AB Exch Reserves Goes Govt
AllianceBernstein filed a Prospectus Supplement to change its $1.8 billion AB Exchange Reserves Fund from Prime to Government. The filing states, "At a Meeting on March 9, 2016, the Board of Directors of AB Exchange Reserves (the "Fund") approved proposals to change the name of the Fund to AB Government Exchange Reserves and to change certain investment policies of the Fund to convert it to a government money market fund that invests almost all of its assets in U.S. Government securities in accordance with Rule 2a-7 under the Investment Company Act of 1940. U.S. Government securities generally have lower yields than the types of non-government securities in which the Fund has historically invested the bulk of its assets. As part of these changes, the Fund will also reduce its current management fee of 0.25% to an annualized fee of 0.20% of the Fund's average daily net assets. As a government money market fund, the Fund will invest at least 99.5% of its total assets in cash, marketable obligations (which may bear adjustable rates of interest) issued or guaranteed by the U.S. Government, its agencies and instrumentalities and repurchase agreements that are collateralized fully (i.e., by U.S. Government securities). The Fund will also invest at least 80% of its net assets in U.S. Government securities and repurchase agreements that are collateralized by U.S. Government securities. The proposals were recommended to the Board by the Fund's investment adviser, AllianceBernstein L.P. in light of recent money market fund reforms, after considering the nature of the Fund's shareholder base and the desirability of the Fund being able to continue to seek to maintain a stable $1.00 net asset value ("NAV") as opposed to operating with a "floating" NAV and, among other things, becoming subject to potential redemption fees and limitations on redemptions under certain circumstances. The changes to the Fund's name and management fee and changes to the Fund's investment policies to convert it to a government money market fund do not require stockholder approval. The changes are expected to be effective on or about July 1, 2016." With this conversion, $301.9 billion will have shifted from Prime funds into Govt MMFs by Oct. 14. In other news, Institutional Investor posted a story, "Money Market Reform: The Risks of Your Cash Strategy," written by Northern Trust's Peter Yi.
