating rate
obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a
change in the market rate to which the security's interest
rate is tied. The Portfolio may also purchase floating and
variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 397 days,
but which permit the holder to demand payment of principal
and accrued interest at any time, or at specified intervals
not exceeding 397 days, in each case upon not more than 30
days' notice.
Except as otherwise provided, the Portfolio's investment
policies are not designated "fundamental policies" within
the meaning of the Act and may, therefore, be changed by the
Directors of the Fund without a shareholder vote. However,
the Portfolio will not change its investment policies
15
<PAGE>
without contemporaneous written notice to shareholders.
There can be no assurance, as is true with all investment
companies, that the Portfolio's objectives will be achieved.
Additional Investment Policies
The following investment policies supplement those set
forth above for each Portfolio. Except as otherwise
indicated below, such additional policies apply to all
Portfolios.
Repurchase Agreements
A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the
vendor on 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
each 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, each
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 397 days, the term of the
repurchase agreement is always less than 397 days. In the
event that a counterparty defaulted on its repurchase
obligation, a 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, a
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 a Portfolio's assets. Pursuant to Rule 2a-7, a
repurchase agreement is deemed to be an acquisition of the
underlying securities, provided that the obligation of the
seller to repurchase the securities from the money market
fund is collateralized fully (as defined in such Rule).
Accordingly, the counterparty of a fully collateralized
repurchase agreement is deemed to be the issuer of the
underlying securities.
16
<PAGE>
Reverse Repurchase Agreements
Each Portfolio may also enter into reverse repurchase
agreements, which involve the sale of money market
securities held by a Portfolio with an agreement to
repurchase the securities at an agreed-upon price, date and
interest payment. The Portfolios do not currently intend to
enter into such agreements during the coming year.
When-Issued Securities
Certain issues that the Portfolios are permitted to
purchase are offered on a "when-issued" basis. When so
offered, the price, which is generally expressed in yield
terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the
settlement date occurs from within ten days to one month
after the purchase of the issue. During the period between
purchase and settlement, no payment is made by a Portfolio
to the issuer and, thus, no interest accrues to a Portfolio
from the transaction. When-issued securities may be sold
prior to the settlement date, but each Portfolio makes
when-issued commitments only with the intention of actually
acquiring the securities. To facilitate such acquisitions,
the Fund's Custodian will maintain, in a separate account of
each Portfolio, U.S. Government securities or other liquid
high grade debt securities having value equal to or greater
than commitments held by that Portfolio. Similarly, a
separate account will be maintained to meet obligations in
respect of reverse repurchase agreements. On delivery dates
for such transactions, a Portfolio will meet its obligations
from maturities or sales of the securities held in the
separate account and/or from the available cash flow. If a
Portfolio, however, chooses to dispose of the right to
acquire a when-issued security prior to its acquisition, it
can incur a gain or loss. At the time a Portfolio makes the
commitment to purchase a security on a when-issued basis, it
records the transaction and reflects the value of the
security in determining its net asset value. No when-issued
commitments will be made if, as a result, more than 15% of a
Portfolio's net assets would be so committed.
Illiquid Securities and Restricted Securities
None of the Portfolios will maintain more than 10% of
its net assets in illiquid securities. Illiquid securities
may include securities that are not readily marketable,
securities subject to legal or contractual restrictions on
resale (except as described below) and repurchase agreements
not terminable within seven days. Except with respect to
17
<PAGE>
the Tax-Free Portfolio, which is not permitted to invest in
restricted securities, restricted securities that are
determined by the Adviser to be liquid in accordance with
procedures adopted by the Directors, including securities
eligible for resale under Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act") and commercial
paper issued in reliance upon the exemption from
registration in Section 4(2) of the Securities Act, will not
be treated as illiquid for purposes of the restriction on
illiquid securities. Restricted securities are securities
subject to the contractual or legal restrictions on resale,
such as those arising from an issuer's reliance upon certain
exemptions from registration under the Securities Act. As
to illiquid securities, a Portfolio is subject to a risk
that, should the Portfolio's desire to sell them when a
ready buyer is not available at a price the Portfolio deems
representative of their value, the value of the Portfolio's
net assets could be adversely affected.
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.
Following the purchase of a restricted security by a
Portfolio, the Adviser monitors continuously the liquidity
of such security and reports to the Directors regarding
purchases of liquid restricted securities.
Senior Securities
None of the Portfolios will issue senior securities
except as permitted by the Act or the rules, regulations, or
interpretations thereof.
General
While there are many kinds of short-term securities used
by money market investors, the Portfolios, in keeping with
their primary investment objective of safety of principal,
generally restrict their investments to the types summarized
above. Net income to shareholders is aided both by each
Portfolio's ability to make investments in large
denominations and by efficiencies of scale. Also, each
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 market value of each Portfolio's investments may
decrease during periods of rising interest rates and to
increase during intervals of falling rates. These changes
18
<PAGE>
in value are usually smaller for short-term securities than
for securities with longer maturities. Because the
Portfolios invest in securities with short maturities and
seek to maintain a stable net asset value of $1.00 per
share, it is possible, though unlikely, that changes in
interest rates would change the value of your investment.
____________________________________________________________
INVESTMENT RESTRICTIONS
____________________________________________________________
Unless otherwise specified to the contrary, the
following restrictions may not be changed with respect to a
Portfolio 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 Portfolio's assets will not constitute
a violation of that restriction.
Prime Portfolio
The Portfolio may not:
1. purchase any security which has a maturity date
more than one year* from the date of the 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, or
bank obligations, including certificates of deposit,
bankers' acceptances and interest-bearing savings deposits
(such bank obligations are issued by domestic banks,
including U.S. branches of foreign banks subject to the same
regulation as U.S. banks) and (b) consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries;
____________________
* Which maturity, pursuant to Rule 2a-7, may extend to
397 days, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7.
19
<PAGE>
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 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 an
aggregate amount not to exceed 15% of the 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 not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;
6. pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by
the Fund except as may be necessary in connection with any
borrowing mentioned above, including reverse repurchase
agreements, and in an aggregate amount not to exceed 15% of
the Portfolio's assets;
7. make loans, provided that the 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 Portfolio's assets would be
____________________
** As a matter of operating policy, pursuant to Rule
2a-7, the Prime Portfolio will invest no more than 5%
of its assets in the first tier (as defined in Rule
2a-7) securities of any one issuer, except that under
Rule 2a-7, a Fund may invest up to 25% of its total
assets in the first tier securities of a single
issuer for a period of up to three business days.
Fundamental policy number (3) would give the
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.
20
<PAGE>
committed 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 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 employees 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.
Government Portfolio
The Portfolio may not:
1. purchase any security which has a maturity date
more than one year*** from the date of the Portfolio's
purchase;
2. purchase securities other than marketable
obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, or repurchase
agreements pertaining thereto;
3. enter into repurchase agreements if, as a result
thereof, more than 10% of the Portfolio's assets would be
committed to repurchase agreements not terminable within
seven days and other illiquid investments or with any one
seller if, as a result thereof, more than 5% of the
____________________
*** Which maturity, pursuant to Rule 2a-7, may extend to
397 days, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7.
21
<PAGE>
Portfolio's assets would be invested in repurchase
agreements purchased from such seller;**** and may not enter
into any reverse repurchase agreements if, as a result
thereof, the Portfolio's obligations with respect to reverse
repurchase agreements would exceed 10% of the Portfolio's
assets;
4. borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements in
aggregate amounts not to exceed 10% of the 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 not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;
5. pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by
the 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 10% of
the Portfolio's assets;
6. make loans, provided that the Portfolio may
purchase securities of the type referred to in paragraph 2
above and enter into repurchase agreements with respect
thereto;
7. act as an underwriter of securities; or
8. invest more than 25% of its total assets in
securities of a single issuer, or in securities of issuers
in any single industry, except that these restrictions do
not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or other U.S
Government securities.
____________________
**** Pursuant to Rule 2a-7, acquisition of a fully
collateralized repurchase agreement is deemed to be
the acquisition of the underlying securities.
22
<PAGE>
Tax-Free Portfolio
The Portfolio may not:
1. purchase any security which has a maturity date
more than one year***** from the date of the Portfolio's
purchase;
2. invest more than 25% of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, provided that for purposes
of this policy (a) there is no limitation with respect to
investments in municipal securities (including industrial
development bonds), securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, and bank
obligations, including certificates of deposit, bankers'
acceptances and interest-bearing savings deposits, (such
bank obligations are issued by domestic banks, including
U.S. branches of foreign banks subject to the same
regulation as U.S. banks) and (b) consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries. For purposes of this restriction
and those set forth in restrictions 4 and 5 below, the
Portfolio will regard the entity which has the primary
responsibility for the payment of interest and principal as
the issuer;
3. invest more than 25% of its total assets in
municipal securities (a) whose issuers are located in the
same state, or (b) the interest upon which is paid from
revenues of similar-type projects;
4. invest more than 5% of its total assets in the
securities of any one issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities) except that with respect to 25% of its
total assets it may invest not more than 10% of such total
assets in the securities of any one issuer.****** For
____________________
***** Which maturity, pursuant to Rule 2a-7, may extend to
397 days, or such greater length of time as may be
permitted from time to time pursuant to Rule 2a-7.
****** As a matter of operating policy, pursuant to Rule
2a-7, the Tax-Free Portfolio will invest no more than
5% of its assets in the securities of any one issuer,
except that under Rule 2a-7, a Fund may invest up to
25% (subject to the Fund's limitation of not
investing more than 10% per issuer) of its total
(footnote continued)
23
<PAGE>
purposes of such 5% and 10% limitations, the issuer of the
letter of credit or other guarantee backing a participation
interest in a variable rate industrial development bond is
deemed to be the issuer of such participation interest;
5. purchase more than 10% of any class of the voting
securities of any one issuer except securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;
6. borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements for
extraordinary or emergency purposes in an aggregate amount
not to exceed 15% of the Portfolio's total assets. Such
borrowings may be used, for example, to facilitate the
orderly maturation and sale of portfolio securities during
periods of abnormally heavy redemption requests, if they
should occur, such borrowings may not be used to purchase
investments and the Portfolio will not purchase any
investments while borrowings in excess of 5% of total assets
exist;
7. pledge, hypothecate, mortgage or otherwise encumber
its assets except to secure borrowings, including reverse
repurchase agreements, effected within the limitations set
forth in restriction 6. To meet the requirements of
regulations in certain states, the Portfolio, as a matter of
operating policy, will limit any such pledging,
hypothecating or mortgaging to 10% of its total assets,
valued at market, so long as shares of the Portfolio are
being sold in those states;
8. make loans of money or securities except by the
purchase of debt obligations in which the Portfolio may
invest consistent with its investment objectives and
policies and by investment in repurchase agreements;
9. enter into repurchase agreements (i) not terminable
within seven days if, as a result thereof, more than 10% of
the Portfolio's total assets would be committed to such
repurchase agreements (whether or not illiquid) or other
____________________
(footnote continued)
assets in the first tier securities (as defined in
Rule 2a-7) of a single issuer for a period of up to
three business days. Fundamental policy number (4)
would give the 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.
24
<PAGE>
illiquid investments, or (ii) with a particular
vendor******* if immediately thereafter more than 5% of the
Portfolio's assets would be committed to repurchase
agreements entered into with such vendor; or
10. (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 securities secured by real estate or
interests therein or securities issued by companies which
invest in real estate or interests therein), commodities or
commodity contracts; (d) purchase any restricted securities
or securities on margin; (e) make short sales of securities
or maintain a short position or write, purchase or sell puts
(except for standby commitments as described in the
Prospectus and above), calls 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 Portfolio's assets would be
invested in such securities; (g) purchase or retain
securities of any issuer if those officers and directors of
the Fund and of the Adviser who own individually more than
1/2 of 1% 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.
Treasury Portfolio
The Portfolio:
1. May not borrow money except from banks on a
temporary basis or via entering into reverse repurchase
agreements in aggregate amounts not to exceed 10% of the
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 not be used to
purchase investments and the Portfolio will not purchase any
investment while any such borrowings exist;
2. May not pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities owned
or held by the Portfolio except as may be necessary in
____________________
*******Pursuant to Rule 2a-7, acquisition of a fully
collateralized repurchase agreement is deemed to be
the acquisition of the underlying securities.
25
<PAGE>
connection with any borrowing mentioned above, including
reverse repurchase agreements, and in an aggregate amount
not to exceed 10% of the Portfolio's assets;
3. May not make loans, provided that the Portfolio may
purchase securities of the type referred to in paragraph 2
above and enter into repurchase agreements with respect
thereto;
4. May not 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, interests in oil, gas and other mineral
exploration or other development programs;
5. May not act as an underwriter of securities; and
6. May not invest more than 25% of its total assets in
securities of a single issuer, or in securities of issuers
in any single industry, except that these restrictions do
not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or other U.S
Government securities.
____________________________________________________________
MANAGEMENT
____________________________________________________________
Organization
Each of the Portfolios is a series of Alliance
Institutional Reserves, Inc., an open-end management
investment company registered under the 1940 Act and
organized as a Maryland corporation on March 21, 1990. Each
Portfolio's activities are supervised by the Board of
Directors. The Adviser provides investment advice and, in
general, conducts the management and investment program of
the Fund, subject to the general supervision and control of
the Board of Directors.
Normally, shares of each series are entitled to one vote
per share, and vote as a single series, on matters that
affect each series in substantially the same manner.
Maryland law does not require annual meetings of
shareholders and it is anticipated that shareholder meetings
will be held only when required by federal or Maryland law.
Shareholders have available certain procedures for the
removal of directors.
26
<PAGE>
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. Those Directors whose names are followed by
an asterisk are "interested persons" of the Fund as
determined under the Act. 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
JOHN D. CARIFA, 54, Chairman of the Board of Directors,
is the President, Chief Operating Officer and a Director of
Alliance Capital Management Corporation ("ACMC"), with which
he has been associated since prior to 1994.********
RUTH BLOCK, 68, was formerly Executive Vice President
and Chief Insurance Officer of The Equitable Life Assurance
Society of the United States. She is a Director of Ecolab
Incorporated (specialty chemicals) and BP Amoco Corporation
(oil and gas). Her address is Box 4623, Stamford,
Connecticut, 06903.
DAVID H. DIEVLER, 69, is an independent consultant. He
was formerly a Senior Vice President of ACMC until December
1994. His address is P.O. Box 167, Spring Lake, New Jersey,
07762.
JOHN H. DOBKIN, 57, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1994.
Previously, he was Director of the National Academy of
Design. His address is 150 White Plains Road, Tarrytown,
New York 10591.
WILLIAM H. FOULK, JR., 66, is an Investment Advisor and
Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser,
with which he had been associated since prior to 1994. His
address is Suite 100, 2 Greenwich Plaza, Greenwich,
Connecticut 06830.
DR. JAMES M. HESTER, 75, is President of the Harry Frank
Guggenheim Foundation with which he has been associated
since prior to 1994. He was formerly President of New York
University, the New York Botanical Garden and Rector of the
____________________
********An interested person as defined in the Act.
27
<PAGE>
United Nations University. His address is 25 Cleveland
Lane, Princeton, New Jersey 08540.
CLIFFORD L. MICHEL, 60, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated
since prior to 1994. He is President and Chief Executive
Officer of Wenonah Development Company (investment holding
company) and a Director of Placer Dome, Inc. (mining). His
address is St. Bernard's Road, Gladstone, New Jersey 07934.
DONALD J. ROBINSON, 65, is Senior Counsel of the law
firm of Orrick, Herrington & Sutcliffe and was formerly a
senior partner and a member of the Executive Committee of
that firm. He was also a Trustee of the Museum of the City
of New York from 1977-1995. His address is 98 Hell's Peak
Road, Weston, Vermont 05161.
Officers
RONALD M. WHITEHILL - President, 61, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since prior to
1994.
KATHLEEN A. CORBET, Senior Vice President, 39, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1994.
DREW A. BIEGEL - Senior Vice President, 48, is a Vice
President of ACMC with which he has been associated since
prior to 1994.
RAYMOND J. PAPERA - Senior Vice President, 43, is a
Senior Vice President of ACMC with which he has been
associated since prior to 1994.
KENNETH T. CARTY - Vice President, 38, is a Vice
President of ACMC with which he has been associated since
prior to 1994.
JOHN F. CHIODI, JR. - Vice President, 33, is a Vice
President of ACMC with which he has been associated since
prior to 1994.
MARIA R. CONA - Vice President, 44, is an Assistant Vice
President of ACMC with which she has been associated since
prior to 1994.
FRANCES M. DUNN - Vice President, 28, is a Vice
President of ACMC with which she has been associated since
prior to 1994.
28
<PAGE>
JOSEPH R. LASPINA - Vice President, 38, is an Assistant
Vice President of ACMC with which he has been associated
since prior to 1994.
EDMUND P. BERGAN, JR., Secretary, 49, is a Senior Vice
President and the General Counsel of Alliance Fund
Distributors, Inc. ("AFD") and Alliance Fund Services, Inc.
("AFS") with which he has been associated since prior to
1994.
MARK D. GERSTEN, Treasurer and Chief Financial Officer,
48, is a Senior Vice President of AFS and a Vice President
of AFD with which he has been associated since prior to
1994.
VINCENT S. NOTO, Controller, 34, is a Vice President of
AFS with which he has been associated since prior to 1994.
ANDREW L. GANGOLF - Assistant Secretary, 45, is a Vice
President and Assistant General Counsel of AFD with which he
has been associated since December 1994.
DOMENICK PUGLIESE - Assistant Secretary, 38, is a Vice
President and Assistant General Counsel of AFD with which he
has been associated since May 1995. Prior thereto, he was
Vice President and Counsel of Concord Holding Corporation
since 1994.
EMILIE D. WRAPP - Assistant Secretary, 43, is a Vice
President and Assistant General Counsel of AFD with which
she has been associated since prior to 1994.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended April 30, 1999,
the aggregate compensation paid to each of the Directors
during calendar year 1998 by all of the registered
investment companies to which the Adviser provides
investment advisory services (collectively, the "Alliance
Fund Complex"), and the total number of registered
investment companies (and separate investment portfolios
within those companies) in the Alliance Fund Complex with
respect to which each of the Directors serves as a director
or trustee, are set forth below. Neither the Fund nor any
registered investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement
benefits to any of its directors or trustees. Each of the
Directors is a director or trustee of one or more other
registered investment companies in the Alliance Fund
Complex.
29
<PAGE>
Total Number Total Number
of Registered of Investment
Investment Portfolios
Companies Within the
Total the Alliance Alliance Fund
Compensation Fund Complex, Complex,
from the Including the Including the
Alliance Fund, as to Fund, as to
Aggregate Fund which the which the
Compensation Complex, Director is Director is
from the Including a Director a Director
Name of Director Fund the Fund or Trustee or Trustee
- --------------- ----------- ------------ ------------- -------------
John D. Carifa $-0- $-0- 50 116
Ruth Block $2,825 $180,762.50 37 79
David H. Dievler $2,945 $216,287.50 44 86
John H. Dobkin $2,945 $185,362.50 42 97
William H. Foulk, Jr. $2,945 $241,002.50 45 111
Dr. James M. Hester $2,945 $172,912.50 38 80
Clifford L. Michel $2,945 $187,762.50 39 96
Donald J. Robinson $2,142 $193,708.50 41 105
As of August 16, 1999, the Directors and officers of the
Fund as a group owned less than 1% of the outstanding shares
of each Portfolio.
The Adviser
The Fund's investment adviser is Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New
York 10105. The Adviser is a leading international adviser
managing client accounts with assets as of June 30, 1999
totaling more than $321 billion (of which approximately $140
billion represented assets of investment companies). As of
June 30, 1999, the Adviser 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 out of the 50
states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 54
registered investment companies managed by the Adviser,
comprising 120 separate investment portfolios, currently
have more than 4.5 million shareholder accounts.
Alliance Capital Management Corporation ("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
30
<PAGE>
insurance companies in the United States and a wholly-owned
subsidiary of The Equitable Companies Incorporated ("ECI").
ECI is a holding company controlled by AXA, a French
insurance holding company. As of March 1, 1999, AXA and
certain of its subsidiaries beneficially owned approximately
58.4% of ECI's outstanding common stock. ECI is a public
company with shares traded on the New York Stock Exchange.
AXA, a French company, is the holding company for an
international group of insurance and related financial
services companies. AXA's insurance operations include
activities in life insurance, property and casualty
insurance and reinsurance. The insurance operations are
diverse geographically with activities principally in
Western Europe, North America, the Asia/Pacific area and, to
a lesser extent, in Africa and South America. AXA is also
engaged in asset management, investment banking, securities
trading, brokerage, real estate and other financial
activities principally in the United States, as well as in
Western Europe and the Asia/Pacific area.
For insurance regulatory purposes the shares of capital
stock of ECI beneficially owned by AXA and its subsidiaries
have been deposited into a voting trust which has an initial
term of 10 years commencing in 1992. The trustees of the
voting trust (the "Voting Trustees") have agreed to protect
the legitimate economic interests of AXA, but with a view of
ensuring that certain minority shareholders of AXA do not
exercise control over ECI or certain of its insurance
subsidiaries. As of March 1, 1999, AXA, ECI, Equitable and
certain subsidiaries of Equitable were the beneficial owners
of approximately 56.6% of the issued and outstanding units
representing assignments of beneficial ownership of limited
partnership interests ("Units") in the Adviser.
Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares
(representing 32.7% of the voting power) of AXA were owned
directly and indirectly by Finaxa, a French holding company.
As of March 1, 1999, 61.7% of the shares (representing 72.3%
of the voting power) of Finaxa were owned by four French
mutual insurance companies (the "Mutuelles AXA") (one of
which, AXA Assurances I.A.R.D Mutuelle, owned 35.4% of the
shares, representing 41.5% of the voting power of Finaxa),
and 22.7% of the shares of Finaxa (representing 13.7% of the
voting power) were owned by Paribas, a French bank.
Including the ordinary shares owned by Finaxa, on March 1,
1999, the Mutuelles AXA directly and indirectly owned
approximately 23.9% of the issued ordinary shares
(representing 37.6% of the voting power) of AXA. The Voting
Trustees may be deemed to be beneficial owners of all Units
31
<PAGE>
beneficially owned by AXA and its subsidiaries. By virtue
of the provisions of the voting trust agreement, AXA may be
deemed to have shared voting power with respect to the
Units. In addition, the Mutuelles AXA, as a group, and
Finaxa may be deemed to be beneficial owners of all Units
beneficially owned by AXA and its subsidiaries. AXA and its
subsidiaries have the power to dispose or direct the
disposition of all shares of the capital stock of ECI
deposited in the voting trust. The Mutuelles AXA, as a
group, and Finaxa may be deemed to share power to vote or
direct the vote and to dispose or to direct the disposition
of all the Units beneficially owned by AXA and its
subsidiaries. By reason of their relationship, AXA, the
Voting Trustees, the Mutuelles AXA, Finaxa, ECI, Equitable,
Equitable Holdings, L.L.C., Equitable Investment
Corporation, ACMC and Equitable Capital Management
Corporation may be deemed to share the power to vote or
direct the vote and to dispose or direct the disposition of
all or a portion of the Units beneficially owned by AXA and
its subsidiaries.
Under the Advisory Agreement, the Adviser provides 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, each Portfolio
pays the Adviser at an annual rate of .20% of the average
daily value of its net assets. The fee is accrued daily and
paid monthly.
The Adviser has undertaken, that if, in any fiscal year,
the aggregate expenses with respect to a class of shares of
a Portfolio, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, but including the
management fee and any applicable distribution services fee,
exceed .20%, .30% or .45% of a Portfolio's aggregate
operating expenses for the fiscal year attributable to the
Portfolio's Class A shares, Class B shares or Class C
shares, respectively, the Portfolio may deduct from the
payment to be made to the Adviser, or the Adviser will
otherwise bear, such expenses unless the Adviser provides
the Fund with at least 60 days' notice prior to the end of
the fiscal year of its determination not to extend the
agreement. For the fiscal year ended April 30, 1999, each
Portfolio paid the Adviser a management fee of .20 of 1%.
Such fees were $4,306,084, $855,152, $813,820 and $51,075
for the Prime, Government, Tax-Free and Treasury Portfolios,
respectively. See the Report of Independent Auditors and
Financial Statements for reimbursements and waivers with
respect to operating expenses. For the fiscal year ended
32
<PAGE>
April 30, 1998, the Prime Portfolio paid the Adviser a
management fee of .16 of 1% ($2,034,673) and the Adviser
reimbursed $562,608, all of which represented advisory fees,
the Government Portfolio paid the Adviser a management fee
of .12 of 1% ($357,512) and the Adviser reimbursed $243,394,
all of which represented advisory fees and the Tax-Free
Portfolio paid the Adviser a management fee of .12 of 1%
($311,563) and the Adviser reimbursed $205,077, all of which
represented advisory fees. For the fiscal year ended
April 30, 1997, the Prime Portfolio paid the Adviser a
management fee of .11% of 1% ($847,338) and the Adviser
reimbursed $661,792, all of which represented advisory fees.
