N-30D 1 edg7883.txt AFD EXCHANGE RESERVES SAR AFD -------------------------------------------------------------------------------- EXCHANGE -------------------------------------------------------------------------------- RESERVES -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT MARCH 31, 2002 -------------------------------------------------------------------------------- An investment in the Fund is not (i) insured or guaranteed by the U.S. government, (ii) a deposit or obligation of, or guaranteed or endorsed by any bank, or (iii) federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency. There can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS AFD Exchange Reserves ================================================================================ May 7, 2002 Dear Shareholder: Although the U.S. economy is expanding at a significant pace, according to the Federal Open Market Committee, interest rates still remain at 1.75%--a 40-year low--as real growth remains uncertain. One of the key determinants of interest rates is the outlook for inflation. The consensus view for 2002 is that core inflation will slow to about 2.0%, or even less; however, we believe inflation is likely to remain steady, with prices rising 2.5% to 2.75%. Consumer spending, industrial production and business investment are improving, yet, the job-loss rate is still down considerably. A dominant theme for 2002 is the expected surge in federal spending. In the first quarter, real federal government spending rose 12% annualized, following an 11% gain in the fourth quarter of 2001--the biggest back-to-back quarterly gains since 1986. Importantly, much more is in the pipeline, especially in the defense area. Defense capital goods orders are up 16% over first quarter 2001 levels. The financial services and telecommunications sectors are still struggling financially and are not likely to increase capital spending anytime soon. Overall, we continue to believe that the economy will improve against a backdrop of strong liquidity flows, fiscal and monetary stimulus, increased productivity, increased business spending and improving earnings-an environment that historically has been constructive for the equity markets. We appreciate your continued interest in AFD Exchange Reserves. Sincerely, /s/ John D. Carifa John D. Carifa Chairman and President 1 STATEMENT OF NET ASSETS March 31, 2002 (unaudited) AFD Exchange Reserves ================================================================================ Principal Amount (000) Security Yield Value -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS-52.4% Federal Home Loan Bank $ 25,000 12/12/02 ........................ 2.34% $ 25,000,000 Federal Home Loan Mortgage Corp. 290,500 4/01/02 ......................... 1.70 290,500,000 10,600 5/07/02 ......................... 1.80 10,580,920 Federal National Mortgage Association 25,000 9/27/02 FRN ..................... 1.70 24,991,447 25,000 3/27/03 FRN ..................... 1.70 24,980,388 40,000 11/29/02 FRN .................... 1.73 39,992,686 25,000 5/05/03 FRN ..................... 1.74 24,978,842 50,000 5/08/02 ......................... 1.76 49,909,556 50,000 4/11/02 ......................... 1.77 49,975,417 27,615 5/08/02 ......................... 1.78 27,564,480 67,000 6/12/02 ......................... 1.84 66,753,440 44,000 6/26/02 ......................... 1.86 43,804,493 -------------- Total U.S. Government Agency Obligations (amortized cost $679,031,669) ................... 679,031,669 -------------- COMMERCIAL PAPER-44.2% American Express Co. 12,000 4/15/02 (a) ..................... 1.80 11,991,600 American General Corp. 26,600 4/15/02 ......................... 1.80 26,581,380 AWB Finance, Ltd. 12,500 4/17/02 (a) ..................... 1.80 12,490,000 Cargill, Inc. 15,000 4/26/02 (a) ..................... 1.79 14,981,354 Caterpillar Financial Services, Ltd. 12,000 6/24/02 ......................... 1.91 11,946,520 Coca Cola Co. 15,000 4/30/02 (a) ..................... 1.80 14,978,250 Colgate Palmolive Co. 15,000 4/30/02 ......................... 1.79 14,978,371 Deutsche Bank AG 15,000 4/30/02 ......................... 1.61 14,980,546 20,000 4/24/02 ......................... 1.80 19,977,064 General Electric Capital Corp. 20,000 5/16/02 ......................... 1.85 19,953,750 General Re Corp. 2,000 5/28/02 ......................... 1.78 1,994,363 33,500 5/28/02 ......................... 1.80 33,404,525 20,000 4/29/02 ......................... 1.80 19,972,000 Gillette Co. 12,020 5/13/02 (a) ..................... 1.84 11,994,197 J.P. Morgan Chase & Co. 13,000 6/10/02 (a) ..................... 1.90 12,951,972 Kraft Foods, Inc. 13,000 4/12/02 ......................... 1.80 12,992,850 Marshall & Ilsley Corp. 16,000 5/15/02 ......................... 