-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Swd13ABipYgDrn6YnXeCZYdYIylYeOvVRLWmxiyFbqnADsJs//kCCIEAL2GVW2uH svruXwQH/x2z2jz1G1V0KQ== 0000936772-03-000465.txt : 20031210 0000936772-03-000465.hdr.sgml : 20031210 20031210143519 ACCESSION NUMBER: 0000936772-03-000465 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031210 EFFECTIVENESS DATE: 20031210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN EXCHANGE RESERVES CENTRAL INDEX KEY: 0000917713 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08294 FILM NUMBER: 031047008 BUSINESS ADDRESS: STREET 1: C/O ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2129692124 MAIL ADDRESS: STREET 1: C/O ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: AFD EXCHANGE RESERVES INC DATE OF NAME CHANGE: 19980528 N-CSR 1 edg9543_ar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-8294 AllianceBernstein Exchange Reserves (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley. Alliance Capital Management, L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: September 30, 2003 Date of reporting period: September 30, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. ALLIANCEBERNSTEIN EXCHANGE RESERVES ANNUAL REPORT SEPTEMBER 30, 2003 AN INVESTMENT IN THE FUND IS NOT A DEPOSIT IN A BANK AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. STATEMENT OF NET ASSETS September 30, 2003 AllianceBernstein Exchange Reserves _______________________________________________________________________________ Principal Amount (000) Security Yield Value - ----------------------------------------------------------------------- COMMERCIAL PAPER-49.6% Amstel Funding Corp. $ 23,000 12/29/03 (a) 1.05% $ 22,940,296 Barton Capital Corp. 20,052 11/05/03 (a) 1.07 20,031,140 Caisse Nationale Des Caisses D'epargne 22,000 10/07/03 1.03 21,996,223 Citigroup Global Markets Holdings, Inc. 5,000 10/29/03 1.06 4,995,878 Clipper Receivables Corp. 55,000 10/27/03 (a) 1.06 54,957,895 Concord Minutemen Capital Corp. 15,000 10/22/03 (a) 1.08 14,990,550 Edison Asset Securitization 18,000 12/04/03 (a) 1.03 17,967,040 General Electric Capital Corp. 4,000 3/09/04 1.10 3,980,444 General Electric Capital Services, Inc. 30,000 10/02/03 1.25 29,998,958 Giro Funding Corp. 11,000 10/15/03 (a) 1.03 10,995,594 Goldman Sachs Group, LP 19,000 11/20/03 MTN (a) 1.02 18,973,083 HBOS Treasury Services PLC 28,000 10/01/03 1.03 28,000,000 HSBC Bank PLC 25,000 11/10/03 1.06 24,970,556 20,000 12/15/03 1.08 19,955,000 ING Insurance Holdings, Inc. 20,000 10/15/03 1.03 19,991,989 K2 LLC 13,500 10/07/03 (a) 1.03 13,497,682 10,000 10/03/03 (a) 1.03 9,999,428 KBC Financial Products, Ltd. 19,000 10/15/03 1.03 18,992,390 Landesbank Baden- Wurttemberg 20,000 10/10/03 1.02 19,994,900 Montauk Funding Corp. 23,000 10/16/03 (a) 1.03 22,990,129 Norddeutsche Landesbank 25,000 10/14/03 (a) 1.03 24,990,701 Prudential PLC 27,000 12/08/03 1.07 26,945,430 Scaldis Capital LLC 20,000 10/08/03 (a) 1.25 19,995,139 UBS Finance, Inc. 26,000 10/01/03 (a) 1.11 26,000,000 -------------- Total Commercial Paper (amortized cost $498,150,445) 498,150,445 -------------- U.S. GOVERNMENT AGENCY OBLIGATIONS-36.6% Federal Home Loan Bank 60,000 9/27/04 FRN 1.01 59,976,171 26,000 10/31/03 1.06 25,977,033 33,000 7/06/04 1.23 33,000,000 10,000 9/22/04 1.43 10,000,000 Federal Home Loan Mortgage Corp. 3,500 12/31/03 1.08 3,490,445 20,000 11/13/03 1.08 19,974,200 25,000 10/31/03 1.08 24,977,500 12,000 8/20/04 1.17 12,000,000 Federal National Mortgage Association 15,350 10/29/03 1.05 15,337,464 4,868 10/22/03 1.05 4,865,019 22,000 10/29/03 1.06 21,981,862 8,000 12/22/03 1.07 7,980,502 16,000 1/28/04 1.08 15,941,293 33,000 7/06/04 1.11 33,000,000 25,000 2/13/04 1.13 24,894,063 9,000 3/08/04 1.14 8,954,685 45,000 5/07/04 1.38 45,000,000 -------------- Total U.S. Government Agency Obligations (amortized cost $367,350,237) 367,350,237 -------------- 1 STATEMENT OF NET ASSETS (continued) AllianceBernstein Exchange Reserves _______________________________________________________________________________ Principal Amount (000) Security Yield Value - ----------------------------------------------------------------------- CERTIFICATES OF DEPOSIT-10.4% Canadian Imperial Bank of Commerce $ 20,000 10/30/03 FRN 1.04% $ 19,999,677 Dexia CLF Finance Co. 15,000 10/29/03 1.07 15,000,000 Landesbank Hessen Thueringen 50,000 10/14/03 1.04 50,000,090 Nordea Bank Finland PLC 19,000 12/15/03 1.03 19,000,000 -------------- Total Certificates of Deposit (amortized cost $103,999,767) 103,999,767 -------------- CORPORATE OBLIGATIONS-3.4% American Express Credit Corp. 14,000 12/17/03 FRN MTN (a) 1.17 14,002,377 Centauri Corp. 20,000 5/12/04 FRN MTN (a) 1.06 19,999,694 -------------- Total Corporate Obligations (amortized cost $34,002,071) 34,002,071 -------------- TOTAL INVESTMENTS-100.0% (amortized cost $1,003,502,520) 1,003,502,520 Other assets less liabilities-0.0% (145,573) -------------- NET ASSETS-100% (offering and redemption price of $1.00 per share; 362,393,800 Class A shares; 292,926,467 Class B shares; 67,647,077 Class C shares and 280,411,925 Advisor Class shares outstanding) $1,003,356,947 ============== (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 September 30, 2003, these securities amounted to $392,306,596 representing 39.1% of net assets. Glossary of Terms FRN - Floating Rate Note MTN - Medium Term Note See notes to financial statements. 2 STATEMENT OF OPERATIONS Year Ended September 30, 2003 AllianceBernstein Exchange Reserves _______________________________________________________________________________ INVESTMENT INCOME Interest $ 19,437,349 EXPENSES Advisory fee $ 3,600,672 Distribution fee--Class A 3,680,433 Distribution fee--Class B 3,700,126 Distribution fee--Class C 628,057 Transfer agency 3,233,276 Custodian 297,319 Registration fees 231,797 Printing 143,608 Administrative 105,500 Audit and legal 88,243 Trustees' fees 27,500 Miscellaneous 28,165 ------------ Total expenses 15,764,696 Less: expense offset arrangement (see Note B) (1,426) Less: expenses waived (see Note C) (1,797,804) ------------ Total expenses 13,965,466 ------------ Net investment income 5,471,883 REALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 53 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,471,936 ============ See notes to financial statements. 3 STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Exchange Reserves _______________________________________________________________________________ Year Ended Year Ended September 30, September 30, 2003 2002 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 5,471,883 $ 12,220,358 Net realized gain (loss) on investment transactions 53 (22,375) -------------- -------------- Net increase in net assets from operations 5,471,936 12,197,983 DIVIDENDS AND DISRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (2,959,738) (6,953,131) Class B (403,696) (1,835,886) Class C (141,911) (778,663) Advisor Class (1,966,538) (2,652,678) Net realized gain on investment transactions Class A -0- (26,738) Class B -0- (15,586) Class C -0- (3,921) Advisor Class -0- (4,289) TRANSACTION IN SHARES OF BENEFICIAL INTEREST Net increase (decrease) (557,090,321) 326,818,738 -------------- -------------- Total increase (decrease) (557,090,268) 326,745,829 NET ASSETS Beginning of period 1,560,447,215 1,233,701,386 -------------- -------------- End of period $1,003,356,947 $1,560,447,215 ============== ============== See notes to financial statements. 4 NOTES TO FINANCIAL STATEMENTS September 30, 2003 AllianceBernstein Exchange Reserves _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES AllianceBernstein Exchange Reserves (the "Fund"), formerly AFD Exchange Reserves, 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, as described in the prospectus, 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, to the extent described in the prospectus, 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, to the extent described in the prospectus, for Class B shares of other Alliance Mutual Funds. Class B shares also are offered in exchange, to the extent described in the prospectus, 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. 5 NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Exchange Reserves _______________________________________________________________________________ 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 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. 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 year ended September 30, 2003, such reimbursements totaled $105,500. For the year ended September 30, 2003, the Fund's expenses were reduced by $1,426 under an expense offset arrangement with Alliance Global Investor Services, Inc. (AGIS). AllianceBernstein Investment Research and Management, Inc., (the "Distributor"), formerly Alliance Fund Distributors, Inc., 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 $1,830,173, $1,794,460, and $76,870 in contingent deferred sales charges imposed upon redemption by shareholders of Class A, Class B, and Class C shares, respectively, for the year ended September 30, 2003. 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 $2,199,078 for the year ended September 30, 2003. 