For the fiscal year ended April 30, 1997, the Government
Portfolio paid the Adviser a management fee of .05% of 1%
($99,907) and the Adviser reimbursed $289,896, all of which
represented advisory fees. For the fiscal year ended
April 30, 1997, the Tax-Free Portfolio paid the Adviser a
management fee of .07% of 1% ($151,472) and the Adviser
reimbursed $257,876, all of which represented advisory fees.
The Treasury Portfolio had not commenced operation during
such periods. The Adviser may make payments from time to
time from its own resources, which may include the
management fees paid by the Portfolios of the Fund, to
compensate broker-dealers, including Donaldson, Lufkin &
Jenrette Securities Corp. and its Pershing Division,
affiliates of the Adviser, depository institutions and other
financial intermediaries that engage in or support the
distribution of shares of the Fund, and to pay for the
preparation, printing and distribution of prospectuses and
other literature or other promotional activities.
The Advisory Agreement will remain in effect until
December 31, 1999, 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 each Portfolio's outstanding
voting securities or by the Fund's Board of Directors,
including in either case approval by a 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 any 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 such Portfolio; it will automatically
terminate in the event of assignment. The Adviser is not
liable for any action or inaction with 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.
33
<PAGE>
____________________________________________________________
EXPENSES OF THE FUND
____________________________________________________________
Distribution Agreement
The Fund has entered into a Distribution Agreement (the
"Agreement") with Alliance Fund Distributors, Inc., the
Fund's principal underwriter (the "Principal Underwriter"),
to permit the Fund to pay distribution services fees to
defray expenses associated with distribution of its Class B
and Class C shares in accordance with a plan of distribution
which is included in the Agreement and has been duly adopted
and approved in accordance with Rule 12b-1 adopted by the
Commission under the Act (the "Rule 12b-1 Plan").
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the
purposes for which such expenditures were made to the
Directors of the Fund for their review on a quarterly basis.
Also, the Agreement provides that the selection and
nomination of Directors who are not interested persons of
the Fund (as defined in the Act) are committed to the
discretion of such disinterested Directors then in office.
The Agreement was initially approved by the Directors of the
Fund at a meeting held on June 22, 1998.
In approving the Agreement, the Directors of the Fund
determined that there was a reasonable likelihood that the
Agreement would benefit the Fund and its shareholders.
Information with respect to distribution services fees and
other revenues and expenses of the Principal Underwriter
will be presented to the Directors each year for their
consideration in connection with their deliberations as to
the continuance of the Agreement. In their review of the
Agreement, the Directors will be asked to take into
consideration separately with respect to each class the
distribution expenses incurred with respect to such class.
The distribution services fee of a particular class will not
be used to subsidize the provision of distribution services
with respect to any other class.
During the Fund's fiscal period June 29, 1998
(commencement of operations of Class B and Class C shares)
to April 30, 1999, the Fund paid distribution services fees
for expenditures under the Agreement with respect to Class B
and Class C Shares. With respect to the Prime Portfolio
Class B shares, distribution services fees for expenditures
under the Agreement amounted to $207,634, which constituted
.10% of the Portfolio's aggregate average daily net assets
34
<PAGE>
attributable to Class B shares during the fiscal year and
the Adviser made payments from its own resources aggregating
$11,542. Of the $219,176 paid by the Adviser and the Fund
under the Agreement, $1,000 was paid for advertising,
printing and mailing of prospectuses for persons other than
current shareholders; and $218,176 was paid to broker-
dealers and other financial intermediaries for distribution
assistance.
With respect to the Prime Portfolio Class C shares,
distribution services fees for expenditures under the
Agreement amounted to $49,452, which constituted .25% of the
Portfolio's aggregate average daily net assets attributable
to Class C shares during the fiscal year. Of the $49,452
paid by the Fund under the Agreement, the entire amount was
paid to broker-dealers and other financial intermediaries
for distribution assistance.
With respect to the Government Portfolio Class B shares,
distribution services fees for expenditures under the
Agreement amounted to $65,988, which constituted .10% of the
Portfolio's aggregate average daily net assets during the
fiscal year. Of the $65,988 paid by the Fund under the
Agreement, the entire amount was paid to broker-dealers and
other financial intermediaries for distribution assistance.
With respect to the Government Portfolio Class C shares,
distribution services fees for expenditures under the
Agreement amounted to $6,209 which constituted .25% of the
Portfolio's aggregate average daily net assets during the
fiscal year. Of the $6,209 paid by the Fund under the
Agreement, the entire amount was paid to broker-dealers and
other financial intermediaries for distribution assistance.
With respect to the Tax-Free Portfolio Class B shares,
distribution services fees for expenditures under the
Agreement amounted to $86,382 which constituted .10% of the
Portfolio's aggregate average daily net assets during the
fiscal year and the Adviser made payments from its own
resources aggregating $888. Of the $87,270 paid by the
Adviser and the Fund under the Agreement, $1,000 was paid
for advertising, printing and mailing of prospectuses for
persons other than current shareholders; and $86,270 was
paid to broker-dealers and other financial intermediaries
for distribution assistance.
With respect to the Tax-Free Portfolio Class C shares,
distribution services fees for expenditures under the
Agreement amounted to $2,821 which constituted .25% of the
Portfolio's aggregate average daily net assets during the
fiscal year. Of the $2,821 paid by the Fund under the
35
<PAGE>
Agreement, the entire amount was paid to broker-dealers and
other financial intermediaries for distribution assistance.
With respect to the Treasury Portfolio Class B shares,
distribution services fees for expenditures under the
Agreement amounted to $4,030 which constituted .10% of the
Portfolio's aggregate average daily net assets during the
fiscal year. Of the $4,030 paid by the Fund under the
Agreement, the entire amount was paid to broker-dealers and
other financial intermediaries for distribution assistance.
With respect to the Treasury Portfolio Class C shares,
distribution services fees for expenditures under the
Agreement amounted to $36,483, which constituted .25% of the
Portfolio's aggregate average daily net assets during the
fiscal year. Of the $36,483 paid by the Fund under the
Agreement, the entire amount was paid to broker-dealers and
other financial intermediaries for distribution assistance.
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued.
The distribution services fees attributable to the Class B
shares and Class C shares are designed to permit an investor
to purchase such shares through broker-dealers, depository
institutions or other financial intermediaries and at the
same time to permit the Principal Underwriter to compensate
such broker-dealers, including Donaldson, Lufkin & Jenrette
Securities Corp. and its Pershing Division, affiliates of
the Adviser, depository institutions or other financial
intermediaries in connection with the sale of such shares or
the provision of administrative or other services to the
holders of such shares. The distribution services fee for a
Portfolio is an amount equal to, on an annualized basis,
.10% of the aggregate average daily net assets attributable
to the Class B shares of the Portfolio and .25% of the
aggregate average daily net assets attributable to the
Class C shares of the Portfolio.
The Agreement became effective on July 22, 1992, and was
amended to become effective with respect to shares in the
Treasury Portfolio and the Class B shares and Class C shares
of the other Portfolios on June 29, 1998. The Agreement
will continue in effect until December 31, 1999 and
thereafter with respect to a class of shares of a Portfolio,
provided, however, that such continuance with respect to
that class is specifically approved annually by the
Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities (as defined in
the Act) of that class, and in either case, by a majority of
the Directors of the Fund who are not parties to this
agreement or interested persons, as defined in the Act, of
36
<PAGE>
any such party (other than as trustees of the Fund) and who
have no direct or indirect financial interest in the
operation of the Rule 12b-1 Plan or any agreement related
thereto. In the event that the Agreement is terminated or
not continued with respect to the Class B shares or Class C
shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by
the Fund to the Principal Underwriter with respect to that
class, and (ii) the Fund would not be obligated to pay the
Principal Underwriter for any amounts expended under the
Agreement not previously recovered by the Principal
Underwriter from distribution services fees in respect of
shares of such class or through deferred sales charges.
All material amendments to the Agreement will become
effective only upon approval as provided in the preceding
paragraph; and the Agreement may not be amended in order to
increase materially the costs that the Fund may bear
pursuant to the Agreement without the approval of a majority
of the holders of the outstanding voting shares of the Fund
or the class or classes of the Fund affected. The Agreement
may be terminated (a) by the Fund without penalty at any
time by a majority vote of the holders of the Fund's
outstanding voting securities, voting separately by class,
or by a majority vote of the disinterested Directors or
(b) by the Principal Underwriter. To terminate the
Agreement, any party must give the other parties 60 days'
written notice; to terminate the Rule 12b-1 Plan only, the
Fund is not required to give prior notice to the Principal
Underwriter. The Agreement will terminate automatically in
the event of its assignment.
Transfer Agency Agreement
Alliance Fund Services, Inc. ("AFS"), P.O. Box 1520,
Secaucus, NJ 07096-1520 and Alliance Fund Distributors, Inc.
("AFD"), 1345 Avenue of the Americas, New York, NY 10105,
are the Fund's Transfer Agent and Distributor, respectively.
AFS, an indirect wholly-owned subsidiary of Alliance,
receives a minimum transfer agency fee per month for each of
the Class A shares, Class B shares and Class C shares of the
Fund, plus reimbursement for out-of-pocket expenses.
____________________________________________________________
PURCHASE AND REDEMPTION OF SHARES
____________________________________________________________
The Fund may refuse any order for the purchase of
shares. The Fund reserves the right to suspend the sale of
37
<PAGE>
a Portfolio's shares to the public in response to conditions
in the securities markets or for other reasons.
Shareholders maintaining accounts in a Portfolio of the
Fund through brokerage firms, depository institutions or
other financial intermediaries 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 Fund 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
Fund 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. (Eastern time) will become
shareholders on, and will receive the dividend declared,
that day, with respect to the Prime, Government and Treasury
Portfolios. An investor's purchase order with respect to
the Tax-Free Portfolio must be received by State Street Bank
by 12:00 Noon (Eastern time). 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 received by AFS by 4:00 p.m.
(Eastern time) and Federal Funds or bank wire monies are
received by State Street bank prior to 4:00 p.m. (Eastern
time) of such day, with respect to the Prime, Government and
Treasury Portfolios. With respect to the Tax-Free
Portfolio, 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
received by AFS by 12:00 Noon (Eastern time) and Federal
Funds or bank wire monies are received by State Street bank
prior to 12:00 Noon (Eastern 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.
38
<PAGE>
All shares purchased are confirmed monthly to each
shareholder and are credited to his or her account at net
asset value. To avoid unnecessary expense to the Fund and
to facilitate the 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. The Fund
reserves the right to reject any purchase order.
The Fund 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 Fund shares can become effective and the transmittal of
redemption proceeds can occur, is considered for Fund
purposes as any weekday exclusive of national holidays on
which the New York Stock Exchange is closed and of Good
Friday and Martin Luther King, Jr. Day; 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 Fund 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 Commission) exists, or
the 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 cost, depending on the market value of the
securities held by the Fund at such time and the income
earned.
39
<PAGE>
____________________________________________________________
DAILY DIVIDENDS - DETERMINATION OF NET ASSET VALUE
____________________________________________________________
All net income of each Portfolio, except the Tax-Free
Portfolio, is determined at 12:00 Noon and 4:00 p.m.
(Eastern time) and is paid immediately thereafter pro rata
to shareholders of record of that 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. All net income of the Tax-Free
Portfolio is determined at 12:00 Noon (Eastern time) and is
paid immediately thereafter pro rata to shareholders of
record of the Tax-Free 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 are entitled to
dividends on following days, a compounding growth of income
occurs.
A Portfolio's net income consists of all accrued
interest income on assets less expenses allocable to that
Portfolio (including accrued expenses and fees payable to
the Adviser) applicable to that dividend period. Realized
gains and losses of each Portfolio are reflected in its net
asset value and are not included in net income. Net asset
value per share of each Portfolio is expected to remain
constant at $1.00 since all net income of each 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 each Portfolio's portfolio securities
is based upon their 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 a
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 Fund maintains procedures designed to maintain, to
the extent reasonably possible, the price per share of each
Portfolio as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of a
40
<PAGE>
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 each Portfolio
calculated by using available market quotations or market
equivalents deviates from net asset value based on amortized
cost. There can be no assurance, however, that the Fund's
net asset value per share will remain constant at $1.00.
The net asset value of the shares of each Portfolio,
except the Tax-Free Portfolio, is determined each Fund
business day (and on such other days as the Directors deem
necessary) at 12:00 Noon and 4:00 p.m. (Eastern time). The
net asset value of the shares of the Tax-Free Portfolio is
determined each Fund business day (and on such other days as
the Directors deem necessary) at 12:00 Noon (Eastern time).
The net asset value per share of a Portfolio is calculated
by taking the sum of the value of the Portfolio's
investments and any cash or other assets, subtracting
liabilities, and dividing by the total number of shares of
that Portfolio outstanding. All expenses, including the
fees payable to the Adviser, are accrued daily.
____________________________________________________________
TAXES
____________________________________________________________
Federal Income Tax Considerations
The Prime, Government, Tax-Free and Treasury Portfolios
intend to qualify for each taxable year as "regulated
investment companies" 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
their shareholders. Since each Portfolio of the Fund
distributes all of its investment company taxable income and
net capital gains, each 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 each 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 a Portfolio
to a shareholder are taxable to the shareholder as long-term
capital gain, irrespective of the length of time he may have
held his shares. Any loss realized on shares held for six
months or less will be treated as a long-term loss for
41
<PAGE>
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 Fund's fiscal year, although such distributions may be
made more frequently if necessary in order to maintain the
Portfolio's net asset value at $1.00 per share.
With respect to the Tax-Free Portfolio, for
shareholder's Federal income tax purposes, distributions to
shareholders out of tax-exempt interest income earned by
such Portfolio generally is not subject to Federal income
tax. Any loss realized on shares of the Tax-Free Portfolio
that are held for six months or less will not be realized
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. Shareholders of
the Tax-Free Portfolio may be subject to state and local
taxes on distributions. Each investor should consult his
own tax adviser to determine the status of distributions in
his particular state or locality. See, however, above
"Alternative Minimum Tax."
Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Tax-Free Portfolio is not
deductible for Federal income tax purposes. Under rules of
the Internal Revenue Service for determining when borrowed
Funds are used for purchasing or carrying particular assets,
Tax-Free Portfolio shares may be considered to have been
purchased or carried with borrowed Funds even though those
Funds are not directly linked to the shares. Further, with
respect to the Tax-Free Portfolio, persons who are
"substantial users" (or related persons) of facilities
financed by private activity bonds (within the meaning of
Section 147(a) of the Internal Revenue Code) should consult
their tax advisers before purchasing shares of the Tax-Free
Portfolio.
Substantially all of the dividends paid by the Tax-Free
Portfolio are anticipated to be exempt from Federal income
taxes. Shortly after the close of each calendar year, a
notice is sent to each shareholder advising him of the total
dividends paid into his or her account for the year and the
portion of such total that is exempt from Federal income
taxes. This portion is determined by the ratio of the
tax-exempt income to total income for the entire year and,
thus, is an annual average rather than day-by-day
determination for each shareholder.
42
<PAGE>
____________________________________________________________
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 Portfolios.
Because the Portfolios invest 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
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 Portfolios have 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 each 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 a 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 each Portfolio participate equally in
dividends and distributions from that Portfolio, including
any distributions in the event of a liquidation. Each share
of a 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 in
substantially the same manner as a single class, except as
otherwise required by law. As to matters affecting each
43
<PAGE>
Portfolio differently, such as approval of the Advisory
Agreement, shares of each Portfolio vote as a separate
class. There are no conversion or preemptive rights in
connection with any shares of the Fund. 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 each 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 August 16, 1999, there
were 1,829,549,988 shares of the Prime Portfolio Class A,
957,647,375 shares of the Prime Portfolio Class B,
42,718,728 shares of the Prime Portfolio Class C;
356,942,456 shares of the Government Portfolio Class A,
277,186,560 shares of the Government Portfolio Class B,
9,313,941 shares of the Government Portfolio Class C;
250,313,922 shares of the Tax-Free Portfolio Class A,
213,176,155 shares of the Tax-Free Portfolio Class B,
24,749,992 shares of the Tax-Free Portfolio Class C; and
3,931,079 shares of the Treasury Portfolio Class A,
93,366,722 shares of the Treasury Portfolio Class B, and
3,919,638 shares of the Treasury Portfolio Class C. 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 a portfolio at August 16, 1999:
44
<PAGE>
No. of % of
Name and Address Shares Class
Prime Portfolio Class A
Hare & Co 105,577,267 5.77%
C/o Bank of New York
One Wall Street 5th Flr
New York, NY 10005-2500
Robertson Stephens & Co. 102,571,358 5.61%
555 California St #2600
San Francisco, CA 94104-1502
The J Fund LP 125,431,544 6.86%
(Hellman Jordan)
75 State Street
Suite 2420
Boston, MA 02109-1807
The J Fund LP 120,881,589 6.61%
(Hellman Jordan)
75 State Street
Suite 2420
Boston, MA 02109-1807
Prime Portfolio Class B
Pershing As Agent 932,507,484 97.37%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Prime Portfolio Class C
Pershing As Agent 38,076,799 89.13%
Omnibus Account
For Exclusive Benefit of Customers
I Pershing Plaza
Jersey City, NJ 07399-0002
AF
Government Portfolio Class A
Herzog Heine Geduld Inc. 79,168,466 22.18%
Firm Investment
26 Broadway
New York, NY 10004-1703
45
<PAGE>
Resources Trust Company 26,793,893 7.51%
Attn Curtis Huntsman
PO Box 5900
Denver, Co 80217-5900
Davenport & Co of Virginia Inc 76,537,624 21.44%
As Agent Omnibus A/C for Exclusive
Benefit of Customers
One James Center
901 E Cary Street
Richmond, VA 23219-4057
Government Portfolio Class B
Pershing As Agent 274,025,308 98.863%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Government Portfolio Class C
Pershing As Agent 5,083,912 54.58%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Fall Creek Management 3,753,011 40.29%
c/o Bank of Bermuda
#7000268
570 Lexington Ave
New York, NY 10022-6837
Tax Portfolio Class A
Synopsys Inc. 24,080,000 9.62%
700 East Middlefield Rd
Mt View, CA 94043-4033
Tax-Free Portfolio Class B
Pershing As Agent 211,655,464 99.29%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
46
<PAGE>
Tax-Free Portfolio Class C
Pershing As Agent 24,749,992 100%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Treasury Portfolio Class A
Hare & Co 2,714,454 69.05%
C/o Bank of New York
One Wall Street 5th Flr
New York, NY 10005-2500
Richard Angle Trust 540,056 13.74%
c/o Bank of Bermuda NY
Acct #6000475
57O Lexington Ave
New York, NY 10022-6837
Laurene M. Degroff 366,746 9.33%
120 E Miami Ave
Wildwood Crst, NJ 08260-3612
Treasury Portfolio Class B
Pershing As Agent 93,366,722 100%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Treasury Portfolio Class C
Hare & Co 904,007 23.06%
C/o Bank of New York
One Wall Street 5th Flr
New York, NY 10005-2500
Camelback Insurance Trust 2,970,759 75.79%
c/o Bank of Bermuda NY
#6000236
570 Lexington Ave
New York, NY 1002206837
Legal Matters. The legality of the shares offered hereby has
been passed upon by Seward & Kissel LLP, New York, New York,
counsel for the Fund and the Adviser. Seward & Kissel has relied
upon the opinion of Venable, Baetjer and Howard LLP, Baltimore,
Maryland 21201, for matters relating to Maryland law.
47
<PAGE>
Accountants. PricewaterhouseCoopers LLP, New York, New York,
are the independent auditors for the Fund.
Yield Quotations and Performance Information. Advertisements
containing yield quotations for one or more Portfolios for the
Fund may from time to time be sent to investors or placed in
newspapers, magazines or other media on behalf of the Fund.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Fund's performance to bank money market
deposit accounts, certificates of deposit or various indices.
Yield quotations are calculated in accordance with the
standardized method referred to in Rule 482 under the Securities
Act of 1933.
From time to time each Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical
earnings and are not intended 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
investment. To calculate "effective yield," which will be higher
than the "yield" because of compounding, the dividends paid are
assumed to be reinvested. Dividends for the Prime Portfolio
Class A for the seven days ended April 30, 1999, after expense
reimbursement, amounted to an annualized yield of 4.79%,
equivalent to an effective yield of 4.90%. Absent such
reimbursement, the annualized yield for such period would have
been 4.75%, equivalent to an effective yield of 4.86%. Dividends
for the Prime Portfolio Class B for the seven days ended
April 30, 1999, after expense reimbursement, amounted to an
annualized yield of 4.69%, equivalent to an effective yield of
4.80%. Absent such reimbursement, the annualized yield for such
period would have been 4.63%, equivalent to an effective yield of
4.74%. Dividends for the Prime Portfolio Class C for the seven
days ended April 30, 1999, after expense reimbursement, amounted
to an annualized yield of 4.54%, equivalent to an effective yield
of 4.64%. Absent such reimbursement, the annualized yield for
such period would have been 4.48%, equivalent to an effective
yield of 4.58%.
Dividends for the Government Portfolio Class A for the seven
days ended April 30, 1999, after expense reimbursement, amounted
to an annualized yield of 4.68%, equivalent to an effective yield
of 4.79%. Absent such reimbursement, the annualized yield for
such period would have been 4.59%, equivalent to an effective
yield of 4.70%. Dividends for the Government Portfolio Class B
for the seven days ended April 30, 1999, after expense
reimbursement, amounted to an annualized yield of 4.58%,
48
<PAGE>
equivalent to an effective yield of 4.69%. Absent such
reimbursement, the annualized yield for such period would have
been 4.47%, equivalent to an effective yield of 4.58%. Dividends
for the Government Portfolio Class C for the seven days ended
April 30, 1999, after expense reimbursement, amounted to an
annualized yield of 4.43%, equivalent to an effective yield of
4.53%. Absent such reimbursement, the annualized yield for such
period would have been 4.32%, equivalent to an effective yield of
4.42%.
Dividends for the Tax-Free Portfolio Class A for the seven
days ended April 30, 1999, after expense reimbursement, amounted
to an annualized yield of 3.49%, equivalent to an effective yield
of 3.55% and a tax equivalent yield of 5.78%. Absent such
reimbursement, the annualized yield for such period would have
been 3.41%, equivalent to an effective yield of 3.47%. Dividends
for the Tax-Free Portfolio Class B for the seven days ended
April 30, 1999, after expense reimbursement, amounted to an
annualized yield of 3.40%, equivalent to an effective yield of
3.45% and a tax equivalent yield of 5.63%. Absent such
reimbursement, the annualized yield for such period would have
been 3.28%, equivalent to an effective yield of 3.33%. Dividends
for the Tax-Free Portfolio Class C for the seven days ended
April 30, 1999, after expense reimbursement, amounted to an
annualized yield of 3.24%, equivalent to an effective yield of
3.30% and a tax equivalent yield of 5.36%. Absent such
reimbursement, the annualized yield for such period would have
been 3.12%, equivalent to an effective yield of 3.18%.
Dividends for the Treasury Portfolio Class A for the seven
days ended April 30, 1999, after expense reimbursement, amounted
to an annualized yield of 4.48%, equivalent to an effective yield
of 4.58%. Absent such reimbursement, the annualized yield for
such period would have been 3.26%, equivalent to an effective
yield of 3.36%. Dividends for the Treasury Portfolio Class B for
the seven days ended April 30, 1999, after expense reimbursement,
amounted to an annualized yield of 4.38%, equivalent to an
effective yield of 4.48%. Absent such reimbursement, the
annualized yield for such period would have been 3.60%,
equivalent to an effective yield of 3.70%. Dividends for the
Treasury Portfolio Class C for the seven days ended April 30,
1999, after expense reimbursement, amounted to an annualized
yield of 4.23%, equivalent to an effective yield of 4.32%.
Absent such reimbursement, the annualized yield for such period
would have been 3.69%, equivalent to an effective yield of 3.78%.
Yield quotations for a 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 such
Portfolio at the beginning of such period, (ii) dividing the net
49
<PAGE>
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. A 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.
50
<PAGE>
____________________________________________________________
APPENDIX A
COMMERCIAL PAPER AND BOND 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.
A-1
<PAGE>
Issues rate SP-2 have satisfactory capacity to pay principal and
interest.
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.
A-2
<PAGE>
____________________________________________________________
APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
____________________________________________________________
Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less.
They include the following:
1. Project Notes, which carry a U.S. Government guarantee,
are issued by public bodies (called "local issuing
agencies") created under the laws of a state, territory,
or U.S. possession. They have maturities that range up
to one year from the date of issuance. Project Notes
are backed by an agreement between the local issuing
agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide
range of financial assistance programs for housing,
redevelopment, and related needs (such as low-income
housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they are
issued in anticipation of various seasonal tax revenues,
such as income, sales use and business taxes, and are
payable from these specific future taxes.
3. Revenue Anticipation Notes are issued in expectation of
receipt of other types of revenues, such as Federal
revenues available under the Federal Revenue Sharing
Programs.
4. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged. In
most cases, the long-term bonds then provide the money
for the repayment of the Notes.
5. Construction Loan Notes are sold to provide construction
financing. After successful completion and Acceptance,
many projects receive permanent financing through the
Federal Housing Administration under the Federal
National Mortgage Association or the Government National
Mortgage Association.
