TEXT-Fitch rates AllianceBernstein Exchange Reserves fund 'AAAmmf'

Mon Oct 8, 2012 5:02pm EDT

Oct 8 - Fitch Ratings has assigned an 'AAAmmf' rating to the
AllianceBernstein Exchange Reserves, a prime money market fund managed
by AllianceBernstein.

The rating assignment reflects the fund's extremely strong capacity to achieve 
its investment objectives of preserving capital and providing shareholder 
liquidity through limiting credit, market and liquidity risks.

KEY RATING DRIVERS

--The fund's overall credit quality and diversification; 

--Short maturity profile;

--Minimal exposure to interest rate and spread risk;

--The capabilities and resources of AllianceBernstein as investment advisor.

As of Sept. 20, 2012, the fund had $2.04 billion in assets under management.

CREDIT QUALITY AND DIVERSIFICATION

The fund seeks to maximize current income consistent with the safety of 
principal and liquidity by investing. These may include: short-term obligations 
issued or guaranteed by the U.S. government, its agencies or instrumentalities; 
certificates of deposit issued by domestic and foreign banks; high-quality 
commercial paper (short-term corporate debt issued by U.S. or foreign 
companies); and other short-term investment instruments.  

Under normal market conditions, the fund invests in securities rated at least 
'A-' or 'F1' by Fitch or equivalent or enters into repurchase agreements with 
counterparties rated at least 'F1' or equivalent. Similarly, under normal market
conditions, the fund limits exposure of all credits in the portfolio to 5% of 
its assets - this applies to direct issuers, repurchase agreement 
counterparties, municipal letter of credit providers as well as underlying 
municipal obligors. All repurchase agreements purchased are overcollateralized 
by 102% with U.S. Treasury or government agency securities. The fund does not 
invest in ABS, MBS or ABCP, other than Straight-A funding.

These investment policies are consistent with Fitch's 'AAAmmf' rating criteria.

As of Sept. 20, 2012, the fund's Portfolio Credit Factor, which is a risk 
weighted measure of the credit quality and maturity profile of portfolio assets,
was also consistent with Fitch's 'AAAmmf' rating criterion of 1.50 or less.

MATURITY PROFILE

The fund manages its market risk exposure by limiting its weighted average 
maturity (WAM) and weighted average life (WAL) to 60 and 120 days, respectively.
As of Sept. 20, 2012, the fund had a WAM of 33 days and a WAL of 75 days.

LIQUIDITY PROFILE

To limit liquidity risk, the fund seeks to invest at least 10% of its assets in 
daily liquid securities and at least 30% of its assets in weekly liquid 
securities. As of Sept. 20, 2012, the fund's available daily and weekly 
liquidity levels were consistent with Fitch 'AAAmmf' rating criteria.

Approximately 50% of shareholder money in the fund originates from various 
AllianceBernstein's equity mutual funds as part of their securities 
lending/collateral reinvestment program.  As a result, Fitch views the 
shareholder base as being somewhat concentrated relative to available overnight 
liquidity.  However, this concentration risk is substantially mitigated by 
several factors, including the capabilities, resources and risk management 
oversight of AllianceBernstein; the diversified nature of the various equity 
mutual funds and the securities lent; and a focus on lending 'hot issues' where 
equity fund managers maintain long-term convictions. Furthermore, expected 
inflows from external investors into the AllianceBernstein Exchange Reserves 
fund should serve to diversify the shareholder base over time.  

INVESTMENT ADVISOR

AllianceBernstein, L.P., rated 'A+/F1' with a Stable Outlook, is a global, 
diversified asset manager (USD411 billion assets under management as at Aug. 31,
2012), approximately 63% owned by AXA S.A. (rated 'A/F1', Outlook Stable). AB 
has been investing in high yield and emerging market debt since the early 1990s.
Money market assets under management were $9.2 billion as of Aug. 31, 2012.

RATING SENSITIVITY AND SURVEILLANCE

The rating may be sensitive to material changes in the credit quality, market or
liquidity risk profiles of the fund. A material adverse deviation from Fitch 
guidelines for any key rating driver could cause the rating to be lowered by 
Fitch, including adverse changes in shareholder concentration and/or increases 
in unanticipated cash outflows. Given the portfolio's primary investment focus 
on domestic and foreign issuers in the financial sector, the ratings may also be
sensitive to material adverse changes in the sector globally.

Fitch expects to receive weekly portfolio holdings information from the fund's 
administrator to conduct surveillance against ratings guidelines and maintain 
its money market fund rating.

Surveillance and analytical information on this fund is expected to be available
in the Funds Surveillance section of Fitch's web site ('www.fitchratings.com') 
in the near future.

The sources of information used to assess this rating were the public domain and
DIMA.

Additional information is available at 'www.fitchratings.com'. The ratings above
were unsolicited and have been provided by Fitch as a service to investors.

Applicable Criteria and(New York Ratings Team)