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 6 AllianceBernstein Exchange Reserves _______________________________________________________________________________ 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. For the period ending September 30, 2003, the Distributor has agreed to waive a portion of the distribution fees in the amount of $602,986, $1,106,875 and $87,943 for the Class A, Class B and Class C shares, respectively. NOTE D: INVESTMENT TRANSACTIONS, INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS At September 30, 2003, the cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes. At September 30, 2003, the Fund had a capital loss carryforward of $22,322, which expires 2010. To the extent that any net capital loss carryforward is used to offset future capital gains, it is probable that these gains will not be distributed to shareholders. During the year ended September 30, 2003 the Fund utilized $53 of the capital loss carryforward. The dividends paid by the Fund for the years ended September 30, 2003 and 2002 are deemed to be ordinary income for federal income tax purposes. NOTE E: TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST An unlimited number of shares ($.001 par value) are authorized. At September 30, 2003, capital paid-in aggregated $1,003,379,269. Transactions, all at $1.00 per share, were as follows: CLASS A ------------------------------ Year Ended Year Ended September 30, September 30, 2003 2002 -------------- -------------- Shares sold 16,790,806,054 23,668,352,864 Shares issued on reinvestment of dividends and distributions 2,959,738 6,979,869 Shares converted from Class B 4,416,210 9,897,868 Shares redeemed (17,221,881,973)(23,563,570,144) -------------- -------------- Net increase (decrease) (423,699,971) 121,660,457 ============== ============== CLASS B ------------------------------ Year Ended Year Ended September 30, September 30, 2003 2002 -------------- -------------- Shares sold 205,045,129 468,603,104 Shares issued on reinvestment of dividends and distributions 403,696 1,851,472 Shares converted to Class A (4,416,210) (9,897,868) Shares redeemed (340,195,716) (414,477,310) -------------- -------------- Net increase (decrease) (139,163,101) 46,079,398 ============== ============== CLASS C ------------------------------ Year Ended Year Ended September 30, September 30, 2003 2002 -------------- -------------- Shares sold 406,705,423 720,074,439 Shares issued on reinvestment of dividends and distributions 141,911 782,584 Shares redeemed (447,562,375) (725,867,766) -------------- -------------- Net decrease (40,715,041) (5,010,743) ============== ============== 7 NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Exchange Reserves _______________________________________________________________________________ ADVISOR CLASS ------------------------------ YEAR ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, 2003 2002 -------------- -------------- Shares sold 74,601,750 205,254,790 Shares issued on reinvestment of dividends and distributions 1,966,538 2,656,967 Shares redeemed (30,080,496) (43,822,131) -------------- -------------- Net increase 46,487,792 164,089,626 ============== ============== NOTE F: LEGAL PROCEEDINGS Alliance Capital Management L.P. ("Alliance Capital"), the Fund's Adviser, is currently under investigation by the Office of the New York State Attorney General ("NYAG") and the United States Securities and Exchange Commission ("SEC") in connection with their investigation of practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities are also conducting investigations into these practices within the industry and have requested that Alliance Capital provide information to them. Alliance Capital has been cooperating with all of these authorities and has been conducting its own internal investigation into these matters. In addition, Alliance Capital's Board of Directors authorized a special committee, comprised of the members of Alliance Capital's Audit Committee and the other independent member of the Board, to direct and oversee a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. On October 2, 2003, a putative class action complaint entitled HINDO ET AL. V. ALLIANCEBERNSTEIN GROWTH & INCOME FUND ET AL. (the "Hindo Complaint") was filed against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with Alliance Capital. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with Alliance Capital, including recovery of all fees paid to Alliance Capital pursuant to such contracts. Between October 3 and November 13, 2003, twenty-one additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against Alliance Capital and certain other defendants. All of these lawsuits seek an unspecified amount of damages. Through November 14, 2003, Alliance Capital's internal investigation has revealed that Alliance Capital maintained relationships with certain investors who were permitted to engage in market timing trades in certain AllianceBernstein Mutual Funds in return for or in connection with making investments (which were not actively traded) in other Alliance Capital products, including hedge funds and mutual funds, for which Alliance Capital receives advisory fees ("Market Timing Relationships"). Alliance Capital believes that these Market Timing Relationships created conflicts of interest and that certain of the trades made pursuant to these relationships had an adverse effect on some shareholders of the AllianceBernstein Mutual Funds. These matters are the subject of the ongoing internal investigation by Alliance Capital. As a result of Alliance Capital's involvement in market timing or for other reasons, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell 8 AllianceBernstein Exchange Reserves _______________________________________________________________________________ investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. Any resolution of Alliance Capital's involvement in market timing and the related SEC and NYAG investigations and private lawsuits is likely to include, but not be limited to, sanctions, penalties, appropriate restitution to mutual fund shareholders and structural changes in the governance of Alliance Capital's mutual fund business. Alliance Capital is committed to full restitution of the adverse effects that inappropriate market timing transactions allowed by Alliance Capital had on the shareholders of the AllianceBernstein Mutual Funds. 9 FINANCIAL HIGHLIGHTS AllianceBernstein Exchange Reserves _______________________________________________________________________________ Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
CLASS A ----------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS Net investment income .0040(a) .0100 .0414 .0511 .0408 Net realized gain (loss) on investment transactions (b) -0- -0- -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Net increase in net asset value from operations .0040 .0100 .0414 .0511 .0408 ----------- ----------- ----------- ----------- ----------- LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.0040) (.0100) (.0414) (.0511) (.0408) Distributions from net realized gain on investment transactions -0- -0-(b) -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Total dividends and distributions (.0040) (.0100) (.0414) (.0511) (.0408) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 =========== =========== =========== =========== =========== TOTAL RETURN Total investment return based on net asset value (c) .37% 1.01% 4.23% 5.24% 4.16% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $362 $786 $664 $680 $290 Ratio to average net assets of: Expenses, net of waivers/reimbursements .95% .97% .96% .99% .99% Expenses, before waivers/reimbursements 1.03% .97% .96% .99% .99% Net investment income .40%(a) .99% 4.09% 5.14% 4.06%
See footnote summary on page 13. 10 AllianceBernstein Exchange Reserves _______________________________________________________________________________ Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
CLASS B ----------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS Net investment income .0011(a) .0051 .0364 .0461 .0357 Net realized gain (loss) on investment transactions (b) -0- -0- -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Net increase in net asset value from operations .0011 .0051 .0364 .0461 .0357 ----------- ----------- ----------- ----------- ----------- LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.0011) (.0051) (.0364) (.0461) (.0357) Distributions from net realized gain on investment transactions -0- -0-(b) -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Total dividends and distributions (.0011) (.0051) (.0364) (.0461) (.0357) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 =========== =========== =========== =========== =========== TOTAL RETURN Total investment return based on net asset value (c) .10% 0.51% 3.71% 4.72% 3.64% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $293 $432 $386 $169 $267 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.24% 1.48% 1.47% 1.50% 1.50% Expenses, before waivers/reimbursements 1.54% 1.48% 1.47% 1.50% 1.50% Net investment income .11%(a) .51% 3.43% 4.54% 3.57%
See footnote summary on page 13. 11 FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Exchange Reserves _______________________________________________________________________________ Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