6. Tax-Exempt Commercial Paper is a short-term obligation
with a state maturity of 365 days or less. It is issued
by agencies of state and local governments to finance
seasonal working capital needs or as short-term
financing in anticipation of longer term financing.
B-1
<PAGE>
Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
1. General Obligation Bonds are issued by such entities as
states, countries, cities, towns, and regional
districts. The proceeds of these obligations are used
to fund a wide range of public projects, including
construction or improvement of schools, highways and
roads, and water and sewer systems. The basic security
behind General Obligation Bonds is the issuer's pledge
of its full faith and credit and taxing power for the
payment of principal and interest. The taxes that can
be levied for the payment of debt service may be limited
or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds generally are secured by the net revenues
derived from a particular facility, group of facilities,
or, in some cases, the proceeds of a special excise of
other specific revenue source. Revenue Bonds are issued
to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways,
bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Many of
these Bonds provide additional security in the form of a
debt service reserve fund to be used to make principal
and interest payments. Housing authorities have a wide
range of security, including partially or fully insured
mortgages, rent subsidized and/or collateralized
mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further
security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service
reserve fund.
3. Industrial Development Bonds are considered municipal
bonds if the interest paid thereon is exempt from
Federal income tax and are issued by or on behalf of
public authorities to raise money to finance various
privately operated facilities for business and
manufacturing, housing, sports, and pollution control.
These Bonds are also used to finance public facilities
such as airports, mass transit systems, ports, and
parking. The payment of the principal and interest on
such Bonds is dependent solely on the ability of the
facility's user to meet its financial obligations and
the pledge, if any, of real and personal property as
security for such payment.
B-2
<PAGE>
FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
COMMERCIAL PAPER-48.6%
ASSOCIATES CORP. OF
NORTH AMERICA
$ 36,000 5/27/99 4.88% $ 35,873,120
AUSTRALIA NEW ZEALAND
DELAWARE
25,000 6/28/99 4.80 24,806,667
BANCO SANTANDER PR
25,000 7/13/99 4.82 24,755,653
13,787 5/11/99 4.88 13,768,311
BANK OF AMERICA
55,000 6/08/99 4.88 54,716,689
25,000 5/11/99 4.93 24,965,764
BANK OF NOVA SCOTIA
25,000 5/24/99 4.84 24,922,694
BANQUE CAISSE
D'EPARGNE L'ETAT
48,500 7/08/99 4.81 48,059,351
20,000 8/12/99 4.82 19,724,189
BANQUE GENERALE DU
LUXEMBOURG
10,000 6/14/99 4.81 9,941,211
80,000 9/15/99 4.86 78,520,400
BIL NORTH AMERICA, INC.
25,000 9/15/99 4.82 24,541,430
16,500 7/15/99 4.83 16,333,969
CAISSE CENTRALE JARDINS
DU QUEBEC
23,000 6/07/99 4.83 22,885,824
CS FIRST BOSTON,
GUERNSEY
35,000 6/15/99 (a) 4.85 34,787,813
20,000 9/09/99 (a) 4.87 19,645,572
CS FIRST BOSTON, INC.
15,000 6/14/99 (a) 4.85 14,911,083
DEN DANSKE CORP.
30,000 6/29/99 4.84 29,762,279
FIRST CHICAGO FINANCIAL
CORP.
10,000 6/28/99 4.84 9,922,022
10,250 6/29/99 4.85 10,168,527
1
<PAGE>
15,000 9/16/99 4.85 14,721,125
FORD MOTOR CREDIT
CORP.
30,000 6/09/99 4.86 29,842,050
GENERAL ELECTRIC
FINANCIAL ASSURANCE
15,000 6/11/99 4.85 14,917,146
GENERALE BANK
14,688 6/16/99 4.84 14,597,163
GOVERNMENT
DEVELOPMENT BANK OF
PUERTO RICO
20,000 7/13/99 4.82 19,804,522
20,000 6/21/99 4.87 19,862,017
J.P. MORGAN & CO.
50,000 7/07/99 4.81 49,552,403
40,000 9/27/99 4.83 39,200,366
MORGAN STANLEY
GROUP, INC.
75,000 6/15/99 4.84 74,546,250
NATIONAL CITY CORP.
20,000 5/10/99 4.95 19,975,250
SHEFFIELD RECEIVABLES
CORP.
10,000 5/20/99 (a) 4.87 9,974,297
SOCIETE GENERALE N.A.,
INC.
35,000 6/23/99 4.84 34,750,863
UBS FINANCE DELAWARE,
INC.
50,000 6/10/99 4.85 49,730,333
UNI FUNDING, INC.
45,000 7/15/99 4.82 44,548,125
VATTENFALL TREASURY
35,000 6/16/99 4.80 34,785,333
25,000 9/15/99 4.82 24,541,430
10,000 6/16/99 4.84 9,938,156
15,000 6/16/99 4.85 14,907,042
WELLS FARGO CORP.
30,000 6/15/99 4.80 29,820,000
Total Commercial Paper
(amortized cost $1,093,026,439) 1,093,026,439
CORPORATE
OBLIGATIONS-20.2%
ALLMERICA FINANCIAL
LIFE INSURANCE CO. FRN
20,000 4.94%, 2/05/00 4.94 20,000,000
ALLSTATE LIFE INSURANCE
FUNDING AGREEMENT FRN
25,000 4.95%, 5/01/00 (b) 4.95 25,000,000
25,000 4.99%, 5/01/99 (b) 4.99 25,000,000
2
<PAGE>
AMERICAN GENERAL LIFE
INSURANCE CO.
20,000 4.94%, 9/01/99 4.94 20,000,000
COMBINED INSURANCE
CO. OF AMERICA
20,000 4.98%, 7/27/99 4.98 20,000,000
3
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
CS FIRST BOSTON, INC.
$ 12,000 4.87%, 6/08/99 FRN (a) 4.91% $ 11,999,497
GENERAL AMERICAN
FUNDING CORP. FRN
85,000 5.14%, 7/09/99 5.14 85,000,000
HARTFORD LIFE, INC.
40,000 4.94%, 3/16/00 (b) 4.94 40,000,000
MERRILL LYNCH & CO.,
INC.
35,000 4.89%, 6/01/99 FRN 4.89 35,000,000
25,000 5.00%, 9/30/99 FRN 5.00 25,000,000
10,000 5.09%, 2/07/00 MTN 5.09 10,000,000
PRUDENTIAL INSURANCE
CO. OF AMERICA FUNDING
AGREEMENT
16,000 4.95%, 11/30/00 FRN 4.95 16,000,000
SECURITY BENEFIT LIFE
INSURANCE CO.
30,000 5.09%, 9/14/99 5.09 30,000,000
SIGMA FINANCE FRN
25,000 4.94%, 9/15/99 (a) 4.94 25,000,000
20,000 5.00%, 9/15/99 (a) 5.00 20,000,000
TRAVELERS LIFE FUNDING
AGREEMENT FRN
20,000 4.91%, 4/14/00 4.91 20,000,000
25,000 4.95%, 10/21/99 (b) 4.95 25,000,000
Total Corporate Obligations
(amortized cost $452,999,497) 452,999,497
CERTIFICATES OF
DEPOSIT-11.6%
BAYERISCHE LANDESBANK
FRN
60,000 4.89%, 3/30/00 4.95 59,967,629
CREDIT COMMUNAL DE
BELGIQUE
50,000 4.90%, 6/15/99 4.90 50,000,000
NATIONAL WESTMINSTER
BANK FRN
35,000 4.88%, 4/17/00 4.94 34,981,082
NORDEUTSCHE LANDESBANK
10,000 5.66%, 7/27/99 5.71 9,998,858
RABOBANK NEDERLAND
10,000 5.65%, 7/26/99 5.70 9,998,871
STATE STREET BANK &
TRUST CO.
4
<PAGE>
20,000 4.95%, 9/13/99 4.95 20,000,000
TORONTO DOMINION BANK
15,000 5.07%, 2/17/00 5.10 14,995,951
15,000 5.30%, 3/06/00 5.34 14,995,713
UBS FINANCE STAMFORD,
INC.
20,000 5.16%, 2/28/00 5.19 19,995,205
25,000 5.29%, 3/07/00 5.12 25,029,772
Total Certificates of Deposit
(amortized cost $259,963,081) 259,963,081
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-6.1%
FEDERAL HOME LOAN
BANK
21,325 5.00%, 2/10/00 5.00 21,325,000
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
FRN
35,000 4.87%, 5/21/99 4.95 34,998,512
STUDENT LOAN MARKETING
ASSOCIATION FRN
15,000 5.13%, 11/24/99 5.16 14,997,448
40,000 5.16%, 2/04/00 5.18 39,994,016
25,000 5.21%, 11/09/99 5.27 24,992,241
Total U.S. Government &
Agency Obligations
(amortized cost $136,307,217) 136,307,217
BANK OBLIGATIONS-5.3%
ABBEY NATIONAL
TREASURY SERVICES FRN
35,000 4.80%, 7/15/99 4.87 34,995,438
LASALLE NATIONAL BANK
25,000 4.90%, 6/15/99 4.90 25,000,000
15,000 4.90%, 6/22/99 4.90 15,000,000
ROYAL BANK OF CANADA
FRN
45,000 5.01%, 8/25/99 5.09 44,988,816
Total Bank Obligations
(amortized cost $119,984,254) 119,984,254
PROMISSORY NOTES-4.5%
GOLDMAN SACHS
GROUP LP
30,000 4.95%, 8/02/99 (a) 4.95 30,000,000
30,000 4.98%, 5/24/99 (a) 4.98 30,000,000
40,000 4.98%, 10/12/99 (a) 4.98 40,000,000
Total Promissory Notes
(amortized cost $100,000,000) 100,000,000
5
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
TIME DEPOSIT-3.9%
BANK OF MONTREAL
$ 86,700 5.00%, 5/03/99
(amortized
cost $86,700,000) 5.00% $ 86,700,000
TOTAL INVESTMENTS-100.2%
(amortized
cost $2,248,980,488) 2,248,980,488
Other assets less
liabilities-(0.2%) (3,715,820)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
1,671,016,155 Class A shares;
536,066,979 Class B shares
and 38,318,343 Class C
shares outstanding) $ 2,245,264,668
See Glossary of Terms on page 16.
See notes to financial statements.
6
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-80.5%
FEDERAL HOME LOAN
MORTGAGE CORP.-24.1%
$ 5,300 5/25/99 4.75% $ 5,283,323
7,000 7/13/99 4.78 6,933,002
2,000 5/18/99 4.79 1,995,504
2,000 5/20/99 4.79 1,994,976
3,000 5/24/99 4.79 2,990,896
5,000 5/28/99 4.79 4,982,188
5,300 8/23/99 4.79 5,220,951
5,500 8/10/99 4.80 5,427,168
5,300 8/13/99 4.80 5,227,732
6,000 8/20/99 4.80 5,912,680
3,000 5/18/99 4.81 2,993,228
5,000 6/23/99 4.81 4,965,035
10,000 6/25/99 4.81 9,927,736
5,000 7/06/99 4.81 4,956,458
5,300 9/13/99 4.81 5,206,389
5,000 5/14/99 4.82 4,991,351
6,000 6/11/99 4.82 5,967,405
7,500 7/09/99 4.83 7,431,642
2,000 7/16/99 4.83 1,979,902
2,200 5/26/99 4.84 2,192,667
3,390 7/14/99 4.85 3,356,691
4,000 8/06/99 4.85 3,948,752
5,000 10/01/99 4.86 4,899,275
9,517 5/14/99 4.87 9,500,676
5,000 6/04/99 4.88 4,977,428
5,400 5/06/99 4.93 5,396,377
128,659,432
STUDENT LOAN
MARKETING
ASSOCIATION-22.9%
4,500 4.59%, 7/12/99 FRN 4.95 4,496,728
24,000 5.04%, 7/15/99 FRN 5.04 24,000,000
15,000 5.10%, 6/30/99 FRN 5.11 14,999,757
4,000 5.11%, 6/17/99 FRN 5.11 4,000,000
10,000 5.11%, 12/03/99 FRN 5.15 9,997,633
15,000 5.11%, 2/14/00 FRN 5.17 14,993,024
10,000 5.13%, 11/24/99 FRN 5.16 9,998,299
15,000 5.14%, 9/30/99 FRN 5.14 15,000,000
7
<PAGE>
15,000 5.16%, 2/04/00 FRN 5.18 14,997,756
10,000 5.21%, 11/09/99 FRN 5.27 9,996,896
122,480,093
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION-15.7%
2,000 4.59%, 9/22/99 FRN 5.40 1,993,561
10,500 4.87%, 5/21/99 FRN 4.95 10,499,554
9,000 5.00%, 5/05/00 MTN 5.10 8,989,560
3,500 5.04%, 4/06/00 MTN 5.10 3,497,538
6,665 5/10/99 4.69 6,657,202
9,000 6/18/99 4.81 8,943,240
5,000 6/22/99 4.82 4,965,550
3,000 7/30/99 4.84 2,964,300
13,000 6/10/99 4.85 12,931,333
3,000 7/22/99 4.87 2,967,542
7,500 9/17/99 4.88 7,362,158
8,000 5/17/99 4.90 7,982,933
4,000 5/05/99 4.93 3,997,853
83,752,324
FEDERAL HOME LOAN BANK-15.1%
2,000 4.90%, 8/12/99 FRN 5.41 1,997,144
5,000 4.92%, 8/18/99 FRN 4.97 4,999,253
7,000 5.06%, 12/01/99 FRN 5.14 6,996,979
5,000 6/30/99 4.87 4,960,417
20,000 2/10/00 5.00 19,999,610
5,500 2/25/00 5.00 5,497,875
7,000 3/03/00 5.03 6,998,165
2,000 2/17/00 5.07 1,998,144
2,000 2/18/00 5.07 1,998,138
14,000 3/17/00 5.12 14,000,000
3,000 3/03/00 5.15 2,998,692
8,000 3/08/00 5.23 7,994,885
80,439,302
FEDERAL FARM
CREDIT BANK-2.7%
2,000 5.43%, 8/02/99 MTN 4.96 2,001,732
3,200 6/30/99 4.87 3,174,667
9,000 9/01/99 4.87 8,995,979
14,172,378
Total U.S. Government &
Agency Obligations
(amortized cost $429,503,529) 429,503,529
REPURCHASE
AGREEMENTS-19.1%
ABN AMRO
25,000 4.92%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,250 (cost $25,000,000;
collateralized by $25,702,000
FNMA, 5.94%, 10/15/01,
8
<PAGE>
value $25,430,873) (c) 4.92 25,000,000
PAINE WEBBER, INC.
25,000 4.93%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,271 (cost $25,000,000;
collateralized by $25,576,000
FNMA, 6.50%, 5/01/29,
value $25,645,978) (c) 4.93 25,000,000
PARIBAS CORP.
25,000 4.92%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,250 (cost $25,000,000;
collateralized by $24,786,000
FNMA, 7.06%, 8/14/07,
value $25,405,828) (c) 4.92 25,000,000
9
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT (000) SECURITY YIELD
VALUE
- ------------------------------------------------------------------------------
PRUDENTIAL SECURITIES, INC.
$ 25,000 4.91%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,229 (cost $25,000,000;
collateralized by $27,335,000
FNMA, 6.00%, 9/01/13,
value $25,600,964) (c) 4.91% $ 25,000,000
STATE STREET BANK AND TRUST CO.
2,100 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,100,831 (cost $2,100,000;
collateralized by $2,090,000
U.S. Treasury Note,
5.50%, 12/31/00,
value $2,143,776)(c) 4.75 2,100,000
Total Repurchase
Agreements
(amortized cost $102,100,000) 102,100,000
TOTAL INVESTMENTS-99.6%
(amortized cost $531,603,529) 531,603,529
Other assets less
liabilities-0.4% 2,091,436
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
394,500,284 Class A shares;
136,101,347 Class B shares
and 3,223,494 Class C
shares outstanding) $ 533,694,965
See Glossary of Terms on page 16.
See notes to financial statements.
10
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
MUNICIPAL BONDS-91.1%
ALABAMA-2.0%
ARAB IDB
(SCI Manufacturing, Inc.)
Series '89 VRDN
$ 150 8/01/00 (e) 5.25% $150,000
DECATUR IDA
PCR: (Amoco Chemical
Project)
Series '95 AMT VRDN
5,000 5/01/25 (e) 4.30 5,000,000
SELMA IDR
(Specialty Minerals
Project)
Series '94 VRDN
4,000 11/01/09 (e) 4.05 4,000,000
9,150,000
ALASKA-3.3%
ALASKA HOUSING
FINANCE CORP.
(University of Alaska)
Series '97A VRDN
7,205 12/01/27 (e) 4.05 7,205,000
ANCHORAGE
Electric Utility Revenue
Series D VRDN
3,330 12/01/26 (e) 4.05 3,330,000
NORTH SLOPE ALASKA BOND
Series B FSA
4,350 6/30/99 3.00 4,371,871
14,906,871
ARIZONA-2.0%
APACHE COUNTY IDR
(Tucson Electric Power
Co. Project)
Series '83C VRDN
8,900 12/15/18 (e) 4.00 8,900,000
ARKANSAS-1.5%
ARKANSAS HOSPITAL
EQUIPMENT FINANCE
AUTHORITY
(AHA Pooled Financing
Program)
Series '98A VRDN
11
<PAGE>
6,700 11/01/28 (e) 4.05 6,700,000
CALIFORNIA-2.6%
SAN DIEGO MFHR
(Paseo Point Apartments)
Series A VRDN
5,250 8/01/15 (e) 3.85 5,250,000
STUDENT EDUCATION
LOAN MARKET CORP.
California Student Loan
Revenue
Series '93A VRDN
6,500 11/01/02 (e) 4.05 6,500,000
11,750,000
COLORADO-2.4%
DOUGLAS COUNTY MFHR
(Autumn Chase Project)
Series '85 VRDN
10,950 7/01/06 (e) 3.90 10,950,000
DELAWARE-2.8%
DELAWARE ECONOMIC
DEVELOPMENT AUTHORITY
(Delmarva Power & Light)
Series '93C VRDN
8,150 10/01/28 (e) 4.20 8,150,000
DELAWARE IDR
(Delmarva Power & Light)
Series '88 AMT VRDN
4,500 10/01/17 (e) 4.40 4,500,000
12,650,000
DISTRICT OF COLUMBIA-6.6%
DISTRICT OF COLUMBIA
(American Society for
Micro Biology)
Series '99A VRDN
3,000 1/01/29 (e) 3.95 3,000,000
DISTRICT OF COLUMBIA
(Resources For The
Future, Inc.)
Series '98 VRDN
4,200 8/01/29 (e) 4.05 4,200,000
DISTRICT OF COLUMBIA GO
Series '92A-1 VRDN
4,300 10/01/07 (e) 4.30 4,300,000
Series '92A-4 VRDN
2,600 10/01/07 (e) 4.30 2,600,000
Series '92A-5 VRDN
4,000 10/01/07 (e) 4.30 4,000,000
Series '92A-6 VRDN
11,900 10/01/07 (e) 4.30 11,900,000
30,000,000
FLORIDA-8.1%
12
<PAGE>
BROWARD COUNTY
HOUSING REVENUE
MFHR
(Margate Investments
Project) VRDN
4,000 11/01/05 (e) 4.05 4,000,000
HIGHLANDS COUNTY
HEALTH FACILITIES
(Adventist/Sunbelt)
Series A VRDN
4,000 11/15/26 (e) 4.05 4,000,000
JACKSONVILLE IDR
(St. John's Medical
Investors)
Series '96 VRDN
1,930 1/01/15 (e) 4.05 1,930,000
13
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
MARION COUNTY
HFA MFHR
(Summer Trace Project)
Series '85D VRDN
$ 2,300 12/01/07 (e) 4.05% $ 2,300,000
PALM BEACH COUNTY
(Water & Sewer Revenue)
VRDN
6,300 10/01/11 (e) 5.35 6,300,000
PALM BEACH COUNTY
HFA MFHR
(Village Crossing Project)
Series '97B VRDN
3,300 10/01/27 (e) 4.05 3,300,000
TAMPA BAY WATER
(Utility System Revenue)
Series '98B FGIC
3,725 10/01/99 3.44 3,733,665
UNIVERSITY ATHLETIC
ASSOCIATION, INC. CAPITAL
IMPROVEMENT REVENUE
(University of Florida
Stadium Project)
Series '90 VRDN
5,000 2/01/20 (e) 4.30 5,000,000
VOLUSIA COUNTY
HFA MFHR
(Ocean Oaks Apartments)
Series '97B VRDN
5,795 10/01/27 (e) 4.05 5,795,000
36,358,665
GEORGIA-2.8%
GEORGIA HFA
(Single Family Mortgage)
Series '98C PPB
2,000 12/01/17 (e) 3.20 2,000,000
PUTNAM COUNTY IDA
(Georgia Power Co.
Plant Project 2nd)
Series '97 VRDN
4,200 9/01/29 (e) 4.30 4,200,000
SAVANNAH ECONOMIC
DEVELOPMENT AUTHORITY
(Georgia Kaolin)
14
<PAGE>
Series '97 AMT VRDN
3,000 7/01/27 (e) 4.10 3,000,000
THOMASTON-UPSON
COUNTY IDR
(De Ster Production Corp.)
Series A AMT VRDN
3,300 10/01/09 (e) 4.30 3,300,000
12,500,000
IDAHO-0.3%
CUSTER COUNTY SOLID
WASTE REVENUE
(Hecla Mining Co. Project)
Series '97 AMT VRDN
1,300 7/01/07 (e) 4.15 1,300,000
ILLINOIS-6.9%
CHICAGO SCHOOL FINANCE
AUTHORITY
Series A FGIC
5,000 6/01/99 2.98 5,006,200
DES PLAINES COOK
COUNTY IDR
(CP Partners LLC Project)
Series '97A VRDN
6,730 11/01/15 (e) 4.05 6,730,000
ELMHURST HOSPITAL
REVENUE
(Joint Comm. Health Org.)
Series '88 VRDN
8,940 7/01/18 (e) 4.00 8,940,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(D.E. Akin Seed Project)
AMT VRDN
1,000 11/01/04 (e) 4.20 1,000,000
ILLINOIS HEALTH FACILITIES
AUTHORITY
(Northwest Community
Hospital)
Series '85C VRDN
7,700 10/01/15 (e) 4.05 7,700,000
VERNON HILLS IDR
(Kinder Care Center)
VRDN
550 2/01/01 (e) 4.05 550,000
WEST CHICAGO IDR
(Acme Printing Co.)
Series '89 AMT VRDN
1,100 5/01/99 (e) 5.10 1,100,000
31,026,200
INDIANA-4.3%
GIBSON COUNTY IDR
15
<PAGE>
(Toyota Motor
Manufacturing Project)
Series '98 AMT VRDN
2,500 1/01/28 (e) 4.05 2,500,000
INDIANA DEVELOPMENT
FINANCE AUTHORITY
Environmental
Improvement Bond
(USX Corp. Project)
PPB
3,000 12/01/22 (e) 3.00 3,000,000
INDIANA DEVELOPMENT
FINANCE AUTHORITY
REVENUE
(Alcoa Inc. Project)
Series '99 VRDN
13,905 1/01/17 (e) 4.20 13,905,000
19,405,000
16
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- ------------------------------------------------------------------------------
KENTUCKY-0.4%
BARBOURVILLE COLLEGE
REVENUE
(Union College Project)
Series A VRDN
$ 2,000 8/01/23 (e) 4.05% $ 2,000,000
LOUISIANA-7.9%
LAKE CHARLES PORT FACILITY
(Conoco Project)
Series '84 VRDN
5,800 11/01/11 (e) 4.25 5,800,000
LOUISIANA PUBLIC
FACILITY AUTHORITY
(Hospital Equipment
Finance Project)
Series '85A VRDN
18,000 12/01/10 (e) 4.00 18,000,000
SAINT CHARLES PARISH
POLLUTION CONTROL
REVENUE
(Shell Oil Co. Project)
Series '92B VRDN
4,700 10/01/22 (e) 4.20 4,700,000
WEST BATON ROUGE IDR
(Dow Chemical #3)
Series '94B VRDN
7,100 12/01/16 (e) 4.30 7,100,000
35,600,000
MAINE-2.0%
BIDDEFORD REVENUE
(DK Associates & Volk
Packaging Project)
Series '97 AMT VRDN
5,305 7/01/17 (e) 4.15 5,305,000
MAINE FINANCE AUTHORITY
(Barber Foods, Inc.)
Series '90B AMT VRDN
1,265 12/01/06 (e) 4.25 1,265,000
WESTBROOK IDA
(D & G Group Project)
AMT VRDN
2,690 5/01/17 (e) 4.15 2,690,000
9,260,000
MINNESOTA-0.3%
COTTAGE GROVE
17
<PAGE>
(Minnesota Mining &
Manufacturing Co.
Project) VRDN
1,000 8/01/12 (e) 3.76 1,000,000
EDEN PRAIRIE IDA
(Kinder Care Project)
Series C VRDN
465 2/01/01 (e) 4.05 465,000
1,465,000
MISSISSIPPI-0.5%
MISSISSIPPI BUSINESS
AUTHORITY
(Triton Systems, Inc.)