1.84 15,964,018 Merck & Co., Inc. FRN 8,750 10/25/02 (a) .................... 1.86 8,750,000 Morgan Stanley Dean Witter 15,000 4/11/02 ......................... 1.82 14,992,417 National City Corp. 12,500 4/09/02 ......................... 1.80 12,495,000 Nordea North America, Inc. 15,000 5/28/02 ......................... 1.87 14,955,588 Pfizer, Inc. 34,700 4/15/02 (a) ..................... 1.79 34,675,845 Private Export Funding Corp. 4,600 5/21/02 (a) ..................... 1.83 4,588,308 Prudential PLC 20,200 5/15/02 ......................... 1.82 20,155,066 13,000 4/22/02 ......................... 1.82 12,986,199 Salomon Smith Barney, Inc. 25,000 4/15/02 ......................... 1.82 24,982,306 2 AFD Exchange Reserves ================================================================================ Principal Amount (000) Security Yield Value -------------------------------------------------------------------------------- SBC Communications, Inc. $ 15,000 4/08/02 (a) ..................... 1.79% $ 14,994,779 Schlumberger Technology Corp. 15,000 4/26/02 ......................... 1.82 14,981,042 Smithkline Beecham Corp. 15,000 4/02/02 ......................... 1.95 14,999,187 UBS Finance, Inc. 63,000 4/01/02 ......................... 1.85 63,000,000 Verizon Network Funding 15,000 4/24/02 ......................... 1.82 14,982,558 Wal-Mart Stores, Inc. 15,000 4/02/02 (a) ..................... 1.83 14,999,237 ZCM Matched Funding Corp. 14,500 5/24/02 ......................... 1.82 14,461,148 -------------- Total Commercial Paper (amortized cost $573,131,440) ................... 573,131,440 -------------- CERTIFICATES OF DEPOSIT-3.6% Lloyds Bank PLC 26,000 5/28/02 ......................... 1.81 25,997,171 Southtrust Bank NA 15,000 6/28/02 ......................... 1.92 15,000,000 Westdeutsche Landesbank 6,000 1/15/03 ......................... 2.00 6,000,000 -------------- Total Certificates of Deposit (amortized cost $46,997,171) .................... 46,997,171 -------------- CORPORATE OBLIGATION-1.9% Merrill Lynch & Co., Inc. FRN MTN 25,000 (amortized cost $25,000,000) 4/01/03 ............ 1.85 25,000,000 -------------- TOTAL INVESTMENTS-102.1% (amortized cost $1,324,160,280) ................. 1,324,160,280 Other assets less liabilities-(2.1%) .............. (27,730,448) -------------- NET ASSETS-100% (offering and redemption price of $1.00 per share; 670,172,356 Class A shares; 311,544,136 Class B shares; 93,208,456 Class C shares and 221,528,037 Advisor Class shares outstanding) ....... $1,296,429,832 ============== -------------------------------------------------------------------------------- (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 March 31, 2002, these securities amounted to $157,395,542, representing 12.1% of net assets. Glossary of Terms: FRN - Floating Rate Note MTN - Medium Term Note See notes to financial statements. 3 STATEMENT OF OPERATIONS Six Months Ended March 31, 2002 (unaudited) AFD Exchange Reserves ================================================================================ INVESTMENT INCOME Interest ....................................... $ 13,512,515 EXPENSES Advisory fee ................................... $ 1,579,662 Distribution fee - Class A ..................... 1,673,440 Distribution fee - Class B ..................... 1,768,233 Distribution fee - Class C ..................... 379,993 Transfer agency ................................ 833,144 Custodian ...................................... 134,219 Registration fees .............................. 98,468 Printing ....................................... 58,037 Administrative ................................. 53,500 Audit and legal ................................ 26,280 Trustees' fees ................................. 9,983 Miscellaneous .................................. 9,363 ----------- Total expenses ................................. 6,624,322 ------------ Net investment income .......................... 6,888,193 REALIZED LOSS ON INVESTMENTS Net realized loss on investment transactions ... (73,687) ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS ....... $ 6,814,506 ============ -------------------------------------------------------------------------------- See notes to financial statements. 4 STATEMENT OF CHANGES IN NET ASSETS AFD Exchange Reserves ================================================================================
Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ================ =============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income .................................. $ 6,888,193 $ 34,484,050 Net realized gain (loss) on investment transactions .... (73,687) 5,283 --------------- --------------- Net increase in net assets from operations ............. 6,814,506 34,489,333 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income Class A .............................................. (4,006,829) (21,470,906) Class B .............................................. (1,288,713) (8,394,429) Class C .............................................. (498,103) (3,723,485) Advisor Class ........................................ (1,094,548) (895,230) TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase ........................................... 62,802,133 253,846,713 --------------- --------------- Total increase ......................................... 62,728,446 253,851,996 NET ASSETS Beginning of period .................................... 1,233,701,386 979,849,390 --------------- --------------- End of period .......................................... $ 1,296,429,832 $ 1,233,701,386 =============== ===============
-------------------------------------------------------------------------------- See notes to financial statements. 5 NOTES TO FINANCIAL STATEMENTS March 31, 2002 (unaudited) AFD Exchange Reserves ================================================================================ NOTE A: Significant Accounting Policies AFD Exchange Reserves (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end investment company. The Fund's investment objective is to provide maximum current income to the extent consistent with safety of principal and liquidity. The Fund offers Class A, Class B, Class C and Advisor Class shares. All four classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears its own distribution and transfer agency expenses and has exclusive voting rights with respect to its distribution plan. Class A shares are sold for cash without an initial sales charge at the time of purchase. On cash purchases of $1,000,000 or more, however, a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of net asset value at the time of redemption or original cost if redeemed within one year may be charged. Class A shares may be exchanged for Class A shares of other Alliance Mutual Funds, subject, in the case of Class A shares of the Fund that were purchased for cash, to any applicable initial sales charge at the time of exchange. Class A shares of the Fund also are offered in exchange for Class A shares of other Alliance Mutual Funds without any sales charge at the time of purchase, but on Class A shares that were received in exchange for Alliance Mutual Fund Class A shares that were not subject to an initial sales charge when originally purchased for cash because the purchase was of $1,000,000 or more, a 1% CDSC may be assessed if shares of the Fund are redeemed within one year of the Alliance Mutual Fund Class A shares originally purchased for cash. Class B shares are sold for cash without an initial sales charge. However, a CDSC is charged if shares are redeemed within four years after purchase. The CDSC charge declines from 4% to zero depending on the period of time the shares are held. Class B shares purchased for cash will automatically convert to Class A shares after eight years. Class B shares may be exchanged for Class B shares of other Alliance Mutual Funds. Class B shares also are offered in exchange for Class B shares of other Alliance Mutual Funds without an initial sales charge. However, a CDSC may be charged if shares are redeemed within a certain number of years of the original purchase of Alliance Mutual Fund Class B shares. When redemption occurs, the applicable CDSC schedule is that which applied to the Alliance Mutual Fund Class B shares originally purchased for cash at the time of their purchase. Class C shares are sold for cash or in exchange for Class C shares of another Alliance Mutual Fund without an initial sales charge at the time of purchase. Class C shares are subject to a CDSC of 1% on redemptions made within the first year after purchase. Class C shares do not convert to any other class of shares of the Fund. Class C shares may be exchanged for Class C shares of other Alliance Mutual Funds. Advisor Class shares are sold for cash or in exchange for Advisor Class shares of another Alliance Mutual Fund without an initial sales charge or CDSC and are not subject to ongoing distribution expenses. Advisor Class shares are offered solely to investors participating in fee-based programs and to certain retirement plan accounts. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the 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. 2. Taxes It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to its shareholders. Therefore, no provisions for federal income or excise taxes are required. 