CLASS C ----------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS Net investment income .0017(a) .0075 .0389 .0486 .0383 Net realized gain (loss) on investment transactions (b) -0- -0- -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Net increase in net asset value from operations .0017 .0075 .0389 .0486 .0383 ----------- ----------- ----------- ----------- ----------- LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.0017) (.0075) (.0389) (.0486) (.0383) Distributions from net realized gain on investment transactions -0- -0-(b) -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Total dividends and distributions (.0017) (.0075) (.0389) (.0486) (.0383) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 =========== =========== =========== =========== =========== TOTAL RETURN Total investment return based on net asset value (c) .15% 0.76% 3.97% 4.98% 3.90% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $68 $108 $113 $129 $128 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.18% 1.22% 1.22% 1.24% 1.24% Expenses, before waivers/reimbursements 1.29% 1.22% 1.22% 1.24% 1.24% Net investment income .17%(a) .77% 3.85% 4.85% 3.86%
See footnote summary on page 13. 12 AllianceBernstein Exchange Reserves _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS ----------------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----------- ----------- ----------- ----------- ----------- INCOME FROM INVESTMENT OPERATIONS Net investment income .0076 .0150 .0464 .0561 .0458 Net realized gain (loss) on investment transactions (b) -0- -0- -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Net increase in net asset value from operations .0076 .0150 .0464 .0561 .0458 ----------- ----------- ----------- ----------- ----------- LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.0076) (.0150) (.0464) (.0561) (.0458) Distributions from net realized gain on investment transactions -0- -0-(b) -0- -0- -0- ----------- ----------- ----------- ----------- ----------- Total dividends and distributions (.0076) (.0150) (.0464) (.0561) (.0458) ----------- ----------- ----------- ----------- ----------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 =========== =========== =========== =========== =========== TOTAL RETURN Total investment return based on net asset value (c) .78% 1.51% 4.75% 5.77% 4.68% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $280,406 $233,919 $69,835 $1,787 $11,576 Ratio of expenses to average net assets .55% .48% .47% .47% .49% Net investment income .76% 1.39% 3.76% 5.53% 4.57%
(a) Net of fees waived and expenses reimbursed. (b) Amount is less than $0.0001. (c) 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 return does not reflect the deuction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment return calculated for a period of less than one year is not annualized. 13 REPORT OF INDEPENDENT AUDITORS AllianceBernstein Exchange Reserves _______________________________________________________________________________ TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ALLIANCEBERNSTEIN EXCHANGE RESERVES In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AllianceBernstein Exchange Reserves, formerly AFD Exchange Reserves, (the "Fund") at September 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York November 25, 2003 14 AllianceBernstein Exchange Reserves _______________________________________________________________________________ ALLIANCEBERNSTEIN EXCHANGE RESERVES 1345 Avenue of the Americas New York, NY 10105 Toll-free (800) 221-5672 TRUSTEES WILLIAM H. FOULK, JR. (1), CHAIRMAN MARC O. MAYER, PRESIDENT RUTH BLOCK (1) DAVID H. DIEVLER (1) JOHN H. DOBKIN (1) CLIFFORD L. MICHEL (1) DONALD J. ROBINSON (1) OFFICERS KATHLEEN A. CORBET, SENIOR VICE PRESIDENT JOHN J. KELLEY, SENIOR VICE PRESIDENT RAYMOND J. PAPERA, SENIOR VICE PRESIDENT JOHN F. CHIODI, JR., VICE PRESIDENT MARIA R. CONA, VICE PRESIDENT JOSEPH C. DONA, VICE PRESIDENT MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER THOMAS R. MANLEY, CONTROLLER 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 AUDITORS PRICEWATERHOUSECOOPERS LLP 1177 Avenue of the Americas New York, NY 10036 TRANSFER AGENT ALLIANCE GLOBAL INVESTOR SERVICES, INC. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free 1-(800) 221-5672 DISTRIBUTOR ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT, INC. 1345 Avenue of the Americas New York, NY 10105 (1) MEMBER OF THE AUDIT COMMITTEE. 15 MANAGEMENT OF THE FUND AllianceBernstein Exchange Reserves _______________________________________________________________________________ BOARD OF TRUSTEES INFORMATION The business and affairs of the Fund are managed under the direction of the Board of Trustees. Certain information concerning the Fund's Trustees is set forth below.