Series '98A AMT VRDN
2,500 12/01/13 (e) 4.20 2,500,000
MISSOURI-0.7%
BLUE SPRINGS IDA
(Kinder Care Project)
Series C VRDN
540 2/01/01 (e) 4.05 540,000
BOONE COUNTY IDA
(Minnesota Mining &
Manufacturing Co.
Project)
VRDN
500 12/01/25 (e) 3.45 500,000
ST. LOUIS GENERAL
FUND REVENUE TRAN
Series '98
2,000 6/30/99 3.65 2,002,726
3,042,726
NEVADA-2.4%
WASHOE COUNTY IDR
(Sierra Pacific Power Co.)
Series '90 AMT VRDN
10,800 12/01/20 (e) 4.30 10,800,000
NEW JERSEY-0.8%
JERSEY CITY BAN
(Water Notes)
Series '98
3,500 9/17/99 3.44 3,507,338
NEW MEXICO-0.9%
NEW MEXICO MORTGAGE
FINANCE AUTHORITY SFMR
Series '99 PPB
4,000 8/03/99 (e) 3.05 4,000,000
OHIO-1.3%
BUTLER COUNTY
HEALTHCARE FACILITIES
(Knolls of Oxford)
Series '99 VRDN
18
<PAGE>
3,265 3/01/29 (e) 4.10 3,265,000
WARREN COUNTY IDR
(Pioneer Industrial
Components Project)
Series '85 VRDN
2,500 12/01/05 (e) 5.45 2,500,000
5,765,000
OREGON-0.8%
OREGON ECONOMIC
DEVELOPMENT REVENUE
(Kyotaru Oregon Project)
Series '89 AMT VRDN
3,800 12/01/99 (e) 4.38 3,800,000
19
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- ------------------------------------------------------------------------------
PENNSYLVANIA-5.5%
ALLEGHENY COUNTY IDR
(United Jewish
Federation Project)
Series '96A VRDN
$ 11,320 10/01/26 (e) 4.05% $ 11,320,000
MONTGOMERY COUNTY
HIGHER EDUCATION &
HEALTH LOAN REVENUE
Series '96A VRDN
2,000 4/01/17 (e) 4.05 2,000,000
MONTGOMERY COUNTY IDA
(Kinder Care Project)
Series D VRDN
400 10/01/00 (e) 4.05 400,000
PHILADELPHIA SCHOOL
DISTRICT TRAN
Series A
6,000 6/30/99 3.63 6,005,901
PHILADELPHIA TRAN
5,000 6/30/99 3.64 5,004,871
VENANGO IDR
(Penzoil Co. Project)
Series '82A VRDN
285 12/01/12 (e) 4.10 285,000
25,015,772
RHODE ISLAND-0.7%
RHODE ISLAND HEALTH &
EDUCATION
(St. Andrews School)
Series '99 VRDN
3,000 12/01/29 (e) 4.30 3,000,000
SOUTH CAROLINA-4.5%
BERKELEY COUNTY IDR
(Nucor Corp. Project)
Series '97 AMT VRDN
5,400 4/01/30 (e) 4.05 5,400,000
Series '98 AMT VRDN
10,700 4/01/31 (e) 4.05 10,700,000
HILTON HEAD ISLAND BAN
4,000 9/14/99 3.10 4,005,818
20,105,818
TENNESSEE-0.7%
VOLUNTEER STATE STUDENT
20
<PAGE>
LOAN REVENUE
(Student Funding Corp.)
Series '87A-2 AMT VRDN
3,000 12/01/17 (e) 4.00 3,000,000
TEXAS-6.5%
BRAZOS RIVER TEXAS
HARBOR NAVIGATION
DISTRICT
(Merey Sweeny Project)
Series '98 AMT VRDN
8,700 9/01/18 (e) 4.30 8,700,000
GULF COAST WASTE
DISPOSAL AUTHORITY
(Exxon Project)
VRDN
5,750 6/01/20 (e) 4.20 5,750,000
PORT ARTHUR NAVIGATION
DISTRICT
(Texaco Inc. Project)
Series '94 VRDN
2,000 10/01/24 (e) 4.25 2,000,000
PORT DEVELOPMENT CORP.
(Stolt Terminals)
Series '89 VRDN
2,165 1/15/14 (e) 3.90 2,165,000
SOUTHWEST HIGHER
EDUCATION AUTHORITY
(Southern Methodist
University)
VRDN
3,900 7/01/15 (e) 4.25 3,900,000
TEXAS TRAN
6,700 8/31/99 2.98 6,732,629
29,247,629
VERMONT-3.8%
VERMONT HEFA
(Capital Asset Financing
Program)
Series '97-1 VRDN
8,217 6/01/22 (e) 4.00 8,217,000
Series '97-2 VRDN
8,895 6/01/27 (e) 4.00 8,895,000
17,112,000
VIRGINIA-3.8%
CHESTERFIELD COUNTY IDR
(Philip Morris Co.)
VRDN
15,000 4/01/09 (e) 4.10 15,000,000
DINWIDDIE COUNTY IDA
(Chaparral Steel Project)
Series '98A AMT VRDN
21
<PAGE>
1,000 9/01/28 (e) 4.30 1,000,000
KING GEORGE COUNTY IDA
(Birchwood Power Project)
Series '96 AMT VRDN
1,200 4/01/26 (e) 4.30 1,200,000
17,200,000
WASHINGTON-0.9%
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '92B AMT VRDN
4,000 8/01/07 (e) 4.10 4,000,000
WEST VIRGINIA-0.4%
KEYSER IDR
(Keyser Associates
Project)
VRDN
1,800 7/01/14 (e) 4.05 1,800,000
22
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
WISCONSIN-0.7%
MANITOWOC IDR
(Jagemann Stamping Co.)
Series '98 AMT VRDN
$ 1,618 4/01/11 (e) 4.15% $ 1,618,000
WAUSAU
(Minnesota Mining &
Manufacturing Co.
Project)
VRDN
1,600 8/01/17 (e) 3.76 1,600,000
3,218,000
Total Municipal Bonds
(amortized cost $411,036,019) 411,036,019
COMMERCIAL PAPER-8.7%
GEORGIA-1.6%
MUNICIPAL ELECTRIC
AUTHORITY
(Project One Ban)
Series B
7,100 5/06/99 2.90 7,100,000
ILLINOIS-1.8%
ILLINOIS EDUCATIONAL
FACILITIES AUTHORITY
(Pooled Financing
Program)
5,000 7/29/99 3.10 5,000,000
3,310 8/11/99 3.10 3,310,000
8,310,000
NEVADA-2.0%
LAS VEGAS VALLEY WATER
SNWA Revenue
Supported
Series A
5,000 5/07/99 2.85 5,000,000
4,000 5/12/99 2.85 4,000,000
9,000,000
NORTH CAROLINA-1.4%
NORTH CAROLINA
MUNICIPAL POWER CORP.
(Catawba Project #1)
6,110 5/07/99 3.05 6,110,000
TEXAS-1.9%
UNIVERSITY OF TEXAS
23
<PAGE>
BOARD OF REGENTS
Series A
8,500 8/25/99 3.15 8,500,000
Total Commercial Paper
(amortized cost $39,020,000) 39,020,000
TOTAL INVESTMENTS-99.8%
(amortized cost $450,056,019) 450,056,019
Other assets less
liabilities-0.2% 913,713
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
256,096,862 Class A shares;
192,730,218 Class B shares
and 2,226,147 Class C
shares outstanding) $ 450,969,732
See Glossary of Terms on page 16.
See notes to financial statements.
24
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TRUST PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
COMMERCIAL PAPER-44.0%
ALLIANZ OF AMERICA
FINANCE CORP.
$ 10,000 6/11/99 (a) 4.84% $ 9,944,878
ASSOCIATES CORP. OF
NORTH AMERICA
15,000 5/24/99 4.86 14,953,425
10,000 5/26/99 4.88 9,966,111
AUSTRALIA NEW ZEALAND
DELAWARE
10,000 6/21/99 4.80 9,932,000
BANCA CRT FINANCIAL
CORP.
18,000 6/30/99 4.86 17,854,200
4,450 5/12/99 4.87 4,443,378
BANK OF AMERICA
5,000 6/08/99 4.88 4,974,244
10,000 5/11/99 4.93 9,986,306
BANK OF NOVA SCOTIA
10,000 5/24/99 4.84 9,969,078
BANQUE GENERALE DU
LUXEMBOURG
20,000 9/15/99 4.86 19,630,100
CBA FINANCE, INC.
DELAWARE
5,000 9/15/99 4.84 4,907,906
CS FIRST BOSTON, INC.
10,000 5/28/99 (a) 4.85 9,963,625
15,000 6/10/99 (a) 4.85 14,919,167
DEN DANSKE
7,000 6/29/99 4.84 6,944,532
EKSPORTFINANS
20,000 5/12/99 4.84 19,970,422
FIRST CHICAGO FINANCIAL
CORP.
10,000 6/29/99 4.85 9,920,514
FORD MOTOR CREDIT
CORP.
10,000 6/09/99 4.86 9,947,350
GENERAL ELECTRIC
FINANCIAL ASSURANCE
8,000 6/11/99 4.85 7,955,811
5,000 6/14/99 4.86 4,970,300
GENERALE BANK
25
<PAGE>
8,000 6/29/99 4.84 7,936,542
GOVERNMENT
DEVELOPMENT BANK OF
PUERTO RICO
5,000 7/13/99 4.82 4,951,131
5,000 6/21/99 4.87 4,965,504
MORGAN STANLEY GROUP,
INC.
25,000 6/15/99 4.84 24,848,750
5,000 5/28/99 4.85 4,981,812
NATIONAL CITY CORP.
4,500 5/10/99 4.95 4,494,431
SALOMON SMITH BARNEY,
INC.
5,000 6/10/99 4.84 4,973,111
SHEFFIELD RECEIVABLES
CORP.
10,000 5/20/99 (a) 4.87 9,974,297
SHELL FINANCE
NETHERLANDS
20,000 8/02/99 4.82 19,750,967
SOCIETE GENERALE N.A.,
INC.
10,000 6/23/99 4.84 9,928,818
UNI FUNDING, INC.
10,000 7/15/99 4.82 9,899,583
VATTENFALL TREASURY, INC.
10,000 6/23/99 4.84 9,928,744
10,000 6/16/99 4.85 9,938,028
WELLS FARGO CORP.
22,000 6/15/99 4.80 21,868,000
Total Commercial Paper
(amortized cost $349,593,065) 349,593,065
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-23.4%
FEDERAL HOME LOAN
BANK
154,816 4.90%, 5/03/99 4.90 154,773,856
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
FRN
7,000 4.87%, 5/21/99 4.95 6,999,702
STUDENT LOAN MARKETING
ASSOCIATION FRN
3,000 5.13%, 11/24/99 5.16 2,999,490
15,000 5.16%, 2/04/00 5.18 14,997,756
6,000 5.21%, 11/09/99 5.27 5,998,138
Total U.S. Government &
Agency Obligations
(amortized cost $185,768,942) 185,768,942
26
<PAGE>
CORPORATE
OBLIGATIONS-13.7%
ALLMERICA FINANCIAL
LIFE INSURANCE FRN
5,000 4.94%, 2/05/00 4.94 5,000,000
ALLSTATE LIFE INSURANCE
FUNDING AGREEMENT FRN
5,000 4.97%, 9/01/99 (b) 4.97 5,000,000
AMERICAN GENERAL LIFE
INSURANCE CO.
5,000 4.94%, 9/01/99 4.94 5,000,000
COMBINED INSURANCE
CO. OF AMERICA
5,000 4.98%, 7/27/99 4.98 5,000,000
GENERAL AMERICAN
FUNDING CORP. FRN
20,000 5.14%, 7/09/99 5.14 20,000,000
HARTFORD LIFE
INSURANCE CO.
10,000 4.94%, 3/16/00 4.94 10,000,000
27
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TRUST PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
MERRILL LYNCH & CO.,
INC. FRN
$ 5,000 4.89%, 6/01/99 4.89% $ 5,000,000
8,000 5.00%, 9/30/99 5.00 8,000,000
PRUDENTIAL INSURANCE
CO. OF AMERICA PPB
4,000 4.95%, 11/30/00 (e) 4.95 4,000,000
SECURITY BENEFIT LIFE
INSURANCE CO.
20,000 5.09%, 9/14/99 5.09 20,000,000
SIGMA FINANCE FRN
12,000 4.94%, 9/15/99 (a) 4.94 12,000,000
TRAVELERS LIFE FUNDING
AGREEMENT FRN
5,000 4.91%, 4/14/00 4.91 5,000,000
5,000 4.95%, 10/21/99 (b) 4.95 5,000,000
Total Corporate Obligations
(amortized cost $109,000,000) 109,000,000
BANK OBLIGATIONS-6.6%
ABBEY NATIONAL TREASURY
SERVICES FRN
10,000 4.80%, 7/15/99 4.87 9,998,696
BAYERISCHE
LANDESBANK FRN
18,000 4.89%, 3/30/00 4.99 17,990,289
LASALLE NATIONAL BANK
10,000 4.90%, 6/15/99 4.90 10,000,000
5,000 4.90%, 6/22/99 4.90 5,000,000
ROYAL BANK OF
CANADA FRN
10,000 5.01%, 8/25/99 5.09 9,997,515
Total Bank Obligations
(amortized cost $52,986,500) 52,986,500
TIME DEPOSITS-4.5%
BANK OF MONTREAL
20,000 5.00%, 5/03/99 5.00 20,000,000
WESTDEUTSCHE
LANDESBANK
15,500 4.94%, 5/03/99 4.94 15,500,000
Total Time Deposits
(amortized cost $35,500,000) 35,500,000
CERTIFICATES OF
DEPOSIT-4.0%
HESSISCHE LANDESBANK
28
<PAGE>
5,000 5.22%, 2/29/00 5.24 4,998,998
NATIONAL WESTMINSTER
BANK FRN
7,000 4.88%, 4/17/00 4.94 6,996,216
STATE STREET BANK AND
TRUST CO.
5,000 4.95%, 9/13/99 4.95 5,000,000
TORONTO DOMINION BANK
5,000 5.07%, 2/17/00 5.10 4,998,651
5,000 5.30%, 3/06/00 5.34 4,998,571
UBS FINANCE DELAWARE
5,000 5.16%, 2/28/00 5.19 4,998,801
Total Certificates of Deposit
(amortized cost $31,991,237) 31,991,237
PROMISSORY NOTES-3.5%
GOLDMAN SACHS GROUP LP
10,000 4.95%, 8/02/99 (a) 4.95 10,000,000
7,000 4.98%, 5/24/99 (a) 4.98 7,000,000
11,000 4.98%, 10/12/99 (a) 4.98 11,000,000
Total Promissory Notes
(amortized cost $28,000,000) 28,000,000
TOTAL INVESTMENTS-99.7%
(amortized cost $792,839,744) 792,839,744
Other assets less
liabilities-0.3% 2,189,826
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
795,069,334 shares
outstanding) $795,029,570
See Glossary of Terms on page 16.
See notes to financial statements.
29
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS-30.7%
U.S. TREASURY BILLS-16.2%
$ 5,000 6/17/99 4.42% $ 4,971,343
1,500 5/27/99 4.50 1,495,168
500 5/13/99 4.53 499,252
500 9/16/99 4.53 491,471
1,000 5/27/99 4.57 996,735
8,453,969
U.S. TREASURY NOTES-14.5%
1,000 7/15/99 4.46 1,003,701
2,000 8/31/99 4.55 2,007,671
3,500 9/30/99 4.55 3,515,234
1,000 5/31/99 4.68 1,001,132
7,527,738
Total U.S. Government
Obligations
(amortized cost $15,981,707) 15,981,707
REPURCHASE
AGREEMENTS-69.0%
ABN AMRO
2,000 4.87%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,812 (cost $2,000,000;
collateralized by $2,020,000
U.S. Treasury Note,
5.125%, 8/31/00,
value $2,040,947) (c) 4.87 2,000,000
BARCLAYS DE ZOETE WEDD
SECURITIES, INC.
1,000 4.72%, dated 3/29/99,
due 5/27/99 in the amount
of $1,007,736 (cost $1,000,000;
collateralized by $1,010,000
U.S. Treasury Note,
7.50%, 10/31/99,
value $1,060,759) (c) 4.72 1,000,000
BEAR STEARNS CO.
2,000 4.85%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,808 (cost $2,000,000;
collateralized by $2,085,000
U.S. Treasury Bond,
5.50%, 8/15/28,
30
<PAGE>
value $2,046,337) (c) 4.85 2,000,000
CHASE SECURITIES, INC.
1,000 4.70%, dated 3/30/99,
due 5/28/99 in the amount
of $1,007,703 (cost $1,000,000;
collateralized by $945,000
U.S. Treasury Note,
7.50%, 11/15/01,
value $1,026,211) (c) 4.70 1,000,000
CIBC/WOOD GUNDY, INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,287,000
U.S. Treasury Bond,
14.00%, 11/15/11,
value $2,036,048) (c) 4.75 2,000,000
DEUTSCHE BANK
1,000 4.70%, dated 3/30/99,
due 5/28/99 in the amount
of $1,007,703 (cost $1,000,000;
collateralized by $996,000
U.S. Treasury Note,
6.125%, 7/31/00,
value $1,020,403) (c) 4.70 1,000,000
DEUTSCHE BANK
1,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $1,015,000
U.S. Treasury Note,
4.00%, 10/31/00,
value $1,018,527) (c) 4.80 1,000,000
DRESDNER BANK AG
2,000 4.71%, dated 3/30/99,
due 5/28/99 in the amount
of $2,015,438 (cost $2,000,000;
collateralized by $1,949,000
U.S. Treasury Note,
6.75%, 4/30/00,
value $2,049,588) (c) 4.71 2,000,000
FIRST BOSTON CORP.
1,000 4.72%, dated 3/29/99,
due 5/28/99 in the amount
of $1,007,867 (cost $1,000,000;
collateralized by $893,000
U.S. Treasury Bond,
6.75%, 8/15/26,
value $1,028,294) (c) 4.72 1,000,000
FIRST BOSTON CORP.
1,000 4.80%, dated 4/30/99,
31
<PAGE>
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $1,031,000
U.S. Treasury Bill,
7/29/99,
value $1,019,607) (c) 4.80 1,000,000
FIRST CHICAGO CORP.
1,000 4.70%, dated 3/31/99,
due 6/29/99 in the amount
of $1,011,750 (cost $1,000,000;
collateralized by $965,000
U.S. Treasury Note,
6.25%, 2/15/07,
value $1,022,088) (c) 4.70 1,000,000
32
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
FIRST CHICAGO CORP.
$ 1,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $950,000
U.S. Treasury Note,
6.50%, 8/15/05,
value $1,022,740) (c) 4.80% $ 1,000,000
GOLDMAN SACHS & CO.
2,000 4.73%, dated 3/31/99,
due 5/05/99 in the amount of
$2,009,197 (cost $2,000,000;
collateralized by $1,465,000
U.S. Treasury Note,
9.125%, 5/15/18,
value $2,047,658) (c) 4.73 2,000,000
GREENWICH FUNDING CORP.
2,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,800 (cost $2,000,000;
collateralized by $2,000,000
U.S. Treasury Note,
5.625%, 2/15/06,
value $2,050,000) (c) 4.80 2,000,000
MERRILL LYNCH & CO., INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,855,000
U.S. Treasury Note,
7.50%, 5/15/02,
value $2,038,343) (c) 4.75 2,000,000
MORGAN (J.P.) & CO.
2,000 4.83%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,805 (cost $2,000,000;
collateralized by $1,976,000
U.S. Treasury Note,
5.625%, 11/30/00,
value $2,040,633) (c) 4.83 2,000,000
MORGAN STANLEY GROUP,
INC.
2,000 4.82%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,803 (cost $2,000,000;
33
<PAGE>
collateralized by $1,815,000
U.S. Treasury Bond,
8.375%, 8/15/08,
value $2,046,859) (c) 4.82 2,000,000
NATIONSBANC MONTGOMERY
SECURITIES
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,990,000
U.S. Treasury Note,
6.25%, 8/31/00,
value $2,042,021) (c) 4.75 2,000,000
PARIBAS CORP.
1,000 4.70%, dated 3/29/99,
due 5/26/99 in the amount
of $1,007,572 (cost $1,000,000;
collateralized by $791,000
U.S. Treasury Bond,
8.00%, 11/15/21,
value $1,017,241) (c) 4.70 1,000,000
PARIBAS CORP.
1,000 4.85%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,404 (cost $1,000,000;
collateralized by $999,000
U.S. Treasury Note,
6.375%, 7/15/99,
value $1,021,218) (c) 4.85 1,000,000
SALOMON SMITH BARNEY,
INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,820,000
U.S. Treasury Note,
7.50%, 2/15/05,
value $2,041,272) (c) 4.75 2,000,000
STATE STREET BANK AND
TRUST CO.
1,900 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $1,900,752 (cost $1,900,000;
collateralized by $1,890,000
U.S. Treasury Note,
5.50%, 12/31/00,
value $1,938,630) (c) 4.75 1,900,000
WARBURG SECURITIES
2,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,800 (cost $2,000,000;
34
<PAGE>
collateralized by $1,767,000
U.S. Treasury Bond,
6.875%, 8/15/25,
value $2,043,509) (c) 4.80 2,000,000
Total Repurchase Agreements
(amortized cost $35,900,000) 35,900,000
35
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
VALUE
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS-99.7%
(amortized cost $51,881,707) $ 51,881,707
Other assets less
liabilities-0.3% 150,630
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
4,067,485 Class A shares,
14,885,766 Class B shares
and 33,081,429 Class C
shares outstanding) $ 52,032,337
(a) Securities issued in reliance on Section (4) 2 or Rule 144A of the
Securities Act of 1933. Rule 144A securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At April
30, 1999, these securities amounted to $236,318,262, representing 10.5% of net
assets on the Prime Portfolio, and $84,801,967, representing 10.7% of net
assets on the Trust Portfolio.
(b) Funding agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $115,000,000, representing 5.1% of net
assets on the Prime Portfolio, and $10,000,000, representing 1.3% of net
assets on the Trust Portfolio (see Note A to the financial statements).
(c) Repurchase agreement which is terminable within 7 days.
(d) All securities either mature or their interest rate changes in one year
or less.
(e) 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
FGIC Financial Guarantee Insurance Company
FNMA Federal National Mortgage Association
FRN Floating Rate Note
FSA Financial Security Assurance, Inc.
GO General Obligation
HEFA Health & Educational Facility Authority
HFA Housing Finance Agency/Authority
36
<PAGE>
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
MTN Medium Term Note
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
TRAN Tax & Revenue Anticipation Note
See notes to financial statements.
37
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
PRIME GOVERNMENT TAX-FREE TRUST TREASURY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
(A)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 114,920,128 $ 22,167,100 $ 13,721,615 $ 26,438,960 $ 1,225,724
EXPENSES
Advisory fee (Note B) 4,306,084 855,152 813,820 2,225,285 51,075
Distribution fee - Class B 207,634 65,988 86,382 -0- 4,030
Distribution fee - Class C 49,452 6,209 2,821 -0- 36,483
Registration 517,311 183,793 177,828 305,174 88,057
Custodian 281,255 134,113 118,321 117,234 63,596
Audit and legal 95,260 21,426 25,969 22,062 13,534
Transfer agency 32,174 29,146 22,506 25,836 14,186
Printing 17,792 3,518 3,837 7,926 8,306
Directors' fees 5,298 5,298 5,298 5,298 5,298
Miscellaneous 37,338 15,285 15,299 12,572 1,917
Total expenses 5,549,598 1,319,928 1,272,081 2,721,387 286,482
Less: expense reimbursement (986,428) (392,575) (369,058) (248,847) (194,894)
Net expenses 4,563,170 927,353 903,023 2,472,540 91,588
Net investment income 110,356,958 21,239,747 12,818,592 23,966,420 1,134,136
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investment transactions 46,911 189 -0- 3,996 (2,192)
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 110,403,869 $ 21,239,936 $ 12,818,592 $ 23,970,416 $ 1,131,944
(a) Commencement of operations, June 29, 1998.
See notes to financial statements.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
PRIME PORTFOLIO
GOVERNMENT PORTFOLIO
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 110,356,958 $ 71,740,159 $ 21,239,747 $ 16,319,887
Net realized gain on
investment transactions 46,911 84 189 1,000
Net change in unrealized
appreciation of
investments -0- -0- -0- -0-
Net increase in net assets
from operations 110,403,869 71,740,243 21,239,936 16,320,887
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (99,429,944) (71,740,159) (18,006,917) (16,319,887)
Class B (9,997,982) -0- (3,119,916) -0-
Class C (929,032) -0- (112,914) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 480,524,899 897,353,419 259,233,401 (52,059,333)
Total increase (decrease) 480,571,810 897,353,503 259,233,590 (52,058,333)
NET ASSETS
Beginning of year 1,764,692,858 867,339,355 274,461,375 326,519,708
End of year $ 2,245,264,668 $ 1,764,692,858 $ 533,694,965 $ 274,461,375
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE PORTFOLIO
TRUST PORTFOLIO
PORTFOLIO
--------------------------------- --------------------------------- ---------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999(A)
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 12,818,592 $ 9,321,671 $ 23,966,420 $ 14,247,619 $ 1,134,136
-0- 168 3,996 13,207 (2,192)
-0- (351) -0- -0- -0-
12,818,592 9,321,488 23,970,416 14,260,826 1,131,944
(10,300,293) (9,321,671) (23,966,420) (14,247,619) (333,222)
(2,487,651) -0- -0- -0- (178,256)
(30,648) -0- -0- -0- (622,809)
157,206,086 110,698,884 404,533,541 214,797,663 52,034,680
157,206,086 110,698,701 404,537,537 214,810,870 52,032,337
293,763,646 183,064,945 390,492,033 175,681,163 -0-
$ 450,969,732 $ 293,763,646 $ 795,029,570 $ 390,492,033 $ 52,032,337
(a) Commencement of operations, June 29, 1998.