3. Dividends The Fund declares dividends daily and automatically reinvests such dividends in additional shares at net asset 6 AFD Exchange Reserves ================================================================================ value. Net realized capital gains on investments, if any, are expected to be distributed near year end. 4. Income and Expenses All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each settled class of shares, based on the proportionate interest in the Fund represented by the shares of such class, except that the Fund's Class B and Class C shares bear higher distribution and transfer agent fees than Class A shares and the Advisor Class shares have no distribution fees. 5. 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. 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 other Transactions with Affiliates The Fund pays its Adviser, Alliance Capital Management L.P., an advisory fee at the annual rate of .25% on the first $1.25 billion of average daily net assets; ..24% on the next $.25 billion; .23% on the next $.25 billion; .22% on the next $.25 billion; .21% on the next $1 billion; and .20% in excess of $3 billion. In addition to the advisory fee, the Fund also reimburses the Adviser for certain legal and accounting services provided to the Fund by the Adviser. For the six months ended March 31, 2002, such reimbursements totaled $53,500. For the six months ended March 31, 2002, the Fund's expenses were reduced by $3,765 under an expense offset arrangement with Alliance Global Investor Services, Inc. (AGIS). Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The Distributor has advised the Fund that it has received front-end sales charges of $144,641 from the sales of Class A shares and $157,295, $1,050,545, and $86,942 in contingent deferred sales charges imposed upon redemption by share holders of Class A, Class B, and Class C shares, respectively, for the six months ended March 31, 2002. The Fund compensates AGIS, a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. Such compensation amounted to $796,617 for the six months ended March 31, 2002. -------------------------------------------------------------------------------- NOTE C: Distribution Services Agreement The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A, Class B and Class C. Under the Agreement, the Fund pays distribution and servicing fees to the Distributor at an annual rate of up to .50% of the Fund's average daily net assets attributable to Class A shares, 1.00% of the average daily net assets attributable to Class B shares and .75% of the average daily net assets attributable to Class C shares. There are no distribution and servicing fees on the Advisor Class shares. Such fee is accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Fund's shares. -------------------------------------------------------------------------------- NOTE D: Investment Transactions At March 31, 2002, the cost of securities for federal income tax purposes was the same as the cost for financial reporting purposes. 7 NOTES TO FINANCIAL STATEMENTS (continued) AFD Exchange Reserves ================================================================================ NOTE E: Transactions in Shares of Beneficial Interest An unlimited number of shares ($.001 par value) are authorized. At March 31, 2002, capital paid-in aggregated $1,296,452,985. Transactions, all at $1.00 per share, were as follows:
---------------------------------- CLASS A ---------------------------------- Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ---------------- --------------- Shares sold .................................... 10,625,554,761 16,140,684,024 Shares issued on reinvestments of dividends .... 4,006,829 21,470,906 Shares converted from Class B .................. 4,703,891 1,513,297 Shares redeemed ................................ (10,628,526,439) (16,179,695,884) --------------- --------------- Net increase (decrease) ........................ 5,739,042 (16,027,657) =============== =============== ---------------------------------- CLASS B ---------------------------------- Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ---------------- --------------- Shares sold .................................... 154,899,994 618,421,776 Shares issued on reinvestments of dividends .... 1,288,713 8,394,429 Shares converted to Class A .................... (4,703,891) (1,513,297) Shares redeemed ................................ (225,950,850) (408,066,500) --------------- --------------- Net increase (decrease) ........................ (74,466,034) 217,236,408 =============== =============== ---------------------------------- CLASS C ---------------------------------- Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ---------------- --------------- Shares sold .................................... 