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS AGE OF TRUSTEE OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS TRUSTEE TRUSTEE - -------------------------------------------------------------------------------------------------- DISINTERESTED TRUSTEES William H. Foulk, Jr., #+, 71 Investment Adviser and Independent 113 None 2 Sound View Drive Consultant. Formerly Senior Manager of Suite 100 Barrett Associates, Inc., a registered Greenwich, CT 06830 investment adviser, with which he had been (9) associated since prior to 1998. Formerly CHAIRMAN OF THE BOARD Deputy Comptroller and Chief Investment Officer of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings. Ruth Block, #+, 73 Formerly Executive Vice President and 96 None 500 SE Mizner Blvd. Chief Insurance Officer of The Equitable Boca Raton, FL 33432 Life Assurance Society of the United States; (9) Chairman and Chief Executive Officer of Evlico; Director of Avon, BP (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group and Donaldson, Lufkin & Jenrette Securities Corporation; former Governor at Large National Association of Securities Dealers, Inc. David H. Dievler, #+, 74 Independent Consultant. Until December 100 None P.O. Box 167 1994, Senior Vice President of Alliance Spring Lake, NJ 07762 Capital Management Corporation ("ACMC") (9) responsible for mutual fund administration. Prior to joining ACMC in 1984, Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that, Senior Manager at Price Waterhouse & Co. Member of the American Institute of Certified Public Accountants since 1953. John H. Dobkin, #+, 61 Consultant. Formerly President of Save 98 None P.O. Box 12 Venice, Inc. (preservation organization) Annandale, NY 12504 from 2001-2002, Senior Advisor from June (9) 1999-June 2000 and President of Historic Hudson Valley (historic preservation) from December 1989-May 1999. Previously, Director of the National Academy of Design and during 1988-1992, Director and Chairman of the Audit Committee of ACMC.
16 AllianceBernstein Exchange Reserves _______________________________________________________________________________
PORTFOLIOS IN FUND OTHER NAME, ADDRESS, PRINCIPAL COMPLEX DIRECTORSHIPS AGE OF TRUSTEE OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS TRUSTEE TRUSTEE - -------------------------------------------------------------------------------------------------- DISINTERESTED TRUSTEES (CONTINUED) Clifford L. Michel, #+, 64 Senior Counsel of the law firm of Cahill 97 Placer Dome, Inc. 15 St. Bernard's Road Gordon & Reindel since February 2001 and a Gladstone, NJ 07934 partner of that firm for more than twenty-five (9) years prior thereto. President and Chief Executive Officer of Wenonah Development Company (investments) and a Director of Placer Dome, Inc. (mining). Donald J. Robinson, #+, 69 Senior Counsel to the law firm of Orrick, 96 None 98 Hell's Peak Road Herrington & Sutcliffe LLP since prior to Weston, VT 05161 1998. Formerly a senior partner and a member (7) of the Executive Committee of that firm. He was also a member and Chairman of the Municipal Securities Rulemaking Board and a Trustee of the Museum of the City of New York. INTERESTED TRUSTEE Marc O.Mayer++, 46 Executive Vice President of ACMC since 68 None 1345 Avenue of the Americas, 2001; prior thereto, Chief Executive Officer New York, NY 10105 of Sanford C. Bernstein & Co., LLC and its (1 month) predecessor since prior to 1998.