See notes to financial statements.
</TABLE>
40
<PAGE>
________________________________________________________________
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Institutional Reserves, Inc. (the "Fund") formerly ACM
Institutional Reserves, Inc., is registered under the Investment
Company Act of 1940 as an open-end investment company. On June
22, 1998 the creation of a second and third class of shares,
Class B and Class C shares, was approved by the Board of
Directors (with respect to the Prime, Government, Tax-Free and
Treasury Portfolios). The Fund operates as a series company
currently consisting of five Portfolios: Prime Portfolio,
Government Portfolio, Tax-Free Portfolio, Trust Portfolio and
Treasury Portfolio. Each Portfolio is considered to be a separate
entity for financial reporting and tax purposes. The Prime,
Government, Treasury and Tax-Free Portfolios offer all three
classes of shares. The Trust Portfolio offers Class A shares.
Each Portfolio pursues its objectives by maintaining a portfolio
of high-quality money market securities all of which, at the time
of investment, have remaining maturities of 397 days or less. The
financial statements have been prepared in conformity with
generally accepted accounting principles which require management
to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the
reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting
policies followed by the 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.
Certain illiquid securities containing unconditional par puts are
also valued at amortized cost. Amortization of premium is charged
to income. Accretion of market discount is credited to unrealized
gain.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its investment company taxable income and net
realized gains, if any, to its shareholders. Therefore, no
provisions for federal income or excise taxes are required.
41
<PAGE>
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are
recorded on the date securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis.
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 year end. Dividends paid
by Tax-Free Portfolio from net investment income for the period
ended April 30, 1999 are exempt from federal income taxes.
However, certain shareholders may be subject to the alternative
minimum tax.
5. REPURCHASE AGREEMENTS
It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a
daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE
ADVISER Under the terms of an investment advisory agreement, the
Fund pays Alliance Capital Management L.P., (the "Adviser"), an
advisory fee at the annual rate of .20% of average daily net
assets for the Prime, Government, Tax-Free and Treasury
Portfolios and .45% of average daily net assets for the Trust
Portfolio. For the period ended April 30, 1999, the Adviser has
agreed to reimburse each of the Portfolios to the extent
necessary to limit total operating expenses on an annual basis to
a certain limit (excluding taxes, brokerage, interest and, where
permitted, extraordinary expenses). For the period ended April
30, 1999, reimbursement was $986,428, $392,575, $369,058,
$248,847 and $194,894 for the Prime, Government, Tax-Free, Trust
and Treasury Portfolios, respectively.
Each Portfolio compensates Alliance Fund Services, Inc., a
wholly-owned subsidiary of the Adviser, under a Transfer Agency
Agreement for providing personnel and facilities to perform
transfer agency services. Such compensation for the Prime,
Government, Tax-Free, and Trust Portfolios was $18,000 per
Portfolio, and for the Treasury Portfolio, $6,000, for the period
ended April 30, 1999.
For the period ended April 30, 1999, the Fund's expenses were
reduced by $519, $108 and $266 for the Prime, Government and
Trust Portfolios, respectively under an expense offset
arrangement with Alliance Fund Services.
NOTE C: DISTRIBUTION AGREEMENT
42
<PAGE>
The Fund has adopted a Distribution Agreement (the "Agreement")
which includes for each Portfolio except the Trust Portfolio, a
distribution plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Agreement, the Fund pays a
distribution fee to the Distributor at an annual rate of .10 of
1% of the aggregate average daily net assets attributable to
Class B shares of the Prime, Government, Treasury and Tax-Free
Portfolios and .25 of 1% of the aggregate average daily net
assets attributable to Class C shares of the Prime, Government,
Treasury and Tax-Free Portfolios. There is no distribution fee on
the Class A shares. Such fees are accrued daily and paid monthly.
The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and
promotional activities. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of
the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
At April 30, 1999, the cost of investments 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 available to
offset future gains at April 30, 1999 of $136,809, of which
$71,055 expires in 2003, $40,007 in 2004 and $25,747 in the year
2005; the Government Portfolio had a capital loss carryforward of
$130,160, of which $151 expires in 2000, $9,174 in 2001, $51,091
in 2002, $23,230 in 2003, $30,512 in 2004 and $16,002 in the year
2005; the Tax-Free Portfolio had a capital loss carryforward of
$83,495, of which $6,110 expires in 2002, $76,925 in 2004, $400
in 2005 and $60 in the year 2006; the Trust Portfolio had a
capital loss carryforward of $39,764, of which $2,919 expires in
2003, $30,219 in 2004, $2,251 in 2005 and $4,375 in the year
2006; Treasury Portfolio had a capital loss carryforward of
$2,192, which expires in the year 2007.
NOTE E: CAPITAL STOCK
There are 65,000,000,000 shares of $.01 par value capital stock
authorized. At April 30, 1999, capital paid-in aggregated
$2,245,401,477 on Prime Portfolio, $533,825,125 on Government
Portfolio, $451,053,227 on Tax-Free Portfolio, $795,069,334 on
Trust Portfolio and $52,034,680 on Treasury Portfolio.
Transactions, all at $1.00 per share, were as follows:
PRIME PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
43
<PAGE>
Shares sold 23,622,009,804 18,859,885,064
Shares issued on reinvestments
of dividends 99,429,944 71,740,159
Shares redeemed
(23,815,300,171) (18,034,271,804)
Net increase (decrease) (93,860,423) 897,353,419
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
PRIME PORTFOLIO
------------------
AUGUST 14, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 2,348,283,090
Shares issued on reinvestments
of dividends 9,997,982
Shares redeemed (1,822,214,093)
Net increase 536,066,979
JULY 13, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 103,018,527
Shares issued on reinvestments
of dividends 929,032
Shares redeemed (65,629,216)
Net increase 38,318,343
GOVERNMENT PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 2,628,953,985 1,463,678,015
Shares issued on reinvestments
of dividends 18,006,917 16,319,887
Shares redeemed
(2,527,052,342) (1,532,057,235)
Net increase (decrease) 119,908,560 (52,059,333)
45
<PAGE>
AUGUST 7, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 333,938,088
Shares issued on reinvestments
of dividends 3,119,916
Shares redeemed (200,956,657)
Net increase 136,101,347
OCTOBER 21, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 17,279,127
Shares issued on reinvestments
of dividends 112,914
Shares redeemed (14,168,547)
Net increase 3,223,494
* Commencement of distribution.
46
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES
____________________________________________________________________________
TAX-FREE PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 2,015,274,013 2,187,340,593
Shares issued on reinvestments
of dividends 10,300,293 9,321,671
Shares redeemed
(2,063,324,585) (2,085,963,380)
Net increase (decrease) (37,750,279) 110,698,884
AUGUST 17, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 618,511,568
Shares issued on reinvestments
of dividends 2,487,651
Shares redeemed (428,269,001)
Net increase 192,730,218
SEPTEMBER 8, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 10,344,376
Shares issued on reinvestments
of dividends 30,648
Shares redeemed (8,148,877)
Net increase 2,226,147
47
<PAGE>
TRUST PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ -------------------
CLASS A
Shares sold 2,122,594,704 1,732,157,312
Shares issued on reinvestments
of dividends 23,966,420 14,247,619
Shares redeemed
(1,742,027,583) (1,531,607,268)
Net increase 404,533,541 214,797,663
TREASURY PORTFOLIO
------------------------------------------
JUNE 29, 1998*
TO
APRIL 30, 1999
------------------
CLASS A
Shares sold 19,859,145
Shares issued on reinvestments
of dividends 333,222
Shares redeemed (16,124,882)
Net increase 4,067,485
* Commencement of distribution.
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
TREASURY PORTFOLIO
-------------------------------------------
DECEMBER 31, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 40,092,172
Shares issued on reinvestments
of dividends 178,256
Shares redeemed (25,384,662)
Net increase 14,885,766
OCTOBER 15, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 131,076,991
Shares issued on reinvestments
of dividends 622,809
Shares redeemed (98,618,371)
Net increase 33,081,429
* Commencement of distribution.
49
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS ALLIANCE INSTITUTIONAL RESERVES
____________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
PRIME PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0518 .0552 .0530 .0560 .0502
LESS: DIVIDENDS
Dividends from net investment income (.0518) (.0552) (.0530) (.0560) (.0502)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 5.31% 5.68% 5.44% 5.76% 5.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $1,671 $1,765 $867 $493 $198
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .24% .24% .29% .32% .36%
Net investment income (a) 5.16% 5.52% 5.31% 5.54% 5.24%
</TABLE>
50
<PAGE>
PRIME PORTFOLIO
------------------
CLASS B
------------------
AUGUST 14, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0358
LESS: DIVIDENDS
Dividends from net investment income (.0358)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $536
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .36%
Net investment income (a)(d) 4.82%
See footnote summary on page 33.
51
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
PRIME PORTFOLIO
------------------
CLASS C
------------------
JULY 13, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0392
LESS: DIVIDENDS
Dividends from net investment income (.0392)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $38
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .51%
Net investment income (a)(d) 4.70%
See footnote summary on page 33.
52
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
GOVERNMENT PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0505 .0543 .0519 .0552 .0493
LESS: DIVIDENDS
Dividends from net investment income (.0505) (.0543) (.0519) (.0552) (.0493)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 5.18% 5.58% 5.33% 5.67% 5.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $394 $275 $327 $151 $104
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .29% .28% .35% .36% .38%
Net investment income (a) 5.01% 5.43% 5.22% 5.50% 4.94%
</TABLE>
53
<PAGE>
GOVERNMENT PORTFOLIO
------------------
CLASS B
------------------
AUGUST 7, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0361
LESS: DIVIDENDS
Dividends from net investment income (.0361)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $136
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .41%
Net investment income (a)(d) 4.73%
See footnote summary on page 33.
54
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
GOVERNMENT PORTFOLIO
------------------
CLASS C
------------------
OCTOBER 21, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0243
LESS: DIVIDENDS
Dividends from net investment income (.0243)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on
net asset value (b) 2.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .56%
Net investment income (a)(d) 4.55%
See footnote summary on page 33.
55
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE INSTITUTIONAL RESERVES
____________________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
TAX-FREE PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0321 .0363 .0347 .0372 .0326
Net unrealized loss on investments -0- -0- -0- -0- (.0048)
Net increase in net asset value from
operations .0321 .0363 .0347 .0372 .0278
LESS: DIVIDENDS
Dividends from net investment income (.0321) (.0363) (.0347) (.0372) (.0326)
ADD: CAPITAL CONTRIBUTION
Capital Contributed by the Adviser -0- -0- -0- -0- .0048
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.26% 3.70% 3.53% 3.79% 3.31%(e)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $256 $294 $183 $184 $36
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .28% .28% .33% .48% .76%
Net investment income (a) 3.22% 3.61% 3.46% 3.73% 3.31%
</TABLE>
56
<PAGE>
TAX-FREE PORTFOLIO
------------------
CLASS B
------------------
AUGUST 17, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0210
LESS: DIVIDENDS
Dividends from net investment income (.0210)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 2.13%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $193
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .42%
Net investment income (a)(d) 2.88%
See footnote summary on page 33.
57
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
TAX-FREE PORTFOLIO
------------------
CLASS C
------------------
SEPTEMBER 8, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0184
LESS: DIVIDENDS
Dividends from net investment income (.0184)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .57%
Net investment income (a)(d) 2.69%
See footnote summary on page 33.
58
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
TRUST PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0489 .0523 .0492 .0527 .0479
LESS: DIVIDENDS
Dividends from net investment income (.0489) (.0523) (.0492) (.0527) (.0479)
Net asset value, end of year $ 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 year (in millions) $795 $391 $176 $170 $109
Ratios 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%
See footnote summary on page 33.
</TABLE>
59
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
TREASURY PORTFOLIO
------------------
CLASS A
------------------
JUNE 29, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0401
LESS: DIVIDENDS
Dividends from net investment income (.0401)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 4.09%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .20%
Expenses, before waivers and
reimbursements (d) 1.42%
Net investment income (a)(d) 4.82%
60
<PAGE>
TREASURY PORTFOLIO
------------------
CLASS B
------------------
DECEMBER 31, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0143
LESS: DIVIDENDS
Dividends from net investment income (.0143)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 1.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) 1.08%
Net investment income (a)(d) 4.42%
See footnote summary on page 33.
61
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
TREASURY PORTFOLIO
------------------
CLASS C
------------------
OCTOBER 15, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0248
LESS: DIVIDENDS
Dividends from net investment income (.0248)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 2.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .99%
Net investment income (a)(d) 4.27%
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial
investment made at the net asset value at the beginning of the
period, reinvestment of all dividends at net asset value during
the period, and redemption on the last day if the period. Total
investment return calculated for a period of less than one year
is not annualized.
(c) Commencement of distribution.
(d) Annualized.
62
<PAGE>
(e) Capital contributed by the Adviser had no material effect on
net asset value, and therefore, no effect on total return.
63
<PAGE>
INDEPENDENT AUDITOR'S REPORT
ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS ALLIANCE INSTITUTIONAL
RESERVES, INC.
We have audited the accompanying statements of net assets of
Alliance Institutional Reserves (formerly ACMInstitutional
Reserves)--Prime, Government, Tax-Free, Trust and Treasury
Portfolios as of April 30, 1999 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, 1999 by correspondence with the
custodian and brokers. 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 Alliance Institutional Reserves--Prime,
Government, Tax-Free, Trust and Treasury Portfolios as of April
30, 1999, and the results of their operations, changes in their
net assets, and financial highlights for the periods indicated,
in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
May 27, 1999
64
<PAGE>
This is filed pursuant to Rule 497(c).
File Nos. 33-34001 and 811-06068.
<PAGE>
[LOGO]
ALLIANCE INSTITUTIONAL RESERVES, INC.
- Trust Portfolio
_________________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096
Toll Free (800) 221-5672
_________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1999
_________________________________________________________________
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, 1999 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. . . . . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies . . . . . . . . . . .
Investment Restrictions . . . . . . . . . . . . . . . .
Management. . . . . . . . . . . . . . . . . . . . . . .
Purchase and Redemption of Shares . . . . . . . . . . .
Daily Dividends-Determination of Net Asset Value. . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . .
Report of Independent Auditors and Financial Statements.
Appendix A - Commercial Paper and Bond Ratings. . . . . . A-1
_________________________________________________________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
_________________________________________________________________
THE FUND
_________________________________________________________________
Alliance 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. Four additional
Portfolios of the Fund, the Prime Portfolio, the Government
Portfolio, the Tax-Free Portfolio and the Treasury Portfolio, are
described in a separate Prospectus and Statement of Additional
Information. The Fund changed its name from ACM Institutional
Reserves, Inc. to Alliance Institutional Reserves, Inc. effective
June 29, 1998.
_________________________________________________________________
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. As is true with all
investment companies, 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 diversification, quality and maturity
conditions imposed by the Rule. To the extent that the Trust
Portfolios limitations are more permissive than Rule 2a-7, the
Portfolio will comply with the more restrictive provisions of the
Rule.
Currently, pursuant to Rule 2a-7, the Trust Portfolio may
invest only in U.S. dollar-denominated "Eligible Securities" (as
that term is defined in the Rule) that have been determined by
the Adviser to present minimal credit risks pursuant to
procedures approved by the Board of Directors. Generally, an
Eligible Security is a security that (i) has a remaining maturity
of 397 days or less and (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. Unrated securities may also
2
<PAGE>
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 of
the ratings of some NRSROs appears in Appendix attached hereto.
Securities in which the Trust Portfolio may invest may be subject
to liquidity or credit enhancements. These securities are
generally considered to be Eligible Securities if the enhancement
or the issuer of the enhancement has received the appropriate
rating from an NRSRO.
Under Rule 2a-7 the Trust Portfolio may not invest more than
five percent of its assets in the first tier securities of any
one issuer other than the United States Government, its agencies
and instrumentalities. Generally, a first tier security is an
Eligible Security that has received a short-term rating from the
requisite NRSROs in the highest short-term rating category for
debt obligations, or is an unrated security deemed to be of
comparable quality. Government securities are also considered to
be first tier securities. 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
3
<PAGE>
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 then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the
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 funding agreements and
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. For a further description of variable
amount master demand notes, see "Additional Investment Policies"
below.
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
counterparty 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
4
<PAGE>
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 397 days, the term of the repurchase
agreement is always less than 397 days. 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 counterparty 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. Pursuant to Rule 2a-7, a repurchase
agreement is deemed to be an acquisition of the underlying
securities, provided that the obligation of the seller to
repurchase the securities from the money market fund is
collateralized fully (as defined in such Rule). Accordingly, the
counterparty of a fully collateralized repurchase agreement is
deemed to be the issuer of the underlying securities.
The Trust Portfolio may invest in asset-backed securities
that meet its existing diversification, quality and maturity
criteria. These securities must generally be rated. 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 entity. 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. Generally, as
required by Rule 2a-7, the special purpose entity is deemed to be
the issuer of the asset-backed security, however the Trust
Portfolio is required to treat any person whose obligations
constitute ten percent or more of the assets of the asset-backed
security as the issuer of the portion of the asset-backed
security that such obligations represent.
Additional Investment Policies
The following investment policies supplement those set forth
above.
Floating and Variable Rate Obligations. The Trust Portfolio
may purchase floating and variable rate demand notes and bonds,
which are obligations ordinarily having stated maturities in
excess of 397 days, but which permit the holder to demand payment
of principal and accrued interest at any time, or at specified
5
<PAGE>
intervals not exceeding 397 days, in each case upon not more than
30 days notice. The Portfolio may also invest in master demand
notes which are obligations that permit the Trust Portfolio to
invest fluctuating amounts, at varying rates of interest,
pursuant to direct arrangements between the Trust Portfolio, as
lender, and the borrower. These obligations permit daily changes
in the amounts borrowed. Because these obligations are direct
lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value, plus
accrued interest. The Trust Portfolio also may invest in short-
term obligations of insurance companies, sometimes referred to as
funding agreements. These arrangements are direct obligations of
insurance companies and are not traded. Where these types of
obligations are not secured by letters of credit or other credit
support arrangements, the Trust Portfolios right to redeem is
dependent on the ability of the borrower or insurance company to
pay principal and interest on demand.
Reverse 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.
Illiquid Securities and Restricted Securities.
The Trust Portfolio will not maintain more than 10% of its
net assets in illiquid securities. Illiquid securities may
include securities that are not readily marketable, securities
subject to legal or contractual restrictions on resale (except as
described below) and repurchase agreements not terminable within
seven days. Restricted securities that are determined by the
Adviser to be liquid in accordance with procedures adopted by the
Directors, including securities eligible for resale under Rule
144A under the Securities Act of 1933, as amended (the
"Securities Act") and commercial paper issued in reliance upon
the exemption from registration in Section 4(2) of the Securities
Act, will not be treated as illiquid for purposes of the
restriction on illiquid securities. Restricted securities are
securities subject to the contractual or legal restrictions on
resale, such as those arising from an issuers reliance upon
certain exemptions from registration under the Securities Act.
As to illiquid securities, a Portfolio is subject to a risk that,
should the Portfolio's desire to sell them when a ready buyer is
not available at a price the Portfolio deems representative of
their value, the value of the Portfolio's net assets could be
adversely affected.
The Fund's Directors have the ultimate responsibility for
determining whether specific securities are liquid or illiquid.
6
<PAGE>
The Directors have delegated the function of making day-to-day
determinations of liquidity to the Adviser, pursuant to
guidelines approved by the Directors.
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.
Senior Securities. The Portfolio will not issue senior
securities except as permitted by the Act or the rules,
regulations, or interpretations thereof.
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, generally
restricts its investments to the types summarized above. 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
7
<PAGE>
its investment policies without contemporaneous written notice to
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 of more
than 397 days 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;*********
____________________
*********As a matter of operating policy, pursuant to Rule 2a-7,
the Trust Portfolio will invest no more than 5% of its
assets in the first tier (as defined in Rule 2a-7)
securities of any one issuer, except that under Rule 2a-7,
a Fund may invest up to 25% of its total assets in the
first tier securities of a single issuer for a period of
up to three business days. Fundamental policy number (3)
would give the Portfolio the ability to invest, with
respect to 25% of its assets, more than 5% of its assets
(footnote continued)
8
<PAGE>
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
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
____________________
(footnote continued)
in any one issuer only in the event Rule 2a-7 is amended
in the future.
9
<PAGE>
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.
_________________________________________________________________
MANAGEMENT
_________________________________________________________________
Organization
The Portfolio is a series of Alliance Institutional
Reserves, Inc., an open-end management investment company
registered under the 1940 Act and organized as a Maryland
corporation on March 21, 1990. The Portfolio's activities are
supervised by the Board of Directors. The Adviser provides
investment advice and, in general, conducts the management and
investment program of the Fund, subject to the general
supervision and control of the Board of Directors.
Normally, shares of each series are entitled to one vote per
share, and vote as a single series, on matters that affect each
series in substantially the same manner. Maryland law does not
require annual meetings of shareholders and it is anticipated
that shareholder meetings will be held only when required by
federal or Maryland law. Shareholders have available certain
procedures for the removal of directors.
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.
Those Directors whose names are followed by an asterisk are
"interested persons" of the Fund as determined under the Act.
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
JOHN D. CARIFA,********** 54, Chairman of the Board of
Directors, is the President, Chief Operating Officer and a
____________________
**********An "interested person" of the Fund as defined in the
1940 Act.
10
<PAGE>
Director of Alliance Capital Management Corporation ("ACMC"),
with which he has been associated since prior to 1994.
RUTH BLOCK, 68, was formerly Executive Vice President and
Chief Insurance Officer of The Equitable Life Assurance Society
of the United States. She is a Director of Ecolab Incorporated
(specialty chemicals) and BP Amoco Corporation (oil and gas).
Her address is Box 4623, Stamford, Connecticut, 06903.
DAVID H. DIEVLER, 69, is an independent consultant. He was
formerly a Senior Vice President of ACMC until December 1994.
His address is P.O. Box 167, Spring Lake, New Jersey, 07762.
JOHN H. DOBKIN, 57 has been the President of Historic Hudson
Valley (historic preservation) since prior to 1994. Previously,
he was Director of the National Academy of Design. His address
is 150 White Plains Road, Tarrytown, New York 10591.
WILLIAM H. FOULK, JR., 66 is an Investment Advisor and
Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1994. His address is
Suite 100, 2 Greenwich Plaza, Greenwich, Connecticut 06830.
DR. JAMES M. HESTER, 75 is President of the Harry Frank
Guggenheim Foundation with which he has been associated since
prior to 1994. He was formerly President of New York University,
the New York Botanical Garden and Rector of the United Nations
University. His address is 25 Cleveland Lane, Princeton, New
Jersey 08540.
CLIFFORD L. MICHEL, 60, is a member of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1994. He is President and Chief Executive Officer of
Wenonah Development Company (investment holding company) and a
Director of Placer Dome, Inc. (mining). His address is St.
Bernard's Road, Gladstone, New Jersey 07934.
DONALD J. ROBINSON, 64, is Senior Counsel of the law firm of
Orrick, Herrington & Sutcliffe and was formerly a senior partner
and a member of the Executive Committee of that firm. He was
also a Trustee of the Museum of the City of New York from 1977-
1995. His address is 98 Hell's Peak Road, Weston, Vermont 05161.
Officers
RONALD M. WHITEHILL - President, 61, is a Senior Vice
President of ACMC and President of Alliance Cash Management
Services with which he has been associated since prior to 1994.
11
<PAGE>
KATHLEEN A. CORBET - Senior Vice President, 39, is an
Executive Vice President of ACMC with which she has been
associated since prior to 1994.
DREW A. BIEGEL - Senior Vice President, 48, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
RAYMOND J. PAPERA Senior Vice President, 43, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1994.
KENNETH T. CARTY - Vice President, 38, is a Vice President
of ACMC with which he has been associated since prior to 1994.
JOHN F. CHIODI, JR. - Vice President, 33, is a Vice
President of ACMC with which he has been associated since prior
to 1994.
MARIA R. CONA - Vice President, 44, is an Assistant Vice
President of ACMC with which she has been associated since prior
to 1994.
FRANCES M. DUNN - Vice President, 28, is a Vice President of
ACMC with which she has been associated since prior to 1994.
JOSEPH R. LASPINA - Vice President, 38, is an Assistant Vice
President of ACMC with which he has been associated since prior
to 1994.