417,138,572 1,066,874,434 Shares issued on reinvestments of dividends .... 498,103 3,723,485 Shares redeemed ................................ (437,801,080) (1,086,008,108) --------------- --------------- Net decrease ................................... (20,164,405) (15,410,189) =============== =============== ---------------------------------- ADVISOR CLASS ---------------------------------- Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ---------------- --------------- Shares sold .................................... 154,992,465 72,371,760 Shares issued on reinvestments of dividends .... 1,094,548 895,230 Shares redeemed ................................ (4,393,483) (5,218,839) --------------- --------------- Net increase ................................... 151,693,530 68,048,151 =============== ===============
8 FINANCIAL HIGHLIGHTS AFD Exchange Reserves ================================================================================ Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------ Six Months Ended March 31, Year Ended September 30, 2002 ======================================================== (unaudited) 2001 2000 1999 1998 1997 =========== ========= ========= ========= ========= ========= Net asset value, beginning of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------- -------- -------- -------- -------- -------- Income from Investment Operations Net investment income .................................. .0060 .0414 .0511 .0408 .0454 .0411 --------- -------- -------- -------- -------- -------- Less: Dividends Dividends from net investment income ................... (.0060) (.0414) (.0511) (.0408) (.0454) (.0411) --------- -------- -------- -------- -------- -------- Net asset value, end of period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========= ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value (a) ... .60% 4.23% 5.24% 4.16% 4.64% 4.19% Ratios/Supplemental Data Net assets, end of period (in millions) ................ $ 670 $ 664 $ 680 $ 290 $ 168 $ 41 Ratio of expenses to average net assets ................ .94%(b) .96% .99% .99% 1.06% 1.38% Ratio of net investment income to average net assets ... 1.20%(b) 4.09% 5.14% 4.06% 4.56% 4.10% ------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------ Six Months Ended March 31, Year Ended September 30, 2002 ======================================================== (unaudited) 2001 2000 1999 1998 1997 =========== ========= ========= ========= ========= ========= Net asset value, beginning of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------- -------- -------- -------- -------- -------- Income from Investment Operations Net investment income................................... .0036 .0364 .0461 .0357 .0404 .0361 --------- -------- -------- -------- -------- -------- Less: Dividends Dividends from net investment income ................... (.0036) (.0364) (.0461) (.0357) (.0404) (.0361) --------- -------- -------- -------- -------- -------- Net asset value, end of period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========= ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value(a) .................................. .36% 3.71% 4.72% 3.64% 4.13% 3.67% Ratios/Supplemental Data Net assets, end of period (in millions) ................ $ 312 $ 386 $ 169 $ 267 $ 152 $ 74 Ratio of expenses to average net assets ................ 1.45%(b) 1.47% 1.50% 1.50% 1.58% 1.88% Ratio of net investment income to average net assets ... .73%(b) 3.43% 4.54% 3.57% 4.05% 3.61%
-------------------------------------------------------------------------------- See footnote summary on page 10. 9 FINANCIAL HIGHLIGHTS (continued) AFD Exchange Reserves ================================================================================ Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------ Six Months Ended March 31, Year Ended September 30, 2002 ======================================================== (unaudited) 2001 2000 1999 1998 1997 =========== ========= ========= ========= ========= ========= Net asset value, beginning of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------- -------- -------- -------- -------- -------- Income from Investment Operations Net investment income .................................. .0048 .0389 .0486 .0383 .0430 .0386 --------- -------- -------- -------- -------- -------- Less: Dividends Dividends from net investment income ................... (.0048) (.0389) (.0486) (.0383) (.0430) (.0386) --------- -------- -------- -------- -------- -------- Net asset value, end of period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========= ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value (a) .................................. .48% 3.97% 4.98% 3.90% 4.39% 3.93% Ratios/Supplemental Data Net assets, end of period (in millions) ................ $ 93 $ 113 $ 129 $ 128 $ 125 $ 24 Ratio of expenses to average net assets ................ 1.19%(b) 1.22% 1.24% 1.24% 1.29% 1.61% Ratio of net investment income to average net assets ... .98%(b) 3.85% 4.85% 3.86% 4.34% 3.90% -------------------------------------------------------------------------- ADVISOR CLASS -------------------------------------------------------------------------- Six Months January 30, Ended 1997(c) March 31, Year Ended September 30, to 2002 =========================================== September 30, (unaudited) 2001 2000 1999 1998 1997 =========== ========= ========= ========= ========= ============= Net asset value, beginning of period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------- -------- -------- -------- -------- -------- Income from Investment Operations Net investment income .................................. .0085 .0464 .0561 .0458 .0505 .0254 --------- -------- -------- -------- -------- -------- Less: Dividends Dividends from net investment income ................... (.0085) (.0464) (.0561) (.0458) (.0505) (.0254) --------- -------- -------- -------- -------- -------- Net asset value, end of period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========= ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value (a) .................................. .85% 4.75% 5.77% 4.68% 5.18% 3.14% Ratios/Supplemental Data Net assets, end of period (in thousands) ............... $ 221,522 $ 69,835 $ 1,787 $ 11,576 $ 3,240 $ 35 Ratio of expenses to average net assets ................ .45%(b) .47% .47% .49% .55% .88%(b) Ratio of net investment income to average net assets ... 1.56%(b) 3.76% 5.53% 4.57% 5.08% 4.15%(b)
-------------------------------------------------------------------------------- (a) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. (b) Annualized. (c) Commencement of distribution. 10 AFD Exchange Reserves ================================================================================ AFD Exchange Reserves 1345 Avenue of the Americas New York, NY 10105 Toll-free (800) 221-5672 CUSTODIAN State Street Bank and Trust Company P.O. Box 1912 Boston, MA 02105 LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 TRANSFER AGENT Alliance Global Investor Services, Inc. P.O. Box 1520 Secaucus, NJ 07096-1520 DISTRIBUTOR Alliance Fund Distributors, Inc. 1345 Avenue of the Americas New York, NY 10105 -------------------------------------------------------------------------------- Distribution of this report other than to shareholders must be preceded or accompanied by the Fund's current prospectus, which contains further information about the Fund. (R) These registered service marks used under license from the owner, Alliance Capital Management L.P. 11 THE ALLIANCE FAMILY OF MUTUAL FUNDS ================================================================================ U.S. Stock Funds Growth & Income Fund Growth Fund Health Care Fund Mid-Cap Growth Fund* Premier Growth Fund Quasar Fund Technology Fund Global & International Stock Funds All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund AllianceBernstein Value Funds Disciplined Value Fund Global Value Fund International Value Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Small Cap Growth Portfolio Technology Portfolio Asset Allocation Funds Balanced Shares Conservative Investors Fund Growth Investors Fund Taxable Bond Funds Americas Government Income Trust** Corporate Bond Portfolio Global Dollar Government Fund Emerging Market Debt Fund*** High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio U.S. Government Portfolio Tax-Exempt Bond Funds National Intermediate Diversified Insured National Arizona California Intermediate California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Intermediate New York Ohio Pennsylvania Virginia Closed-End Funds All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund The Korean Investment Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Southern Africa Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II -------------------------------------------------------------------------------- * The Alliance Fund changed its name to Alliance Mid-Cap Growth Fund on February 1, 2002. ** Alliance North American Government Income Trust changed its name to Alliance Americas Government Income Trust on March 1, 2002. *** Alliance Global Dollar Government Fund changed its name to Alliance Emerging Market Debt Fund on March 1, 2002. AFD Exchange Reserves serves as the money market fund exchange vehicle for the Alliance mutual funds. To obtain a prospectus for any Alliance Capital fund, call your investment professional, or call Alliance at (800)227-4618. 12 (This page left intentionally blank.)