* There is no stated term of office for the Fund's trustees. # Member of the Audit Committee. + Member of the Nominating Committee. ++ Mr. Mayer is an "interested trustee", as defined in the 1940 Act, due to his position as Executive Vice President of ACMC. 17 AllianceBernstein Exchange Reserves _______________________________________________________________________________ OFFICER INFORMATION Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) HELD PRINCIPAL OCCUPATION DURING AND AGE WITH FUND PAST 5 YEARS** - ----------------------------------------------------------------------------------------------------------------- Marc O.Mayer, 46 President See biography above. Kathleen A. Corbet, 43 Senior Vice President Executive Vice President of Alliance Capital Management Corporation ("ACMC")** with which she has been associated since prior to 1998. John J. Kelley , 43 Senior Vice President Senior Vice President of ACMC** with which he has been associated since prior to 1998. Raymond J. Papera, 47 Senior Vice President Senior Vice President of ACMC** with which he has been associated since prior to 1998. John F. Chiodi, Jr., 37 Vice President Vice President of ACMC** with which he has been associated since prior to 1998. Maria R. Cona, 48 Vice President Vice President of ACMC** with which she has been associated since prior to 1998. Joseph C. Dona, 42 Vice President Vice President of ACMC** with which he has been associated since prior to 1998. Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance Global Investor Financial Officer Services, Inc. ("AGIS")** and Vice President of AllianceBernstein Investment Research and Management, Inc. ("ABIRM")** with which he has been associated since prior to 1998. Thomas R. Manley, 52 Controller Vice President of ACMC** with which he has been associated since prior to 1998.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, ABIRM and AGIS are affiliates of the Fund. The Fund's Statement of Additional Information (SAI) has additional information about the Fund's Trustees and Officers and is available without charge upon request. Contact your financial representative or Alliance Capital at 800-227-4618 for a free prospectus or SAI. 18 THE ALLIANCEBERNSTEIN FAMILY OF MUTUAL FUNDS AllianceBernstein Exchange Reserves _______________________________________________________________________________ WEALTH STRATEGIES FUNDS Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy* Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy** BLENDED STYLE SERIES U.S. Large Cap Portfolio GROWTH FUNDS DOMESTIC Growth Fund Mid-Cap Growth Fund Premier Growth Fund Small Cap Growth Fund# Technology Fund GLOBAL & INTERNATIONAL All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Premier Growth Fund New Europe Fund Worldwide Privatization Fund SELECT INVESTOR SERIES Biotechnology Portfolio Premier Portfolio Technology Portfolio VALUE FUNDS DOMESTIC Balanced Shares Disciplined Value Fund Growth & Income Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund GLOBAL & INTERNATIONAL Global Value Fund International Value Fund TAXABLE BOND FUNDS Americas Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio Short Duration Portfolio U.S. Government Portfolio MUNICIPAL BOND FUNDS National Insured National Arizona California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Pennsylvania Virginia INTERMEDIATE MUNICIPAL BOND FUNDS Intermediate California Intermediate Diversified Intermediate New York CLOSED-END FUNDS All-Market Advantage Fund ACM Income Fund ACM Government Opportunity 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 Spain Fund World Dollar Government Fund World Dollar Government Fund II For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. Please read the prospectus carefully before you invest or send money. * Formerly Growth Investors Fund. ** Formerly Conservative Investors Fund. # Quasar Fund changed its name to Small Cap Growth Fund on 11/3/03. ## An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 19 (This page left intentionally blank.) (This page left intentionally blank.) AFDAR0903 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant's code of ethics is filed herewith as Exhibit 10(a)(1). (b) During the period covered by this report, no amendments were made to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors has determined that independent directors David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial experts. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Form N-CSR disclosure requirement not yet effective with respect to the registrant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant's internal controls that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. The following exhibits are attached to this Form N-CSR: Exhibit No. DESCRIPTION OF EXHIBIT ----------- ---------------------- 10(a)(1) Code of ethics that is subject to the disclosure of Item 2 hereof 10(b)(1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10(b)(2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10(c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Exchange Reserves By: /s/ Marc O. Mayer ----------------------------------- Marc O. Mayer President Date: November 25, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ------------------------------- Marc O. Mayer President Date: November 25, 2003 