EDMUND P. BERGAN, JR. - Secretary, 49 is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS"), with which
he has been associated since prior to 1994.
MARK D. GERSTEN - Treasurer and Chief Financial Officer, 48,
is a Senior Vice President of AFS and a Vice President of AFD
with which he has been associated since prior to 1994.
VINCENT S. NOTO - Controller, 34, is a Vice President of AFS
with which he has been associated since prior to 1994.
ANDREW L. GANGOLF - Assistant Secretary, 45, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since December 1994.
DOMENICK PUGLIESE - Assistant Secretary, 38, is a Vice
President and Assistant General Counsel of AFD with which he has
been associated since May 1995. Prior thereto, he was Vice
President and Counsel of Concord Holding Corporation since.
12
<PAGE>
EMILIE D. WRAPP, Assistant Secretary, 43, is a Vice
President and Assistant General Counsel of AFD with which she has
been associated since prior to 1993.
The Fund does not pay any fees to, or reimburse expenses of,
its Directors who are considered "interested persons" of the
Fund. The aggregate compensation paid by the Fund to each of the
Directors during its fiscal year ended April 30, 1999, the
aggregate compensation paid to each of the Directors during
calendar year 1998 by all of the registered investment companies
to which the Adviser provides investment advisory services
(collectively, the "Alliance Fund Complex") and the total number
of registered investment companies (and separate investment
portfolios within those companies) in the Alliance Fund Complex
with respect to which each of the Directors serves as a director
or trustee, are set forth below. Neither the Fund nor any other
registered investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement
benefits to any of its directors or trustees. Each of the
Directors is a director or trustee of one or more other
registered investment companies in the Alliance Fund Complex.
Total Number Total Number
of Registered of Investment
Investment Portfolios
Companies Within the
Total the Alliance Alliance Fund
Compensation Fund Complex, Complex,
from the Including the Including the
Alliance Fund, as to Fund, as to
Aggregate Fund which the which the
Compensation Complex, Director is Director is
from the Including a Director a Director
Name of Director Fund the Fund or Trustee or Trustee
John D. Carifa $-0- $-0- 50 116
Ruth Block $2,825 $180,762.50 37 79
David H. Dievler $2,945 $216,287.50 44 86
John H. Dobkin $2,945 $185,362.50 42 97
William H. Foulk, Jr. $2,945 $241,002.50 45 111
James M. Hester $2,945 $172,912.50 38 80
Clifford L. Michel $2,945 $187,762.50 39 96
Donald J. Robinson $2,142 $193,708.50 41 105
As of August 16, 1999, the Directors and officers of the
Fund as a group owned less than 1% of the outstanding shares of
the Trust Portfolio.
The Adviser
13
<PAGE>
The Fund's investment adviser is Alliance Capital Management
L.P., 1345 Avenue of the Americas, New York, New York 10105. The
Adviser is a leading international adviser managing client
accounts with assets as of June 30, 1999 totaling more than $321
billion (of which approximately $140 billion represented assets
of investment companies). As of June 30, 1999, the Adviser
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 the Adviser,
comprising 120 separate investment portfolios, currently have
more than 4.5 million shareholder accounts.
Alliance Capital Management Corporation ("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 Equitable
Companies Incorporated ("ECI"). ECI is a holding company
controlled by AXA, a French insurance holding company. As of
March 1, 1999, AXA and certain of its subsidiaries beneficially
owned approximately 58.4% of ECI's outstanding common stock. ECI
is a public company with shares traded on the New York Stock
Exchange.
AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically with activities
principally in Western Europe, North America, the Asia/Pacific
area and, to a lesser extent, in Africa and South America. AXA
is also engaged in asset management, investment banking,
securities trading, brokerage, real estate and other financial
activities principally in the United States, as well as in
Western Europe and the Asia/Pacific area.
For insurance regulatory purposes the shares of capital
stock of ECI beneficially owned by AXA and its subsidiaries have
been deposited into a voting trust which has an initial term of
10 years commencing in 1992. The trustees of the voting trust
(the "Voting Trustees") have agreed to protect the legitimate
economic interests of AXA, but with a view of ensuring that
certain minority shareholders of AXA do not exercise control over
ECI or certain of its insurance subsidiaries. As of March 1,
1999, AXA, ECI, Equitable and certain subsidiaries of Equitable
were the beneficial owners of approximately 56.6% of the issued
14
<PAGE>
and outstanding units representing assignments of beneficial
ownership of limited partnership interests ("Units") in the
Adviser.
Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares (representing
32.7% of the voting power) of AXA were owned directly and
indirectly by Finaxa, a French holding company. As of March 1,
1999, 61.7% of the shares (representing 72.3% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D Mutuelle, owned 35.4% of the shares, representing 41.5%
of the voting power of Finaxa), and 22.7% of the shares of Finaxa
(representing 13.7% of the voting power) were owned by Paribas, a
French bank. Including the ordinary shares owned by Finaxa, on
March 1, 1999, the Mutuelles AXA directly and indirectly owned
approximately 23.9% of the issued ordinary shares (representing
37.6% of the voting power) of AXA. The Voting Trustees may be
deemed to be beneficial owners of all Units beneficially owned by
AXA and its subsidiaries. By virtue of the provisions of the
voting trust agreement, AXA may be deemed to have shared voting
power with respect to the Units. In addition, the Mutuelles AXA,
as a group, and Finaxa may be deemed to be beneficial owners of
all Units beneficially owned by AXA and its subsidiaries. AXA and
its subsidiaries have the power to dispose or direct the
disposition of all shares of the capital stock of ECI deposited
in the voting trust. The Mutuelles AXA, as a group, and Finaxa
may be deemed to share power to vote or direct the vote and to
dispose or to direct the disposition of all the Units
beneficially owned by AXA and its subsidiaries. By reason of
their relationship, AXA, the Voting Trustees, the Mutuelles AXA,
Finaxa, ECI, Equitable, Equitable Holdings, L.L.C., Equitable
Investment Corporation, ACMC and Equitable Capital Management
Corporation may be deemed to share the power to vote or direct
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Trust 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, 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
15
<PAGE>
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 unless
the Adviser provides the Fund with at least 60 days' notice prior
to the end of the fiscal year of its determination not to extend
the undertaking. For the fiscal year ended April 30, 1999, the
Trust Portfolio paid the Adviser at an annual rate of .40 of 1%
($1,976,438) of average daily net assets and the Adviser
reimbursed $248,847, all of which represented advisory fees. For
the fiscal year ended April 30, 1998, the Trust Portfolio paid
the Adviser at an annual rate of .40 of 1% ($1,097,281) of
average daily net assets and the Adviser reimbursed $128,100, all
of which represented advisory fees. For the fiscal year ended
April 30, 1997, the Trust Portfolio paid the Adviser at an annual
rate of .38 of 1% ($742,232) of average daily net assets and the
Adviser reimbursed $144,572, all of which represented advisory
fees. 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, (including
Donaldson, Lufkin & Jenrette Securities Corp. and its Pershing
Division, affiliates of the Adviser) 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 Commission and with state regulatory
authorities. The Trust Portfolio pays all other expenses
incurred in its operations, including the Adviser's management
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 remains in effect with respect to the
Trust Portfolio until December 31, 1999, 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
16
<PAGE>
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 with 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.
_________________________________________________________________
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. (Eastern 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 received by AFS by
4:00 p.m. (Eastern time) and Federal funds or bank wire monies
are received by State Street bank prior to 4:00 p.m. (Eastern
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
17
<PAGE>
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 monthly 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 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
and Martin Luther King, Jr. Day; 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 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.
18
<PAGE>
________________________________________________________________
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. (Eastern time) and is paid immediately
thereafter pro rata to shareholders of record of the Trust
Portfolio via automatic investment in additional full and
[6~fractional shares in each shareholder's account at the rate of
one share for each dollar distributed. 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 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 maintains procedures designed to
maintain, 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. There can
be no assurance, however, that the Fund's net asset value per
share will remain constant at $1.00.
19
<PAGE>
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. (Eastern
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, 1999, 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.
20
<PAGE>
________________________________________________________________
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.
There are no conversion or preemptive rights in connection with
21
<PAGE>
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 August 16, 1999, there were
747,359,562 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 August 16, 1999.
No. of % of
Name and Address Shares Class
Pershing as Agent 457,562,865 61.22%
Omnibus Account
For Exclusive Benefit of Customers
1 Pershing Plaza
Jersey City, NJ 07399-0002
Ragen Mackenzie Incorporated 66,164,172 8.85%
As Agent Omnibus Account
For Exclusive Benefit of Customers
999 3rd Avenue, Suite 4300
Seattle, WA 98104-4081
Legal Matters. The legality of the shares offered hereby
has been passed upon by Seward & Kissel LLP, New York, New York,
counsel for the Trust Portfolio and the Adviser. Seward & Kissel
has relied upon the opinion of Venable, Baetjer and Howard, LLP,
Baltimore, Maryland, for matters relating to Maryland law.
Accountants. PricewaterhouseCoopers LLP, New York, New
York, are the independent auditors for the Trust Portfolio.
22
<PAGE>
Yield Quotations and Performance Information.
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.
These advertisements may quote performance rankings, ratings or
data from independent organizations or financial publications
such as Lipper Analytical Services, Inc., Morningstar, Inc.,
IBC's Money Fund Report, IBC's Money Market Insight or Bank Rate
Monitor or compare the Portfolio's performance to bank money
market deposit accounts, certificates of deposit or various
indices. 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.
23
<PAGE>
________________________________________________________________
APPENDIX A
COMMERCIAL PAPER AND BOND 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.
A-1
<PAGE>
Issues rate SP-2 have satisfactory capacity to pay principal and
interest.
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.
A-2
<PAGE>
FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
COMMERCIAL PAPER-48.6%
ASSOCIATES CORP. OF
NORTH AMERICA
$ 36,000 5/27/99 4.88% $ 35,873,120
AUSTRALIA NEW ZEALAND
DELAWARE
25,000 6/28/99 4.80 24,806,667
BANCO SANTANDER PR
25,000 7/13/99 4.82 24,755,653
13,787 5/11/99 4.88 13,768,311
BANK OF AMERICA
55,000 6/08/99 4.88 54,716,689
25,000 5/11/99 4.93 24,965,764
BANK OF NOVA SCOTIA
25,000 5/24/99 4.84 24,922,694
BANQUE CAISSE
D'EPARGNE L'ETAT
48,500 7/08/99 4.81 48,059,351
20,000 8/12/99 4.82 19,724,189
BANQUE GENERALE DU
LUXEMBOURG
10,000 6/14/99 4.81 9,941,211
80,000 9/15/99 4.86 78,520,400
BIL NORTH AMERICA, INC.
25,000 9/15/99 4.82 24,541,430
16,500 7/15/99 4.83 16,333,969
CAISSE CENTRALE JARDINS
DU QUEBEC
23,000 6/07/99 4.83 22,885,824
CS FIRST BOSTON, GUERNSEY
35,000 6/15/99 (a) 4.85 34,787,813
20,000 9/09/99 (a) 4.87 19,645,572
CS FIRST BOSTON, INC.
15,000 6/14/99 (a) 4.85 14,911,083
DEN DANSKE CORP.
30,000 6/29/99 4.84 29,762,279
FIRST CHICAGO FINANCIAL
CORP.
10,000 6/28/99 4.84 9,922,022
10,250 6/29/99 4.85 10,168,527
15,000 9/16/99 4.85 14,721,125
1
<PAGE>
FORD MOTOR CREDIT
CORP.
30,000 6/09/99 4.86 29,842,050
GENERAL ELECTRIC
FINANCIAL ASSURANCE
15,000 6/11/99 4.85 14,917,146
GENERALE BANK
14,688 6/16/99 4.84 14,597,163
GOVERNMENT
DEVELOPMENT BANK OF
PUERTO RICO
20,000 7/13/99 4.82 19,804,522
20,000 6/21/99 4.87 19,862,017
J.P. MORGAN & CO.
50,000 7/07/99 4.81 49,552,403
40,000 9/27/99 4.83 39,200,366
MORGAN STANLEY
GROUP, INC.
75,000 6/15/99 4.84 74,546,250
NATIONAL CITY CORP.
20,000 5/10/99 4.95 19,975,250
SHEFFIELD RECEIVABLES
CORP.
10,000 5/20/99 (a) 4.87 9,974,297
SOCIETE GENERALE N.A.,
INC.
35,000 6/23/99 4.84 34,750,863
UBS FINANCE DELAWARE,
INC.
50,000 6/10/99 4.85 49,730,333
UNI FUNDING, INC.
45,000 7/15/99 4.82 44,548,125
VATTENFALL TREASURY
35,000 6/16/99 4.80 34,785,333
25,000 9/15/99 4.82 24,541,430
10,000 6/16/99 4.84 9,938,156
15,000 6/16/99 4.85 14,907,042
WELLS FARGO CORP.
30,000 6/15/99 4.80 29,820,000
Total Commercial Paper
(amortized cost $1,093,026,439) 1,093,026,439
CORPORATE
OBLIGATIONS-20.2%
ALLMERICA FINANCIAL
LIFE INSURANCE CO. FRN
20,000 4.94%, 2/05/00 4.94 20,000,000
ALLSTATE LIFE INSURANCE
FUNDING AGREEMENT FRN
25,000 4.95%, 5/01/00 (b) 4.95 25,000,000
25,000 4.99%, 5/01/99 (b) 4.99 25,000,000
AMERICAN GENERAL LIFE
2
<PAGE>
INSURANCE CO.
20,000 4.94%, 9/01/99 4.94 20,000,000
COMBINED INSURANCE
CO. OF AMERICA
20,000 4.98%, 7/27/99 4.98 20,000,000
3
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
CS FIRST BOSTON, INC.
$ 12,000 4.87%, 6/08/99 FRN (a) 4.91% $ 11,999,497
GENERAL AMERICAN
FUNDING CORP. FRN
85,000 5.14%, 7/09/99 5.14 85,000,000
HARTFORD LIFE, INC.
40,000 4.94%, 3/16/00 (b) 4.94 40,000,000
MERRILL LYNCH & CO.,
INC.
35,000 4.89%, 6/01/99 FRN 4.89 35,000,000
25,000 5.00%, 9/30/99 FRN 5.00 25,000,000
10,000 5.09%, 2/07/00 MTN 5.09 10,000,000
PRUDENTIAL INSURANCE
CO. OF AMERICA FUNDING
AGREEMENT
16,000 4.95%, 11/30/00 FRN 4.95 16,000,000
SECURITY BENEFIT LIFE
INSURANCE CO.
30,000 5.09%, 9/14/99 5.09 30,000,000
SIGMA FINANCE FRN
25,000 4.94%, 9/15/99 (a) 4.94 25,000,000
20,000 5.00%, 9/15/99 (a) 5.00 20,000,000
TRAVELERS LIFE FUNDING
AGREEMENT FRN
20,000 4.91%, 4/14/00 4.91 20,000,000
25,000 4.95%, 10/21/99 (b) 4.95 25,000,000
Total Corporate Obligations
(amortized cost $452,999,497) 452,999,497
CERTIFICATES OF
DEPOSIT-11.6%
BAYERISCHE LANDESBANK
FRN
60,000 4.89%, 3/30/00 4.95 59,967,629
CREDIT COMMUNAL DE
BELGIQUE
50,000 4.90%, 6/15/99 4.90 50,000,000
NATIONAL WESTMINSTER
BANK FRN
35,000 4.88%, 4/17/00 4.94 34,981,082
NORDEUTSCHE LANDESBANK
10,000 5.66%, 7/27/99 5.71 9,998,858
RABOBANK NEDERLAND
10,000 5.65%, 7/26/99 5.70 9,998,871
STATE STREET BANK &
TRUST CO.
4
<PAGE>
20,000 4.95%, 9/13/99 4.95 20,000,000
TORONTO DOMINION BANK
15,000 5.07%, 2/17/00 5.10 14,995,951
15,000 5.30%, 3/06/00 5.34 14,995,713
UBS FINANCE STAMFORD,
INC.
20,000 5.16%, 2/28/00 5.19 19,995,205
25,000 5.29%, 3/07/00 5.12 25,029,772
Total Certificates of Deposit
(amortized cost $259,963,081) 259,963,081
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-6.1%
FEDERAL HOME LOAN
BANK
21,325 5.00%, 2/10/00 5.00 21,325,000
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
FRN
35,000 4.87%, 5/21/99 4.95 34,998,512
STUDENT LOAN MARKETING
ASSOCIATION FRN
15,000 5.13%, 11/24/99 5.16 14,997,448
40,000 5.16%, 2/04/00 5.18 39,994,016
25,000 5.21%, 11/09/99 5.27 24,992,241
Total U.S. Government &
Agency Obligations
(amortized cost $136,307,217) 136,307,217
BANK OBLIGATIONS-5.3%
ABBEY NATIONAL
TREASURY SERVICES FRN
35,000 4.80%, 7/15/99 4.87 34,995,438
LASALLE NATIONAL BANK
25,000 4.90%, 6/15/99 4.90 25,000,000
15,000 4.90%, 6/22/99 4.90 15,000,000
ROYAL BANK OF CANADA
FRN
45,000 5.01%, 8/25/99 5.09 44,988,816
Total Bank Obligations
(amortized cost $119,984,254) 119,984,254
PROMISSORY NOTES-4.5%
GOLDMAN SACHS
GROUP LP
30,000 4.95%, 8/02/99 (a) 4.95 30,000,000
30,000 4.98%, 5/24/99 (a) 4.98 30,000,000
40,000 4.98%, 10/12/99 (a) 4.98 40,000,000
Total Promissory Notes
(amortized cost $100,000,000) 100,000,000
5
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - PRIME PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
TIME DEPOSIT-3.9%
BANK OF MONTREAL
$ 86,700 5.00%, 5/03/99
(amortized
cost $86,700,000) 5.00% $ 86,700,000
TOTAL INVESTMENTS-100.2%
(amortized
cost $2,248,980,488) 2,248,980,488
Other assets less
liabilities-(0.2%) (3,715,820)
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
1,671,016,155 Class A shares;
536,066,979 Class B shares
and 38,318,343 Class C
shares outstanding) $ 2,245,264,668
See Glossary of Terms on page 16.
See notes to financial statements.
6
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-80.5%
FEDERAL HOME LOAN
MORTGAGE CORP.-24.1%
$ 5,300 5/25/99 4.75% $ 5,283,323
7,000 7/13/99 4.78 6,933,002
2,000 5/18/99 4.79 1,995,504
2,000 5/20/99 4.79 1,994,976
3,000 5/24/99 4.79 2,990,896
5,000 5/28/99 4.79 4,982,188
5,300 8/23/99 4.79 5,220,951
5,500 8/10/99 4.80 5,427,168
5,300 8/13/99 4.80 5,227,732
6,000 8/20/99 4.80 5,912,680
3,000 5/18/99 4.81 2,993,228
5,000 6/23/99 4.81 4,965,035
10,000 6/25/99 4.81 9,927,736
5,000 7/06/99 4.81 4,956,458
5,300 9/13/99 4.81 5,206,389
5,000 5/14/99 4.82 4,991,351
6,000 6/11/99 4.82 5,967,405
7,500 7/09/99 4.83 7,431,642
2,000 7/16/99 4.83 1,979,902
2,200 5/26/99 4.84 2,192,667
3,390 7/14/99 4.85 3,356,691
4,000 8/06/99 4.85 3,948,752
5,000 10/01/99 4.86 4,899,275
9,517 5/14/99 4.87 9,500,676
5,000 6/04/99 4.88 4,977,428
5,400 5/06/99 4.93 5,396,377
128,659,432
STUDENT LOAN
MARKETING
ASSOCIATION-22.9%
4,500 4.59%, 7/12/99 FRN 4.95 4,496,728
24,000 5.04%, 7/15/99 FRN 5.04 24,000,000
15,000 5.10%, 6/30/99 FRN 5.11 14,999,757
4,000 5.11%, 6/17/99 FRN 5.11 4,000,000
10,000 5.11%, 12/03/99 FRN 5.15 9,997,633
15,000 5.11%, 2/14/00 FRN 5.17 14,993,024
10,000 5.13%, 11/24/99 FRN 5.16 9,998,299
15,000 5.14%, 9/30/99 FRN 5.14 15,000,000
15,000 5.16%, 2/04/00 FRN 5.18 14,997,756
7
<PAGE>
10,000 5.21%, 11/09/99 FRN 5.27 9,996,896
122,480,093
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION-15.7%
2,000 4.59%, 9/22/99 FRN 5.40 1,993,561
10,500 4.87%, 5/21/99 FRN 4.95 10,499,554
9,000 5.00%, 5/05/00 MTN 5.10 8,989,560
3,500 5.04%, 4/06/00 MTN 5.10 3,497,538
6,665 5/10/99 4.69 6,657,202
9,000 6/18/99 4.81 8,943,240
5,000 6/22/99 4.82 4,965,550
3,000 7/30/99 4.84 2,964,300
13,000 6/10/99 4.85 12,931,333
3,000 7/22/99 4.87 2,967,542
7,500 9/17/99 4.88 7,362,158
8,000 5/17/99 4.90 7,982,933
4,000 5/05/99 4.93 3,997,853
83,752,324
FEDERAL HOME LOAN BANK-15.1%
2,000 4.90%, 8/12/99 FRN 5.41 1,997,144
5,000 4.92%, 8/18/99 FRN 4.97 4,999,253
7,000 5.06%, 12/01/99 FRN 5.14 6,996,979
5,000 6/30/99 4.87 4,960,417
20,000 2/10/00 5.00 19,999,610
5,500 2/25/00 5.00 5,497,875
7,000 3/03/00 5.03 6,998,165
2,000 2/17/00 5.07 1,998,144
2,000 2/18/00 5.07 1,998,138
14,000 3/17/00 5.12 14,000,000
3,000 3/03/00 5.15 2,998,692
8,000 3/08/00 5.23 7,994,885
80,439,302
FEDERAL FARM
CREDIT BANK-2.7%
2,000 5.43%, 8/02/99 MTN 4.96 2,001,732
3,200 6/30/99 4.87 3,174,667
9,000 9/01/99 4.87 8,995,979
14,172,378
Total U.S. Government &
Agency Obligations
(amortized cost $429,503,529) 429,503,529
REPURCHASE
AGREEMENTS-19.1%
ABN AMRO
25,000 4.92%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,250 (cost $25,000,000;
collateralized by $25,702,000
FNMA, 5.94%, 10/15/01,
value $25,430,873) (c) 4.92 25,000,000
8
<PAGE>
PAINE WEBBER, INC.
25,000 4.93%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,271 (cost $25,000,000;
collateralized by $25,576,000
FNMA, 6.50%, 5/01/29,
value $25,645,978) (c) 4.93 25,000,000
PARIBAS CORP.
25,000 4.92%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,250 (cost $25,000,000;
collateralized by $24,786,000
FNMA, 7.06%, 8/14/07,
value $25,405,828) (c) 4.92 25,000,000
9
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - GOVERNMENT PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT (000) SECURITY YIELD
VALUE
- ------------------------------------------------------------------------------
PRUDENTIAL SECURITIES, INC.
$ 25,000 4.91%, dated 4/30/99,
due 5/03/99 in the amount
of $25,010,229 (cost $25,000,000;
collateralized by $27,335,000
FNMA, 6.00%, 9/01/13,
value $25,600,964) (c) 4.91% $ 25,000,000
STATE STREET BANK AND TRUST CO.
2,100 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,100,831 (cost $2,100,000;
collateralized by $2,090,000
U.S. Treasury Note,
5.50%, 12/31/00,
value $2,143,776)(c) 4.75 2,100,000
Total Repurchase
Agreements
(amortized cost $102,100,000) 102,100,000
TOTAL INVESTMENTS-99.6%
(amortized cost $531,603,529) 531,603,529
Other assets less
liabilities-0.4% 2,091,436
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
394,500,284 Class A shares;
136,101,347 Class B shares
and 3,223,494 Class C
shares outstanding) $ 533,694,965
See Glossary of Terms on page 16.
See notes to financial statements.
10
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- ------------------------------------------------------------------------------
MUNICIPAL BONDS-91.1%
ALABAMA-2.0%
ARAB IDB
(SCI Manufacturing, Inc.)
Series '89 VRDN
$ 150 8/01/00 (e) 5.25% $150,000
DECATUR IDA
PCR: (Amoco Chemical
Project)
Series '95 AMT VRDN
5,000 5/01/25 (e) 4.30 5,000,000
SELMA IDR
(Specialty Minerals
Project)
Series '94 VRDN
4,000 11/01/09 (e) 4.05 4,000,000
9,150,000
ALASKA-3.3%
ALASKA HOUSING
FINANCE CORP.
(University of Alaska)
Series '97A VRDN
7,205 12/01/27 (e) 4.05 7,205,000
ANCHORAGE
Electric Utility Revenue
Series D VRDN
3,330 12/01/26 (e) 4.05 3,330,000
NORTH SLOPE ALASKA BOND
Series B FSA
4,350 6/30/99 3.00 4,371,871
14,906,871
ARIZONA-2.0%
APACHE COUNTY IDR
(Tucson Electric Power
Co. Project)
Series '83C VRDN
8,900 12/15/18 (e) 4.00 8,900,000
ARKANSAS-1.5%
ARKANSAS HOSPITAL
EQUIPMENT FINANCE
AUTHORITY
(AHA Pooled Financing
Program)
Series '98A VRDN
11
<PAGE>
6,700 11/01/28 (e) 4.05 6,700,000
CALIFORNIA-2.6%
SAN DIEGO MFHR
(Paseo Point Apartments)
Series A VRDN
5,250 8/01/15 (e) 3.85 5,250,000
STUDENT EDUCATION
LOAN MARKET CORP.
California Student Loan
Revenue
Series '93A VRDN
6,500 11/01/02 (e) 4.05 6,500,000
11,750,000
COLORADO-2.4%
DOUGLAS COUNTY MFHR
(Autumn Chase Project)
Series '85 VRDN
10,950 7/01/06 (e) 3.90 10,950,000
DELAWARE-2.8%
DELAWARE ECONOMIC
DEVELOPMENT AUTHORITY
(Delmarva Power & Light)
Series '93C VRDN
8,150 10/01/28 (e) 4.20 8,150,000
DELAWARE IDR
(Delmarva Power & Light)
Series '88 AMT VRDN
4,500 10/01/17 (e) 4.40 4,500,000
12,650,000
DISTRICT OF COLUMBIA-6.6%
DISTRICT OF COLUMBIA
(American Society for
Micro Biology)
Series '99A VRDN
3,000 1/01/29 (e) 3.95 3,000,000
DISTRICT OF COLUMBIA
(Resources For The
Future, Inc.)
Series '98 VRDN
4,200 8/01/29 (e) 4.05 4,200,000
DISTRICT OF COLUMBIA GO
Series '92A-1 VRDN
4,300 10/01/07 (e) 4.30 4,300,000
Series '92A-4 VRDN
2,600 10/01/07 (e) 4.30 2,600,000
Series '92A-5 VRDN
4,000 10/01/07 (e) 4.30 4,000,000
Series '92A-6 VRDN
11,900 10/01/07 (e) 4.30 11,900,000
30,000,000
FLORIDA-8.1%
12
<PAGE>
BROWARD COUNTY
HOUSING REVENUE
MFHR
(Margate Investments
Project) VRDN
4,000 11/01/05 (e) 4.05 4,000,000
HIGHLANDS COUNTY
HEALTH FACILITIES
(Adventist/Sunbelt)
Series A VRDN
4,000 11/15/26 (e) 4.05 4,000,000
JACKSONVILLE IDR
(St. John's Medical
Investors)
Series '96 VRDN
1,930 1/01/15 (e) 4.05 1,930,000
13
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
_
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- ------------------------------------------------------------------------------
MARION COUNTY
HFA MFHR
(Summer Trace Project)
Series '85D VRDN
$ 2,300 12/01/07 (e) 4.05% $ 2,300,000
PALM BEACH COUNTY
(Water & Sewer Revenue)
VRDN
6,300 10/01/11 (e) 5.35 6,300,000
PALM BEACH COUNTY
HFA MFHR
(Village Crossing Project)
Series '97B VRDN
3,300 10/01/27 (e) 4.05 3,300,000
TAMPA BAY WATER
(Utility System Revenue)
Series '98B FGIC
3,725 10/01/99 3.44 3,733,665
UNIVERSITY ATHLETIC
ASSOCIATION, INC. CAPITAL
IMPROVEMENT REVENUE
(University of Florida
Stadium Project)
Series '90 VRDN
5,000 2/01/20 (e) 4.30 5,000,000
VOLUSIA COUNTY
HFA MFHR
(Ocean Oaks Apartments)
Series '97B VRDN
5,795 10/01/27 (e) 4.05 5,795,000
36,358,665
GEORGIA-2.8%
GEORGIA HFA
(Single Family Mortgage)
Series '98C PPB
2,000 12/01/17 (e) 3.20 2,000,000
PUTNAM COUNTY IDA
(Georgia Power Co.
Plant Project 2nd)
Series '97 VRDN
4,200 9/01/29 (e) 4.30 4,200,000
SAVANNAH ECONOMIC
DEVELOPMENT AUTHORITY
14
<PAGE>
(Georgia Kaolin)
Series '97 AMT VRDN
3,000 7/01/27 (e) 4.10 3,000,000
THOMASTON-UPSON
COUNTY IDR
(De Ster Production Corp.)
Series A AMT VRDN
3,300 10/01/09 (e) 4.30 3,300,000
12,500,000
IDAHO-0.3%
CUSTER COUNTY SOLID
WASTE REVENUE
(Hecla Mining Co. Project)
Series '97 AMT VRDN
1,300 7/01/07 (e) 4.15 1,300,000
ILLINOIS-6.9%
CHICAGO SCHOOL FINANCE
AUTHORITY
Series A FGIC
5,000 6/01/99 2.98 5,006,200
DES PLAINES COOK
COUNTY IDR
(CP Partners LLC Project)
Series '97A VRDN
6,730 11/01/15 (e) 4.05 6,730,000
ELMHURST HOSPITAL
REVENUE
(Joint Comm. Health Org.)
Series '88 VRDN
8,940 7/01/18 (e) 4.00 8,940,000
ILLINOIS DEVELOPMENT
FINANCE AUTHORITY
(D.E. Akin Seed Project)
AMT VRDN
1,000 11/01/04 (e) 4.20 1,000,000
ILLINOIS HEALTH FACILITIES
AUTHORITY
(Northwest Community
Hospital)
Series '85C VRDN
7,700 10/01/15 (e) 4.05 7,700,000
VERNON HILLS IDR
(Kinder Care Center)
VRDN
550 2/01/01 (e) 4.05 550,000
WEST CHICAGO IDR
(Acme Printing Co.)
Series '89 AMT VRDN
1,100 5/01/99 (e) 5.10 1,100,000
31,026,200
INDIANA-4.3%
15
<PAGE>
GIBSON COUNTY IDR
(Toyota Motor
Manufacturing Project)
Series '98 AMT VRDN
2,500 1/01/28 (e) 4.05 2,500,000
INDIANA DEVELOPMENT
FINANCE AUTHORITY
Environmental
Improvement Bond
(USX Corp. Project)
PPB
3,000 12/01/22 (e) 3.00 3,000,000
INDIANA DEVELOPMENT
FINANCE AUTHORITY
REVENUE
(Alcoa Inc. Project)
Series '99 VRDN
13,905 1/01/17 (e) 4.20 13,905,000
19,405,000
16
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
KENTUCKY-0.4%
BARBOURVILLE COLLEGE
REVENUE
(Union College Project)
Series A VRDN
$ 2,000 8/01/23 (e) 4.05% $ 2,000,000
LOUISIANA-7.9%
LAKE CHARLES PORT FACILITY
(Conoco Project)
Series '84 VRDN
5,800 11/01/11 (e) 4.25 5,800,000
LOUISIANA PUBLIC
FACILITY AUTHORITY
(Hospital Equipment
Finance Project)
Series '85A VRDN
18,000 12/01/10 (e) 4.00 18,000,000
SAINT CHARLES PARISH
POLLUTION CONTROL
REVENUE
(Shell Oil Co. Project)
Series '92B VRDN
4,700 10/01/22 (e) 4.20 4,700,000
WEST BATON ROUGE IDR
(Dow Chemical #3)
Series '94B VRDN
7,100 12/01/16 (e) 4.30 7,100,000
35,600,000
MAINE-2.0%
BIDDEFORD REVENUE
(DK Associates & Volk
Packaging Project)
Series '97 AMT VRDN
5,305 7/01/17 (e) 4.15 5,305,000
MAINE FINANCE AUTHORITY
(Barber Foods, Inc.)
Series '90B AMT VRDN
1,265 12/01/06 (e) 4.25 1,265,000
WESTBROOK IDA
(D & G Group Project)
AMT VRDN
2,690 5/01/17 (e) 4.15 2,690,000
9,260,000
MINNESOTA-0.3%
COTTAGE GROVE
17
<PAGE>
(Minnesota Mining &
Manufacturing Co.
Project) VRDN
1,000 8/01/12 (e) 3.76 1,000,000
EDEN PRAIRIE IDA
(Kinder Care Project)
Series C VRDN
465 2/01/01 (e) 4.05 465,000
1,465,000
MISSISSIPPI-0.5%
MISSISSIPPI BUSINESS
AUTHORITY
(Triton Systems, Inc.)
Series '98A AMT VRDN
2,500 12/01/13 (e) 4.20 2,500,000
MISSOURI-0.7%
BLUE SPRINGS IDA
(Kinder Care Project)
Series C VRDN
540 2/01/01 (e) 4.05 540,000
BOONE COUNTY IDA
(Minnesota Mining &
Manufacturing Co.
Project)
VRDN
500 12/01/25 (e) 3.45 500,000
ST. LOUIS GENERAL
FUND REVENUE TRAN
Series '98
2,000 6/30/99 3.65 2,002,726
3,042,726
NEVADA-2.4%
WASHOE COUNTY IDR
(Sierra Pacific Power Co.)
Series '90 AMT VRDN
10,800 12/01/20 (e) 4.30 10,800,000
NEW JERSEY-0.8%
JERSEY CITY BAN
(Water Notes)
Series '98
3,500 9/17/99 3.44 3,507,338
NEW MEXICO-0.9%
NEW MEXICO MORTGAGE
FINANCE AUTHORITY SFMR
Series '99 PPB
4,000 8/03/99 (e) 3.05 4,000,000
OHIO-1.3%
BUTLER COUNTY
HEALTHCARE FACILITIES
(Knolls of Oxford)
Series '99 VRDN
18
<PAGE>
3,265 3/01/29 (e) 4.10 3,265,000
WARREN COUNTY IDR
(Pioneer Industrial
Components Project)
Series '85 VRDN
2,500 12/01/05 (e) 5.45 2,500,000
5,765,000
OREGON-0.8%
OREGON ECONOMIC
DEVELOPMENT REVENUE
(Kyotaru Oregon Project)
Series '89 AMT VRDN
3,800 12/01/99 (e) 4.38 3,800,000
19
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
PENNSYLVANIA-5.5%
ALLEGHENY COUNTY IDR
(United Jewish
Federation Project)
Series '96A VRDN
$ 11,320 10/01/26 (e) 4.05% $ 11,320,000
MONTGOMERY COUNTY
HIGHER EDUCATION &
HEALTH LOAN REVENUE
Series '96A VRDN
2,000 4/01/17 (e) 4.05 2,000,000
MONTGOMERY COUNTY IDA
(Kinder Care Project)
Series D VRDN
400 10/01/00 (e) 4.05 400,000
PHILADELPHIA SCHOOL
DISTRICT TRAN
Series A
6,000 6/30/99 3.63 6,005,901
PHILADELPHIA TRAN
5,000 6/30/99 3.64 5,004,871
VENANGO IDR
(Penzoil Co. Project)
Series '82A VRDN
285 12/01/12 (e) 4.10 285,000
25,015,772
RHODE ISLAND-0.7%
RHODE ISLAND HEALTH &
EDUCATION
(St. Andrews School)
Series '99 VRDN
3,000 12/01/29 (e) 4.30 3,000,000
SOUTH CAROLINA-4.5%
BERKELEY COUNTY IDR
(Nucor Corp. Project)
Series '97 AMT VRDN
5,400 4/01/30 (e) 4.05 5,400,000
Series '98 AMT VRDN
10,700 4/01/31 (e) 4.05 10,700,000
HILTON HEAD ISLAND BAN
4,000 9/14/99 3.10 4,005,818
20,105,818
TENNESSEE-0.7%
VOLUNTEER STATE STUDENT
20
<PAGE>
LOAN REVENUE
(Student Funding Corp.)
Series '87A-2 AMT VRDN
3,000 12/01/17 (e) 4.00 3,000,000
TEXAS-6.5%
BRAZOS RIVER TEXAS
HARBOR NAVIGATION
DISTRICT
(Merey Sweeny Project)
Series '98 AMT VRDN
8,700 9/01/18 (e) 4.30 8,700,000
GULF COAST WASTE
DISPOSAL AUTHORITY
(Exxon Project)
VRDN
5,750 6/01/20 (e) 4.20 5,750,000
PORT ARTHUR NAVIGATION
DISTRICT
(Texaco Inc. Project)
Series '94 VRDN
2,000 10/01/24 (e) 4.25 2,000,000
PORT DEVELOPMENT CORP.
(Stolt Terminals)
Series '89 VRDN
2,165 1/15/14 (e) 3.90 2,165,000
SOUTHWEST HIGHER
EDUCATION AUTHORITY
(Southern Methodist
University)
VRDN
3,900 7/01/15 (e) 4.25 3,900,000
TEXAS TRAN
6,700 8/31/99 2.98 6,732,629
29,247,629
VERMONT-3.8%
VERMONT HEFA
(Capital Asset Financing
Program)
Series '97-1 VRDN
8,217 6/01/22 (e) 4.00 8,217,000
Series '97-2 VRDN
8,895 6/01/27 (e) 4.00 8,895,000
17,112,000
VIRGINIA-3.8%
CHESTERFIELD COUNTY IDR
(Philip Morris Co.)
VRDN
15,000 4/01/09 (e) 4.10 15,000,000
DINWIDDIE COUNTY IDA
(Chaparral Steel Project)
Series '98A AMT VRDN
21
<PAGE>
1,000 9/01/28 (e) 4.30 1,000,000
KING GEORGE COUNTY IDA
(Birchwood Power Project)
Series '96 AMT VRDN
1,200 4/01/26 (e) 4.30 1,200,000
17,200,000
WASHINGTON-0.9%
PORT OF PORT ANGELES IDR
(Daishowa America Project)
Series '92B AMT VRDN
4,000 8/01/07 (e) 4.10 4,000,000
WEST VIRGINIA-0.4%
KEYSER IDR
(Keyser Associates
Project)
VRDN
1,800 7/01/14 (e) 4.05 1,800,000
22
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TAX-FREE PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY(D) YIELD VALUE
- -----------------------------------------------------------------------------
WISCONSIN-0.7%
MANITOWOC IDR
(Jagemann Stamping Co.)
Series '98 AMT VRDN
$ 1,618 4/01/11 (e) 4.15% $ 1,618,000
WAUSAU
(Minnesota Mining &
Manufacturing Co.
Project)
VRDN
1,600 8/01/17 (e) 3.76 1,600,000
3,218,000
Total Municipal Bonds
(amortized cost $411,036,019) 411,036,019
COMMERCIAL PAPER-8.7%
GEORGIA-1.6%
MUNICIPAL ELECTRIC
AUTHORITY
(Project One Ban)
Series B
7,100 5/06/99 2.90 7,100,000
ILLINOIS-1.8%
ILLINOIS EDUCATIONAL
FACILITIES AUTHORITY
(Pooled Financing
Program)
5,000 7/29/99 3.10 5,000,000
3,310 8/11/99 3.10 3,310,000
8,310,000
NEVADA-2.0%
LAS VEGAS VALLEY WATER
SNWA Revenue
Supported
Series A
5,000 5/07/99 2.85 5,000,000
4,000 5/12/99 2.85 4,000,000
9,000,000
NORTH CAROLINA-1.4%
NORTH CAROLINA
MUNICIPAL POWER CORP.
(Catawba Project #1)
6,110 5/07/99 3.05 6,110,000
TEXAS-1.9%
UNIVERSITY OF TEXAS
23
<PAGE>
BOARD OF REGENTS
Series A
8,500 8/25/99 3.15 8,500,000
Total Commercial Paper
(amortized cost $39,020,000) 39,020,000
TOTAL INVESTMENTS-99.8%
(amortized cost $450,056,019) 450,056,019
Other assets less
liabilities-0.2% 913,713
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
256,096,862 Class A shares;
192,730,218 Class B shares
and 2,226,147 Class C
shares outstanding) $ 450,969,732
See Glossary of Terms on page 16.
See notes to financial statements.
24
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TRUST PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- -----------------------------------------------------------------------------
COMMERCIAL PAPER-44.0%
ALLIANZ OF AMERICA
FINANCE CORP.
$ 10,000 6/11/99 (a) 4.84% $ 9,944,878
ASSOCIATES CORP. OF
NORTH AMERICA
15,000 5/24/99 4.86 14,953,425
10,000 5/26/99 4.88 9,966,111
AUSTRALIA NEW ZEALAND
DELAWARE
10,000 6/21/99 4.80 9,932,000
BANCA CRT FINANCIAL
CORP.
18,000 6/30/99 4.86 17,854,200
4,450 5/12/99 4.87 4,443,378
BANK OF AMERICA
5,000 6/08/99 4.88 4,974,244
10,000 5/11/99 4.93 9,986,306
BANK OF NOVA SCOTIA
10,000 5/24/99 4.84 9,969,078
BANQUE GENERALE DU
LUXEMBOURG
20,000 9/15/99 4.86 19,630,100
CBA FINANCE, INC.
DELAWARE
5,000 9/15/99 4.84 4,907,906
CS FIRST BOSTON, INC.
10,000 5/28/99 (a) 4.85 9,963,625
15,000 6/10/99 (a) 4.85 14,919,167
DEN DANSKE
7,000 6/29/99 4.84 6,944,532
EKSPORTFINANS
20,000 5/12/99 4.84 19,970,422
FIRST CHICAGO FINANCIAL
CORP.
10,000 6/29/99 4.85 9,920,514
FORD MOTOR CREDIT
CORP.
10,000 6/09/99 4.86 9,947,350
GENERAL ELECTRIC
FINANCIAL ASSURANCE
8,000 6/11/99 4.85 7,955,811
5,000 6/14/99 4.86 4,970,300
GENERALE BANK
25
<PAGE>
8,000 6/29/99 4.84 7,936,542
GOVERNMENT
DEVELOPMENT BANK OF
PUERTO RICO
5,000 7/13/99 4.82 4,951,131
5,000 6/21/99 4.87 4,965,504
MORGAN STANLEY GROUP,
INC.
25,000 6/15/99 4.84 24,848,750
5,000 5/28/99 4.85 4,981,812
NATIONAL CITY CORP.
4,500 5/10/99 4.95 4,494,431
SALOMON SMITH BARNEY,
INC.
5,000 6/10/99 4.84 4,973,111
SHEFFIELD RECEIVABLES
CORP.
10,000 5/20/99 (a) 4.87 9,974,297
SHELL FINANCE
NETHERLANDS
20,000 8/02/99 4.82 19,750,967
SOCIETE GENERALE N.A.,
INC.
10,000 6/23/99 4.84 9,928,818
UNI FUNDING, INC.
10,000 7/15/99 4.82 9,899,583
VATTENFALL TREASURY, INC.
10,000 6/23/99 4.84 9,928,744
10,000 6/16/99 4.85 9,938,028
WELLS FARGO CORP.
22,000 6/15/99 4.80 21,868,000
Total Commercial Paper
(amortized cost $349,593,065) 349,593,065
U.S. GOVERNMENT &
AGENCY OBLIGATIONS-23.4%
FEDERAL HOME LOAN
BANK
154,816 4.90%, 5/03/99 4.90 154,773,856
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
FRN
7,000 4.87%, 5/21/99 4.95 6,999,702
STUDENT LOAN MARKETING
ASSOCIATION FRN
3,000 5.13%, 11/24/99 5.16 2,999,490
15,000 5.16%, 2/04/00 5.18 14,997,756
6,000 5.21%, 11/09/99 5.27 5,998,138
Total U.S. Government &
Agency Obligations
(amortized cost $185,768,942) 185,768,942
26
<PAGE>
CORPORATE
OBLIGATIONS-13.7%
ALLMERICA FINANCIAL
LIFE INSURANCE FRN
5,000 4.94%, 2/05/00 4.94 5,000,000
ALLSTATE LIFE INSURANCE
FUNDING AGREEMENT FRN
5,000 4.97%, 9/01/99 (b) 4.97 5,000,000
AMERICAN GENERAL LIFE
INSURANCE CO.
5,000 4.94%, 9/01/99 4.94 5,000,000
COMBINED INSURANCE
CO. OF AMERICA
5,000 4.98%, 7/27/99 4.98 5,000,000
GENERAL AMERICAN
FUNDING CORP. FRN
20,000 5.14%, 7/09/99 5.14 20,000,000
HARTFORD LIFE
INSURANCE CO.
10,000 4.94%, 3/16/00 4.94 10,000,000
27
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TRUST PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
MERRILL LYNCH & CO.,
INC. FRN
$ 5,000 4.89%, 6/01/99 4.89% $ 5,000,000
8,000 5.00%, 9/30/99 5.00 8,000,000
PRUDENTIAL INSURANCE
CO. OF AMERICA PPB
4,000 4.95%, 11/30/00 (e) 4.95 4,000,000
SECURITY BENEFIT LIFE
INSURANCE CO.
20,000 5.09%, 9/14/99 5.09 20,000,000
SIGMA FINANCE FRN
12,000 4.94%, 9/15/99 (a) 4.94 12,000,000
TRAVELERS LIFE FUNDING
AGREEMENT FRN
5,000 4.91%, 4/14/00 4.91 5,000,000
5,000 4.95%, 10/21/99 (b) 4.95 5,000,000
Total Corporate Obligations
(amortized cost $109,000,000) 109,000,000
BANK OBLIGATIONS-6.6%
ABBEY NATIONAL TREASURY
SERVICES FRN
10,000 4.80%, 7/15/99 4.87 9,998,696
BAYERISCHE
LANDESBANK FRN
18,000 4.89%, 3/30/00 4.99 17,990,289
LASALLE NATIONAL BANK
10,000 4.90%, 6/15/99 4.90 10,000,000
5,000 4.90%, 6/22/99 4.90 5,000,000
ROYAL BANK OF
CANADA FRN
10,000 5.01%, 8/25/99 5.09 9,997,515
Total Bank Obligations
(amortized cost $52,986,500) 52,986,500
TIME DEPOSITS-4.5%
BANK OF MONTREAL
20,000 5.00%, 5/03/99 5.00 20,000,000
WESTDEUTSCHE
LANDESBANK
15,500 4.94%, 5/03/99 4.94 15,500,000
Total Time Deposits
(amortized cost $35,500,000) 35,500,000
CERTIFICATES OF
DEPOSIT-4.0%
HESSISCHE LANDESBANK
28
<PAGE>
5,000 5.22%, 2/29/00 5.24 4,998,998
NATIONAL WESTMINSTER
BANK FRN
7,000 4.88%, 4/17/00 4.94 6,996,216
STATE STREET BANK AND
TRUST CO.
5,000 4.95%, 9/13/99 4.95 5,000,000
TORONTO DOMINION BANK
5,000 5.07%, 2/17/00 5.10 4,998,651
5,000 5.30%, 3/06/00 5.34 4,998,571
UBS FINANCE DELAWARE
5,000 5.16%, 2/28/00 5.19 4,998,801
Total Certificates of Deposit
(amortized cost $31,991,237) 31,991,237
PROMISSORY NOTES-3.5%
GOLDMAN SACHS GROUP LP
10,000 4.95%, 8/02/99 (a) 4.95 10,000,000
7,000 4.98%, 5/24/99 (a) 4.98 7,000,000
11,000 4.98%, 10/12/99 (a) 4.98 11,000,000
Total Promissory Notes
(amortized cost $28,000,000) 28,000,000
TOTAL INVESTMENTS-99.7%
(amortized cost $792,839,744) 792,839,744
Other assets less
liabilities-0.3% 2,189,826
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
795,069,334 shares
outstanding) $795,029,570
See Glossary of Terms on page 16.
See notes to financial statements.
29
<PAGE>
STATEMENT OF NET ASSETS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS-30.7%
U.S. TREASURY BILLS-16.2%
$ 5,000 6/17/99 4.42% $ 4,971,343
1,500 5/27/99 4.50 1,495,168
500 5/13/99 4.53 499,252
500 9/16/99 4.53 491,471
1,000 5/27/99 4.57 996,735
8,453,969
U.S. TREASURY NOTES-14.5%
1,000 7/15/99 4.46 1,003,701
2,000 8/31/99 4.55 2,007,671
3,500 9/30/99 4.55 3,515,234
1,000 5/31/99 4.68 1,001,132
7,527,738
Total U.S. Government
Obligations
(amortized cost $15,981,707) 15,981,707
REPURCHASE
AGREEMENTS-69.0%
ABN AMRO
2,000 4.87%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,812 (cost $2,000,000;
collateralized by $2,020,000
U.S. Treasury Note,
5.125%, 8/31/00,
value $2,040,947) (c) 4.87 2,000,000
BARCLAYS DE ZOETE WEDD
SECURITIES, INC.
1,000 4.72%, dated 3/29/99,
due 5/27/99 in the amount
of $1,007,736 (cost $1,000,000;
collateralized by $1,010,000
U.S. Treasury Note,
7.50%, 10/31/99,
value $1,060,759) (c) 4.72 1,000,000
BEAR STEARNS CO.
2,000 4.85%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,808 (cost $2,000,000;
collateralized by $2,085,000
U.S. Treasury Bond,
5.50%, 8/15/28,
30
<PAGE>
value $2,046,337) (c) 4.85 2,000,000
CHASE SECURITIES, INC.