By: /s/ Mark D. Gersten ------------------------------ Mark D. Gersten Treasurer and Chief Financial Officer Date: November 25, 2003 EX-99.CERT 3 edg9543-ethics.txt Exhibit 10(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code The AllianceBernstein Mutual Fund Complex's code of ethics (this "Code") for the investment companies within the complex (collectively, the "Funds" and each, a "Company") applies to each Company's Principal Executive Officer, Principal Financial and Accounting Officer and Controller (the "Covered Officers," each of whom is set forth in Exhibit A) for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. For the purposes of this Code, members of the Covered Officer's family include his or her spouse, children, stepchildren, financial dependents, parents and stepparents. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The Company's and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Company's Board of Directors or Trustees (the "Directors") that the Covered Officers may also be officers or employees of one or more of the other Funds or of other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; o not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Company; o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; There are some conflict of interest situations, whether involving a Covered Officer directly or a member of his family, that should always be discussed with the General Counsel of AllianceBernstein Investment Research and Management, Inc.(the "General Counsel"), if material. Examples of these include: o service as a director on the board of directors or trustees of any public or private company (other than a not-for-profit organization); o the receipt of any non-nominal gifts; o the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements and disclosure controls and procedures generally applicable to the Company; o each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; o each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the General Counsel that he has received, read, and understands the Code; o annually thereafter affirm to the General Counsel that he has complied with the requirements of the Code; o complete at least annually a questionnaire relating to affiliations or other relationships that may give rise to conflicts of interest; o not retaliate against any other Covered Officer or any employee of the Company or their affiliated persons for reports of potential violations that are made in good faith; and o notify the General Counsel promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code. The General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, waivers sought by a Covered Officer will be considered by the Company's Audit Committee (the "Committee"). The Company will follow these procedures in investigating and enforcing this Code: o the General Counsel will take all appropriate action to investigate any potential violations reported to him; o if, after such investigation, the General Counsel believes that no material violation has occurred, the General Counsel is not required to take any further action; o any matter that the General Counsel believes is a material violation will be reported to the Committee; o if the Committee concurs that a material violation has occurred, it will inform and make a recommendation to the Directors, who will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o the Committee will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, the Company's adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, it is understood that this Code is in all respects separate and apart from, and operates independently of, any such policies and procedures. In particular, the Company's and its investment adviser's and principal underwriter's codes of ethics under Rule 17j-l under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Directors, including a majority of independent directors. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Directors, the investment adviser, their counsel, counsel to the Company and, if deemed appropriate by the Directors of the Company, to the Directors of the other Funds. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Date: July 22, 2003 Exhibit A Persons Covered by this Code of Ethics John Carifa, Principal Executive Officer Mark Gersten, Principal Financial and Accounting Officer Thomas Manley, Controller EX-99.906 CERT 4 edg9543-ex10b_302.txt EXHIBIT 10(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Exchange Reserves (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: November 25, 2003 /s/ Marc O. Mayer --------------------------- Marc O. Mayer President EXHIBIT 10(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Exchange Reserves (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: November 25, 2003 /s/ Mark D. Gersten --------------------------- Mark D. Gersten Treasurer and Chief Financial Officer EX-99.CODE ETH 5 edg9543-ex10c_906.txt EXHIBIT 10(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Exchange Reserves (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended September 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 25, 2003 By: /s/ Marc O. Mayer ------------------------- Marc O. Mayer President By: /s/ Mark D. Gersten ------------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----