1,000 4.70%, dated 3/30/99,
due 5/28/99 in the amount
of $1,007,703 (cost $1,000,000;
collateralized by $945,000
U.S. Treasury Note,
7.50%, 11/15/01,
value $1,026,211) (c) 4.70 1,000,000
CIBC/WOOD GUNDY, INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,287,000
U.S. Treasury Bond,
14.00%, 11/15/11,
value $2,036,048) (c) 4.75 2,000,000
DEUTSCHE BANK
1,000 4.70%, dated 3/30/99,
due 5/28/99 in the amount
of $1,007,703 (cost $1,000,000;
collateralized by $996,000
U.S. Treasury Note,
6.125%, 7/31/00,
value $1,020,403) (c) 4.70 1,000,000
DEUTSCHE BANK
1,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $1,015,000
U.S. Treasury Note,
4.00%, 10/31/00,
value $1,018,527) (c) 4.80 1,000,000
DRESDNER BANK AG
2,000 4.71%, dated 3/30/99,
due 5/28/99 in the amount
of $2,015,438 (cost $2,000,000;
collateralized by $1,949,000
U.S. Treasury Note,
6.75%, 4/30/00,
value $2,049,588) (c) 4.71 2,000,000
FIRST BOSTON CORP.
1,000 4.72%, dated 3/29/99,
due 5/28/99 in the amount
of $1,007,867 (cost $1,000,000;
collateralized by $893,000
U.S. Treasury Bond,
6.75%, 8/15/26,
value $1,028,294) (c) 4.72 1,000,000
FIRST BOSTON CORP.
1,000 4.80%, dated 4/30/99,
31
<PAGE>
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $1,031,000
U.S. Treasury Bill,
7/29/99,
value $1,019,607) (c) 4.80 1,000,000
FIRST CHICAGO CORP.
1,000 4.70%, dated 3/31/99,
due 6/29/99 in the amount
of $1,011,750 (cost $1,000,000;
collateralized by $965,000
U.S. Treasury Note,
6.25%, 2/15/07,
value $1,022,088) (c) 4.70 1,000,000
32
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
PRINCIPAL
AMOUNT
(000) SECURITY YIELD VALUE
- ------------------------------------------------------------------------------
FIRST CHICAGO CORP.
$ 1,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,400 (cost $1,000,000;
collateralized by $950,000
U.S. Treasury Note,
6.50%, 8/15/05,
value $1,022,740) (c) 4.80% $ 1,000,000
GOLDMAN SACHS & CO.
2,000 4.73%, dated 3/31/99,
due 5/05/99 in the amount of
$2,009,197 (cost $2,000,000;
collateralized by $1,465,000
U.S. Treasury Note,
9.125%, 5/15/18,
value $2,047,658) (c) 4.73 2,000,000
GREENWICH FUNDING CORP.
2,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,800 (cost $2,000,000;
collateralized by $2,000,000
U.S. Treasury Note,
5.625%, 2/15/06,
value $2,050,000) (c) 4.80 2,000,000
MERRILL LYNCH & CO., INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,855,000
U.S. Treasury Note,
7.50%, 5/15/02,
value $2,038,343) (c) 4.75 2,000,000
MORGAN (J.P.) & CO.
2,000 4.83%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,805 (cost $2,000,000;
collateralized by $1,976,000
U.S. Treasury Note,
5.625%, 11/30/00,
value $2,040,633) (c) 4.83 2,000,000
MORGAN STANLEY GROUP,
INC.
2,000 4.82%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,803 (cost $2,000,000;
33
<PAGE>
collateralized by $1,815,000
U.S. Treasury Bond,
8.375%, 8/15/08,
value $2,046,859) (c) 4.82 2,000,000
NATIONSBANC MONTGOMERY
SECURITIES
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,990,000
U.S. Treasury Note,
6.25%, 8/31/00,
value $2,042,021) (c) 4.75 2,000,000
PARIBAS CORP.
1,000 4.70%, dated 3/29/99,
due 5/26/99 in the amount
of $1,007,572 (cost $1,000,000;
collateralized by $791,000
U.S. Treasury Bond,
8.00%, 11/15/21,
value $1,017,241) (c) 4.70 1,000,000
PARIBAS CORP.
1,000 4.85%, dated 4/30/99,
due 5/03/99 in the amount
of $1,000,404 (cost $1,000,000;
collateralized by $999,000
U.S. Treasury Note,
6.375%, 7/15/99,
value $1,021,218) (c) 4.85 1,000,000
SALOMON SMITH BARNEY,
INC.
2,000 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,792 (cost $2,000,000;
collateralized by $1,820,000
U.S. Treasury Note,
7.50%, 2/15/05,
value $2,041,272) (c) 4.75 2,000,000
STATE STREET BANK AND
TRUST CO.
1,900 4.75%, dated 4/30/99,
due 5/03/99 in the amount
of $1,900,752 (cost $1,900,000;
collateralized by $1,890,000
U.S. Treasury Note,
5.50%, 12/31/00,
value $1,938,630) (c) 4.75 1,900,000
WARBURG SECURITIES
2,000 4.80%, dated 4/30/99,
due 5/03/99 in the amount
of $2,000,800 (cost $2,000,000;
34
<PAGE>
collateralized by $1,767,000
U.S. Treasury Bond,
6.875%, 8/15/25,
value $2,043,509) (c) 4.80 2,000,000
Total Repurchase Agreements
(amortized cost $35,900,000) 35,900,000
35
<PAGE>
STATEMENT OF NET ASSETS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES - TREASURY PORTFOLIO
_____________________________________________________________________________
VALUE
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS-99.7%
(amortized cost $51,881,707) $ 51,881,707
Other assets less
liabilities-0.3% 150,630
NET ASSETS-100%
(offering and redemption
price of $1.00 per share;
4,067,485 Class A shares,
14,885,766 Class B shares
and 33,081,429 Class C
shares outstanding) $ 52,032,337
(a) Securities issued in reliance on Section (4) 2 or Rule 144A of the
Securities Act of 1933. Rule 144A securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At April
30, 1999, these securities amounted to $236,318,262, representing 10.5% of net
assets on the Prime Portfolio, and $84,801,967, representing 10.7% of net
assets on the Trust Portfolio.
(b) Funding agreements are illiquid securities subject to restrictions as to
resale. These securities amounted to $115,000,000, representing 5.1% of net
assets on the Prime Portfolio, and $10,000,000, representing 1.3% of net
assets on the Trust Portfolio (see Note A to the financial statements).
(c) Repurchase agreement which is terminable within 7 days.
(d) All securities either mature or their interest rate changes in one year
or less.
(e) 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
FGIC Financial Guarantee Insurance Company
FNMA Federal National Mortgage Association
FRN Floating Rate Note
FSA Financial Security Assurance, Inc.
GO General Obligation
HEFA Health & Educational Facility Authority
HFA Housing Finance Agency/Authority
36
<PAGE>
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue
MFHR Multi-Family Housing Revenue
MTN Medium Term Note
PCR Pollution Control Revenue
SFMR Single Family Mortgage Revenue
TRAN Tax & Revenue Anticipation Note
See notes to financial statements.
37
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES
__________________________________________________________________________________________________________________
PRIME GOVERNMENT TAX-FREE TRUST TREASURY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
(A)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 114,920,128 $ 22,167,100 $ 13,721,615 $ 26,438,960 $ 1,225,724
EXPENSES
Advisory fee (Note B) 4,306,084 855,152 813,820 2,225,285 51,075
Distribution fee - Class B 207,634 65,988 86,382 -0- 4,030
Distribution fee - Class C 49,452 6,209 2,821 -0- 36,483
Registration 517,311 183,793 177,828 305,174 88,057
Custodian 281,255 134,113 118,321 117,234 63,596
Audit and legal 95,260 21,426 25,969 22,062 13,534
Transfer agency 32,174 29,146 22,506 25,836 14,186
Printing 17,792 3,518 3,837 7,926 8,306
Directors' fees 5,298 5,298 5,298 5,298 5,298
Miscellaneous 37,338 15,285 15,299 12,572 1,917
Total expenses 5,549,598 1,319,928 1,272,081 2,721,387 286,482
Less: expense reimbursement (986,428) (392,575) (369,058) (248,847) (194,894)
Net expenses 4,563,170 927,353 903,023 2,472,540 91,588
Net investment income 110,356,958 21,239,747 12,818,592 23,966,420 1,134,136
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investment transactions 46,911 189 -0- 3,996 (2,192)
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 110,403,869 $ 21,239,936 $ 12,818,592 $ 23,970,416 $ 1,131,944
(a) Commencement of operations, June 29, 1998.
See notes to financial statements.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
PRIME PORTFOLIO
GOVERNMENT PORTFOLIO
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 110,356,958 $ 71,740,159 $ 21,239,747 $ 16,319,887
Net realized gain on
investment transactions 46,911 84 189 1,000
Net change in unrealized
appreciation of
investments -0- -0- -0- -0-
Net increase in net assets
from operations 110,403,869 71,740,243 21,239,936 16,320,887
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (99,429,944) (71,740,159) (18,006,917) (16,319,887)
Class B (9,997,982) -0- (3,119,916) -0-
Class C (929,032) -0- (112,914) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 480,524,899 897,353,419 259,233,401 (52,059,333)
Total increase (decrease) 480,571,810 897,353,503 259,233,590 (52,058,333)
NET ASSETS
Beginning of year 1,764,692,858 867,339,355 274,461,375 326,519,708
End of year $ 2,245,264,668 $ 1,764,692,858 $ 533,694,965 $ 274,461,375
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE PORTFOLIO
TRUST PORTFOLIO
PORTFOLIO
--------------------------------- --------------------------------- ---------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999 APRIL 30, 1998 APRIL 30, 1999(A)
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 12,818,592 $ 9,321,671 $ 23,966,420 $ 14,247,619 $ 1,134,136
-0- 168 3,996 13,207 (2,192)
-0- (351) -0- -0- -0-
12,818,592 9,321,488 23,970,416 14,260,826 1,131,944
(10,300,293) (9,321,671) (23,966,420) (14,247,619) (333,222)
(2,487,651) -0- -0- -0- (178,256)
(30,648) -0- -0- -0- (622,809)
157,206,086 110,698,884 404,533,541 214,797,663 52,034,680
157,206,086 110,698,701 404,537,537 214,810,870 52,032,337
293,763,646 183,064,945 390,492,033 175,681,163 -0-
$ 450,969,732 $ 293,763,646 $ 795,029,570 $ 390,492,033 $ 52,032,337
(a) Commencement of operations, June 29, 1998.
See notes to financial statements.
</TABLE>
40
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Institutional Reserves, Inc. (the "Fund") formerly ACM
Institutional Reserves, Inc., is registered under the Investment
Company Act of 1940 as an open-end investment company. On June
22, 1998 the creation of a second and third class of shares,
Class B and Class C shares, was approved by the Board of
Directors (with respect to the Prime, Government, Tax-Free and
Treasury Portfolios). The Fund operates as a series company
currently consisting of five Portfolios: Prime Portfolio,
Government Portfolio, Tax-Free Portfolio, Trust Portfolio and
Treasury Portfolio. Each Portfolio is considered to be a separate
entity for financial reporting and tax purposes. The Prime,
Government, Treasury and Tax-Free Portfolios offer all three
classes of shares. The Trust Portfolio offers Class A shares.
Each Portfolio pursues its objectives by maintaining a portfolio
of high-quality money market securities all of which, at the time
of investment, have remaining maturities of 397 days or less. The
financial statements have been prepared in conformity with
generally accepted accounting principles which require management
to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial
statements and amounts of income and expenses during the
reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting
policies followed by the 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.
Certain illiquid securities containing unconditional par puts are
also valued at amortized cost. Amortization of premium is charged
to income. Accretion of market discount is credited to unrealized
gain.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its investment company taxable income and net
realized gains, if any, to its shareholders. Therefore, no
provisions for federal income or excise taxes are required.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
41
<PAGE>
Interest income is accrued daily. Investment transactions are
recorded on the date securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis.
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 year end. Dividends paid
by Tax-Free Portfolio from net investment income for the period
ended April 30, 1999 are exempt from federal income taxes.
However, certain shareholders may be subject to the alternative
minimum tax.
5. REPURCHASE AGREEMENTS
It is the Fund's policy to take possession of securities as
collateral under repurchase agreements and to determine on a
daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements.
NOTE B: ADVISORY FEE AND TRANSACTIONS WITH AN AFFILIATE OF THE
ADVISER Under the terms of an investment advisory agreement, the
Fund pays Alliance Capital Management L.P., (the "Adviser"), an
advisory fee at the annual rate of .20% of average daily net
assets for the Prime, Government, Tax-Free and Treasury
Portfolios and .45% of average daily net assets for the Trust
Portfolio. For the period ended April 30, 1999, the Adviser has
agreed to reimburse each of the Portfolios to the extent
necessary to limit total operating expenses on an annual basis to
a certain limit (excluding taxes, brokerage, interest and, where
permitted, extraordinary expenses). For the period ended April
30, 1999, reimbursement was $986,428, $392,575, $369,058,
$248,847 and $194,894 for the Prime, Government, Tax-Free, Trust
and Treasury Portfolios, respectively.
Each Portfolio compensates Alliance Fund Services, Inc., a
wholly-owned subsidiary of the Adviser, under a Transfer Agency
Agreement for providing personnel and facilities to perform
transfer agency services. Such compensation for the Prime,
Government, Tax-Free, and Trust Portfolios was $18,000 per
Portfolio, and for the Treasury Portfolio, $6,000, for the period
ended April 30, 1999.
For the period ended April 30, 1999, the Fund's expenses were
reduced by $519, $108 and $266 for the Prime, Government and
Trust Portfolios, respectively under an expense offset
arrangement with Alliance Fund Services.
NOTE C: DISTRIBUTION AGREEMENT
The Fund has adopted a Distribution Agreement (the "Agreement")
which includes for each Portfolio except the Trust Portfolio, a
distribution plan pursuant to Rule 12b-1 under the Investment
42
<PAGE>
Company Act of 1940. Under the Agreement, the Fund pays a
distribution fee to the Distributor at an annual rate of .10 of
1% of the aggregate average daily net assets attributable to
Class B shares of the Prime, Government, Treasury and Tax-Free
Portfolios and .25 of 1% of the aggregate average daily net
assets attributable to Class C shares of the Prime, Government,
Treasury and Tax-Free Portfolios. There is no distribution fee on
the Class A shares. Such fees are accrued daily and paid monthly.
The Agreement provides that the Distributor will use such
payments in their entirety for distribution assistance and
promotional activities. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of
the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
At April 30, 1999, the cost of investments 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 available to
offset future gains at April 30, 1999 of $136,809, of which
$71,055 expires in 2003, $40,007 in 2004 and $25,747 in the year
2005; the Government Portfolio had a capital loss carryforward of
$130,160, of which $151 expires in 2000, $9,174 in 2001, $51,091
in 2002, $23,230 in 2003, $30,512 in 2004 and $16,002 in the year
2005; the Tax-Free Portfolio had a capital loss carryforward of
$83,495, of which $6,110 expires in 2002, $76,925 in 2004, $400
in 2005 and $60 in the year 2006; the Trust Portfolio had a
capital loss carryforward of $39,764, of which $2,919 expires in
2003, $30,219 in 2004, $2,251 in 2005 and $4,375 in the year
2006; Treasury Portfolio had a capital loss carryforward of
$2,192, which expires in the year 2007.
NOTE E: CAPITAL STOCK
There are 65,000,000,000 shares of $.01 par value capital stock
authorized. At April 30, 1999, capital paid-in aggregated
$2,245,401,477 on Prime Portfolio, $533,825,125 on Government
Portfolio, $451,053,227 on Tax-Free Portfolio, $795,069,334 on
Trust Portfolio and $52,034,680 on Treasury Portfolio.
Transactions, all at $1.00 per share, were as follows:
PRIME PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 23,622,009,804 18,859,885,064
43
<PAGE>
Shares issued on reinvestments
of dividends 99,429,944 71,740,159
Shares redeemed (23,815,300,171) (18,034,271,804)
Net increase (decrease) (93,860,423) 897,353,419
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
PRIME PORTFOLIO
------------------------------
AUGUST 14, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 2,348,283,090
Shares issued on reinvestments
of dividends 9,997,982
Shares redeemed (1,822,214,093)
Net increase 536,066,979
JULY 13, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 103,018,527
Shares issued on reinvestments
of dividends 929,032
Shares redeemed (65,629,216)
Net increase 38,318,343
GOVERNMENT PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 2,628,953,985 1,463,678,015
Shares issued on reinvestments
of dividends 18,006,917 16,319,887
Shares redeemed
(2,527,052,342) (1,532,057,235)
Net increase (decrease) 119,908,560 (52,059,333)
45
<PAGE>
AUGUST 7, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 333,938,088
Shares issued on reinvestments
of dividends 3,119,916
Shares redeemed (200,956,657)
Net increase 136,101,347
OCTOBER 21, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 17,279,127
Shares issued on reinvestments
of dividends 112,914
Shares redeemed (14,168,547)
Net increase 3,223,494
* Commencement of distribution.
46
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
TAX-FREE PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 2,015,274,013 2,187,340,593
Shares issued on reinvestments
of dividends 10,300,293 9,321,671
Shares redeemed
(2,063,324,585) (2,085,963,380)
Net increase (decrease) (37,750,279) 110,698,884
AUGUST 17, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 618,511,568
Shares issued on reinvestments
of dividends 2,487,651
Shares redeemed (428,269,001)
Net increase 192,730,218
SEPTEMBER 8, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 10,344,376
Shares issued on reinvestments
of dividends 30,648
Shares redeemed (8,148,877)
Net increase 2,226,147
TRUST PORTFOLIO
------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1999 1998
------------------ ------------------
CLASS A
Shares sold 2,122,594,704 1,732,157,312
Shares issued on reinvestments
of dividends 23,966,420 14,247,619
Shares redeemed
47
<PAGE>
(1,742,027,583) (1,531,607,268)
Net increase 404,533,541 214,797,663
TREASURY PORTFOLIO
------------------------------------------
JUNE 29, 1998*
TO
APRIL 30, 1999
------------------
CLASS A
Shares sold 19,859,145
Shares issued on reinvestments
of dividends 333,222
Shares redeemed (16,124,882)
Net increase 4,067,485
* Commencement of distribution.
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
_____________________________________________________________________________
TREASURY PORTFOLIO
------------------------------------------
DECEMBER 31, 1998*
TO
APRIL 30, 1999
------------------
CLASS B
Shares sold 40,092,172
Shares issued on reinvestments
of dividends 178,256
Shares redeemed (25,384,662)
Net increase 14,885,766
OCTOBER 15, 1998*
TO
APRIL 30, 1999
------------------
CLASS C
Shares sold 131,076,991
Shares issued on reinvestments
of dividends 622,809
Shares redeemed (98,618,371)
Net increase 33,081,429
* Commencement of distribution.
49
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS ALLIANCE INSTITUTIONAL RESERVES
___________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
PRIME PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0518 .0552 .0530 .0560 .0502
LESS: DIVIDENDS
Dividends from net investment income (.0518) (.0552) (.0530) (.0560) (.0502)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 5.31% 5.68% 5.44% 5.76% 5.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $1,671 $1,765 $867 $493 $198
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .24% .24% .29% .32% .36%
Net investment income (a) 5.16% 5.52% 5.31% 5.54% 5.24%
</TABLE>
PRIME PORTFOLIO
------------------
CLASS B
- ------------------
AUGUST 14, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
50
<PAGE>
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0358
LESS: DIVIDENDS
Dividends from net investment income (.0358)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $536
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .36%
Net investment income (a)(d) 4.82%
See footnote summary on page 33.
51
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
PRIME PORTFOLIO
------------------
CLASS C
------------------
JULY 13, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0392
LESS: DIVIDENDS
Dividends from net investment income (.0392)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $38
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .51%
Net investment income (a)(d) 4.70%
See footnote summary on page 33.
52
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE INSTITUTIONAL RESERVES
____________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
GOVERNMENT PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0505 .0543 .0519 .0552 .0493
LESS: DIVIDENDS
Dividends from net investment income (.0505) (.0543) (.0519) (.0552) (.0493)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 5.18% 5.58% 5.33% 5.67% 5.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $394 $275 $327 $151 $104
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .29% .28% .35% .36% .38%
Net investment income (a) 5.01% 5.43% 5.22% 5.50% 4.94%
</TABLE>
53
<PAGE>
GOVERNMENT PORTFOLIO
------------------
CLASS B
------------------
AUGUST 7, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0361
LESS: DIVIDENDS
Dividends from net investment income (.0361)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $136
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .41%
Net investment income (a)(d) 4.73%
See footnote summary on page 33.
54
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
GOVERNMENT PORTFOLIO
------------------
CLASS C
------------------
OCTOBER 21, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0243
LESS: DIVIDENDS
Dividends from net investment income (.0243)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on
net asset value (b) 2.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .56%
Net investment income (a)(d) 4.55%
See footnote summary on page 33.
55
<PAGE>
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
TAX-FREE PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0321 .0363 .0347 .0372 .0326
Net unrealized loss on investments -0- -0- -0- -0- (.0048)
Net increase in net asset value from
operations .0321 .0363 .0347 .0372 .0278
LESS: DIVIDENDS
Dividends from net investment income (.0321) (.0363) (.0347) (.0372) (.0326)
ADD: CAPITAL CONTRIBUTION
Capital Contributed by the Adviser -0- -0- -0- -0- .0048
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 3.26% 3.70% 3.53% 3.79% 3.31%(e)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in millions) $256 $294 $183 $184 $36
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .20% .20% .20% .20% .20%
Expenses, before waivers and
reimbursements .28% .28% .33% .48% .76%
Net investment income (a) 3.22% 3.61% 3.46% 3.73% 3.31%
</TABLE>
56
<PAGE>
TAX-FREE PORTFOLIO
------------------
CLASS B
------------------
AUGUST 17, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0210
LESS: DIVIDENDS
Dividends from net investment income (.0210)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 2.13%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $193
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) .42%
Net investment income (a)(d) 2.88%
See footnote summary on page 33.
57
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
TAX-FREE PORTFOLIO
------------------
CLASS C
------------------
SEPTEMBER 8, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0184
LESS: DIVIDENDS
Dividends from net investment income (.0184)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .57%
Net investment income (a)(d) 2.69%
See footnote summary on page 33.
58
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE INSTITUTIONAL RESERVES
____________________________________________________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
TRUST PORTFOLIO
-----------------------------------------------------------------
CLASS A
-----------------------------------------------------------------
YEAR ENDED APRIL 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0489 .0523 .0492 .0527 .0479
LESS: DIVIDENDS
Dividends from net investment income (.0489) (.0523) (.0492) (.0527) (.0479)
Net asset value, end of year $ 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 year (in millions) $795 $391 $176 $170 $109
Ratios 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%
See footnote summary on page 33.
</TABLE>
59
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED) ALLIANCE INSTITUTIONAL RESERVES
________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD
TREASURY PORTFOLIO
------------------
CLASS A
------------------
JUNE 29, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0401
LESS: DIVIDENDS
Dividends from net investment income (.0401)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 4.09%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .20%
Expenses, before waivers and
reimbursements (d) 1.42%
Net investment income (a)(d) 4.82%
60
<PAGE>
TREASURY PORTFOLIO
------------------
CLASS B
------------------
DECEMBER 31, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0143
LESS: DIVIDENDS
Dividends from net investment income (.0143)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 1.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .30%
Expenses, before waivers and
reimbursements (d) 1.08%
Net investment income (a)(d) 4.42%
See footnote summary on page 33.
61
<PAGE>
ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
TREASURY PORTFOLIO
------------------
CLASS C
------------------
OCTOBER 15, 1998(C)
TO
APRIL 30, 1999
------------------
Net asset value, beginning of period $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .0248
LESS: DIVIDENDS
Dividends from net investment income (.0248)
Net asset value, end of period $ 1.00
TOTAL RETURN
Total investment return based on net
asset value (b) 2.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $33
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements (d) .45%
Expenses, before waivers and
reimbursements (d) .99%
Net investment income (a)(d) 4.27%
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Total investment return is calculated assuming an initial
investment made at the net asset value at the beginning of the
period, reinvestment of all dividends at net asset value during
the period, and redemption on the last day if the period. Total
investment return calculated for a period of less than one year
is not annualized.
(c) Commencement of distribution.
(d) Annualized.
62
<PAGE>
(e) Capital contributed by the Adviser had no material effect on
net asset value, and therefore, no effect on total return.
63
<PAGE>
INDEPENDENT AUDITOR'S REPORT
ALLIANCE INSTITUTIONAL RESERVES
_________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS ALLIANCE INSTITUTIONAL
RESERVES, INC.
We have audited the accompanying statements of net assets of
Alliance Institutional Reserves (formerly ACMInstitutional
Reserves)--Prime, Government, Tax-Free, Trust and Treasury
Portfolios as of April 30, 1999 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, 1999 by correspondence with the
custodian and brokers. 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 Alliance Institutional Reserves--Prime,
Government, Tax-Free, Trust and Treasury Portfolios as of April
30, 1999, and the results of their operations, changes in their
net assets, and financial highlights for the periods indicated,
in conformity with generally accepted accounting principles.
McGladrey & Pullen, LLP
New York, New York
May 27, 1999
64
